How Nokia rewrote its story

It took time

This book was written over the course of more than ten years.

A shaky start

No one was happy when I was chosen as Nokia’s CEO on January 16, 1992. Nokia’s share value dropped 10% that afternoon.

I knew that the previous generation had given me the responsibility of rebuilding a company they had destroyed.

Rebuilding the team

I had to find good people who would believe in the company. I had to breathe new life into the company, so that people would believe in themselves.

No substitute for hard work

For me working was as natural as breathing. Laziness was the start of a slippery slope.

The people I grew up with thought you could never do too much work. This was the mindset that helped Finland become a developed country.

Understanding the numbers

Numbers revealed a much wider world. If I understood the numbers, then I would understand things well.

Backed by knowledge

Knowledge has power, by which one could transform one’s destiny. With the help of knowledge, one could advance and do great things. With knowledge one could compete and never be limited.

The right support

Nokia was full of people who thought the same way as me. We couldn’t accept that anything was impossible.

Be prepared

I am at my best when I know I am well prepared, whether it is a speech, a deal or even a routine meeting.

A multicultural attitude

Without a multicultural attitude, one cannot work in an international company.

Confidence in the market economy

Time after time, I returned from the Soviet Union with a feeling of relief—this economic system could never beat a market economy.

Finland in the 1970s

I felt uneasy about the atmosphere in Finland at the end of the 1970s. I was bothered by the intellectual dishonesty, the rigid resistance to change and the politicians’ ineffectuality.

The achievers

According to a popular analysis, people can be divided into four groups: achievers, explorers, socialisers and killers.

Achievers are always aiming toward something bigger.

What sets them apart

Achievers are curious about things, because new knowledge makes new achievements possible.

Achievers keep the promises they make to others, but also the ones they make to themselves.

Trade-offs

All major decisions demand sacrifices.

Merit in the matrix

A matrix structure is a practical way to run an international company.

Lead people, not boxes

Leaders do not lead boxes in an organisation, they lead people.

A good leader must always be ready to promote some surprising candidates in an organisation, without regard to official boxes.

An external focus

I compelled my senior team to travel and meet customers and be externally focused.

Pushing forth

I wasn’t an easy subordinate for anyone.

Chance vs. destiny

Depending on your world view, you may see life as a matter of chance or of destiny.

Nokia in the 1980s

In the early 1980s, Nokia had become Finland’s most important electronics company. It made televisions, telephone exchange, mobile phones and computers.

But, in the 1980s, wellington boots were still Nokia’s best known product.

Order from chaos

My first task at Nokia was to bring order to chaos.

Hobbled by a complex governance model

Nokia’s complex governance model turned out to be a millstone around its neck in the 1980s. The company could not deal promptly or decisively with the many issues it was facing.

Danger signs were rising in the company

Senior executives were jostling for positions, more worried about themselves than doing the right thing for the company.

A sickness, a cancer had taken hold of Nokia and it was eating up the company. Head office spent its time in plots and power struggles.

The media is a treacherous goblin

Things are beautiful when all is well, but when luck runs out, it finds vengeance all the sweeter.

Three traits of a good leader

A good leader has to have three basic qualities: competence, will power and a desire to work hard.

Don’t punish honest mistakes

People who are trying their best shouldn’t be punished for the odd mistake, but they must learn from every mistake.

New ways of doing things call for new people to do them

I have never had time for conservative people. They see every change as threatening the heritage of the firm. Perhaps more to the point, they want their comfortable life to continue.

Product development

Product development has always been one of Nokia’s strengths. Engineers were always proud of their ability to develop new ideas and concepts.

Giving opportunities

In the 1990s, there were very few European companies where talented young people could rise to high responsibility. Nokia believed in giving young people more responsibility.

A new innovation process

We introduced a six stage innovation process in Nokia. Everyone in the meeting looked at the same concept and same numbers. Everyone had one view of innovation.

Defining the brand

Anssi Vanjoki, our head of mobile marketing, defined the Nokia brand along five dimensions: high technology, Nordic touch, individuality, freedom and lasting quality.

Introducing colour phones

Nokia was the first to bring colour phones into a market that was dominated by black phones.

No silos

I got rid of the silo mentality in marketing, R&D, production and procurement.

Time, the most valuable resource

Time is the most valuable resource of all and you can waste it on all the wrong things.

The new slogan

In 1992, we chose the slogan for Nokia: Connecting people. Everyone on the board liked it. We decided to wait for a month for us to be comfortable with it and then agreed on it.

Aticulating the vision and values

My future for Nokia revolved around: Focus, global, mobile phones and high value added.

In 1992, we also articulated the values of the company: Customer orientation, achievement, continuous learning and respect for the individual.

Getting facts right

As CEO I expected all senior people to have their facts and figures right.

High pressure

No one knows the pressures of a CEO’s job until they do the job themselves.

Facing forward

It was good that no one in Nokia looked back and hankered for a broken glorious past.

One learns more from failure

Success often provides less information and learning. Failure brings huge amount of information and learning.

A new working plan

We agreed that Nokia would have low hierarchy, be flat and run on ‘teamwork’.

We identified three processes as key to Nokia: Strategic planning, financial control and HR management.

Trust was the password in Nokia’s culture and growth

We encouraged people in meetings to say what was on their mind irrespective of level. Skirmishes were good in meetings to develop better trust.

Opening up mobile phones to the people

In the early 1990s, Motorola sold phones to the army and police. Most people thought that limiting phones to a few professions was a good idea. Anssi Vanjoki felt that we must sell a phone to the common man and that’s how Nokia went mass and succeeded.

Rapid growth

At the 1994 board meeting, we looked out and did a 2001 forecast—a business of $11 billion and a profit of $829 million. In reality we did a revenue of $31 billion and a profit of $5.9 billion. Nokia was the fastest growth company of those decades.

Leadership by The Five

The leadership model at Nokia was unique. It was run by five people: me, Olli-Pekka Kallasvu, Sari Baldauf, Matti Alahuhta and Pekka Ala-Pietilä.

Leadership is about discussion

The company was run with little formal structure but much in the way of trust and information sharing.

We allowed contradictions to flourish, since this was better than artificial unanimity.

‘We had real collegiality’

Anyone could challenge anybody in an argument over facts, but arguments about authority dominating an argument were never allowed.

How it all worked

We ran the company at four levels—the CEO, The Five, the executive committee and the top 200 managers.

Size vs agility

The biggest company in its field is usually the least agile and doesn’t open up to new ideas. Motorola went through that in the 1990s.

Reacting to success humbly

The year 1994 was great. As a team, we had experience of tough times, but none of us had tasted great success. Reacting to success humbly is a big challenge for teams.

Good news and bad news always come in waves

We mismanaged 1995—the supply chain, the components side, etc. We ended up giving a profit warning because of our inefficiencies and investors were furious with me and Nokia.

Birth of the Nokia Communicator

In 1996, Nokia launched the Communicator, a phone with an internet browser, fax, e-mail and a calendar. It was the work of one man, Reijo Paajanen, who worked on it against all opposition. This gave us tech leadership and this was the first smartphone.

Working with the media

A CEO’s relationship with the media is very important. It is better to say nothing than tell only part of the truth. Never comment on your competitors, guard against complacency and keep a clear head in a crisis.

Getting to No. 1

In 1998, we overtook Motorola and became the No. 1 mobile company in the world. This was an objective we set in 1990 when we were a nobody.

And then a slide back

In June 2001, Nokia gave the next profit warning because growth was a little below 10%.

Growth is physical, psychological

Growth helps people move towards perfection. Growth in a company helps people all around.

A company is healthy when it grows, and the emotional bonus that growth provides for its workers is remarkable.

On working with consultants

We never employed consultants without doing our homework first. We always had to have a sense of what we wanted to do before we invited anyone outside for a dialogue.

Short-termism

Companies usually make mistakes because they focus too much on the short term.

The long-term vision

Employees can’t be motivated by structures, they cannot strike a balance between objectives. It is the job of senior management to see further and paint the picture.

The dangers of success

Success is the gravest danger of all. It makes major companies arrogant and complacent.

Between 2004 and 2007, we tried to change direction and be far more software centric. We were in a sense a prisoner of our past success.

Upstaged by the iPhone

After the iPhone was launched, senior managers recognised that the Nokia operating system Symbian would not be able to compete with iOS. We sadly didn’t end up making quick moves to address this.

Evaluating a leadership change

By January 2010, I was in discussions with the board to check if the current CEO, Olli-Pekka Kallasvuo, was the right person to lead Nokia into the future. (Ollila was CEO from 1992 to 2006 and chairman from 1999 to 2012.)

We hired executive search firm Spencer Stuart to get us a short list of potential CEOs.

Turn of the wheel

Nokia saw huge success and then failed to make the right choices in software in the last few years. That led to its failure and subsequent sale to Microsoft.