Business Today

"Don't cut down on marketing, innovation"

Enhanced levels of communication—both internal and external—and innovation saw Nokia India through the downturn.

Kushan Mitra | Print Edition: January 10, 2010

The crisis is too big an opportunity to miss. The first and foremost lesson for me is the role of leadership, not just of the managing director of the company but of the entire top management. The biggest issue here is that of overconfidence. A lot of people go in thinking that the crisis "won't affect me" or "I'm insulated" and start believing that. A management team needs to have humility during a crisis and recognise it for what it is. Only then can you shape your response.

The best response is to see what is happening and the second is to analyse it and see where it can hit you. The third is to have a response to it and a strategic view of it. These three things—acceptance, analysis and response—also depend on the time horizon. If you look at the US, you will see that recessions last between 8-10 months and upswings 7-8 years—so where are you on that path? If you wake up in the eighth month, then you only have two months to work on it. It's over. Timing is vital.

Communication is critical, if you are in the branded business or even in the B2B business you need to communicate with your consumers straight—openly, honestly and frequently. You need to ensure that you invest more in marketing, not pull back. History has shown repeatedly that cutting marketing investment in a downturn is the biggest bane for a company when the market picks up. So what we did is that we regrouped all our investments behind the brand—trade, advertising, communication and we actually spent more on marketing.

Same is the case with communication with employees. They were worried with what they were reading in the media. What I recognised was that we needed to do a lot of meetings with people—on e-mail, on SMS as also face-to-face. They wanted to know when we, the management team, saw the tide turning. Last year, I put a date to it while saying that by March 2009 the economy would pull out. And sure enough, we did around March-April.

Another mistake people make is that they cut down on innovation. We found, for example, that one of the phones we introduced last year, the 5130, which was a high-priced phone by Indian standards at Rs 6,000, was a success. That is because of the innovation in the value-point and what it offered was fantastic. We invested significantly behind that and our top-end devices. Something else I learnt was that as the downturn progressed and companies did not give salary hikes, it affected the commitment and loyalty of employees.

Why? When we looked across sectors, a lot of young people, by that I mean below 35, had 40 per cent or so of their take-home income locked in monthly payments. They had done this assuming a free run on the economy and salaries and bonuses. For them, it was a shock. We spoke to our people assuaging their fears on the issue.

Then, there are lessons from how several companies laid off people. Companies that employed a meritocracy saw it better accepted, but wherever it was arbitrary, commitment levels fell. Employees hate what is called the 'salami effect'.

You take off 100 people now, 100 people three months from now and another 100 people three months later, you're just slicing salami. That drains the emotional commitment of those who stay back. Nokia globally laid off people, but because India remains a fast-growing country we did not resort to layoffs.

— D. Shivakumar, 50, Vice President and Managing Director, Nokia India

(As told to Kushan Mitra)

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