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  • Writer's pictureHugo Pinto

Risk management in the digital age: How Nokia & Microsoft might get back in the game by trying

One of the biggest paradigm shifts large corporates like Microsoft (mentioned in a recent post) and Nokia face is stopping the adjustment of reality to these companies’ processes, while making business decisions.

I’ll give an example. Company A is trying to enter a new market and they build a go to market strategy that uses small pieces of other businesses and bring political-corporate-manager profiles to do something entirely new for them: start a new business from scratch, sell customer centric SaaS solutions and think digitally. The old motto of “we can build everything ourselves” and prioritising quick revenues over user experience and market fit are a part of the philosophy these companies and people carry with them. The likeliness they will do something as they have for the last 10/15 years is very high.

That just doesn’t work.

Why not get the graduates to get some fresh ideas into the system. Or build a Wayra-type start-up accelerators that can accommodate different ways of doing things (the concept is being widely adopted by corporations, governments and universities).

Back in the days when you had a business and you could build an added value or ancillary service revenue stream, and immediately scale it to all your customers – clear example: SMS – this would have worked, because the risks were basically financial, legal and staff related. All of these could be quickly solved by the large organisation, either with cash or bodies.

But now different risks are involved in setting up a new business. And I’ll try to name a few, usually part of the equation both in corporate and startup ventures.

Product risks

Face it – your product is probably (easily) “copiable” – how are you going to differentiate? Usually the big problem is trying to do a lot of things in one go. Typically, being the best at one very specific thing is great for two reasons – users (market) will find you and so will investors. Example: Dropbox, evernote, skype products.

Market risks

How do you make money and what is your value proposition? These two key questions that are usually so open and new, and on top you have nothing to benchmark against. Do you charge, do a freemium type approach; sell media and the user gets it for free? And no matter your choice, how do you make sure your business decisions don’t affect the user experience or the value for your clients/users? Example: Facebook, twitter and google’s media models.

Technology Risks

Is the technology the product uses changing? Can it be a threat? Are technological advancements of my products components going to disable my product or the need for it? Clearly the reason why companies like IBM have had to reinvent themselves is the commoditisation of markets. The value shifts within the chain, and you have to be smart in anticipating this, and moving while you have the upper hand. Examples: Olympus and Kodak were totally caught by surprise with the fact smartphones replaced point & shoot cameras. Read more: Companies disappearing in 2014

Undepinning anything you do, there’s an extra issue businesses like data and media must consider: Trust

It’s not by change Digital confidence and privacy have been such hot topics, especially since the mind-warping NSA leaks (Mark Zuckerberg spoke about it at MWC), which brought to light a concern and a need (as well as an opportunity): clarify how information is used, stored and traded over the web.

Companies now have to use public opinion as a barometer for their product’s success, especially when the new generations are more tech-savvy that the people that designed the products and apps they use…

So if you are aware of what the crowds want and how they feel about everything you do, it can only go well, or at least better than when you think the world will adjust to satisfy megalomaniac whims of your company’s ego. All of this to get to the final point: some battles are lost – even for Nokia or Microsoft (to name a few).

It’s time to open up and face reality, and this is beginning to happen. Nokia is launching the first piece of hardware that runs on android, Microsoft is launching apps for their office applications across other OS – listening to their users’ wishes!

If you do things differently you’ll at least get different results and these are the first steps in to becoming a digital company.

Kudos to Nokia and Microsoft!

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