Balancing Research and Product Release

Business and tech publications have been filled with news of a struggling Nokia over the past few months as the once dominant cell phone company struggles to regain control of the market through job cuts and the new Lumia 900 smart phone, released in April for $99 though already reduced to $49.99.

You might be surprised to learn that Nokia was actually ahead of the game for smart phones—five years ahead to be exact. The Wall Street Journal published an article earlier this week that describes Nokia’s smart phone development back in the 19990s.

“More than seven years before Apple Inc. rolled out the iPhone, the Nokia team showed a phone with a color touch screen set above a single button…In the late 1990s, Nokia secretly developed another alluring product: a tablet computer with a wireless connection and touch screen—all features today of the hot-selling Apple iPad.”

With such foresight, why is Nokia now scrambling to maintain a share of the market? After pouring funds, 5 billion euros a year to be exact, into research and development, the company failed to bring products to the market. Instead of creating cohesive groups that worked together on specific projects, different teams within the company were working on the same developments, which meant teams were competing with each other instead of other companies. In the article, a former chief designer stated: “You were spending more time fighting politics than doing design.” Another stated that “People were trying to keep their jobs” and “Each group was accountable for delivering the most competitive phone.”

In the competition to make the most innovative product that would allow them to keep their jobs, no one was designing a product that would be popular with consumers. The first smart phone Nokia released in 1997 drew a small dedicated audience of business users but couldn’t reach a mass audience like the iPhone.

Nokia is not the first company to fail to deliver great early developments to a popular audience. It’s not even the first company to fail to do so while Apple swooped in on the market. In a New Yorker piece, Malcolm Gladwell recounts the history of Xerox Parc and its inability to take advantage of innovative products far ahead of their time. In one particularly poignant anecdote, Steve Jobs visits Xerox Parc and after seeing the first PC with a mouse, a menu, and folders, returns to Apple to create the first marketable versions of those same concepts while Xerox ended up dropping out of the PC market completely.

As Gladwell points out, Jobs didn’t steal the idea for the mouse or the PC, both of which were concepts at other companies as well, but he took “ something intended for experts, which is what Xerox PARC had in mind” and instead created “something that’s appropriate for a mass audience, which is what Apple had in mind. PARC was building a personal computer. Apple wanted to build a popular computer.”

The moral of the story is balance. Research and development is what leads to the amazing concepts behind new technology and providing the funds and freedom to create leads to innovation, but knowing when to move from research and ideas that appeals to engineers and designers to a product that’s marketable to the mass audience can mean the difference between the dominance Apple commands today and the now struggling Nokia, desperate for shares of the market they once controlled.

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