In business today, there are two categories of brands – companies with products and services, and executives with professional brands that are shaped by performance, personality and communications/engagement.
Last week, something remarkable happened. Nokia, which once held an impressive 30 percent market share of the critical cellular handset market fell into the arms of Microsoft.
Nokia’s handset/ cellular decline and ultimate sale was a stunning collapse.
Tim Calkins, a Kellogg School of Management faculty member, writing in Business Insider, reported that in 2007 Nokia was trading at $40 a share. When the sale to Microsoft was announced last week, their stock price per share had spiraled downward to $5 a share. Their market share was a pathetic four percent.
What happened? What lesson(s) can we learn from this unbelievable implosion?
Calkins wrote for Business Insider that Nokia’s story is about branding, technology, and strategy. They failed to respond to changes in technology and competitive attacks. They sold cheap phones as well as expensive smartphones. Over time, Calkins posits, the Nokia brand lost meaning. People did not know what it stood for.
“In a competitive market, being a superior brand that everyone likes is not enough,” Calkins writes. “Firms that rely only on technology struggle to hold on to customers over time. You need to build a brand that people care about. These are the brands that are unique and have meaning. They endure over time.”
Apple is a great example of a brand that is exceptionally good at incorporating the latest developments and trends into its products. They deliver amazing service, from the retail stores to the technical support call centers. People care about their products and the buying experience.
The executive whose professional career brand is built solely on performance runs the same risks and consequences that ultimately did in Nokia. In this new normal economy, particularly in healthcare which is entering a prolonged phase of reform, deficit reduction, and transformation, the executive must develop and sustain a brand that is more Apple than Nokia.
If you are an executive who is more about the numbers and the results, both of which are important, but do not take the time to nurture “consumer” loyalty – the enduring and respectful support of your customers, employees and other stakeholders – then you, too, may go the way of Nokia.
The irony is that it was Microsoft that acquired Nokia. Today, Microsoft’s brand is a muddle of mediocrity. Once entrepreneurial – with good software and service to help small businesses – today they are a bloated bureaucracy organized around turf-protecting silos that is anything but inspiring or innovative. Their advantage is that they achieved critical mass before falling into their mess of a strategic abyss. Nokia never made it that far.
Here again there is a lesson for long-surviving executives. Tenure has nothing to do with engagement, inspiration or innovation. It just means the CEO achieved critical mass with the board of directors.
The Apple logo is a registered trademark of Apple, Inc.
The Nokia logo is a registered trademark of Nokia Corporation.