Death of a brand: 5 Lessons from demise of Nokia

December 8, 2018 By Hardeep Kumar 0

The journey from the 5th most valued brand in the world to the desperate brand on sale, stock traded at $40 to paltry $2, valuation of $150 billion to $12 billion, global share of smartphones from 50% to little over 3%, share of Indian market from over 60% to mere 10%, formidable player to marginal operator in mobile handsets segment…. This is the picture that transformed from 2007 to 2012, in the period of mere five years. This is the story of Nokia.

Finally, the inevitable in September 2013, a $7.2 billion deal by Microsoft, buying Nokia’s handset and services division. Interestingly, this value is about the same what Apple made profit in second quarter of 2013. This fate of Nokia was looming for long. You can imagine the enormity of problem by the fact that once Nokia’s capitalization was $10 billion more than Apple; and by the time in 2012 it turned to be $600 billion less than Apple.

This is the story of dramatic rise and sudden fall of an iconic brand. Nokia symbolizes the ERA in mobile telephony. The era ended with the selling off handset division to Microsoft. Microsoft may continue with brand Nokia with existing feature phones for next 10 years but it’s unlikely that the brand will be renewed by its new owner.

There are valuable lessons to be learnt from demise of Nokia. Nokia faltered on many accounts before eventually ending its dream run in the lap of Microsoft.

The lessons are equally relevant to brands across all categories and markets.

Don’t become complacent: Complacency is the key to failure. It’s the other word for severely underestimating the competition. Nokia is the victim of acute complacency, an outcome of its dream run over a decade. It seemed too big to fail, too successful to falter; but it paid the price for ignoring the obvious.

Brands should keep their hunger on. They should keep the adrenalin up to remain aggressive. They should remember that market spares none. Apple seems to learning it the hard way, while the Samsung learnt the lesson early on.

Cannibalize your own business: Nokia needed to cannibalize its own businesses to make the way for future. It seemed to stuck in time warp.

Steve Jobs once said “If you don’t cannibalize yourself, someone else will”. Apple masters this strategy. Samsung follows.

Brands should cannibalize their own business to make place for better successors. If they don’t do this, some other brand will do.

The other brand came to my mind is Gillette. It created a market by moving gradually up the ladder, by cannibalizing its own business in the process. Its brand, Fusion Proglide became the fastest brand to reach a billion dollar sale by cannibalizing most of the market of Mach3, its other successful brand. The catch – Fusion Proglide is 40-50% more expensive than Mach3.

Anticipate the future: Symbian was never the OS of future. Nokia failed to see the future coming. The world was moving from keypads to touch phones, hardware excellence to ecosystem prudence, closed system to open system software. When Nokia woke up from slumber, it was too late to do the correction. The market slipped irreversibly to Apple iOS and Google Android.

Brands should always keep a keen eye on future. Remember, your current plans should be driven by future strategies.

I see a recent example of anticipating future when Toyota launched Camry Hybrid in August’13, clearly anticipating the future of gasoline cars. Toyota, probably, will move swiftly to green technology of future; better than the players who are dozing off in their current success comfort. Some will be Nokia’s of future.

Be flexible and agile: Mobile phones have one of the fastest cycles of obsolescence. Nokia realized this mantra too late to implement. Nokia had one of the largest workforce and longest churning period for getting new products to market.
Samsung has been successful in being agile and flexible. It has one of the shortest product development cycle enabling it to launch models in record time.

Nimble feet brands accommodate the changing needs of customers and they do this really fast. Apple and other manufacturers are learning the lessons in hard way from Samsung.

Communicate, Communicate, and Communicate: Nokia couldn’t struck a chord with its customers while it changed the gears to smartphones. It couldn’t instil the confidence and trust. There was severe lack of dialog with its customers. Customers started drifting away to Apple, Samsung, LG and other formidable players.

Successful brands talk to their customers. The information flow and consistent communication is the key to their success. Brands should communicate about their past glory, their current readiness and their future aspirations. Communication is the prime need to connect with customers, who are eventually responsible for making or breaking the brands.

Nokia may be relegated to the annals of history, or it may rise again .

Whatever happens, it is for sure that Nokia, once the way of life, has blundered seriously on many counts. It’s for other brands to learn the lessons and protect their turf .