More than 10 years ago, this mobile OS was poised to challenge iOS and Android’s dominance. BUT…

Tuesday: Return Driven Strategy FROM THE DESK OF MILES EVERSON: Have you heard about Return Driven Strategy (RDS)? Explained in the book, “Driven,” this pyramid- shaped framework has 11 tenets and 3 foundations that help businesses effectively implement their branding and marketing strategies. For today’s case study, we’ll focus on RDS’ 2nd and 5th tenets: Fulfill otherwise unmet customer needs and innovate offerings. Keep reading to know more about this tech giant’s mobile OS offering. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

More than 10 years ago, this mobile OS was poised to challenge iOS and Android’s dominance. BUT… Apple’s iOS and Google’s Android have powered millions of smartphones for the past several years. Due to this, it’s almost inconceivable to own a mobile device that doesn’t operate on either of those mobile operating systems (OS). Did you know that more than 10 years ago, iOS and Android had a competitor in the form of Microsoft’s Windows Phone? Officially launched on October 11, 2010, Microsoft designed and built the Windows Phone to serve as its primary offering in the competitive smartphone market. As part of Microsoft's entry to the mobile phone space, the tech company partnered with HTC, Dell, Samsung, and LG to manufacture the first phones preloaded with the Windows Phone OS. Later on, the tech giant partnered with Nokia to manufacture smartphones as well. Microsoft’s mobile OS was a significant departure from what was seen on iOS and Android at the time. Instead of static icons, the Windows Phone provided its users with transparent “tiles” that displayed live information such as text messages, email notifications, missed calls, and calendar appointments. Additionally, the mobile phone OS shone with its snappy performance and reliable digital on-screen keyboard. Given all these details, did Microsoft’s entry in the mobile phone market bear fruit? Yes! In fact, the Windows Phone ranked 3rd behind Android and iOS 3 years after its launch. Because of that, the platform emerged as a viable alternative for customers. Market research firm Kantar Worldpanel also reported the mobile OS was successful in attracting first-time smartphone users to buy Windows Phone-powered devices. Due to these developments, Microsoft decided to capitalize on the Windows Phone’s early gains so it acquired the mobile phone division of Nokia in September 2013 for over USD 7 billion. The move made sense because Nokia held 22.5% of the global mobile phone market at the time. Moreover, the firm was responsible for 81.6% of all Windows Phone sales. By assuming direct control of Nokia’s mobile phone division, Microsoft had the ability to design and manufacture phones that could take full advantage of everything the Windows Phone had to offer. Based on these details, it seemed that Microsoft was poised to carve a place for itself in the highly competitive smartphone market. This assumption was further bolstered by a 2011 International Data Corporation (IDC) forecast that the Windows Phone would overtake iOS worldwide by 2016. Unfortunately, Microsoft was unable to sustain the gains it had made. Gartner, a management consulting firm, reported that 96% of smartphones sold in 2015 ran on either Android or iOS while devices that ran the Windows Phone OS were only at 2.5%. To make things worse, Microsoft's market share shrank to below 1% in 2016. As a result, the tech giant gutted its mobile device division through layoffs and a USD 7.6 billion write-off on the assets it acquired from Nokia. Development on the Windows Phone also ceased in 2017, and support for it officially ended on March 10, 2020. What caused the failure of the mobile OS? Lack of a robust application ecosystem During the 2010s, applications became prominent in the world of mobile phones because they allowed users to turn their smartphone into a tool for entertainment, productivity, and communication. Because of this, the success of a mobile OS depended a lot on the number of available apps that its users can download and use. It was in this regard that the Windows Phone lagged behind. Since the mobile OS had a significantly smaller user base, there was less incentive for developers to dedicate time and resources in developing apps for the platform. Lack of software updates and support Even though the Windows Phone came with lots of useful features, there were a few missing ones like multitasking and the ability to cut, copy, and paste. Unfortunately, it took a long time to make these basic functions available to users. To make things worse, Microsoft was unable to make newer updates compatible with older iterations of the Windows Phone. Because of this, users were left with older versions of the mobile OS. In stark contrast, iOS and Android users benefited heavily from periodic software and performance updates that addressed many issues and added new features. To put it simply, the Windows Phone failed because it couldn’t provide the needs of its target market. Moreover, Microsoft wasn’t able to innovate and evolve its mobile OS fast enough to keep pace with its rivals. — The sad tale of the Windows Phone can be explained through tenet 2 of RDS: Fulfill Otherwise Unmet Customer Needs and tenet 5: Innovate Offerings. According to Professor Joel Litman and Dr. Mark L. Frigo in the book, “Driven” : “The path to the creation of wealth is through the customer by fulfilling their unmet needs. This is the recipe for achieving high returns on investment. High-performance businesses deliver an offering that the customers believe is not otherwise available.” Moreover, they had this to say about the importance of innovation: “It’s not enough that a firm be creative. The intention behind innovation needs to be focused on the creation of new offerings that answer needs that customers cannot get answered elsewhere.” These statements drive home the importance of having products or offerings that answer the needs of a customer in such a way that he or she sees no viable alternative. Moreover, these principles also highlight the necessity of constantly innovating to continuously satisfy evolving customer needs. While Microsoft had a good offering in the form of the Windows Phone, the platform was unable to follow through on its early gains because its product failed to provide the needs of its target market. Here are the key takeaways you and your business can learn from this story: Carefully assess the needs of your target market. Doing so will enable you to design a product or offering that has no viable alternative. Constantly be on the lookout for innovations in your field that could significantly alter consumer behavior. This will help you improve your current product or offering. Remember: Your ability to fulfill a target market’s otherwise unmet need can make or break your products or offerings. To prevent a significant decline in performance and earnings, use the principles of RDS’ tenets 2 and 5. If you want to gain more insights from this framework, we highly recommend reading “Driven” by Professor Litman and Dr. Frigo. Click here to get your copy and learn how RDS can help you enhance your existing business strategies and innovate your current products or offerings. Hope you found this week’s insights interesting and helpful.     Stay tuned for next Tuesday’s Return Driven Strategy! Feedback and feedforward. Do you know the difference between the two? Learn more about the benefits of “creating futures” in your career in next week’s article!