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To: energyplay who wrote (85397)	5/29/2007 3:00:23 AM
From: Elroy Jetson	Respond to of 206192

Let's examine this story. The Nokia conglomerate did begin in 1865 as a paper company and expanded into rubber and cable manufacturing in 1912. Likewise, their eventual success in cell phones evolved over a very long period of time - decades. Their "overnight success" in cell phones began with Nokia's expansion into the electronics industry in 1960 - and not by design. Nokia entered the electronics business through a series of acquisitions, resulting in extremely poor financial returns over the next twenty years. During the 1980s Nokia purchased eighteen electronics firms, including: Salora televisions, Swedish owned Luxor electronics, and the data systems group of Ericsson. These companies continued to produce electronic products popular in Scandinavia such as televisions and satellite dishes. But no one outside of Scandinavia has heard of Luxor satellite dishes or Salora televisions. Here's where it got interesting. To expand beyond Scandinavia, Nokia decided to become a contract manufacturer like many Korean firms. Beginning in 1978 they built phone switches for Alcatel and cell phones for Tandy/Radio Shack as well as a local cell phone network in Scandinavia. In 1986 they decided to try selling the cell phones they made under their own name. Although they may not have realized it at the time, this was a strategy that bet the company's survival. Notice Nokia had already been manufacturing and selling electronics for 26 years and manufacturing cell phones for 8 years before deciding to sell under their own name. To fund this world-wide sales effort, Nokia listed on the London exchange and made a massive share offering, and by 1991 they lost $100 million. To save the company, most of their other operations had to be shuttered or sold off. Finally they succeeded, but it could have turned out differently. Compare this long and painful story with the typical glossy corporate "diversification" move, such as Exxon buying Montgomery Ward then selling it later when they realize that no one in the oil business knows anything about retail. .

To: energyplay who wrote (85397)	5/29/2007 3:25:26 AM
From: Elroy Jetson	Respond to of 206192

How do corporations get caught up in these waves of stupidity, sending them into businesses they know nothing about or abandoning common sense for some simple minded "business solution"? Consultants, like McKinsey & Co or even worse Bain & Co, or worse still free-lance charlatans like Don Rumsfeld. To sell their services they need to invent a new concept which will tickle the egos of corporate boards. In return these corporations pay hundreds of dollars per hour for the work of people in their twenties, fresh out of school, under the direction of a managing consultant like Fagin in "Oliver Twist" training his young pick-pockets. Some companies, like Chevron, use these consultants for very specific projects like reorganizing an accounting system. Others like Exxon give them the keys to the kingdom and let the consultants direct their corporate strategy. This always ends in disaster, and indicates serious character and mental weakness among the company board members who abdicate their responsibilities to a pack of twenty-five year olds. As much as I like Bob Waterman of McKinsey, and enjoyed the parties he and his wife gave, I would never buy into any of the grand schemes he or other subsequent McKinsey partners could spin. But many Fortune 500 boards are more gullible. I knew Waterman well enough to know there was no secret, that for a fee they told you what you dearly wanted to hear. Waterman's book "In Pursuit of Excellence" was sensible enough, but common sense can't be taught to Fortune 500 boards who have none already. But these consultants make good money helping Fortune 500 boards, who think they're masters of the universe, waste billions in the process of learning the limits of hubris. .