TFAR Podcast Transcript – Episode with Lars Silberbauer, CMO of HMD Global

Tune in to Time for A Reset

Paul – 00:00:03: Welcome to the Time For A Reset podcast, the podcast where I, Paul Frampton, interview senior marketers on the big issues of the day and the thing that they want to see reset with an ever-changing landscape. Welcome back to another episode of Time for a Reset. This morning, I’m delighted to be joined by Lars Silberbauer. Lars is the CMO of HMD Global, which is the home of Nokia phones, which we’ll unpack in a little bit. Lars has spent a lot of his career in very large, very well-known household brands that include Viacom, MTV, Lego, and he’s also been very much at the forefront of both product design and marketing and run very large teams across the world and also been very involved in transformation and building out digital teams. So Lars has an illustrious career to talk about. So I’m really excited to have you here, Lars. So thank you for joining us this morning.

Lars – 00:00:55: Thank you.

Paul – 00:00:56: So the first place we always start, Lars, is with the reset. The podcast is obviously called Time For A Reset. And whenever we talk to senior marketeers, they usually have a bugbear around something that they would change across the whole of marketing as a discipline if they could. So maybe we’ll start there if you don’t mind.

Lars – 00:01:14: So if there’s one thing that I would love to put a reset on or start from scratch again, I think it’s just the definition of the CMO role and how that’s connected to product and product development. I think that’s a crucial element. And I think we’re right now in a journey in many companies where the CMO role is stepping into product a lot more than we’ve seen previously. At least that is how I feel in my role right now. I’m also head of product design. And I think the design story, the product story needs to be much more integrated in the marketing storyline that has been previously at least in traditional company structure.

Paul – 00:01:48: Yeah, interesting. So I’d imagine that must be fairly unusual for a CMO to also have the product design role. And HMD Global is maybe a business that some listeners haven’t heard of. So could you just tell us a little bit about the relationship between HMD and the Nokia brand, but also how you ended up having a role that cuts across both of those?

Lars – 00:02:07: Yes, absolutely. So I joined about a year and a half ago, and I previously was Global Head of Marketing, Brands and Digital at the Olympics. I was part of the Tokyo Olympics, Summer Olympics, and the Beijing Winter Olympics. So I was offered this role and haven’t been in tech before. So for me, it was quite exciting to actually step into something as crucial. If you worked in entertainment, if you worked in pretty much any other brand, you reach consumers through some kind of tech platform. If you’re not doing it through the TV, of course, which is also kind of a tech platform. So I was quite thrilled to actually get this opportunity with HMD. So HMD is a seven-year-old startup. We’ve sold more than 400 million devices. It’s a company with some quite strategic investors. Google is a big investor. Foxconn and Qualcomm are other really big leading investors. And what they, of course, have done is really to try to take a new take on tech. So for me, stepping into this company was quite interesting. And then we work both with Nokia, but also with other brands in developing tech that is carrying their brand. So we have in six, seven years been the exclusive license holder of Nokia phones. So we brought back Nokia, both on feature phones, both on smartphones, but we also have a number of different brands. And next year, we’re launching our own brand called HMD, Human Mobile Devices, that hopefully will get a lot of traction, a lot of awareness next year.

Paul – 00:03:28: Nice. It works well, actually, doesn’t it, HMD? I like that. And you said you worked at the Olympics, you worked at Lego, you’ve worked at Viacom, some very iconic, recognizable brands. And of course, the Nokia brand is a very iconic brand as well. So how does the relationship between the product change in a technology company versus like a toy manufacturer or a TV broadcaster? What are the fundamental differences?

Lars – 00:03:52: I think some of the differences are, of course, that innovation is coming from a technical point of view. But I think in a world where a lot of the tech development and production of tech is happening in the same places, it is still being commoditized. And somewhat, it is the same things that are coming out. So unless you have a brand story and a true marketing story, you will go into a price competition because everyone is pretty much doing the same thing. And in the mobile industry, it is very difficult to differentiate yourself just through tech. And that’s also where we see, of course, Apple has like really like done a great job on their brand, starting with innovation. But I think we can also truly say that it’s not the tech innovation that year on year is making people buy another Apple phone. It’s the brands and the brand storyline and the ecosystem they’ve built that actually is driving that forward. So I think that’s probably where you see a bigger difference. Like the Lego brick has not really changed in many, many decades. And I think Lego earlier on understood that they need to have not just their own brand storyline, but they need to work with Lucasfilm and Star Wars. And Disney and Harry Potter and like, you name it. I don’t think there’s any brand property or IP except probably Star Trek that Lego hasn’t worked with. And that’s because they wanted to guarantee that relevancy and to tap into communities where they weren’t already present.

Paul – 00:05:14: Okay. Really interesting. Really interesting. And you obviously mentioned Apple and going back in time, obviously Nokia dominated the mobile phone landscape. And some listeners will remember the early Nokia phones. It feels like, yeah. It’s been some really interesting kind of product development that’s happened over the last few years. And you guys have had a lot of success in selling into kind of developing markets and selling affordable kind of high feature phone, high functionality. Could you maybe just unpack like, how do you deal with the challenge of the previous version of Nokia and try to, I guess, almost reimagine that in consumers’ minds?

Lars – 00:05:50: So I think it’s very important to differentiate between feature phones and smartphones. You could also say some people call it dumb phones. Nokia is still the leader in feature phones. That’s quite clear. And you would be surprised about how many feature phones are still being sold worldwide. Because smartphones are great and they can do a lot of stuff, but you still need to charge them every day. And in many countries, developing countries, you will be on your way from a township to wherever you work. It would take a long time. You don’t have a power outlet everywhere that you go. It’s also like the durability and of course the cost. Like $2,000 for a smartphone, that’s a lot of money. And that’s where the feature phone is crucial and still has a really, really big role to play. Everyone thought that the feature phone market would be declining very fast. But what we see is it’s declining a lot slower than actually expected. That’s why Nokia has a huge brand that is premium brands within the feature phone. And then there’s a smartphone category where we’ve seen the Nokia brand some success, but we also see and that’s why we work with other brands in developing other products that really catering for different markets.

Paul – 00:06:57: Right. Nice. That’s really useful for the listeners to understand. And I know that you’ve also innovated in terms of sustainability. You guys have taken a very strong position in an industry which let’s face it is not sustainability is probably not the core of building hardware. And secondly, I know you’ve innovated in terms of both almost like a subscription around promoting sustainability. So is that one of the key things you want the brand to be known for? Is that just part of the brand DNA?

Lars – 00:07:24: This is definitely what we want to be known for, but also what we believe in. And that’s what we’re trying to do. And we’re trying to do what we believe in and quite wholeheartedly believe in. Let’s be honest, Paul. Like, imagine that you bought like a washing machine and 12 months after it was slower, you could barely like get it to wash your clothes. The clothes will not get as clean as before. And the company that you bought it from, they would say like you actually need to buy a new one. I’m not sure that you would buy that brand many times. And that’s basically what we see in the mobile industry, that brands are pushing people to buy a new phone every single year. And at the same time, we know in 2022, there was 5.4 billion new phones. And we’re talking about a million mobile devices lying around in drawers worldwide. Like from a planet point of view, those are very expensive devices to develop, like very, very expensive materials, minerals to like dig out of the earth and then really put into mobile phones. So we have an e-waste issue here. And we have a sustainability issue where we are saying, we actually want you to keep your mobile phone in your hands for longer. And we believe that we can actually do this. We can do that by making them repairable. This year we won the Time Magazine Award for Best Innovation Award. Within the repairability category with Time Magazine, which we’re quite proud of. It should be possible for you to change your screen, to change your battery, to change your charging sockets on your device without going to a mobile store and get it fixed. But that will also make it possible for you to keep your device in your hands for longer. That’s something that we believe in. That’s something we innovate in. We dedicate resources to. And we also know, unfortunately, that these issues are going to be more and more critical for the whole world. So we believe that we are on the right track here. And that’s why we’re here. We have a mission and a role to play here.

Paul – 00:08:59: Right, no, well, you articulate very clearly the big issue with six billion smartphones sat there just laying around. It’s quite scary when you think about it in that kind of scale. How long do you think this shift will take? Because we’ve obviously got a very consumer-driven, like mobile phones have become very aesthetic and part of people’s identity now, and potentially that kind of drives people’s decision over some of the more important long-term. So how do you kind of problem solve around shifting, I guess, almost like the Apple effect?

Lars – 00:09:34: I think there’s two schools here. There’s a sustainability school that says we need to get back to the Stone Ages because that’s great. And we can’t have any kind of luxury items or modern items because that’s destroying the planet. There’s a little amount of people that want to go there. If we want to create positive impact on the planet, we need to hit the mass markets. Mass markets, they don’t want something that looks ugly and is a five centimeter thick phone that it’s going to last forever. They want something that’s beautiful, sexy, is attractive design-wise, has a great usability. It has all those things you expect because that’s what you expect from a smartphone and from a Fujifilm as well. So we want and we insist on making phones that are both beautiful, has great design value, great colors, all that stuff, but at the same time are repairable and sustainable and have all these elements within them. Of course, that takes a lot of work. And I can tell you, I just had this morning a call with the head of our product team. It’s not easy to make that all fit into a very, very tiny device, make it beautiful and make it repairable and sustainable.

Paul – 00:10:37: Right. And presumably also make it affordable. Affordable is a relative thing, but to make it beautiful, repairable, sustainable and not a fortune to your point. That feels like if you can nail that, which obviously, as you say, it’s not a straightforward challenge, then that does have scalability because you’re ticking all the boxes. Rather than just the portion of the market who are very, very conscious about the planet. Everyone says they are, but their purchasing decisions tend to suggest otherwise when they actually have to make a decision on cost.

Lars – 00:11:06: Yeah. What we see is people not purchasing based on just sustainability. Well, a small category, but that’s even if we cater for that category, that’s not going to make the needed impact. We want to create like real sustainability and real sustainability. It needs to be profitable. Like we want to create sustainable products that makes profit because without profit, we don’t have a lot of money. We don’t have scalability. And without scale, we don’t have impact. That’s why I think we also need to challenge people and sometimes say, well, it’s great that you have a sustainability business, but it’s borderline charity and charity can’t scale. So that’s why we need to have that real sustainability and business model element built into the whole company.

Paul – 00:11:43: That makes perfect sense. And as you’ve articulated this, it makes obvious sense why you were so attracted to this task, because marketing and storytelling is obviously going to be critical to get that out there so that people do know. You also talked about, obviously, profitability. And we often talk about on the podcast the fact that marketing needs to be considered as a real growth engine for the business, as opposed to just a function or a department that does communications. So how does that work within a business site, H&M Global, that’s got investors to keep happy about growth all the time?

Lars – 00:12:18: I work very closely with our CFO, and we’re on very good terms because I think it is, of course, often marketing seen as a cost, as a big cost center, and what we get out of it. In my previous jobs and also in my present job, I make a lot of effort into actually showing what kind of return investment we’re giving, whether that’s the paid media and sort of the easier stuff, but also how we’re building the brand. And what does brand value actually mean when you look at the bottom line? And how can you actually charge more than you should for that product? Because if you have that brand storyline, those values that we’re putting into the product. So I think that’s really on the CMO to have those conversations constantly and make sure that it’s being understood, but also be very honest with yourself and say, did that huge sponsorship actually pay off? Or was it more to actually have a nice time, enjoy whatever sport event it was? Really be critical about where you put the money and constantly, constantly measure everything that you do.

Paul – 00:13:15: Yeah, totally. And I imagine from some of the orgs that you’ve worked at, from MTV to Lego, even the Olympics, all of those, let’s call them brands, all of them had a lot of owned property and a lot of earned kind of value within the social space. And I know you’ve spent a lot of time in that space yourselves. Is that part of your vision for how you kind of move Nokia into the market? Into the mainstream? Because I imagine you can’t compete with the budgets that an Apple or a Samsung have, for instance. So how do you think about, I guess what I would call the kind of owned and paid? Like my boss actually often talks about paid media sometimes as a tax. And obviously Bezos and others have said for years that, and now ironically, Amazon’s the biggest investor in paid media in the world. So it isn’t just about having great product, you need product and you need to get it in front of people and prods people and signpost people. So yeah, sorry about that. But I think that’s a good point. I think that’s a good point. I think that’s a good point. That was a long question, but I’m just interested in your perspective on that.

Lars – 00:14:12: Can we compete against Apple and Samsung and so on? Yes, I would love to compete with them on that. I would love to see the numbers on dollar for dollar return on investment. But of course, we don’t have those resources. So we need to rely more on actually using organic media, using PR, telling the story, working with different partners, and then also have a great team, really trying to go where others are not going. So we can’t just pay our way out of it. We can’t just buy the same thing. We can’t just buy the same thing. We can’t just buy the same thing. We can’t just buy the same thing. We can’t just buy the same thing. We can’t just buy the same amount of out of home and TV commercials and so on. I find that that’s actually super interesting to have a role where you’re the underdog. You need to do different things. And we have a lot of things in pipeline for next year. I really look forward to 2024 to show what we’ve been working on and what we’re coming up with, because it’s got to be very different from what you’ve seen so far from the established mobile manufacturers.

Paul – 00:14:58: Well, yeah, and constraints, whether they be budget or resources, are often the best driver of innovation. Otherwise, I often think if you look at a lot of categories, everyone just follows the same model. It’s like a lot of money into broadcast and then a lot of money into meta and Google. And it’s like, OK, the price inflation of media just goes up and up. And how are you really differentiating? So it’s great to hear that you’re thinking about how do you leverage all different opportunities, communications, partnerships, PR, because some of the most successful brands were originally built without paid media.

Lars – 00:15:33: That’s what it’s about. If you’re an established player and you’re making trillions, you have no real reason to innovate besides like tiny things that can just keep the world as it is. So I think that that’s also that’s a benefit of being an industry leader, as some of our competition is. But that’s also the benefit of not being. A leader that we can actually risk things. We can move fast. We can do things that challenge the model, as you said, like launching a subscription model, as we did last year, a circular subscription model, going into repairability, betting high on sustainability and making phones that are actually very affordable. There is no rule within tech or anything that says that a great phone needs to cost $2,000.

Paul – 00:16:12: Right. That’s the nice thing about having an iconic brand, but having a startup mentality connected with it. So one of the other topics that I’ve talked to a lot of our CMO guests about is how you think about brand and performance marketing. In recession and in low growth economies, a lot of the money has moved down the funnel and hence Meta and Google and others have done very well from that. So I’m interested in how you think about the relationship between that, that some of the, even today, the measurement models that really measure the impact of brand and response together are still probably not perfect. Just interested in where you stand on getting that balance right.

Lars – 00:16:50: This again is a good question. This is something that’s been discussed quite a lot above the line, below the line, performance marketing, brand marketing. In my point of view, it’s two sides of the same coin. You can’t have one without having the other, or if you do that, then you’re missing out on a lot of opportunities here. I think what we did, for instance, at Lego was that we really measured, for instance, YouTube content, really measured that with paid media. So used paid media and performance marketing to look at not just the last click attribution and some of the blunt models there, but really looking at every piece of content saying, what we did was just briefly explain the methodology we had back then. For 72 hours, we took a piece of content, put it up on YouTube, target that to the demographic we wanted to target it to. We took it down, look at all of this, like search uplift, retention on the video, brand, and performance marketing. And we took it down to the demographic we wanted to target it to. We did it once more. And then we did it once more. Based on that, we could see huge uplifts on brand uplift, search uplift, retention on it. So we knew that people would have great stickiness. That stickiness would reflect positive on the brand, and it would actually change people’s behaviors at a higher level afterwards. And then we could say, this is good. Then we put the big media behind it, and we take those learnings into the next piece. So I think that way of connecting a brand piece with performance marketing methods is that that’s also how entertainment works. That’s how we change the MTV model of doing content to really be high performing, but also really tightly close to the brand.

Paul – 00:18:20: Yeah, no, that’s a great example, Lars. I mean, that really kind of manifests test and learn. It always surprises me that more marketing organizations don’t stop spend for a while and then start it up to see the differences. I think there’s a nervousness. If you take something out that you’re going to lose a lot. I mean, part of the reason CV is called CV is control versus exposed. Unless you’ve got a control, you don’t really know whether people that are exposed have actually had some kind of different experience or responded differently. So I really like that example.

Lars – 00:18:49: Once we did the experiment at Lego and we fought it because there was just so much demand that we basically had to turn off our paid media advertising. And on Google, we could see our search advertisement. Within 48 hours, the organic just really made up for everything we hadn’t paid. So we realized we were just basically cannibalizing our own organic searches, which is also like not many brands have that, but a brand like Lego, a big brand, we had that. So we basically just had a lot of waste.

Paul – 00:19:16: Right, and it shows the value of running experiments, learning, and then iterating, which I think is modern marketing. On that, that’s quite a good segue into my last question before I ask you some slightly more personal questions, which was, obviously, marketing is becoming more scientific, more data-driven, more MarTech-driven. How are you seeing that change, the kind of marketing operating model within your business or within marketing per se?

Lars – 00:19:39: What I’ve seen in the last year, what we also have to implement in the last year, and again, being a small player, we’ve been able to do it quicker than I think most, is really to use generative AI a lot more. But it’s not like we’re leaving things completely in the hands of AI and letting them have both hands on the wheel. I would say it’s more been a tool where we can have the decision makers have suggestions, having ideas faster and faster and faster, and then briefing agencies or in-house agencies in a way where we actually have borderline 75% of the ideas already. And then it goes more into lower execution, like studio production and so on. And I feel that it’s been a really both pleasure, because I feel personally more hands-on control of the creative output, but also it’s sped up the whole ideation phase and the days of agencies coming in every second week with a PDF and saying like this, this, that, and we can do that in an hour now. It’s unfortunately creating also like a lot of redundancies in that mid-layer of the company, but that’s just how the world is nowadays. So I think in that sense, it’s a challenge. It’s a changing moment in the whole industry.

Paul – 00:20:45: Nice. I like that. It sounds like because of the nature of the culture and being a startup and some of the constraints, you’re able to push towards the new modern marketing model faster than some others. If you were to try and express what you think the CMO of tomorrow looks like and what the key attributes of them, I mean, you’ve described some examples like being much more tested, learned, using technology, being close to product. Is there anything else that you’d add to that?

Lars – 00:21:13: I think we’ve seen that. I think we’ve seen a breed of CMOs and CEOs right now that are much more multidisciplinary. At least I’m not tied to the old agency client, greater agency, media agency model. Not at all. I think we need to shake that up quite a bit. I believe external agencies are quite useful. Sometimes we need to have a lot more internal. I think that there’s a different way of perceiving things that is happening right now. I think also CMOs or any executive at any layer, they need to get their hands dirty when it comes to the CMOs. I think that they need to get their hands dirty when it comes to AI. Do not try to put it with social media on the intern to come up with things. Like you need to sit there. You need to learn the tools and you need to keep learning them because they’re developing so fast. To understand that and to grow with them, I think it’s super important. So I think this centaur, like half man, half machine, I think in the creative world, that’s going to be the winning formula. I don’t see any architects right now who’s not using CAD as a primary tool for, or it might be any kind of software tool for their development of new ideas. Same thing with AI. It is already such a big part of your daily work, at least my daily work. And it’s just going to be more and more important. But it also is important if you want to develop communication, you need to know culture. And it’s very difficult for an AI to predict culture and to predict what is going to be the new change culture that you’re going to deliver. As it’s, of course, generative. So it is based on history, not on future. So I think that’s really where you need to have your cultural references right. Ask the right questions. You cannot get the right results out of an AI. I think that’s becoming more and more apparent.

Paul – 00:22:47: I really like the way you expressed that. I mean, firstly, the provocation around, which I think every marketeer is looking at in some way, what do we do ourselves and what do we insource? That is a very different world to what it was 10 years ago. But also, I really like the way that you talk about the parts of the process that generative AI should plug into and the parts that should remain led by creative people or data-driven analysts types. It feels like you still need these different skill sets, people that are either very highly analytical, highly creative. It’s just they have to accept that their role changes with different tools. Everybody’s always kind of improved and had better tools over time in the history of time. Yet everyone looks at AI because they just think it’s going to remove jobs rather than as an additive support to allow more focus on the strategic or kind of more interesting work.

Lars – 00:23:36: Yeah, like are we going to have copywriters in the future? Yeah, probably a few, but they’re going to be more prompt managers and quality assurance people. It’s going to be more high level. We’re going to have a lot fewer. So that’s going to change. And whoever’s going to make that shift and jump in competencies, they’re going to make a lot of money. The rest will probably need to find a new job.

Paul – 00:23:56: That’s a good segue into my last question, because I think it prompts everyone listening to think about how are you investing in yourself and developing and embracing and experimenting with new technology? Because if you’re not, frankly, whether you’re an assistant or a graduate or a CMO, you can very quickly become irrelevant. So people listening. You’re probably thinking you’ve worked at a lot of big orgs. You really understand marketing and product and work closely with the C level, but I’m sure there are things that you’re working on getting better yourself. So would you mind being vulnerable for the last minute or so and share some of the things that you’re trying to improve yourself in?

Lars – 00:24:31: I’ve been fortunate to always have been growing up together with people that have also been a bit of geeks like myself and not been afraid of spending long nights and early mornings on diving into some rabbit hole that they want to investigate. So that’s what I still do. And I luckily have both of a great older brother who’s also have the same interests I do with technology, but also a big network. And I think it’s really important to carve out time for yourself to do that investigation. And a few weeks ago, I had an agency approaching me and said like they would do an AI workshop with us and teach us new tools about how we could use Midjourney. It’s like, it’s been out for like a long time. We’ve also been spending like long nights into these different tools, running them out and figuring out what they can and do that on a consistent basis. So I think that’s at least one of the things I do. I’m also fortunate enough. To be asked around as a keynote speaker in many parts of the world. I like to sound my own voice. That’s great. But it’s even better to actually meet the next generation coming up right now with new ways of looking at things. It’s always inspiring to be out there talking to new people with different viewpoints and seeing different things in any part of the world that it is. So I travel a lot, even though it does require a lot of time in airports. It’s really beneficial to have those conversations with people in South America or China or wherever they might be. I think that is something that I get energy from, even though it might be… You’re also taking a bit of jet lag here sometimes.

Paul – 00:25:46: Yeah. No, no, I’m very similar. I think the opening horizons and seeing how business is done in Southeast Asia or LATAM or the Middle East. I was in Dubai recently and just the way they approach growth is so different to anywhere else in the world. I mean, obviously there are some slightly different governmental setups there, but you’re right. There’s so much to learn from across the world. So look, Lars, that’s been a great conversation. You’ve taken us from the importance of marketing being adjacent to product, to really kind of helping us understand where the new Nokia will be going. Also jumped into kind of being provocative about what a CMO should do and how they explore new technology and kind of embrace change and work closely with the CFO and the finance department. And lastly, you’ve kind of put out the provocation around the model is changing, whether it’s generative AI or it’s what you build in-house or how you structure different parts of marketing operations. I think for our listeners, you’ve kind of challenged people to think differently about just because it’s been done that way in the past doesn’t mean that you need to carry on doing it that way. So I really like the thrust and that overall theme. So all that remains is for me to thank you for your time.

Lars – 00:26:57: Thank you. Thank you for the invite.

Paul – 00:27:00: Thanks for tuning in to another episode of Time For A Reset. I hope you enjoyed this one as much as I did. We’ll be back talking to a senior marketeer very soon. Make sure you don’t miss out on any new episodes by subscribing on Apple, Spotify, or YouTube.

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