I worked for Nokia for 8 years. I had some of the best days of my life in that period and none of the worst, so I still have a soft spot for Nokia - how can I not? So it somehow pains me every time I see Nokia taking another blow from Apple, RIM and others. When I read Deloitte’s report predicting 2010 to be the year of tablet computers - devices smaller than a netbook but larger than a smartphone with wireless connections and touchscreen - I could not help but think about the importance of the pace of innovation.

A little background here: Nokia actually came up with a tablet computer back in 2005. It was called Nokia 770 Internet Tablet and it looked like this. I was able to get my hands on it right after it was released and it was a neat little device that allowed for pretty much everything you’d like to do with a gadget like that: surf the Web, check emails, read blogs, etc. Well, it never took off. Tablets are destined to become very popular this year and it is the Apple product that creates the most buzz now - no one talks about Nokia. Why did Nokia fail to monetize its early mover advantage?

When large corporations are flush with cash, they hire and attract good people, they venture outside their comfort areas and get a little more experimental, many projects deservedly or not get funded and as a result, especially in technology companies, these kind of prosperity periods tend to generate pockets of creativity and innovation. Bleeding-edge products emerge from the depths of the R&D and some of the luckier ones actually see the light of the day.

Then on the downward cycle, companies hunker down, “focusing on core business” becomes the order of the day, “noncore” projects get shut down and the teams driving those more experimental projects get either disbanded or re-purposed. As a result, many valuable “trains of thought” get lost. And unfortunately, due to macro economic cycles and intense competition, times of prosperity for companies are almost never long enough to bring new established product categories to bear out of marginal experiments. So most of those rare brilliant ideas or products of the previous period become orphan childs.

Nokia suffered from this phenomenon a number of times. In 2001, Nokia only spoke 3G. 2G line of technologies were artifacts of the past. As a result,the 2G delivery in the US suffered and Nokia lost AT&T’s 3G business. At the time, it did not seem to matter much since Europe and Asia were leading the global pack. Then a switch flicked, with increasingly broader-band wireless and the smartphones that were almost mini-computers that went with it, North American companies started taking the lead and the US Telecom companies became a lot more aggressive in deploying broadband wireless. Nokia - having had missed the opportunity to build a large presence in the US - just did not have the right business infrastructure to read the market and eventually totally failed to keep up with it.

What is the moral of this story? I think it all has to do with finding the right pace of innovation. I am getting more and more convinced every day that for large companies, trying to develop the most cutting-edge technology/knowledge and protect it with their lives is simply futile. It is infinitely more important to use their scale and business infrastructure to listen to the market to detect the seismic shifts and maintain a large and healthy network of “innovators” - startups, academia, and creative, visionary individuals - so that they could be at the right place at the right time with the right product.