Jorma Ollila presides over Nokia shareholders’ meeting for the last time

Departing CEO reviews company success story

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Outgoing Nokia President and CEO Jorma Ollila, who has been at the helm of the Finnish electronics company for 14 years, reviewed his company’s dazzling corporate history to shareholders on Thursday. In June, Ollila steps aside to make way for his successor Olli-Pekka Kallasvuo.
      During his nearly one-hour presentation at the Annual General Meeting, Ollila went over the factors that made Nokia the success that it is today.
      The figures were impressive. The number of mobile telephones in the world has grown in the past 14 years to 2.2 billion, and one in every three handsets are manufactured by Nokia. The company’s market value has surged from just under EUR 500 million to more than EUR 70 billion.
      Ollila calculated that the average yield on a markka that was invested in Nokia in 1992 has been nearly 44 percent a year.
     
Ollila saw the roots of his company’s success story to date back to the time before the mobile phone boom, when the company was led by his predecessor Kari Kairamo.
      "Already 20 - 25 years ago there was a dream that Nokia and the electronics cluster that is linked with it could become the third foundation of Finnish industry. This was considered overly ambitious, but it has nevertheless come about", Ollila said.
      There were many factors in the success. Nokia understood before other companies did that mobile telephones would eventually become a device for every man. This was followed by efforts to make them easy to use.
      "We also understood the significance of the brand much before our competitors did, and we built a genuinely global organisation."
      A key insight in Ollila’s opinion was the realisation that the winner in the mobile phone business is determined by the market that grows the fastest. The company has implemented this strategy recently on the growing Asian market, where Nokia concentrated its efforts before its competitors did.
      Ollila feels that the market leader also needs to be a leader in technology, for which reason the company has invested heavily in product development.
      "The fifth matter is the product. Nokia has historically been a company of products for 140 years. The enthusiasm of the people at Nokia comes from creating products that are the best in the world."
     
Ollila gives the greatest credit on Nokia’s corporate culture.
      "Culture, working methods, and values are a decisive part of how to succeed. Perhaps it is ultimately more than half of the whole. At difficult moments we have seen that Nokia will not give up. The will to win is part of the unique culture. Many have downplayed it, and might do so in the future. I do not recommend this", Ollila said.
      Speaking with Helsingin Sanomat Ollila said that he believes that he is leaving his successor a strong company. Last year Nokia’s turnover grew by 16 percent, sales of handsets increased by as much as 28 percent. On Thursday, the company raised the growth forecast of the whole mobile phone market to more than 15 percent from slightly over ten percent.
      "We are in a strong position. Growth of the market is good, the selection of products is growing considerably. This global working method - directed from Finland, with a strong Finnish management and hold, and international scope - has shown its strength", Ollila says.
      So does Jorma Ollila believe that Nokia will still be in Finland 50 years from now?
      "In the long term, the significance of location will decrease. The time when it was necessary to think whether or not Finland could be a centre for anything, is behind us. All the time we need to think forward with the production model: where is the management, where is the product development? It depends on decisions by Finland more than those of Nokia."
     
In his speech, Ollila also commented on a protest by workers at Nokia’ subcontractors (see separate story). His message was that the future of the companies is in their own hands.
      "Subcontractors compete on an international market. When a new component is designed, there are two enthusiastic Finnish suppliers at the door, and at least a dozen foreign companies. Competition on the market determines the price", Ollila said.
     
The Nokia Annual General Meeting stretched out more than three hours. There was debate, and even votes over matters such as payment for the members of the board, the age of board members, and the system of awards in the company.
      As she had done in previous years, investor Ritva Siipi raised the position of women on the Nokia board of directors into the debate.
      Marjorie Scardino, the only woman on the Nokia board, urged Siipi to keep raising the question, even though the members of the board are chosen primarily on the basis of their expertise.


Links:
  Mr. Jorma Ollila, Chairman and CEO, Nokia Corporation Nokia Annual General Meeting “Leading, Transforming, Renewing” March 30, 2006 Helsinki, Finland

Helsingin Sanomat