One line from the now famous burning platform email reputedly from Nokia CEO and President Stephen Elop to staff at Nokia carried an intriguing reference to innovation:  I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.  I’ve said elsewhere the confusion between innovation and collaboration is a handicap for companies – but let’s pass on that for now. Nokia has always innovated – it packs more into its phones than any other phone maker. The problem is it innovates in the wrong way and is a victim of its engineering excellence, which is so dominant that the changing needs of low-geek customers have been overlooked.  In emerged and frontier markets on the other hand it was the first to build a great ecosystem and it has combined a philanthropic and pro-development investment ethic exceptionally well. It’s gifting that ecosystem and growing market to Microsoft in return for credibility in the north American market.  Did it need to and was it wise? Nokia’s most vocal critics have come from Silicon Valley. A big negative for the company’s image lies in not winning those voices over. Nokia never made the case powerfully enough that its emerging market portfolio is a huge long-term advantage for the company. It has been a beacon for innovation there.  While companies like Dell went crowdsourcing innovation Nokia tried to buy its way into the affections of thought leaders with the Ideas Project. I think this was a mistake and a clear sign of hubris.  The new partnership looks designed to forge a more powerful entity rather than a more innovative one. The device platform looks like being Microsoft’s rather than Nokia’s. And the deal with Microsoft does not look likely to improve the customer and developer relationship issues that the Ovi app store created. A merger with Window’s Mobile Marketplace…. the problem has always been compatibility issues for developers who have to deal with different operating systems (and versions of them).  Nokia’s mapping businesses on the other hand are vulnerable to crowdsourced alternatives as well as disruption as the Cloud lays a foundation for real time data innovation from car to car and car-to-road communications. Its foray into autos raised concern about the driver distraction implications of its Terminal mode head unit device, an innovation that is right-on, in theory, but poorly executed.  These issues needed addressing but do you address them while cutting headcount and working through a global partnership with Microsoft?  Microsoft is a partner that allows Nokia to avoid acknowledging its own hubris. You can argue Elop has held his hand up on this one, and changes at the top were necessary but it is change at the bottom and middle that remains Nokia’s biggest problem.
Nokia's deal with Microsoft will distract Nokia from addressing some of its innovation concerns. These extend across the company's portfolio and not just in mobile phones but an executive team busy with the Windows 7 alliance will not have time to deal with grassroots issues in the company.