Note: This post is a direct copy-paste from an article of Helsingin Sanomat, October 2010. Link to original source and reason for this copy-paste are at the end of this post.
Nokia has lost its way. What on earth happened to the mobile phone pathfinder?
By Mikko-Pekka Heikkinen
The scent of a freshly-baked apple pie wafts through the apartment kitchen. A clock ticks on the wall, and a decorative glass angel hangs in front of the window.
Outside through the window is the vista of a small Finnish city.
The woman who pours the coffee has asked that her name and location not be published in this article.
The subject around the coffee table is the handset manufacturer Nokia, the woman’s former employer. She worked for Nokia for more than 25 years, but is now retired.
Nokia is not doing too well. The company’s stock has taken a huge hit, competitors are making finer phones that are finding their way into more pockets, and Nokia’s Finnish CEO was given his marching orders last month.
What on earth has happened to the company?
It is a sensitive subject, and hence the plea for anonymity.
The woman cuts the apple pie. During her working career she worked at a Nokia production plant where mobile phone handsets were assembled.
In a vast hall, processor, memory, microphone, battery, keyboard, and all the bits and pieces were packed by hand into mobile phones.
Finally, the shell of the newly-minted phone was snapped shut, and the employee moved on to the next one.
The woman reports that a change began to take place within Nokia five years ago, and it was visible all the way to the factory floor.
The change began when Olli-Pekka Kallasvuo became the Nokia President and CEO.
He was appointed in 2005 and took up residence in his office from June 2006.
During Kallasvuo’s tenure, the Nokia plant became a colder, harder place. Employees were not trusted as much as they had been, but rather their work began to be strictly monitored.
Line supervisors were controlling even the grip that was to be used when assemblers fitted the components into the handset shells.
In the view of the woman, a kind of “me-me-me spirit” has swept through Nokia.
This has paralysed creativity and displaced the strong sense of “us” solidarity that lifted the company in the 1990s onto the global mobile phone throne.
The feeling of working together towards a common end has been eroded for instance by the fact that the senior management have no longer been witnessed chatting with Nokia staff.
This was by no means uncommon during the term of Jorma Ollila (Nokia’s President and CEO from 1992-1999, Chairman and CEO from 1999-2006).
“Ollila came to the plant several times a year. He never announced when he would be dropping in. He didn’t want any red carpet treatment or special preparations put in place for his visits”, says the woman.
Ollila would stroll around on the factory floor, going from one assembly point to the next and stressing that he was “Just Jorma, please”.
“He might just stop at one employee’s side and ask how he or she was getting on, what’s the work like, and is there anything that is ticking you off”, the woman goes on, and offers up another slice of pie.
And if there were problems in the company or at the plant, Ollila knew how to gee people up.
He spoke rousingly about “us” and delivered his message to the whole complement at the plant, and not just to a small group as was Kallasvuo’s way.
Sometimes Ollila was accompanied by two of the most senior members of the Executive Board at that time – Pekka Ala-Pietilä and Matti Alahuhta.
“They had a quite phenomenal ability to get people forged together behind the same cause. They created confidence and trust.”
The woman pours more coffee. She notes that the apples in the pie have come from a relative’s own orchard.
Out of the window we can see an empty yard.
The clock on the wall continues its steady beat.
Since his departure, the management skills of the deposed Nokia CEO Olli-Pekka Kallasvuo have been the subject of direct, even blunt criticism.
But can Nokia’s recent decline be laid exclusively at Kallasvuo’s door?
No, it cannot.
In years gone by a number of far-reaching decisions were made within Nokia. They had their own impact on the recent past, and on the fact that Nokia’s achievements of late have remained so thin on the ground.
The decisions were taken at the beginning of the century, in other words years before Kallasvuo got the keys to the CEO’s office.
The power in Nokia at that time rested with Chairman and CEO Jorma Ollila.
Nokia is still the world’s largest manufacturer of mobile phone handsets, and by a country mile.
One in every three mobile phones sold worldwide has the Nokia logo on it. Nokia sells more than a million handsets a day.
From the 1990s to the early years of the new century, Nokia grew to quite mind-boggling dimensions and numbers.
In 2000, the company’s market capitalisation value was a dizzying EUR 300 billion.
In many markets, “Nokia” was at one time a direct synonym for the words “mobile phone” – it was the de facto term of choice, like “Hoover” for vacuum cleaner or “Xerox” for photocopies.
The firm was the economic and technological miracle and stealth weapon with which Finland overcame the rest of the world, and above all the Swedes.
Our beloved neighbour’s own mobile phone giant Ericsson was steamrollered by the onrushing Nokia juggernaut.
Finland rose phoenix-like from the ashes of the early 1990s recession with the help of Nokia’s stunning growth figures.
In those days, Nokia was the pioneering name in mobile phones.
As early as 1996, the company launched on the world a revolutionary device whose direct descendants are known today as smartphones.
The Nokia 9000 Communicator became a watchword, with any number of affectionate nicknames.
The clamshell device opened up to reveal an integrated QWERTY keyboard, and it came with a browser that even allowed rudimentary surfing of the Internet.
This was an earth-shaking new breakthrough at the time.
The Communicator was among the first attempts at putting the Net into our pocket, albeit a bulging pocket.
In the first decade of the 21st century, the marrying of the mobile phone handset and the Net has become the decisive battle for hearts and minds in the mobile branch.
It is no longer sufficient that a phone can be used to make calls or send SMS messages on the fly, but it must now enable the user to surf the Net, to Google all manner of human knowledge, and to regularly update his or her Facebook status.
And in this battle, once-mighty Nokia has taken a pounding.
The Finnish giant’s phones are bulging with attractive properties, to be sure, but making use of them seems to require the smarts of a fully-fledged computer nerd.
Even the very basic functions were hidden behind a complex and unwieldy menu structure.
If, for instance, the owner of a Nokia E51 (launched in 2007) wanted to change the ringtone on his phone, he would have to wade through five or six layers and screens of menu to perform this relatively rudimentary task.
In some cases, complete duds have been allowed to reach the retailers’ shelves.
Nokia has itself admitted that the N97 unleashed on the public last year was a work in progress.
According to one former Nokia manager, the devices in the N-series were made “like Ferraris with a Fiat engine under the hood”.
Early models of these complex smartphones were released with far too little by way of RAM or free disk space, and they performed accordingly.
The mobile phone should not simply work, but it should also evoke warm feelings in the user.
One executive who designed user interfaces for Nokia in the 1990s and into the new century stresses that a mobile is not a basic consumer durable like a washing machine or a fridge-freezer, but “a device towards which people have a very strong emotional attachment”.
“Devices like this should be made with the heart and in some fashion as hand-crafted items”, he says.
In the years of its pomp, Nokia and its engineer-powered machinery swelled to colossal proportions.
According to the former manager, there was an adverse consequence to this unbridled expansion:
“The hand-crafted sense of the products melted away.”
A challenger to Nokia’s hegemony in the mobile phone business came from the United States.
In the summer of 2007, the California-based computer manufacturer Apple launched onto the U.S. market its multimedia smartphone, the iPhone, in the wake of the phenomenally successful iPod portable media player.
It was a jaw-dropping device on its appearance.
On the face of the futuristic, shiny black slab there was just one physical menu button.
Pressing this brought up a large display screen featuring brightly-coloured icons. By touching these with a finger, as if by magic the screen lit up with a touch-sensitive virtual keyboard, a web browser, SMS messages, email, maps, a calendar, a digital camera, and a built-in media player.
And for the first time in the short and hectic history of mobile devices, using all these properties was simplicity itself.
In fact it was more than easy – it was fun.
There was no need to pore over manuals to be able to change the ringtone or to find the URL address line in the browser.
The graphics on the touch-screen responded to the movement of a finger sensitively and seductively, and text or picture scrolled back and forth as if adhering to the laws of gravity and friction.
The user’s first close encounter with the iPhone produced a spontaneous WOW effect.
One former Nokia employee says that within the company the initial reaction to Apple and its iPhone was dismissive: They don’t know how to make phones, now do they?
According to another, the iPhone was a serious wake-up call and lesson for the Nokia family.
The game got a whole lot tougher from the middle of the following year.
In July 2008, Apple opened up its online App Store, which sold – and gave away – a range of software applications for the iPhone that could be downloaded directly to the user’s individual device.
Some were just silly toys, like the swishing sound-effects for a Star Wars lightsabre that responded to the hand movements of the phone’s owner, or an image of a buzzing virtual electric shaver that filled the display screen.
Daft perhaps, but they made people laugh.
Since then, a vast array of mobile games, services, and utilities have been added to the App Store assortment – more than a quarter of a million third-party applications at the last count in September 2010.
Anyone and everyone can install them on the phone, and many of the add-on programmes are quite mind-bogglingly ingenious.
One augmented reality application, for instance, uses GPS and gyroscope technology to draw on the screen an accurate star-chart of the night sky when the device is directed towards the heavens. In essence, “you point at a corner of the sky and it shows you what’s up there”.
With things like this offered either for free or for a few euros apiece, it is hardly any wonder that something like 6.5 billion downloads from the App Store have been recorded to date.
Nokia began selling applications for its own phones as early as in 2003.
The current digital distribution platform for these things is the online Ovi service, which was announced at a gaming event in London in August 2007.
Ovi has nevertheless not been anything like as successful as the App Store. The Ovi Store assortment of mobile games, maps, applications, audio & video media, and other widgets is a fraction of the size of that in App Store, and some customers have complained that the service is not overly user-friendly in practice.
Ovi has been a disappointment to consumers, the developers of applications, and Nokia investors alike.
Apple usurped Nokia’s former position as the mobile device pathfinder.
The company dug up the entire playing-field and reseeded it.
Apple was the first to merge successfully mobile telephony, the Net, and a range of useful or entertaining applications into a single easy-to-use device that fits neatly into any hand or pocket.
In the words of one former Nokia Vice-President: “Apple has only gone and done those things that were envisioned by Nokia, but which Nokia has itself been unable to bring into the real world.”
Apple also resolved the thorny “naming of parts” problem that had pestered the marketing of the new generation of intelligent mobile devices, points out one manager who designed user interface software for Nokia.
From the 1990s, Nokia had been trying to come up with a suitable catch-all term for these devices. There were clumsy names, as clunky as the first “shoebox” phones of the 1980s, like “mobile multimedia computer”.
Apple had no truck with this, but announced that its device was simply “a phone”.
“The iPhone is certainly no phone. It is a pocket computer, but one you can make calls with”, says the ex-VP.
Now Apple Inc. has a market value many times that of Nokia.
Apple’s market capitalisation is currently of the order of EUR 190 billion, while Nokia’s has shrunk to approximately EUR 30 billion, a far cry from the heyday of 2000.
According to the Nordea Bank, Apple today accounts for as much as 60% of the annual profit made by the entire mobile device branch.
In the space of three years it has snatched up 14% of the global smartphone market.
In the same period, Nokia’s market share in this sector has declined from 50% to 41%.
Why is it that Nokia, once the undisputed king of the hill, has not come up with a device that matches the allure of the iPhone?
One answer to this conundrum is provided by a man who worked for more than ten years at the top end of Nokia’s product development arm.
A waiter brings over a latte and a creme brulé. Across the table in the cafeteria at Helsinki’s high-end Hotel Kämp sits a man who looks like he must be an engineer.
He, too, prefers not to have his name in print.
Around us, the conversation flows more in English than in Finnish. Most of the customers are tourists.
The former product development executive spoons up a piece of the dessert and begins:
“In the 1990s Nokia’s product development was still very much concentrated on one product – or at the most two products – at any given time. Every product had a clearly-defined team working on it, where the people focused on that one item and no others.”
Hit mobile phones emerged and went into production. Devices that many people remember even today, such as the 2110 or the 6110, with its infra-red port and menu icons.
Then along came 2000, and thereafter a decision was taken to increase the number of available Nokia handsets.
“Two new models a year was no longer enough, but there was a perceived need to bring out as many as 40 or 50 models a year.”
“An utterly terrifying number.”
The old teamwork way of doing things no longer worked in this climate, because it would not have been effective.
A decision was made to establish so-called component workshops that would build functions for phones across the old model demarcation-lines.
Phones began to be constructed by ordering up selected functions – for example an onboard camera application – from the component workshops.
“This really was an effective way of working. But at the same time it meant the loss of a product-centred approach, and we forgot what the firm was actually selling – mobile phones for people”, says the former manager.
“The products became characterless, standard fare devices; phones cobbled together out of basic components and not really differing one from another in any meaningful way. And the wild ideas and visions were killed off effectively by the choking grip of factory thinking.”
Apple’s iPhone is an ingenious package of properties and technologies that Nokia had at its fingertips, or that it could have acquired just like Apple managed to do.
But this did not happen.
There has not even been a decent copy of the iPhone from Nokia, in spite of the fact that people have been expecting the Finns to serve one up for more than three years.
What’s been keeping them?
The former manager offers a graphic example of Nokia’s product development “scrum” process from the early years of the decade.
A designer responsible for the mobile phone’s integrated digital camera works out how the picture quality could be improved by a change in algorithm that would demand a couple of weeks’ work to sort out. He reports on this to his immediate superior, who then feeds the matter into the requirements analysis matrix.
A week later the matter is noticed at an RA follow-up session and further information is sought: if this were to be done, what other things would be omitted or would come in behind schedule as a result? The team replies that their error-fixing capacity would temporarily be reduced.
Another week goes by.
The next RA follow-up session looks at the answer and decides to send the request on for prioritisation.
After a week, the requirements are examined in a prioritisation meeting, and a decision is made to go back to the team to check out the errors status, in order to be able to understand what the scale of risk involved in reducing error-fixing might be.
The team comes up with a risk analysis in a day or two.
Another week goes by.
A prioritisation meeting resolves to approve the initial request, if a suitable “lead product” can be found for it – in other words, a phone model into which the improved algorithm can be installed.
A month later, one product reports back that, yes, we could take the improvement on, if it does not add to the risk of a timebox overrun.
Back to the team.
Is there an increased risk of the timebox not being met? The team replies that no such risk exists if work is started straightaway.
Another week goes by, and the prioritisation meeting gives the second-highest priority to the camera request.
It determines that the algorithm change can be embarked on ,just as soon as any more important work has been completed.
The more important matters take two months.
By the point when the algorithm team should then be getting down to work, it turns out that the scheduling of the lead product has progressed too far and the timebox window has closed.
Another lead product must be found instead.
And so it goes on, until a competitor gets rave press reviews for the improved image quality of its integrated camera.
And someone expresses shock, and wonders why it is that Nokia has not come up with a similar improvement.
The former product development manager sips his coffee and recalls his feelings:
“It made you feel like shouting out: ‘For Christ’s sake, can’t you just bloody DO it and stop all this passing the buck!’. And there were many chains of events just like this one, and worse besides.”
In other words, Nokia’s product development process was bureaucratic, stiff, and painfully slow.
Another ex-Nokia executive confirms the thrust of the earlier remarks.
He charges that there was all too much office politics in play in the company:
“Individual profit centres have so much clout that they can change the direction of development. They have their own games to play out. They don’t think of the best interests of the consumer, but of their own unit. Its role, its resources, and what products it gets to make.”
In the Kämp Hotel café, the ex-R&D man talks about the battles that went on between the many and varied operating systems in Nokia phones. The operating system is the software that determines what is seen on the display screen and how the phone is used.
“Sometimes one got the sensation that people were more concerned about how what we were doing and the product we were working on related to rival groups within the company than about the relationship to our real competitors. The products using a certain software platform were not permitted to implement the newest or the cleverest things, because this might make the device in question a competitor to some other Nokia phone using a different platform.”
And now Nokia’s Symbian platform is being seriously threatened by the proprietary iOS developed by Apple, and most recently by the open source, Linux-derived Android platform backed by Google.
Google’s multi-carrier Android OS has made a big splash and is gaining ground in particular in the mid-range smartphone market, for instance inside the mobiles produced by the South Korean manufacturer Samsung.
At the very top end, Apple’s iPhone continues to rule the roost.
The creme brulé has been eaten. The waiter brings the bill, and outside the window facing onto Helsinki’s Esplanade the normal steady flow of people streams by.
More and more of them today are holding a phone from one of Nokia’s competitors.
How did Nokia end up in a situation where a killer mobile cannot be produced even by swearing? What did Jorma Ollila do?
But let’s not get into Ollila’s role just yet.
The next person to be interviewed for this article is a man who has a lot to say. He worked in the past decade in middle management positions within Nokia, for example in user interface design, conceptualising, and brand management tasks.
He does not mince his words, and in his view the ranks of Nokia’s middle and senior management are altogether too crowded.
The foggy grey mass of the organisation critical hinders the progress of the engineers’ clever inventions towards their intended destination in mobile phone handsets.
The man recounts a “thoroughly typical” example:
A novel application or feature has been dreamed up that should end up installed in a phone a year from now.
This is the beginning of a long day’s journey to nowhere.
The first thing that is missing is the conceptualisation of the feature in question, and then comes the design phase, and after that the bedding of the feature into the phone.
People have to sign off on actions at every stage in the process for it to go forward.
According to the ex-manager, everybody who knows anything about this particular feature approves of the idea, albeit with one or two modifications.
“But then you run up against some Vice-President who gets cold feet, because he doesn’t know the subject-matter. The innovation is going to tie up money and resources if it gets the go-ahead. He is very aware of this, and he sits on it. He might for our purposes be an engineer with a background in HVAC or systems engineering. He doesn’t know squat about user interface software design.”
“What he does know, mind you, is that developing this particular feature is going to require the input of fifty people for the next year ahead. He does not dare to commit people to the project, because they might be required elsewhere. For him, it is safer to freeze the innovation process or at least keep the handbrake on. Then in time the innovation will no longer be so novel after all, and it will not make any sense to carry it forward.”
According to the ex-manager’s own calculations, there are around 300 vice-presidents and SVPs within the Nokia organisation.
A hundred would probably be quite enough.
“If the company goes on with the current structure, one thing is certain, and that is that nothing will ever change.”
For example inside Google, widely regarded as one of the world’s most inventive enterprises, there is none of the expanding waistline found in the Nokia organisation.
Furthermore, Google actually makes a point of pricking its employees into coming up with all kinds of new ideas. The Google staffers can use a fifth of their working time on developing their own projects.
Small shoots like these have grown up into things like Gmail and Google News.
The strength of Nokia’s American competitors comes from managers who know what sort of products should be being made.
And these managers also push to see them getting into production.
“There are not the sort of strong figures within Nokia who can come out and say ‘Hell yeah, we’re going to do this and see it through, even if it takes us two or three years’. This is because the people in those management positions aren’t up to the task. And that’s why they are lacking in the necessary courage and backbone.”
“The members of the Nokia Board and the Group Executive Board are untrained people insofar as Nokia’s present business is concerned. Neither the Board nor the Executive Board has a single representative who could broadly be described as a visionary type. It would be something if there were even one, but by rights there ought to be eight of them.”
By “Nokia’s present business” , the ex-manager means that mobile phone manufacturers are no longer companies that turn out merely devices and hardware, but that they must also provide online services such as Ovi or Apple’s App Store, which are used by the owners of those devices.
The genesis in a company of services that are attractive to the customer and “sticky”, in the sense of pulling the users in and holding them – like Facebook, for instance – is something that requires creative leadership.
According to the ex-manager, this is something that Nokia has never been able to boast.
“Managing technology can be done successfully as teamwork, but creative management doesn’t work that way.”
The man is thus pointing the finger squarely at Nokia’s uppermost management echelon.
Clearly there have been problems there, or otherwise it is hard to see why President and CEO Olli-Pekka Kallasvuo would have been set aside recently in favour of Stephen Elop, headhunted to the post from Microsoft’s Business Division.
But if we are to believe the former Nokia staffers and executives interviewed for this piece, Nokia’s woes began years before Olli-Pekka Kallasvuo’s tenure at the helm, back at the beginning of this decade.
During Chairman and CEO Jorma Ollila’s time.
And in 2003, Ollila did something that put the Finnish mobile phone giant onto the wrong tracks.
On the table in the meeting room in downtown Helsinki are a few sticky buns, coffee cups, and a data projector.
Into the room steps a man wearing a tailored sports jacket.
He made a point of not wanting to meet in a café, so that nobody would see him talking to a reporter.
He pulls the door to behind him.
The man sits himself down at the table and gives a quick run-through of his background: a long career in Nokia, with many years in an executive role. He witnessed at first hand Nokia’s rise to become the world’s largest manufacturer of mobile handsets.
This all happened with a very simple corporate structure.
As recently as at the beginning of the century, Nokia had just two business units: Mobile Phones making handsets and Nokia Networks producing cellular network equipment and solutions.
The former Nokia executive pours coffee.
At that time, he says, Mobile Phones was in full gallop and it was Nokia, for all practical purposes. The unit generated 80% of the company’s annual net sales.
From 1998 it was headed by Matti Alahuhta as President. Alahuhta was a well-liked figure, even down on the assembly hall floor.
Then everything changed.
In September 2003, Nokia announced it was comprehensively rearranging the corporate furniture, and Mobile Phones was broken up into three business groups: Mobile Phones, Multimedia, and Enterprise Solutions.
Mobile Phones was given responsibility for basic phones “for large consumer segments”, Multimedia was charged with “bringing mobile multimedia to consumers in the form of images, games, music and a range of other attractive content”, and Enterprise Solutions was to provide “seamless mobile connectivity solutions” for business.
In the considered view of the ex-Nokia man, “the key reason” for Nokia’s present problems is there: Jorma Ollila’s matrix organisation, which came into effect from January 1, 2004.
The man pauses and raises the coffee cup to his lips.
“What emerged was a leadership vacuum. Right there and then the seed of gradual internal decay was planted. The various units began to compete tooth and nail with each other for the same resources and the same markets. And above them there were not the necessary strong decision-making mechanisms for control of the product assortment. I mean the sort of leadership that would have looked at the big picture and held up a hand and said: ‘Hey, just a second now, it doesn’t make any sort of sense to manufacture overlapping products like this'”, says the former Nokia manager.
He takes the view that the restructuring of 2004 led to a situation where the management of the product assortment fell apart and the development of technologies shifted to become very short-sighted – a sort of “instant gratification” model.
“People tried simply to respond to the challenges and needs of all the different product lines. There was not enough time and money for work at the long-haul end. For example for things like updating and upgrading the operating system software”, he goes on.
This lack of far-sighted research proved to be a significant stumbling block a few years down the line, when a competitor unleashed on the market a real humdinger of a touch-screen mobile phone.
“Precisely. Nobody had had the responsibility for thinking about and putting hands to work on the next user interface. Nokia woke up with its pants around its ankles when the iPhone arrived. In practice, nothing had been done about it at that point. It really was not anyone’s direct responsibility in the then organisation. The responsibility was spread about all over the place, in the whole house. All the resources at that time went into producing the existing product assortment.”
This is not to say Nokia had no touch-screen technology.
It did have. For example the Nokia 7710 multimedia smartphone, released in 2004 and “ahead of its time”, came with a wide, touch-screen colour LCD.
However, the model worked and sold poorly, and was discontinued not long afterwards.
The former Nokia manager reports that the development of the touch-screen technology that went into the prototype 7700 and the 7710 model had to be wound up some time in 2005, or two years before the advent of the iPhone.
The sums of money that were going into the product development were being drained away from maintaining an assortment comprising dozens of handsets that were all much of a muchness one with another.
“The development of the touch-screen should have been continued”, argues the man.
“All the most catastrophic errors are associated with decision-making on the product management side. We produced a quite enormous number of rather average products. It would have been smarter to make fewer – and better.”
The ex-manager charges that Nokia has the world’s most ineffective product development regime.
It is possible to examine this claim in the light of some recent numbers: between April and June of this year Nokia spent a heap of money – some EUR 737 million – on product development. This was more than twice as much as was spent by Apple.
On the other hand, Nokia’s Devices and Services unit generated just EUR 647 million in operating profit for Q2/2010, or approximately 2.7 billion euros less than Apple for the same period.
Nokia’s top-floor management did not notice quite how frenzied the competition between the business units had become.
“Jorma Ollila neither saw nor understood the enormous degree to which the organisation had become politicised from within.”
Just as it had been at the turn of the century, Nokia Mobile Phones was also the most important of the company’s business units at the time of the next re-organisation in 2004.
The Chairman and CEO of Nokia Jorma Ollila had chosen the firm’s then EVP and Chief Financial Officer Olli-Pekka Kallasvuo to head the division.
This was a move into the elevator to the big office.
Two years later, Kallasvuo was appointed as Ollila’s successor at the helm of the company.
In the meeting room in downtown Helsinki, the former Nokia manager pours more coffee as if to steel himself.
Olli-Pekka Kallasvuo is spared even fewer plaudits from his direction than were forthcoming for Ollila.
Kallasvuo is a lawyer by training, and he joined the company in 1980 as Corporate Counsel. In the late 1980s he was made AVP in the Legal Department, and shortly afterwards took on similar tasks on the finance side of the business.
One other former Nokia executive describes him as “an extremely good manager, but a poor leader”, who has difficulty getting the staff to follow his flag.
The ex-manager notes over his coffee that Kallasvuo, coming from the CFO’s position, was lacking in experience of the operative management of a large corporation.
“Kallasvuo didn’t understand the first thing about how the corporation should be organised or how it should work. A product-driven company, in which the product is no longer a piece of hand-held hardware but rather the experience of the user.”
In the years that followed, Kallasvuo made his own organisational reshuffles. They left the company even more hamstrung than the moves made by Ollila in late 2003.
“They took the organisation in an ever more confused and confusing direction and created a kind of internal impotence. Ultimately nobody knew who was making the decisions and about what.”
“This leads in practice to a situation where there are a great many heads that can shake and say ‘No’, but not many who can say ‘Yes, and this is how we are going to do it'”, says the former Nokia manager.
“The real responsibility and the place where the buck stops is altogether too high up the chain. The individual who can say ‘Yes’ is no less than a personage than the CEO.”
By contrast with the brickbats dealt out for the management structure, the former manager has nothing but praise for the people working at the coal-face, Nokia’s engineers.
“Nokia has a complement of totally outstanding engineers! It’s not down to their skills.”
“But it is the product management side of things that has been so weak and so diffused. And the CEO ought to have recognised this. There should have been a product director. and a strong one at that.”
“But there was none.”
So neither Jorma Ollila nor Olli-Pekka Kallasvuo was the sort of corporate water-bringer for the 2010s that Apple enjoyed in its own CEO, Steve Jobs.
The ex-Nokia manager gets up from the table and straightens his jacket. The working day is getting under way, and the time set aside for this interview is up.
The original causes of Nokia’s recent fall from grace are beginning to become clear. But the information gained needs to be put to some kind of bench-test.
We will have to drink some more coffee, but this time not in the company of former executives and managers.
Back in the kitchen of the three-roomed apartment in a small Finnish town, the clock continues to tick loudly and the glass angel still hangs in front of the window.
The table is spread this time with chocolate biscuits and doughnuts.
The woman with whom we talked some weeks ago lifts her cup periodically and nibbles on a biscuit.
She pores intensively over a text on sheets of A4.
The woman, now retired after working for more than 25 years at a Nokia production facility, has been given this article to read through shortly before it goes to print.
She reaches the last page and tidies the papers with a sigh.
“Well, there you go.”
She urges me to have another doughnut. They are warm, taken straight from the freezer and nuked in the microwave.
“Yes, this is just the sort of picture that I had – what these product development people have been saying here. Totally. I mean, where things started to go wrong.”
The woman repeats the claims made in the article. She agrees on many points, even though she has not formed her opinions at a desk in the mobile phone giant’s head office in Espoo, but on the assembly line.
Then the woman says something that is rather interesting.
Even CEO Jorma Ollila was less than enthusiastic about the heavy organisational structure, and recognised perfectly well that it was making Nokia stiff and sluggish in its movements.
In their time, Ollila’s views made it all the way down to the factory floor.
But was it not Jorma Ollila himself who created the organisation he led?
“Yes”, replies the woman.
Ollila’s unwavering line was to allow his subordinates freedom, to trust them without tight controls.
In this way the then leaders of the business units like Mobile Phones and Multimedia could recruit whom they wanted.
And in so doing the number of managers at all levels mushroomed to enormous proportions and the product development channels became clogged.
Yellow leaves are littering the grass in front of the apartment block.
Autumn is doing its business.
At the time of the earlier visit here, Olli-Pekka Kallasvuo was still the Nokia President and CEO. His successor moved into his office a couple of weeks ago.
So what thoughts spring to mind concerning the new man, Stephen Elop?
The woman’s cup clatters into the saucer, and there is a warmth in her voice as she says quietly:
“I see good in him. I believe that he will be able to achieve a lot of good things. I’ve just got that sort of feeling about it.”
A total of fifteen former Nokia employees were interviewed for this article. Olli-Pekka Kallasvuo and Jorma Ollila did not wish to comment on the claims that were put forward.
Helsingin Sanomat / First published in the Kuukausiliite monthly supplement for October 2010.
Copyright 2010, Helsingin Sanomat
Blog author’s note
The text above is – as said – an article form the monthly supplement of Helsingin Sanomat newspaper. The “Nokia History” stories, such as “Operation Elop” or “Mahdoton Menestys” or Tekniikka&Talous articles or INSEAD Alumni Magazine article all seem to repeat the same story. It’s a story about Nokia that could not adapt to disruption in mobile as Nokia was too bureaucratic, too sunken into internal politics to do anything in the speed required. A repeating story that in no point says that Symbian was winning, also contradicts the view that nobody saw Nokia to fall before February 11th of 2011.
The reason I have Helsingin Sanomat article copied to here is two-fold. First reason is that it is the very first such story that I know and it is written in year 2010 – four months before Nokia abandoned Symbian/MeeGo strategy. Second and more important reason is that the article used to be available in the internet  but unfortunately the link is now dead and this text can only be found from the Internet Archive . It’s always better to have multiple copies of the good stuff so I took a copy to here too.