Last week, I blogged about the importance of leaders who can read the market and react, rather than being conservative. And it’s clear that having a bold and creative management team is even more important in times of low growth than when times are good. Our latest white paper on leadership capabilities concludes that a key part of management is a desire to try new ideas and understand the opportunity to commercialise them. Innovation in technology and the performance of an organisations talent are seen as key in getting ahead of your competitors. In fact, this was proved last month with the demise of a heavyweight of the technological sector.
Until as recently as 2012 Nokia was the world number one mobile phone manufacturer. However when customers demanded that they created a touchscreen smartphone, Nokia refused, believing it was too expensive to produce a smartphone over $300. Apple, in contrast, took the risk and launched the hugely successful iPhone at $600.
Former Nokia CEO Jorma Ollila has admitted in his new book that Nokia were let down by their management’s inability to read the market and a reluctance to take risks. “Apple managed to create something completely new; an excellent user experience and a solution in which the phone was a key to the ecosystem of services and applications” claimed Ollila. “A whole new ecosystem was born which Nokia had been unable to create.”
As Ollila now acknowledges, getting ahead of the market and staying there are two completely different things, and now that technology is changing faster than ever, a management’s ability to read customers’ demands is more important than ever.
Creating competitive advantage through differentiation requires innovation, creativity, research, new ideas and ultimately some failure. In times of low growth companies are often less likely to take risks for fear of failure, when, in reality it is actually more important to be creative during these periods. Brands like Apple and Samsung have managed to grow year on year due to a combination of bold management and creative vision. However, even huge brands like Nokia have found that if they don’t have the leadership teams that are creative or brave enough, it is unlikely that their customers will wait around for them.
