Nokia, original a Finnish forestry producís company lormed is 1865. is now Ihe ™dís lep seller of mobile planes, Over the years, Nokia fus made everything fnom toilet paper 15 television sets and tires. Cut in 19S2. incoming C£0 Jornia OHila focused all of (he company's resources on telecommunications.

Nokia's first dgilal phones appeared on the market in 1393. At the time. Nokia expected to set Of^y about 400,000 units. Inslead, it sold 20 mill an. By 1-99S. Nokia ivas Selling 40 million momie phones per year, surpassing fc/otorota lo become the world s biggest mobile phone company. Mokia now has nearly 40 percent market share in a global market that is expected to see neatly halt a bi-:>on handsels shipped In 2ÍI04

How dW Nokia get so successful? Back in the 1990s, cell phone companies I (Of Moicrola were following the hienry Ford moiiD ol "you can have a car (tK phone) in any cotot as long as it is black" Cell phones were black, businesslike, and bcring. Nokia realized that cell phones were peescnal accessories and thai many consumers wanted more ihan just a otl itgrian phone. So tf Miro-duceo pirones with a sense o) slyle. a riolous profusion oí interchangeable face-p;Elis. and a growing list ol ring-tones. In 2001, Nokia's Mobile PSiones (NMP) division launched IS new producís. In 2002, it launched 3D new products. In 2033. just It) >iirs aiier ds entry íh;d me market, Nokia outsold Motorola, ts neares! ríisl, by a hwi-lacwe margin.

The new producís sell well because Ihey'rc more than jtist minor tweaks in colcr or case design. Nokia was ihe first company to mass-markel a eel phone wifli the antenna inside, the first to offer a user-changeable faceplate, the first la feature a bu^lt-in camera, the lirst with a unique slinrt-inewage chat function. The tó1«t model features a rubber feed case, flashlight, thermometer, calore counier, stop '.'¿aich, and rano Another comes with a fold-out QWERTY keyboard iftat looks lie wings on a large color screen.

Why all Lbese innovations? Because the mariiet demands ii. Customers' for fashion, riei-: textures, and small sifc drives Nokia to invest heavily In R&D. And an ever-expa¡id:ng sel of lechncal standards like WCDMA. GPRS, S&, and IPv6 drive Nokia lo innovate the internal components and network iafrasfruclure that give ne^l year's cell ohone more features man ¡ast year's cell phone. The company plows 10 percent of revenues back Into ft&O— giving Nokia a S3 b¡Nn-per year budget lor pushing the envelope and getüng outside Ihe bou.

Nona's secret lo creating prooocts lhal people will buy lies m how it organises lor innoualjar. OtieK) rd 0! Nokia's y^.OOO Bftiployett work ¡ft fl£D. Bui they don't work in a cemrai ran. Tney work as small auiooomous teams. Nokia his some 69 R&D teams located 1rom Boston lo Bangalore, and .1 gives these small (earns Ihe power lo create new ideas lor new market needs. *Kg companies lose sensitivity," sa d Marti AlaliuMa president of NMP. people need to feel they tan irate a cTii-crence. And they need to have the power to make reir ideas happen. We've created a small-company soul Inside a big company body. '

Although Nokia doe$ maintain a central research lab for basic lechnolcgy and oncducl design, each small umt has PSL responsibility to create ds ow business (model and do ¡[sown advanced FSD and markeiint], "finely percent of Ihe lime, it feels live I'm running my ovm company." said iikka Raiskinen, head ol Nokia's Entertainment and Media Business unit "We've been given the freettoai to decide what Ihe rules are. v.hat the value chain is. .. 1 consult the Nukra ijuard the same way that a statl-up '."HCir^l cor-stilt its investors."

From its huniute beginnings in the lar north of Europe. Nokia matte ihs shift from a natural resources company ol the nineleenio century lo a high-tech leader nil the lwenty first century. Now some 300 million people across 130 countries use Nokia phones, fbe company's abi'ily to leirwent itself and unleash [he raalwfy of Ds has m^de NOW ihe swih mosl recoflmffld brand in ihe world. But Ihe company cannot resl un its laurels and must continue lo innovate. When Nokia missed me boat on ci-misheii phones early in 2004, caus:ng a rare drop in revenue, lhc firm accelerated lite introduction c-f new models for He latter tiall ol Ihe year.

Discussion Questions,

1. What have been the key success laciors 1or Nokia'

7. Whflrt is Nrik^ vulnerable? What should it wafcft Out for?

3. Wat recommendations would you make to senior mariteting executives going forward? What shoild ibey be sure to do with ils marketing?

Sources: Ian Wyiie. 'Call ng for a Henewable Future," Fast Company. May 20O3 pp. i&'.'.a: Paul Ksiliiii.-Hikiiis Hil iactny." tfwfriiss 2.0. Aiugust 2002, pp. 65-70 Joma otnia. 'Hakia allhq ForeinOntt of Mot**,1 Nokia Annual Gsne^i Meeting, r.-iarch 21.2003. cwHw.Nokia.Dgni>; Andy fteinlardl, "Can Uaku Get ihe Wbty Bock?" toiwssUVi* May 31. ZWM, DP.

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