Against All Odds: Leading Nokia from Near Catastrophe to Global Success

Against All Odds: Leading Nokia from Near Catastrophe to Global Success

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Overview

Against All Odds: Leading Nokia from Near Catastrophe to Global Success by Jorma Ollila, Harri Saukkomaa


In this compelling memoir, Nokia's legendary CEO Jorma Ollila presents a riveting account of the inner workings of the company that created the global mobile revolution. CEO from 1992 to 2006, Ollila led Nokia from near catastrophe to become the world's leading mobile phone manufacturer. He built a company where visionary thinking and courageous decisions were combined with exceptional creativity and first-rate engineering, leading to phenomenal growth.

Follow Ollila's personal and professional journey, where you'll learn about the fine line between stratospheric success and disastrous failure. His stories are filled with lessons about the nature of leadership, the importance of shared values, and the need for strategic thinking.

Ollila offers a uniquely clear picture of life as a CEO, with many insights into how business is conducted at the highest levels. He is especially upfront about working with his executive and management teams as well as encounters with figures such as Bill Gates, Steve Jobs, and George Soros. He offers poignant as well as illuminating stories of hair-raising risks and huge successes, but also of poor judgment and bad decision-making.

Product Details

ISBN-13: 9781938548956
Publisher: Maven House Press
Publication date: 09/11/2018
Pages: 400
Product dimensions: 6.00(w) x 9.00(h) x (d)
Age Range: 18 Years

About the Author

Jorma Ollila was Nokia's CEO from 1992 to 2006 and Chairman from 1999 to 2012. He was Chairman of Royal Dutch Shell from 2006 to 2015 and Chairman of the European Round Table of Industrialists from 2005 to 2009. He is currently an Advisory Partner at investment bank Perella Weinberg Partners. He is an Honorary Fellow of the London School of Economics and holds honorary doctorates from the University of Helsinki, the Helsinki University of Technology, and the University of Vaasa.

Harri Saukkomaa, chairman and founder of the public relations firm Tekir, is a distinguished journalist, entrepreneur, executive and author of several nonfiction books.

Read an Excerpt

FROM CHAPTER 53: BILL GATES PICKS UP THE PHONE


In 2002 we realized that we definitely had a new competitor in the mobile business. It was based in Redmond in the United States and its name was Microsoft.


Microsoft had really emerged from the shadows in 2000. The company announced then that it intended to move into two new areas of business. The first was games consoles, so that it could dominate home entertainment and electronics. Otherwise Sony would continue to reign supreme in home electronics. Microsoft's second target was mobile phones, where it didn't want Nokia to dominate the software and hence the consumers' souls. Microsoft did not perhaps use those exact words, but that was how we interpreted their actions in Nokia. Microsoft had announced that it was coming on to our pitch, and we knew they played a hard game.


Microsoft had become an icon of the 1990s and indeed the 2000s and a monument to American enterprise. It had also grown into a colossus of the markets, which both went on the attack and defended itself from attack with varying degrees of success. The company concentrated on protecting its source codes and defending its rights in every part of the globe. Microsoft's culture did not have much in common with Nokia's. It was a pure software company, whose cash flow came from licensing payments. In the value chain Microsoft dominates one horizontal element, namely software. Nokia, on the other hand, has grown through its products: mobile phones, for which it has developed ever more sophisticated software as phones have become more complex. By 2000 our mobile phones had similar capabilities to small computers. Our Communicator in particular was interoperable with computers and with Microsoft software. A Communicator was really only useful to an executive if information could readily be transferred between it and a computer.


We had actively sought out areas of cooperation. Pekka Ala-Pietilä and his team had held discussions at Microsoft. These had come up with the idea of a wireless phone with an Internet connection, for office use. This project began in 1998, but it was quickly dropped as it became clear there wouldn't be much demand for the product. After that we agreed that Nokia's smartphones would also work in the Microsoft Outlook environment. This didn't call for particularly dramatic steps, as both sides had much to gain from the deal, and we quickly reached an agreement. It was an ordinary business decision.


In 1999 the founder and chairman of Microsoft, Bill Gates, introduced the Stinger phone. He promised it would be available by the end of 2001. Microsoft was trying to win over Nokia's competitors. It held discussions with Motorola and SonyEricsson, at least. It didn't succeed, but it did collaborate with Samsung to some degree, and they made arrangements for the production of the Stinger. The phone was never launched, however, but was buried in the graveyard where stillborn technology projects are laid to rest.


Microsoft had wanted to supply software for mobile phones. But we wanted to develop the software ourselves. The mobile phone manufacturers had set up a software company called Symbian for that purpose. When we realized what Microsoft was trying to do we focused our software development ever more on Symbian. Its first achievement was the camera phone 7650, launched in 2002. Other companies, such as SonyEricsson, Siemens, and Samsung also invested more money in Symbian.


When Microsoft noticed that it was difficult to fight against Symbian, it changed its strategy once more. This time it focused on operating systems. Nokia's countermove was to bring together the Open Mobile Architecture Forum, which attracted 200 practitioners from the mobile phone markets and elsewhere. This was such a high-profile move that Microsoft saw it had to give up its dream of single-handedly dominating the market for mobile phone software.


Competing with Microsoft is never easy. We had the resources you needed to do it, but once again we came up against cultural differences. The biggest problem was the software development community. Microsoft could mobilize a million software developers, where we could call on fifty or a hundred thousand at best. Symbian seriously lagged behind Microsoft in this.


I met Bill Gates for the first time in Sun Valley, Idaho, at one of the annual conferences that bring IT and media industry executives together. I don't have any particular mental image of Gates. He may well have seemed just as I had expected: he was more focused on technology than on leading people. I invited Gates to Finland, and he did indeed come to Nokia's new head office, which he immediately called PowerPoint Palace after one of his own success stories. We were certainly Microsoft's biggest customer in Finland, and PowerPoint perhaps loomed a little too large in what we did. Sometimes I banned its use when we were working on strategy, because it too readily became a substitute for independent thought.


We sat in our conference room for an hour and a half. Gates was on a post-Davos tour of Europe; he had just come from Brussels where a Belgian anarchist had thrust a cream pie into his face. He was still slightly shaken up, at least to the extent that he had difficulty in firing himself up that morning.


Shortly after, I received a letter thanking me for the meeting and looking forward to co-operation with Nokia.


In June 1999 I was with [my wife] Liisa on a brief visit to our summer place in Orivesi. We were driving through the Finnish countryside. The fields where black and white cows grazed contemplatively were broken up by little huddles of trees; the sun was shining; and Finland's summer was at its zenith. It was all very restful. The phone rang, and at the other end was Bill Gates, straight from Redmond.


"Nokia has been anti-Microsoft," he yelled into the phone. He continued without a break for a quarter of an hour. I had to stop the car at the side of the road, so as not to have a crash. Liisa was astonished. Usually I manage to get a word in, but this time all I could do was listen. Bill Gates was accusing Nokia of unfair practices in some aspect of standards, which of course I knew nothing about. At last the call ended, I started the car again and we continued on our way.


A month later I met Bill Gates again at another Sun Valley meeting. He apologized for the call. He explained he had got the wrong company: the miscreant was Ericsson, not Nokia.


I went to Sun Valley again in 2002. After Midsummer I had sent a message to Bill Gates telling him I hoped to meet him at the conference. At half past two in the afternoon of July 12 we met in a little meeting room at our hotel, called the Sage Room. Bill Gates was armed with one of his own weapons, a laptop computer. I had brought Nokia's new model, the 7650, along with me. This was a camera phone, for which Symbian had developed some wonderful software. You could take photos with this camera, but you couldn't really send them to anyone yet.


I put my brand new phone on the table. Gates had in front of him his laptop, which naturally had Microsoft's latest software. On the table there was also mineral water for us both. We looked at one another, through our respective pairs of metal-framed glasses. "The markets aren't looking too good right now," Gates began. I couldn't have agreed more. The world had yet to recover from the shock of 2001, and technology seemed to have lost its appeal. No one could say what the Next Big Idea would be, or if there was to be one. "Things will get worse before they get better. We have three bad years ahead of us," Gates predicted. The Chairman of Intel, Andy Grove, put it even more succinctly the following day: "The world is a shitty place."


The chairmen of the world's biggest technology companies were certainly not bubbling with optimism in the summer of 2002. Even so, I was satisfied with my conversation with Bill Gates. If we had started to discuss co-operation with Microsoft two years earlier, they would have eaten us for breakfast. We wanted to be in a position where we would be playing with a reasonably strong hand.


Our strategy of defending open source software and co-operating with many manufacturers had paid off. We had also managed to keep control of our own software development. Microsoft had perhaps begun to understand that mobile phones were not as simple as laptop computers.


In a mobile phone the software and the device itself were almost indistinguishable: you couldn't really tell where the software started and the hardware ended. The mobile phone had already started to become a personal product, in which the design, the features, the software and the user interface were packaged into the smallest possible product, which was also a brand in itself. Nokia was on top of all this, while for Microsoft it was unknown territory. Microsoft was a software company, which had developed products that the whole world depended on. Nokia did its best to create attractive products that would appeal to individual consumers in an extremely competitive market.


We agreed with Bill Gates that almost everything possible in our world was going badly. The phone operators were in a bad way. Nokia's competitors had become weaker and we had our own problems, though I wouldn't have used quite those words to Bill Gates. "It would be a pity if our actions or arguments splintered the market, so there was no longer just one single market for mobile phones," I said. Gates suggested we discuss what it was that Microsoft did that annoyed Nokia, and vice versa.


"What annoys me about Microsoft is that you believe you can use the same value chain for mobile phones as you use to create personal computers. But they're two very different things. Our model of vertical integration is designed to produce phones that really appeal to consumers," I said. I didn't say that the way Microsoft was acting was hostile to Nokia, though in reality it was.


"In many decisions on standards you have opted for something other than the Microsoft model. You have chosen Java technology and RealPlayer for your phones," Gates said in his turn. "That’s true," I replied in a conciliatory tone, "but now I am sitting at this table in order to look again at these issues. That is what compatibility is about." We spent twenty minutes or so on these neuralgic questions. Then we sketched out the direction of our future discussions on a notepad. We also agreed that Pekka Ala-Pietilä and Pertti Korhonen would soon get in touch to discuss strategy with their counterparts at Microsoft.


Two years earlier Microsoft's position had intended to capture the market for mobile phone software come what may and push Nokia into the sea. The only question had been which sea Bill Gates would choose for that purpose. Now his approach had changed, and all the arrogance had gone from the thinking of the world's biggest technology company.


There were two moments in our discussion when Gates got jittery. The first was of no significance. The second was when he shouted as he told me that three months earlier Nokia had supported a court indictment against Microsoft. We had had to decide whether to intervene to give Microsoft a chance to offer an expert opinion in a court case. I had concluded that Nokia should not get mixed up in courtroom disputes between Microsoft and the U.S. Federal Government. They were not our business. But perhaps our representatives had said something incautious in the corridors, which had found its way up to Bill Gates.


Finally I asked why Microsoft had ended its cooperation with SonyEricsson. This had started a couple of years earlier but come to a sudden end after a short time. "It wasn’t going anywhere. It's impossible to work with a company which is falling to pieces the whole time," Gates said in his straightforward way. Directness was the Gates trademark, by which I had learnt to know him. I knew it was better to be with him than against him. I also knew that if our efforts at cooperation didn't work, Microsoft would acquire fifty or so tanks from somewhere and try to crush Nokia beneath their tracks. Bill Gates was a typical exemplar of Andy Grove's famous dictum that "Only the paranoid survive." Microsoft's methods had been extremely brutal, but they had created entirely new ways of working and processing information with the aid of Microsoft software. I had respected Bill Gates's clear intelligence and willpower even more when I first met him in 1998, but four years later I knew Microsoft wasn't invincible.


"We realized that we would never make money in the wireless world," Gates said now. I drew a deep breath. I knew that Nokia had reached a critical point. We shook each other's hand after a long discussion. I picked up my mobile phone, Bill Gates his laptop, and the mineral water bottles remained on the table. Peace descended on the Sage room as I returned with Gates to the dinner table in Sun Valley.

Table of Contents

Foreword Jorma Ollila xi

Foreword Harri Saukkomaa xiii

Peface to the U.S. Edition xv

Prologue: One Day in January 1992 xvii

Part I Life Before Nokia

1 A Small Town in Finland 3

2 Where Does Self-Confidence Come From? 11

3 The Birds and the Beatles 15

4 The Day that Changed My Life 20

5 International School 24

6 Back to Finland 27

7 Engineering Student 31

8 Liisa Changes My Life 34

9 Student Leader 37

10 East and West 43

11 Home and Family 47

12 Escape from a Troubled Land 50

13 The Hardest Choice of My Life 55

14 International Banker 60

15 Military service 65

16 A License to Finance 69

17 I Move to Nokia 75

Part II A Chief Executive's Education

18 Fresh and Eager 81

19 The Last Days of Drowsiness 85

20 Black Monday 91

21 The Finance Director Gets Down to Work 94

22 Spend, Spend, Spend 102

23 Annus horribilis 107

24 The Leader Departs 110

25 Preparing to Lead 114

26 The Finance Director Hits the Shop Floor 119

27 Taking Production Seriously 125

28 The Miracle of the Mobile 129

29 The Nokia Brand is Born 135

30 A Telephone in an Envelope 142

31 An Offer and a Reply 146

Part III Masters of the Universe

32 Life as a Chief Executive 155

33 New Plans 161

34 Values Underlie Everything 165

35 A Black Hole 172

36 The Future and the Past 178

37 Markets in the West 182

38 Sums on Scrap Paper 186

39 Turning Off the Televisions 191

40 The Five - A Different Way to Lead 195

41 The Nokia Miracle? 200

42 An Unforgettable Year 203

43 Toward Baden-Baden 209

44 A Year of Hell 212

45 Who Is to Blame? 215

46 Turning Weakness into Strength 221

47 The World Becomes a Web 225

48 Discussions of Public Policy 230

49 What Do People Want? 235

50 How to Lead a Global Nokia? 239

51 Meeting the Media 246

52 The Biggest 252

53 Nokia in Finland, Finland in Nokia 255

54 Toward the New Millennium 258

Part IV Growth and an End to Growth

55 Profit Warning 263

56 Timing is Everything 267

57 Is Everyone Safe? 270

58 Nokia Needs Renewal 277

59 Bill Gates Picks Up the Phone 281

60 Back to Reality 287

61 Reorganization Once More 291

62 The Customers Strike Back 294

63 Clams are Predators 297

64 Three Crises 304

65 The Right Ideas, Some Wrong Assumptions, and Prisoners of Success 307

66 Could Nokia Have Been a Software Company? 312

Part V What's a Chief Executive For?

67 The January Decision 317

68 Twenty-One Years and a Few Months More 322

69 What Did I Learn at School? Fourteen Years as Nokia's Chief Executive 327

70 China is Different 330

71 Agonies of a Chief Executive 334

72 The Game Changes 336

73 Difficulties in Germany 339

74 A Tough Decision 342

75 A New Leader 345

Epilogue 347

Appendix 359

People Index 363

Subject Index 367

About the Authors 379

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