David Prosser: Nokia's boss certainly talks the talk, but will we ever see some walk?

 

Outlook Nokia's boss, Stephen Elop, has an irritating addiction to corporate jargon: the man who famously began his tenure at the company with a memo to all staff warning them about the "burning platform" on which they were standing has continued in that vein ever since. Yesterday, he was talking about the need to "align our workforce and operations with our path forward" – make jobs cuts, in other words.

The annoying thing about the executive-speak is that yesterday's announcement was straightforward and sensible, even if the message is miserable for staff in places such as Romania who are losing their jobs.

Nokia knows that the main market for lower-spec mobile phone products – as opposed to smartphones – is now in the developing economies of the word, especially in Asia. Yet it has been shipping raw materials for these phones from Asia to Europe, using them to manufacture handsets in its plants there, and then shipping them back to Asia for sale. One hardly needs to be a management consultant to spot the flaw.

Nokia is a company where profitability has begun to wane, so an initiative that reduces overheads while moving manufacturing closer to the end market is what Mr Elop would probably call ano-brainer. That's why there will further closures of similar Nokia plants in Europe.

Still, while restructuring the production process for Nokia's lower-tech output will buy Mr Elop some time as he battles to restore it to growth, this is not an answer to the more pressing question for the company: how will it fight back against Apple and Google in the high-margin smartphone sector, where its Symbian operating system has lost so much market share over the past two years?

The answer, Mr Elop told usearlier this year, is the scrapping of Symbian in favour of an alliance with his former bosses at Microsoft. Unfortunately, we have yet to see the fruits of this strategy – one day soon, all new Nokia smartphones will run on Microsoft's Windows operating system but as of today, the alliance has not produced a single new handset (instead, Nokia has wasted more time bringing out a handful of new phones based on an update of Symbian it developed before Mr Elop's arrival).

Nokia's obituarists have been rather too hasty, given the vast sales the company still books every quarter. But unless Mr Elop has decided to give up on the smartphone end of the market, in favour of low and mid-tier phone sales in developing economies – and that would seem short-sighted and defeatist – he needs to pull his finger out.

Nokia's innovation cycle is far too slow: the challenge now is not to raid the management textbooks for new ways to express the need for action, but to just get on with it.

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