WHEN THE LEADER TRIPS

What decision makers can learn from Nokia and Infosys

technology, the market quickly moved from hardware to one driven by operating systems, and then to apps. Samsung and Google were far more nimble in latching onto this wave. As marketing consultants Al and Laura Ries write in War In the Boardroom, The biggest mistake of logical management types is their failure to see the rise of a new category. They seem to believe that categories are firmly fixed and a new one seldom arises. The history of business is littered with examples of companies that refused to see how the market was changing and adapt accordingly. Sony invented the walkman but allowed Apple and other companies that came into the scene later to walk away with the MP3 player market. Take Kodak. Here was a company that since 1888 was an innovator. However, as pointed out by John Bussey in the The Wall Street Journal, it failed to monetise its most important asset its inventions. The highly lucrative film business sort of paralysed the company until it plunged into the highly mature and competitive printing market. This obsession with the current way of doing business stops companies from seeing the rise of a totally new category of doing business. So what went wrong with Infosys? Infosys played too safe, and displayed low risk appetite. It focused excessively on its bread and butter application
ILLUSTRATION: AJAY MOHANTY

service business even as the market quickly moved onto new technology segements like cloud, mobility, social and analytics. Look where the market is going: Gartner forecasts the overall IT services market will expand 5.2 per cent in 2013 and continue strong growth through 2016. It adds that the growth will largely come from changes and opportunities brought by what it calls a nexus of forces cloud, social, mobile and information and newer delivery models, although not exclusively in the consulting and implementation segments. Infosys has another issue: Between June 30, 2000 to December 31, 2012, the employee strength in the company zoomed from 6,445 to 1,55,629. An unwanted fallout of such growth is that organisations lose their entrepreneurial spark besides losing, of course, the ability to adapt, drive for innovation and customer focus. Yes, it took time, but Infosys seems to be reading the signals now. The company now says its aim is to revamp the revenue mix with a heavy focus on driving growth through consulting and products. The objective is to derive 40 per cent of its revenues from consulting and systems integration (it contributed 30 per cent in FY 2013) and 20 per cent from products.
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ON PAGE 4

DEVINA JOSHI uthor and retired American soccer player Mia Hamm has famously said, It is more difficult to stay on top than to get there. In the current context, who will know this better than two brands that have been in the news a lot lately Finnish mobile handset major Nokia and the homegrown IT services major Infosys that were at the top of their games before being overwhelmed by competition and a fast changing business environment. Take Nokia. Just three years ago, it was the worlds runaway market leader in mobile phones. At the start of 2010, Nokia commanded a 39 per cent market share of the smartphone segment globally, which plummeted to below 5 per cent in 2013. Its global market share in the overall mobile handset market slipped from 36.4 per cent in 2009 to 28.9 per cent in 2010, and eventually, a mere 14 per cent in 2013. Nokias slice of the smartphones market currently 3.1 per cent means

that it is ranked ninth in the world in this category. The brands woes led to a takeover by Microsoft this year a move that has, thus far, raised many questions about the prospects of the brands possible revival. The 1981-founded Infosys, on the other hand, was the poster boy of Indian IT. The first Indian company to be listed on Nasdaq, Infosys, or Infy as it is popularly called, chose high margins over fast growth, a strategy that has cost it both market capitalisation and market share. Both Nokia and Infosys are making eager attempts to tackle these issues head on; their experiences have serious lessons for decision makers in many other industries. Some of the inferences you could draw from the travails of these two muchadmired brands would reiterate what you have learnt in your business school or from management books. This is as good a time as any to remember those lessons.

# 1: Be flexible, be ready to change

Market leaders benefit the most from status quo. Therefore, under normal con-

ditions, they do not want to change. Their managers have worked to create the dominant position and thus believe that their strategy is correct, leading to complacency, says Siddharth Singh, director, Fellow Programme in Management, and associate professor of Marketing, Indian School of Business. A company must not wait for problems to happen before solving them. Great companies anticipate change and prepare for potential marketplace challenges, he adds. Both Nokia and Infosys can be reprimanded for violating this theory. Nokia never took its competition seriously. It carried on with its Symbian operating system (OS) assuming India will continue to be the Java-based feature phone market that it had gotten used to. But with the advent of 3G, India moved on to smartphones. The masses tend to define the market in this nation, and for these masses Android was the cheaper option. Nokia made the classic mistake of assuming the mobile market to be hardware driven. With the advancement in