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Jorma Ollila feels grief over sale of Nokia phones – admits to mistakes

Former CEO sees no single cause, event, or culprit behind company's problems, expects Nokia to rise again

Talous
 
Heidi Piiroinen HS
"One reason why I have survived and remained healthy is not lamenting the past”, Jorma Ollila says.
"One reason why I have survived and remained healthy is not lamenting the past”, Jorma Ollila says. Kuva: Heidi Piiroinen HS

On Tuesday morning, September 3rd at 6:00 AM Nokia announced that it had sold its Mobile Phones unit to Microsoft. The problems with the company's mobile telephones operations were common knowledge, but Finland nevertheless was startled by the news.

Nokia was once like a miracle that shone light on Finland in the midst of the depression of the 1990s. The company staked out a position for Finland in the global economy.

Nokia former CEO Jorma Ollila 's telephone rang late the previous evening. The company's Chairman of the Board Risto Siilasmaa told him about the news that was to be announced on Tuesday. "The emotional reaction was certainly the same as with many other Finns and Nokia people: sadness and shock", Ollila says.

Dealing with the grief has taken some time: "Nokia's mobile phones were a part of my life for nearly 30 years."

Ollila resigned from Nokia in late May 2006. He stayed on as Chairman of the Board, somewhat reluctantly he says, until May 2012.

The company's exceptional success is personified in Ollila, and consequently, Ollila was hounded by the media for comments after the Microsoft deal was announced. Ollila remained silent. Many television viewers remember the image of Ollila fleeing journalists in the corridors of Parliament.

"Based on my experience I can say that former CEOs should not give advice or make public comments. It would be quite improper, and would harm the company. The same goes for former chairmen of the board."

Ollila is now speaking publicly for the first time since the events. What exactly went wrong?

Ollila sighs. The coffee cup on his table shakes.

In his view there is no single cause, event, or culprit behind the problems of the company's mobile phone business. Many things link up with each other.

But if some ultimate cause needed to be named, Ollila says that it would be the problems that Nokia experienced in software know-how. The problem was recognised already in the 1990s. There were plans to fix them, but they were not implemented.

"The Mobile Phones Unit once had 1000 people in Silicon Valley, with the task of picking up on new trends of software development. But we were not successful in the way that Google and Apple were later. This is the key failure for Nokia."

The alarm bells started clanging at Nokia in the summer of 2007. Apple introduced its iPhone, and people spent nights queuing for it.

When Apple entered the market, its starting point was different from the one that Nokia had. It developed the software first, and the telephone later. Apple also had little to do with telecommunications operators.

For Nokia, the telecoms operators were important customers, and they had soundly criticised the company already in 2004. The operators said that Nokia did not sufficiently tailor its telephones to their needs. The operators cut back on purchases.

"Apple concentrated exclusively on expensive telephones. At Nokia we had thought of doing the same, but the operators wanted inexpensive models instead."

In 2007 it was recognised at Nokia that the Symbian operating system that it was using in its smartphones was growing obsolete. Planning had started a couple of years earlier on an operating system based on an open source code already. In 2010 it was given the name Meego.

An operating system is software that guides the most important functions of a telephone. It is visible to the consumer on the telephone's display, and is a central factor affecting what can be done with the telephone.

As an executive Ollila has always emphasised values, and the significance of the company's own operations model. According to Ollila, a key value was trust. Another was the right to fail as long as the same mistake is not made twice.

According to Ollila, there were assurances from different parts of the organisation in 2008 and 2009 that Symbian could be upgraded, and made competitive.

"On the Board we had to trust that the messages coming from the organisation were accurate. After all, they had been accurate before. But suddenly the old confidence in the organisation was no longer there. The products started coming in behind schedule."

The execution of the plans started to increasingly falter in 2007 as a result of the organisational changes; Ollila says that as Chairman of the board, he had considered intervening in the operational activities of the company.

"I am quite sure that the execution would have been even messier if the Chairman of the board would have bypassed the CEO and started to take issue with operational matters."

In December 2010 and in January 2011 Nokia's Board of Directors considered the problems surrounding the operating system question at length. The primary option was to continue with Symbian and Meego. "Great risks were involved when we assessed the company's competitiveness on the Board with these operating systems over a period of 2 – 3 years. After very lengthy and meticulous consideration we decided on Microsoft, which happened to have the broad support of our outside advisers, the company's management, and Research and Development."

The decision was a big mistake. Nokia's smartphones did not hold up under the competition. At the same time, Android and Apple increased their lead.

"This is true. We were not successful in using Microsoft's operating system to create competitive products, or an alternative to the two dominant companies in the field", Ollila says.

Nokia's smartphones generated big losses because of the low demand. In February 2013 the problems were so great that the Board began to negotiate with Microsoft about selling the mobile phone operations.

Today is the day of the publication of Jorma Ollila's autobiographical work Mahdoton menestys ("An Impossible Success"). He wrote the book together with Harri Saukkomaa. It is a story of a serious-minded boy from Ostrobothnia, who grew up to be Finland's most successful international corporate leader in history.

Ollila's career at Nokia began in 1985, when the company was experiencing serious difficulties. Nokia was also in crisis in 2012 when Ollila cut his ties with the company.

In that period, a unique success story in Finnish and European economic history was written. Under Ollila's guidance, Nokia had changed the world.

Although the sale of the mobile phones unit came as a shock to Ollila, he says that he understands the decision.

Nokia's Board made a dramatic and courageous decision, which is probably the right one. I hope and I believe that this big decision will also be the beginning of something new at Nokia. The company has always managed to make it through difficult situations before."

Ollila admits that he had been involved in making some wrong decisions. Nevertheless, he is not clinging to the past. He is therefore accepting of mistakes made by himself as he used to be of those made by his subordinates.

"In this line of work you cannot prevail if you start moping over mistakes of the past. One reason why I have survived and remained healthy is not lamenting the past."

He says that he understands the "emotion-based" reactions of Finns to the sale of Nokia's mobile phones. It is evidence of the company's great importance to the Finnish people. However, he feels that second-guessing about what Nokia should have done is pointless.

"It is impossible to say what would have happened to the company if different decisions had been made in early 2011 or at some other time. The past cannot be reconstructed into the present."

Translated by Kimmo Wilska