Innovation And Sustainable Business Development Organization

It is needless to state that the ulterior aim of any private organization is to maximize the profit over a given period of time. Hence, each organization works with the purpose of achieving strategic goals and objectives it has formulated for the specific period of time. A business model of an organization is defined as a way in which an organization operates, adopting the most suitable and effective strategy that helps it to gain a competitive advantage over others. The business model describes the rationale of how an organization creates and delivers value for its consumers, as the moment value of a product or a service is created, the specific organization will start gaining competitive advantage over rival organizations. Disruption, on the other hand, cam be simply termed as the way of blowing up the huge existent business market, for making way for the emerging business. The term “disruption” was first defined by Clayton M. Christensen as a kind of innovation that creates a new market and value network by disrupting an existing market and value network. For example, Twitter is known for having disrupted blogging emails, while Pinterest is known for having disrupted the market of photo sharing (Amit & Zott, 2012).

Nokia is a Finnish organization that has earned a huge recognition in the market for the production of most pocket friendly handsets in the software age. The organization founded in the year of 1885, entered the market of electronics in 1900 and achieved immediate success. Nokia started launching its mobile devices at a time, when there was hardly any competitor, and as such its revenue started soaring high. The business model of Nokia long back in the 90s was to introduce mobile devices, and starting with the introduction of a heavier device like “Mobira Senator”, the organization gradually started introducing light-weighed, affordable and innovative devices such as NavTeq, MetaCarta, and others. However, gradually the business model of Nokia was disrupted, owing to the fundamental shifts in the mobile industry (Aspara et al., 2013).

The question persists as to why such a global leader in the mobile industry Nokia has disastrously failed to sustain itself in the recent past. The answer is to be found in the kind of the business model employed by Nokia over the last few years. Despite the fact that Nokia had set a very clear goal before itself for retaining its success in the mobile device industry, the business process, target customers or the business strategy adopted by the company as par its previous business model was unsuitable in the present business scenario. The target market for Nokia has always been the people aged between 20 to 40 years, especially the teenagers and the businessmen. The strategy as par the old business model of Nokia has been to offer cheap handsets that are largely useful, equipped with several important features. While for a long time, the reasonably low cost of Nokia has been able to offer a great competitive advantage to the organization, gradually that proved to be a disadvantage for Nokia. This is because, Nokia’s strategy of keeping the price low and thereby creating a value for the consumer, was possible by compromising with the chance of introducing any innovative features for its products (Desai & Desai 2013). The disastrous fall of Nokia from the leading position in the market of smart phone industry occurred because of two important factors- (i) Nokia’s inferiority in terms of technological innovation to large organizations, such as Apple or Samsung and (ii) Nokia’s complacence with its own market position (Nummella et al., 2016). Nokia after witnessing the entry of the I Phone should have immediately launched their smart phone with advanced software, but it failed to do so. Although in the year of 2008, the introduction of Nokia 5800, was a commercial success, yet the touch screen phone was far from competing with the Apple or even Samsung, because of its software development problems. The organization’s previous business model was disrupted by the introduction of highly stylized and innovative features offered by its rival companies, such as Apple, Samsung or even LG. The value proposition and marketing strategy are two major components of the business model of any organization, and yet Nokia had failed terribly in these two important factors (Nair et al., 2014).

Any organization that intends to sustain itself in future must have a strong and clear value proposition that helps the organization understand why its products and services will be the best choice among the potential consumers. The recently emerging problem with Nokia was that the organization had got no distinguishable feature to offer, except the low price (Mirza & Beltran, 2013). While I phones emerged to be highly prestigious products, Samsung’s android phones offered versatile features, such as high quality camera, great music storage capacity, and user-friendly service without charging too high. However, Nokia failed to create value in the market, as it was not offering any unique or innovative feature to its consumers (Rantavuo & Harder, 2014). In absence of a proper value proposition, Nokia has failed to introduce effective marketing strategy as well.

Nokia has been a powerful force in the mobile industry, and hence the organization has adopted a new business model, in order to sustain in a highly competitive market of mobile devices. In its critical juncture, Nokia has formed strategic partnership with Microsoft that will help it to build global mobile ecosystem that is itself based on complementary assets. The Nokia-Microsoft deal is meant to help Nokia offer innovative products to its consumers with highly differentiated features. Nokia was offering more durable, yet hard, robust devices that was considered to be obsolete, and hence the organization was gradually losing its brand identity. However, with the new business model, the two big industry giants of the PC and phone worlds is definitely rendering Nokia a greater recognition in the market.  Under the new business model system, Nokia and Microsoft will also be able to share its service assets to create innovation. Under the previous business model, Nokia has remained focused on the creation of value by reducing cost, and sacrificing innovation (Ali-Yrkkö et al., 2013). However, here, this Microsoft-Nokia deal will enable the authority of Nokia drive innovation and offer highly differentiated products. For example, under the proposed partnership, Microsoft will be providing developer tools, making it easier for application developers to leverage Nokia’s global scale (Kolesnikova et al., 2015).

Nokia has previously employed a pricing strategy that has kept it far from introducing any sort of innovation in the products offered. On the other hand, organizations like Samsung could easily substitute it with slim, sleek devices and taglines stating” Next is What?”  which reinforces the idea of innovation. Hence, Nokia had to find out new business models, such as co-operation with Microsoft that would help it survive in a market dominated by comparatively new players, such as Samsung and Apple. Microsoft’s collaboration with Nokia is going to be a beneficial one as Microsoft will help in updating the Windows phone regularly, emulating what Apple has already done to I Phone. Under the present business model, the Nokia –Microsoft deal intends to create an ecosystem that is inclusive of chipset providers, software providers, hardware manufacturers, application developers as well as the operators (Singh, 2014).

Tim Cook once said, “ To stop innovating is to die”, and this very lack of innovation had previously doomed the market prospect of Nokia. The organization’s previous business model was chiefly focused on the pricing strategy, as a result of which it failed to keep in pace with the radical innovation of other rival giants. With the introduction of  the new business model, Nokia will be able to focus on network infrastructure and services that can be regarded as the best path for Nokia as well as its shareholders. The Nokia-Microsoft collaboration is likely to help Nokia make an appealing mobile operating system, and if price strategy and innovation go hand in hand, then Nokia is surely to succeed with the production of new, exclusive range of Lumia phones, or Windows Phone 8. As a result of the joint collaboration of both the organizations, Nokia will be benefitting considerably from the fact that Microsoft will combine its next generation software with the mobile devices of Nokia. Although Nokia has remained a dominant force in the market of mobile handsets, Nokia in the recent years, had found it extremely tough to compete with tech icons such as Apple, Samsung or LG which came to be known for offering radically innovative products. While Nokia phones failed to be anything more than a mere utility gadget, the Nokia-Microsoft deal will help in rendering the handsets an inspirational brand image.

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