Nokia has undergone a significant cultural and identity shift under the leadership of CEO Stephen Elop.
Elop didn't wait too long after he joined the company in September 2010 as CEO to make a splash. Five months into his tenure, he decided to drop the company's home-grown next-generation platform for Windows Phone, which just so happens to be created by his former employer.
But perhaps it's the changes within Nokia that will ultimately have the largest impact in the company's bid to turn itself around. I sat down with Elop to discuss the company's transformation, its latest Lumia 920 flagship smartphone, and other topics. The following is an edited transcript of that conversation.
Q: Under your leadership, how has the culture changed?
Stephen Elop: As I wander around and talk to people, there's something happening here. Everyone knows every single day we have to work harder and with more urgency. We need to challenge what everyone is doing. We need to keep doing that. They're working on the next set of products, and the next ones. They're excited, because you ain't seen nothing yet. It starts with motivated employees delivering great products.
When we were in the final stages of the Lumia 920 and finalizing it for AT&T launch, you bet I'm on every one of those last phone calls, and asking the questions. People are exhausted when they cross that goal line. But they feel wonderful.
There's been a marked shift towards this challenger mindset. We have to move with urgency. We have to have empathy and listen to our customers. How do we respond to consumer demand that we haven't done as quickly as before? How do we take those bold steps? How do we disrupt the competition?
From what I've seen in this organization, that shift is happening. The first Lumia phone was delivered in a fraction of the time that a phone has ever been produced at the company.
When I started early on I asked a question: What do you want me not to change? They said, the sense that we do good things for society. It's helping people communicate, connecting the next billion people to the Internet, helping move people forward. Culturally, that has continued to remain important. Essentially, we help humans progress. We're not just here to sell phones -- we have higher aspirations.
What has surprised you about Nokia?
Elop: I've said this before, but I see a landscape of unpolished gems. There's lots of great engineering, new ideas, but they have not been brought to market effectively. That's what you see with the Lumia 920. We're starting to polish the gems. Our patent portfolio is an expression of the innovation you've generated over the years.
Clearly after years of investment, there were some fundamental challenges. There's a sense that if you're the largest and biggest, perhaps you think you know more than you do. It's hard to feel disruption. One of the things I had to change was the way we went after new strong players.
How have you adapted to life in Finland? (Elop is a Canadian citizen.)
Elop: It's been quite complimentary to my background. The cultures of Finland and Canada are remarkably similar. Both countries have grown up in the shadow of large neighbors, whether it's the Soviet Union for Finland and the U.S. for Canada. But there's a passion for great product-making and quality workmanship here. It's a joy to experience here.
It's an interesting aspect, but it's just one part of Nokia's world. Nokia is one of the very few companies in the world that's truly a global company. In the last two weeks, I've been in the U.S. and Beijing, where Nokia holds full operations. Acclimating to Nokia is not just acclimating to Finland, but to operations on a global basis.
At Microsoft, it was a U.S. company doing business overseas. Nokia in China, for instance, is a particular company that does business in China and has its own relationships with local businesses, and it's the same in India, U.S., and other parts of world.
I know I've asked you this before, but why Windows Phone? Why bet on an operating system that so few people have heard about or embraced?
Elop: The single most important word is differentiation. It was about having to make a decision that allows us to stand out separately and distinctly.
With the Lumia 920, the product is differentiated based on Nokia innovation, but you also see a fundamental point of differentiation because it is a Windows Phone device.
It is also a strategic decision based on establishing a relationship with the carrier. We didn't want to schlep into a carrier and tell them why our Android phone is better. Almost two years ago, we were concerned that someone with vertical integration and an early lead would establish a strong position, and that happened with Samsung and Android.
Entering that environment late, we would have a hard time differentiating. We are standing up as different. We still have to fight our way up in terms of market share, but we have an opportunity because people see us as an alternative.
How is the Lumia 920 doing?
Elop: We're certainly pleased. There's excitement in the sales organization, although there's frustration due to limited supply. Our focus is on broadening distribution. You'll see us launch in more and more countries. We got onstage (back in September during the launch) and said rather boldly that it was the most innovative phone out there. We stand by that statement.
This is something everyone in Nokia is feeling today. It's that sense of pride that we're doing our best work. It's very encouraging.
Why is the Lumia 920 an exclusive on AT&T? Don't you want to go after as many customers as possible?
Elop: One of the things we had learned with the first launch was being very narrow would yield better results for us. We take a product and go exclusive with a particular carrier. In a market where subsidy and marketing dollars are heavy, we encourage them to promote it as a hero product, and use the subsidy to drive down the pricing to a competitive point. It also gives you access to in-store resources.
If you get a concentrated effort, you get far more parallel investment and cooperation. As we did the assessment, we came to the conclusion that working with them from the start would yield the best results.
There might be another similar hero exercise with a different operator. In this particular moment, the opportunity with the Lumia 920 presented well with AT&T. And we're pleased to have just restarted our relationship with Verizon. We are planning a lot of exciting things with Verizon as well.
So does that mean a flagship phone for Verizon is in the works?
Elop: We are planning a lot of exciting things with Verizon as well.
Maps is constantly emphasized by your leadership team. What role does it play in Nokia?
Elop: If Google answers the question of "what," Facebook answers "who," then in the era of mobility, the question is "where." There is an opportunity to understand more about where you are and what's around you.
I want to understand where I am, who's around me, and how do I get to that place? Mobility makes that important.
In the future, you'll see more apps that take advantage of the fact that you're mobile. Navigation is a simple example. Our City Lens app is an example of a different type of application, and it only works because of mobility and our location platform.
It's important to have scale. Every time someone does a search with the map and generates info on traffic, all of that contributes to the greater good.
Did you feel like you missed an opportunity to capitalize on the Apple Maps snafu with the iOS version of your Nokia Maps service? It's not highly rated or that popular.
Elop: We've just begun our efforts on iOS. What we have is an HTML5 application, and it has limitations because of that. Apple did endorse it as an alternative to its maps.
This battle of "where" is just beginning. There's lot of opportunity to have success on this. It is the case where there are only a few significant players with the core assets to compete in this space. Google is one, and we are another.
Lastly, what keeps you up at night?
Elop: It's always about meeting the needs of our consumers, going over every detail of what they like, making sure our employees are motivated and understand they have to serve these people. It's walking into the store and making sure the products are properly explained. If we can get our message across and show off the quality of the product, then we will be very successful. We need to cross that divide with the customer.