NOT why big companies are bad at innovating

July 23, 2012
  1. Belief: Company X could have came to market with product Y Z years ago!
  2. Implied: Company X would have owned the market like Company A does now.
  3. Reality: Product Y would have sucked and nothing would be different.

Today Nokia announced that it lost $1.7 billion in the second quarter, its fifth quarterly net loss in a row. Just a few hours before the announcement, the WSJ published a great piece revealing how, as early as 2000, the Finnish phone maker had designed a proto-iPhone – complete with a color touch screen and geo-location, gaming, and e-commerce capabilities. The phone, though, never moved into the mass production phase because of ”a corporate culture that lavished funds on research but squandered opportunities to bring the innovations it produced to market.”

While it’s not surprising that a lumbering, oversized multinational corporation failed on the innovation front, it’s clear that Nokia does not suffer from a dearth of ideas: It spent $40 billion on research and development over the past decade, almost four times what Apple spent over the same period. Nokia also developed and ultimately discarded not one but two operating systems, Symbian and MeeGo. Nokia’s deficiency lies in what Vijay Govindarajan and Chris Trimble call “the other side of innovation,” or the problem with executing new ideas, not just thinking them up.

Wrong.

Nokia had a nice piece of hardware in tablet form years ago based on Linux: it never took off. This mythical iphone-pre-iphone would also have had no traction. Nokia phones have always sucked software-wise (if you don’t think so, you just didn’t know any better). Basically no one knew any better until the iPhone arrived (except Palm Treo users to some extent).

The truth is that getting the software right was the hard thing. For that, you need an ecosystem for both developers (a real OS, API libraries, etc.) and for consumers (applications, other users, media). That’s why Palm’s come out of nowhere dominance of the handheld space back in the 90s was really remarkable (and why, incidentally, Steve Jobs was interested in buying Palm). Google, too, should be given credit for bringing to market a true OS for a phone with basically no experience in the area (they bought a company, but still). Microsoft had an OS and the ability, but did nothing with Pocket PC for ten years. Only Apple went the distance first.
In Technology
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