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Ollila's Nokia thrives in high-tech revolution
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By Christopher Brown-Humes
Jorma Ollila does not like talking about himself. "There must be more interesting people to write about," the Nokia chief executive says. This is no false modesty on Mr Ollila's part. He would much prefer to talk about Nokia, the company, than Ollila, the person.
But, despite Mr Ollila's best efforts, many people find the two inseparable. He has been Nokia's chief executive since 1992 and more recently chief executive and chairman. He has overseen the transformation of the company from an unfocused conglomerate into the world's leading manufacturer of mobile telephones. And he has created extraordinary wealth not just for Nokia employees but for Finland as well: not many chief executives can claim to have helped inspire an entire country with self-confidence.
Almost uniquely in Europe, Nokia has shown that you do not have to be Japanese to be a world-leading consumer electronics manufacturer, nor do you have to be American to stay at the cutting edge of internet technology.
Ask Mr Ollila the secrets of Nokia's success and he makes it sound almost easy: "We were earlier than most in understanding the benefits of focusing your business portfolio in a globalised world, that in order to be really successful you have to globalise your organisation and focus your business portfolio . . . We have also been able to grow and be global and maintain our agility and be fast at the same time."
But how much of this success is due to him and how much to his senior managers? And what is the role of pure luck, given the explosive growth of mobile telephony in the 1990s?
Mr Ollila became Nokia chief executive on January 16 1992. Before that, he ran the group's mobile phone division, which was lossmaking when he took charge in early 1990. "My brief was to decide whether to sell it or keep it. After four months I proposed we keep it. We had good people, we had know-how and there was a market-growth opportunity," he says.
As chief executive in the mid-1990s, Mr Ollila focused the group on mobile telephony by selling or spinning off operations in consumer electronics, tyres and cables. The best moment of his career came in early 1994: "It was then that I realised we really had a chance to do well." Even that is something of an understatement - Nokia has since become Europe's largest company by market capitalisation.
Mr Ollila is an affable man, the opposite of a flamboyant US boss. Like many Nordic executives, he is happiest when inconspicuous. He is Finland's best-paid executive, last year earning FM86m ($12.6m) - the amount includes the sale of some share options and, Finland being an egalitarian country, FM53m of it was paid in tax. But there is nothing ostentatious about his lifestyle. "You wouldn't recognise his car in the traffic," says a colleague.
"I'm a home-loving person," he says. "I spend a lot of time with my family, even if our children [he has three] have flown the nest. I like to spend time in the country."
His two sons - now 24 and 17 - first beat him at tennis when they were 12 and 13. But he takes pride in still being able to give them a game. Did he mind getting beaten the first time? "When you have taught a youngster for six years on a regular weekly basis, you feel you have achieved something," he says.
Mr Ollila turned his back on a career in academia. "That was the right decision. I am more of a doer than a conceptualist," he says.
Mr Ollila has suffered setbacks but they have been rare. On one occasion in late 1995 the group issued a profits warning shortly after he had been quoted as making upbeat remarks about the US market that seemed hard to square with what emerged. He was then slow to make himself available for explanations. "Ollila lost his balance," said one commentator at the time.
However, work colleagues see a focused and "extremely thorough" man who places considerable demands on himself and is constantly setting himself new challenges. That view is echoed by investment analysts and fund managers. He is admired for his communications and presentation skills.
It is a rare man who can be both self-effacing and boundlessly determined not to sit back. Perhaps it is this combination that is reflected in what Mr Ollila himself describes as a vital element in Nokia's success: "a very stable and single-minded management team that doesn't accept falling into a comfortable feeling and saying, 'OK, now we did it, let's have a party.' "
In the high-technology world, few can boast a team of five senior executives who have all worked at the company for at least 15 years - but that is the record of Pekka Ala-Pietila, Nokia's president; Matti Alahuhta, head of Nokia Mobile Phones; Sari Baldauf, head of Nokia Networks; Olli-Pekka Kallasvuo, the finance director; and Mr Ollila himself.
This stability is spiced with unpredictability. Mr Ollila is said to be a hard taskmaster. The main risk, Mr Ollila says, is complacency. He talks of a "daily, continuous fight against bureaucracy and against becoming an incumbent, stable institution. People easily slip into their comfort zones and don't ask chilling enough questions of themselves or question the environment they are in. It [works] much better if you have to move to a new environment, even within your own industry."
One solution is to move people around. The group's senior executives were reshuffled several years ago - not because things were going badly but to keep them on their toes at a time when Nokia had just taken over from Motorola to become the world's number one mobile phone maker. The custom continues. Nokia's top networks sales executive in Europe recently became sales director of the mobile phone division in the US.
Ultimately, restructuring may also be needed. Mr Ollila has warned that there are dangers for companies that reach $20bn in annual sales and 100,000 employees. Nokia has already hit the first of these and, at present rates of growth, the company, which employs 60,000 today, will reach 100,000 in four years' time.
"We don't want to become an organisation of 100,000 people. If we can avoid that by smart outsourcing and restructuring and the right kind of focusing, we have better chances of being successful," he says.
And how does he keep himself out of the comfort zone? He once said he was energised when times were difficult and he faces plenty of people who question whether Nokia can maintain its current market share - about 30 per cent for handsets - and margins of around 20 per cent without sacrificing one or the other. Others warn that the revolution of the mobile internet may be less earth-shattering than the telecommunications industry would like to think.
But he seems just as energised by success. Indeed he recently had the satisfaction of announcing strong third-quarter results just as Ericsson and Motorola, the company's main rivals, faltered.
Mr Ollila celebrated his 50th birthday in August. He has spent nearly nine years doing one of the most demanding jobs in European business. But he shows no sign of giving up. Asked how long he intends to continue at Nokia, he replies: "A few more years - if the shareholders let me."
Unless something goes badly wrong, they probably will. One analyst says the company's share price would fall 10 per cent if Mr Ollila said he planned to resign tomorrow. Besides, Mr Ollila has unfinished business. He does not want Nokia to be remembered as just the company that led the way in the mobile phone voice market. "I want Nokia to be the company that brought the internet and mobility together," he says.
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