Nokia is taking a beating for its misleading Lumia 920 marketing. Here's what startups and other small firms can learn from the company's foul up.
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It shouldn't come as much surprise that Nokia is taking heat for misrepresenting the camera capabilities of its new Lumia 920 smartphone. But we're not here to fan the flames. Rather, let's sort through what small and midsize businesses (SMBs) can learn from the much larger company's error.
The reason for doing so is simple: Nokia will likely weather this particular storm. SMBs often can't sidestep major public relations disasters, especially when self-inflicted. (If you missed the mishap, here's the recap to get you up to speed.)
"Con marketing is a fast path to SMB ruin," said Techaisle CEO Anurag Agrawal, in an email interview. Agrawal's market research firm focuses on SMBs. "SMBs, especially very small businesses, reply upon word-of-mouth and referrals to grow their business. They have to be extra careful to make sure that they deliver what they promise."
With that in mind, here are five lessons learned from Nokia's bad example.
1. You're not going to fool anyone.
One of the more head-scratching aspects of the Nokia story is that someone may have thought no one would notice the deception. Well then. The Verge gets credit for the catch, which was then picked up by dozens of other media outlets. The 24-7 news era isn't particularly forgiving, nor is the similarly incessant commentary on social media and other public forums.
"Today, businesses use many different digital avenues to have a 360-degree [view] of their customer," Agrawal said. "Many forget that customers themselves track and verify the offerings and marketing messaging of businesses. Any misrepresentations are usually caught and widely reported within the same digital avenues."
2. Weigh risk against reward.
Set aside the morality of the Nokia case for a moment and just consider the risk-versus-reward picture: Whether it realized it or not, the company took a big risk without a particularly obvious reward. As InformationWeek's mobility reporter Eric Zeman asked: "Why do this?" Nokia was already in a precarious position and while this dust-up will eventually subside, it's certainly not going to help the company's cause.
For different reasons, startups and SMBs have a similarly narrow margin for error--they don't have the resources to withstand a major error in judgment. Entrepreneurs are willing to take big risks, but they do so with big rewards in sight--and hopefully without deceiving customers in the process.
"If an SMB is caught lying, especially on something high profile, it's going to take a lot of money and time to set the record straight," said Analysys Mason analyst Steve Hilton via email interview. "Just don't do it."
3. Clear communication is critical.
Hilton offers a general theory as to how Nokia found itself in this position: "I'm guessing a bunch of Nokia employees were working on these videos and pictures of the Lumia and for whatever reason there was a breakdown of communications," he said.
Make sure major customer-facing decisions--and this definitely qualifies in Nokia's case--are well-communicated and well-vetted within the company. "Oftentimes mistakes happen when that communication isn't as robust as it needs to be, when communications break down or when employees don't have a chance to provide input into decisions," Hilton noted.
Agrawal agrees, noting that clarity--let alone honesty--should not be sacrificed for convenience. "Some [companies] even post stock photos of people that do not even work at the business," Agrawal said. "It is a matter of convenience but does not provide any cohesive and constructive positioning of the company."
4. Don't market something that doesn't exist.
Nokia's initial apology points out its fundamental mistake: They were marketing a future promise rather than present reality. (Of course, they would have been OK if they had said so in the copy.) "We produced a video that simulates what we will be able to deliver with OIS," the apology reads. And later: "This was not shot with a Lumia 920. At least, not yet."
Pre-launch buzz can be a good thing, but not if you chase it at any cost. That's a big part of the problem, according to Agrawal: It's simpler and cheaper than ever to market an idea an online, even if that idea doesn't yet pay off.
"It is easy for SMBs to get carried away by promising what they are not capable of delivering either due to competitive pressures or internal directives," Agrawal said. He offers a better alternative: "If a customer comes along that wants something beyond [your] capability, take the customer into confidence, make the customer a partner and work together to develop capabilities and deliver to [everyone's] satisfaction," Agrawal said. "This is a surefire way to develop new business, new products, and new capabilities. Most successful startups and SMBs succeed because of the above method of operations."
5. You need a strategy for screw-ups.
People and organizations make mistakes. When they do, how they react and respond goes a long way to determining the scope of their second chance. Nokia's public apology seemed reasonable enough, if perhaps a bit on the light-and-airy side. But the company has since sent a slightly different message, telling Bloomberg that they'll open an internal investigation. A spokeswoman said the company is handling the fallout "quickly, fairly, and privately." That last adverb is a bit confusing--the cat is out of its cliched bag, so the private route seems ill-advised--but that's Nokia's call.
It's a reminder that you need at least a rough plan in place for handling public problems, even if they're someone else's fault. Giving some thought to the worst-case scenarios can help owners and executives better handle bad situations of all kinds, such as a lawsuit or a data breach.
Of course, there's at least one way to prevent screw-ups from happening in the first place. "Thou shalt not lie," Hilton said. "It's an oldie, but a goodie."
Even small IT shops can now afford thin provisioning, performance acceleration, replication, and other features to boost utilization and improve disaster recovery. Also in the new, all-digital Store More special issue of InformationWeek SMB: Don't be fooled by the Oracle's recent Xsigo buy. (Free registration required.)