STRATEGIC INNOVATION ANALYSIS for A NEWLY MERGED ENTITY
OCTOBER 23, 2013

STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN

...
Created by
Noam Bernstein
http://www.linkedin.com/pub/noam-bernstein/1/ab0/651
https://www.vizify.com/noam-bernstein

Enjo...
http://www.forbes.com/sites/forbesleadershipforum/2013/09/04/microsoftand-nokia-a-marriage-made-in-hell/

http://www.forbe...
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...
Fit to Microsoft Customer

Customers

Innovation Exercise
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN

Fit to Nokia

Fi...
Microsoft remains a multi-product powerhouse brand in homes & offices
of millions of users worldwide, despite recent devic...
Microsoft led early on in the computer software services arena;
Today it competes with giants in many arenas; Apple & Goog...
Microsoft’s sheer scale affords it patience towards a longer term horizon;
Today a mere 3.1% of market, Windows Phone is e...
Nokia, pioneer of cellular phones, failed to identify the smart phone revolution;
No longer leader, Nokia still hold major...
Nonetheless, and far from US hype, the Lumia smart phone sold 61.9 million units
(a feat few companies worldwide are capab...
Heritage, capabilities, assets; driven by a strong user-centered DNA,
Nokia’s distinct design & color identity, is produce...
The Lumia+Windows Phone collaboration represents a fraction of the potential;
Smart combinations range over products, serv...
With such a broad portfolio of products, assets & capabilities to work with,
an external industry & trend hypothesis is a ...
To be at the right place at the right time
should synchronize offerings to users & channels, “on trend”
STRATEGIC INNOVATI...
Macroeconomics, technology & culture are interacting,
impacting consumption around the world, and the way companies suppor...
Within and near Microsoft’s activity areas, expressions of macro trends
pose early signs of potential nascent categories &...
Lumia

Smart
phones

?
Time

Opportunity trends
(size & time)

Innovation Exercise
STRATEGIC INNOVATION EXERCISE – NOAM BE...
Fit to Microsoft Customer

Customers

Innovation Exercise
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN

Fit to Nokia

Fi...
Strategically recommending that Microsoft pair internal strengths & assets
to growing long term external trends, avoiding ...
While preparing to capture larger cycle patterns, Microsoft should remember to
tactically leverage waning markets, such as...
To create “own-able” tech platforms & new categories, the best innovation areas
cluster large scale HW&SW integration at l...
Nokia, ‘Internet of Things’ & ‘Transplantable Tech’ are self-disrupt opportunities;
Microsoft can recreate itself – softwa...
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
INNOVATION EXERCISE

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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.
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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  • nice work noam!! congrats!!
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MicrosoftNokia - Strategic Innovation for the newly merged entity - by Noam Bernstein

  1. 1. STRATEGIC INNOVATION ANALYSIS for A NEWLY MERGED ENTITY OCTOBER 23, 2013 STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN 1
  2. 2. 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
  3. 3. 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
  4. 4. Where should Innovation Exercise STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN play to win? 4
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. To be at the right place at the right time should synchronize offerings to users & channels, “on trend” STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. 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
  22. 22. 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
  23. 23. 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
  24. 24. STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN INNOVATION EXERCISE 24
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