Customer Insight Powers Nokia's Innovation

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Book Excerpt: Nokia puts the consumer at the heart of its corporate culture to drive customer-led growth.

"Unlike its rivals, Nokia has had to struggle for much that most multinational companies take for granted," writes Dan Steinbock in Winning Across Global Markets. "Indeed, it is the tremendous perseverance of the Nokians, both individually and in teams, that has motivated the company to win against all odds.

In this excerpt from Winning Across Global Markets, Steinbock explains how listening to customers is an essential part of that winning strategy:

Seeking Insights From Customers Around the World

Since the 1990s, Nokia has excelled in sensing and responding to market shifts flexibly and swiftly. The Nokians understand that the key to their success lies in understanding consumer needs and responding with relevant mobile solutions. The precursors of the Global Consumer & Customer Insights (GC&CI) unit were created in the mid-1990s. A few years later, these activities were consolidated in tracking, theme, trend, and segmentation activities. The role of the unit was elevated in the early 2000s, when global consumer segmentation was adopted throughout the organization.

Armed with their exceptional research on trends and segmentation globally, the GC&CI provides consumer, market, and channel understanding and insights across Nokia's strategy, devices plus design and product development, services development, and marketing and sales. By the 2010s, the consumer insights activities have accelerated. In barely a decade and a half, a Finnish engineering company with some international activities seeks to transform into a global marketing specialist with worldwide operations.

Enabling Sustainable, Consumer-Led Value Growth

Today the bold vision of GC&CI is that Nokia is recognized externally as the ''most consumer-focused, customer-centric organization on the planet.'' Its strategic intent is to enable sustainable, consumer-led value growth. Ultimately, Nokia is on a journey to truly embed the consumer at the heart of its corporate culture. ''We have a fairly good holistic view of the consumer,'' says Bjorn Ulfberg, head of Nokia's GC&CI since January 2008. The team used to work closely with Nokia's marketing function and design. Through reorganization, GC&CI became a companywide process.

For most practical purposes, the GC&CI teams reflect Nokia's activities in development and planning, identifying and shaping opportunities, generating consumer solutions, as well as providing tracking and segmentation of longitudinal consumer data. GC&CI's insight generation is based on a five-step journey: from objectives to audit to analysis to options to allocations.

Unlike other consumer research organizations and marketers, Nokia has hundreds of millions of mobile devices that are closest to the consumer's heart and thus provide a unique distribution platform worldwide. As a result, the Consumer Insights can increasingly use digital touch points to capture consumer behavior while learning about consumers. In turn, this information can be combined with the knowledge gained through the GC&CI functions that explains why consumers behave in certain ways.

Because mobility appeals differently to different people, Nokia undertook the industry's largest and most comprehensive research when it polled 74,000 people, covering a total of twenty-six countries, to understand the needs and drivers for mobility for different segments of the market. In the Nokia Devices subunit, the operations are aligned with major business categories, which represent target segments for Nokia's portfolio of mobile phones, smart phones, and mobile computers.

Through GC&CI, Nokia seeks to ensure that billions of consumers' voices across the world are injected into Nokia's decision making. In the process, Nokia itself has had to embrace a new mindset. People can purchase a mobile device, be somewhat dismayed but keep the device.

With services, however, a low degree of satisfaction means that consumers will leave immediately, and it takes on average eighteen months for them to return. ''That's why services are kept at the beta stage for a long, long time,'' says Ulfberg.

Listening to Technology and Market Signals

Nowadays, many technology companies are doing consumer research. But this research barely differs from that conducted in research centers. In one way or another, it tends to focus on technology, or technology as an enabler of behavior. That's a part of what Nokia does, but that's not all Nokia does. What makes Nokia's consumer research different is that it studies all kinds of signals. In the shorter term, it tries to create solutions with technology as an enabler, but it is also building on fundamentals in behavior. Nokia also differs from other companies, which typically will cover ten major markets, if even that many. ''We have a lot broader and deeper research,'' says Ulfberg, ''and our global value covers 85 percent, not just 50 percent of the total.''

Several companies-including Intel, Motorola, and Microsoft-employ trained anthropologists to study potential customers, whereas Nokia's researchers more often have degrees in design. Rather than sending someone to Vietnam or India as an emissary for the company-loaded with products and pitch lines, as a marketer might be-the idea is to reverse it, to have a patently good listener enlighten the company on how they live and what they're likely to need from a cell phone, allowing that to inform its design. ''I specialize in taking teams of concept/industrial designers, psychologists, usability experts, sociologists, and ethnographers into the field and, after a fair bit of work, getting them home safely,'' says Jan Chipcase who conducts research for Nokia Design. ''I split my time between running user studies and developing new applications, services, and products that, if I do my job right, you'll be using three to fifteen years from now.''

This sort of on-the-ground intelligence gathering is central to what's known as human-centered design that has become vital to high-tech companies trying to figure out how to write software, design laptops, or build cell phones that people find useful and unintimidating and will thus spend money on.

First Observe, Then Design

The Nokians believe that no matter what makes us different, we share the desire to connect. That is the foundation of Nokia's human approach to technology: first, to observe, and then to design (more on Nokia's design principles in the next chapter). It is this principle that, among other things, accounts for the success of Nokia Life Tools, for example. After a successful pilot in the state of Maharashtra, India, Nokia launched its pioneering service in India. Designed specifically for emerging markets, Nokia Life Tools is a range of agricultural, educational, and entertainment services addressing the information gaps of target consumers. The service expanded to select countries across Asia and Africa later in 2009 and will continue its expansion. Customer Insights played a vital role in the development of the service.

Also, unlike technology firms, such as IBM or Microsoft, Nokia cannot be content with just technology-intensive research. In many segments, technology segmentation poorly differentiates different consumers. Nokia operates in technology- and marketing-intensive business areas. As a result, it offers lessons to both types of companies. With the transition of growth from the West to the East, the world of consumer-led companies will become more diverse. ''The world is becoming more complex, and the world of consumer behavior more complicated,'' says Ulfberg. ''We need to better understand it all.''

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About the Author: Dan Steinbock is research director of international business in the India, China, and America Institute.

Reprinted by permission of the publisher, John Wiley & Sons, Inc.,Winning Across Global Marketsby Dan Steinbock. Copyright (c) 2010 by John Wiley & Sons, Inc. All rights reserved.

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