MicrosoftNokia - Strategic Innovation for the newly merged entity - by Noam Bernstein
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MicrosoftNokia - Strategic Innovation for the newly merged entity - by Noam Bernstein

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September 2013...Microsoft & Nokia...Microsoft the software behemoth acquires Nokia, the inventor of the mobile phone, for a mere $13B. ...

September 2013...Microsoft & Nokia...Microsoft the software behemoth acquires Nokia, the inventor of the mobile phone, for a mere $13B.
Are they two dinosaurs trying to mate? Or, does the data point otherwise?
In this quick exercise, using strategic frameworks & heuristics,combining both companies' data with macro & category trends, I try to answer that question, and also to guide the spotlight to the best Innovation opportunity areas - where, when & how MicrosoftNokia should Innovate

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MicrosoftNokia - Strategic Innovation for the newly merged entity - by Noam Bernstein MicrosoftNokia - Strategic Innovation for the newly merged entity - by Noam Bernstein Presentation Transcript

  • STRATEGIC INNOVATION ANALYSIS for A NEWLY MERGED ENTITY OCTOBER 23, 2013 STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 1
  • Created by Noam Bernstein http://www.linkedin.com/pub/noam-bernstein/1/ab0/651 https://www.vizify.com/noam-bernstein Enjoy! STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 2
  • http://www.forbes.com/sites/forbesleadershipforum/2013/09/04/microsoftand-nokia-a-marriage-made-in-hell/ http://www.forbes.com/sites/nigamarora/2013/09/04/why-microsoftwas-not-stupid-to-buy-nokias-phones/ http://www.zdnet.com/microsofts-nokia-acquisition-it-was-double-down-or-quit-7000020161/ http://www.microsoft.com/en-us/default.aspx STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 3
  • Where should Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN play to win? 4
  • Size Capital Needed To sift through hype & rumor, data driven frameworks synthesizing external opportunity with internal capabilities & assets should be applied ? Time Opportunity trends (size & time) Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Core Microsoft Core Far out Assets filter (customers, channels, knowhow) Time to ROI Capital filter (advantage) 5
  • Fit to Microsoft Customer Customers Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Fit to Nokia Fit to Nokia Channels Fit to Nokia Customers Customers are today, more than ever, at center; channels & regions are still very real, hard won assets; these criteria help filter & focus where to innovate Fit to Microsoft Channels Channels Fit to Microsoft Geographies 6
  • Microsoft remains a multi-product powerhouse brand in homes & offices of millions of users worldwide, despite recent devices & performance http://www.forbes.com/companies/microsoft/ Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 7
  • Microsoft led early on in the computer software services arena; Today it competes with giants in many arenas; Apple & Google are strongest 1990-today Microsoft Apple Google 2008 -today https://www.google.com/finance STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 8
  • Microsoft’s sheer scale affords it patience towards a longer term horizon; Today a mere 3.1% of market, Windows Phone is expected to reach 10.2% in 2017 Today, 8.7 million Windows Phone smart phones make 3.1% In 2017, Windows Phone is forecast to reach 10.2% http://b-i.forbesimg.com/chuckjones/files/2013/08/IDC-Windows-smartphone-vendors-June-2013-qtr.png Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 9
  • Nokia, pioneer of cellular phones, failed to identify the smart phone revolution; No longer leader, Nokia still hold major market share in many global markets http://www.forbes.com/companies/nokia/ Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN http://allaboutwindowsphone.com/images/news/misc/q113finan.png 10
  • Nonetheless, and far from US hype, the Lumia smart phone sold 61.9 million units (a feat few companies worldwide are capable of) Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN http://www.engadget.com/2013/04/18/nokia-hits-7-7-billion-in-revenue-for-q1-2013-with-5-8-million/ 11
  • Heritage, capabilities, assets; driven by a strong user-centered DNA, Nokia’s distinct design & color identity, is produced, distributed & sold worldwide Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 12
  • The Lumia+Windows Phone collaboration represents a fraction of the potential; Smart combinations range over products, services, users, channels & regions Windows Store Windows Windows Explorer Outlook.com Internet Explorer SkyDrive Kinnect Yammer Skype xBox (Live/360) Office (Business) Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Business Channel Bing MSN Lumia Smart Phones Windows Phone/ Mobile Azure (Business) 50% market Nokia share of BetaLabs feature “Here” Apps phones Design Identity Global User research Global Distribution Handset & Hardware design Low cost Nokia Networks Manufacturing Nokia Equipment 13
  • With such a broad portfolio of products, assets & capabilities to work with, an external industry & trend hypothesis is a more pragmatic focus method External need hypothesis Internal focus filter Best Innovation Areas Products Assets & Capabilities Industry Analysis 1 Trends “What they CAN do, BETTER” “What SHOULD be done” 3 2 Products, Assets & Capabilities Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 14
  • To be at the right place at the right time should synchronize offerings to users & channels, “on trend” STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
  • Macroeconomics, technology & culture are interacting, impacting consumption around the world, and the way companies support it Macro-economic crisis Millenials (& digital natives) Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN The “long tail” Emerging economies Frugal Innovation 16
  • Within and near Microsoft’s activity areas, expressions of macro trends pose early signs of potential nascent categories & risky maturing markets Smartphone commoditizing Consumerization of Business IT Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Big Data hedging (search social & location) Internet of Things Augmented Reality 17
  • Lumia Smart phones ? Time Opportunity trends (size & time) Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Nokia Others Need New Core Core Microsoft Microsoft Core Far out Assets filter (customers, channels, knowhow) Capital Needed Size Growing trends attract everyone; however for Microsoft, longer term horizons, requiring larger capital, will filter out & beat constrained competition Other can do too Expensive & long term Others can do faster Too risky Time to ROI Capital filter (advantage) 18
  • Fit to Microsoft Customer Customers Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Fit to Nokia Fit to Nokia Channels Fit to Nokia Customers Leveraging Nokia’s user-centered approach, on Microoft’s huge business & consumer user base, through existing channels, in best regions Fit to Microsoft Channels Channels Winners Forget about it Fit to Microsoft Geographies 19
  • Strategically recommending that Microsoft pair internal strengths & assets to growing long term external trends, avoiding weaknesses Focus Avoid When? longer-term macro trend targets short term ‘sprints’ Where? growing, value add markets, through owned channels commoditized markets How? leveraging scale & capital arenas where small can win What? integrated solutions software + hardware look beyond smart phones Who? future business workers more of the same STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 20
  • While preparing to capture larger cycle patterns, Microsoft should remember to tactically leverage waning markets, such as non-smart phones, to the fullest http://www.blogcdn.com/www.engadget.com/media/2013/04/idc-smartphones-featurephones-04-26-13-02.jpg 21 Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
  • To create “own-able” tech platforms & new categories, the best innovation areas cluster large scale HW&SW integration at low cost with global distribution, Frugal Innovation Microsoft Cloud Internet of Things Nokia hardware Cloud enabled Things Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN Consumerization of IT Emerging economies Business cloud Nokia hardware IT-Net of Business Things HW Product & Users Millenials Augmented Reality ‘Here’ by Nokia Augmented Reality Things 22
  • Nokia, ‘Internet of Things’ & ‘Transplantable Tech’ are self-disrupt opportunities; Microsoft can recreate itself – software & hardware with a ‘twist’ Things Atoms Senses STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 23
  • STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN INNOVATION EXERCISE 24