Why Nokia Needed Microsoft

Mark Mace on Nokia:

In mathematical terms, you manage to the second derivative — the rate and direction of change, not the raw numbers themselves… History shows that if you wait for all of the indicators to turn red it’ll be too late to save the company.

The type of company you run determines what derivative you should pay attention to. Faster-paced industries require their executives to keep tabs on third and fourth derivatives of the company vital signs. The danger is that overly-responsive companies won’t ever get ahead of their own stats: they’re too busy being responsive.

Android has set itself up as the most responsive, quick-to-follow operating system. I think Nokia and HP are both interested in differentiation precisely because they don’t want to be responding to Apple, but instead break out ahead with a runaway success. It’s a riskier strategy with potential for bigger payoffs. It’s also a sign that HP and Nokia think the smartphone market is maturing. Counter-intuitively, the risky strategy is also only viable for the already established giants: they’re the only ones that can bankroll a bet this big. The small “Other” manufacturers that have been recently winning market share have to play it safe with Android.