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Nokia, as just about everybody knows by now, passed Motorola in 1998 to become the world’s leading maker of mobile phones. In 1999, Nokia’s market share continued to grow, to 27% (with second-place Motorola at 17%, according to Dataquest), and the company claimed close to 70% of the profit earned in mobilephone manufacturing. It possesses the world’s 11th most valuable brand (right after Marlboro), as judged byconsulting firmInterbrand. Its stock market value $250 billionas of mid-April, is the highest ofany Europeancompany.

What makes all this especially remarkable – indeed, it has already been remarked upon in the pages of virtually even business publication on earth, including this one – is that Nokia is a 135-year-old corporation headquartered in the previously unremarkable welfare state of Finland. The company has a home market of just five million people. Not all that long ago its major product lines included diapers and rubber boots.

Nokia wasn’t always technologically ahead; it just made things that better suited the moods of the market and the needs of the moment – phones that didn’t require two hands to use, with switchable covers and changeable ringing tones, with the most logical and adaptable user interface, with the right overall look. It was also generally able to get them out to retailers and cellular operators in the right quantity and at the right time. There are three possible explanations for this: (1) Nokia was very lucky; (2) Jorma Ollila (its Chief Executive Officer) is really smart; or (3) something about the way Nokia works makes it more pragmatic, more focused, and more flexible than other companies. There’s truth in all three explanations, but when you talk to Ollila about the company’s secret, it’s clear he’s partial to the third.

Of course, many outsiders have had no trouble putting their finger on Nokia’s secret: It’s Ollila. One can easily see why, aside from the performance of his company, the 49-year-old CEO has become a hero to investors and business journalists: He is as charming a CEO as you’re likely to come across.

But almost every assignment of any importance at Nokia is given to a team, and managing the company is no exception. At least that’s the way Ollila tells it. He’s sitting in the conference room adjacent to his office in Nokia’s glasswalled headquarters in Espoo, a sprawling suburb of Helsinki. Outside, the Gulf of Finland is still hidden under a layer of ice and snow; inside it’s pleasant, there’s coffee on the table (there’s always coffee on the table in Finland), and Ollila is warming to the topic of what makes Nokia work. “First of all it comes from how the management team works, how they communicate,” he says. “Is it a political setup, one with lots of hidden agendas? I think we have had through the years, particularly through the ’90s, a particularly strong culture of none of that nonsense.”

There’s a historical reason for this that is crucial to understanding how Nokia operates: These folks have been through a lot together.

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Nokia gets its name from a lumber mill built on the banks of the Nokia River in southern Finland in 1865. But the businesses it is now in all sprang from something called the Finnish Cable Works, which merged with the Finnish Rubber Works and the Nokia forest products company in 1967. The Cable Works made power transmission cables and phone lines, so it wasn’t all that big a leap when its president decided in 1960 to start an electronics division built around telecom.

Among the division’s products were radio telephones – useful tools in a rugged, sparsely populated land, but not exactly big sellers. At least not until the national telcos of the Nordic countries got together in the 1970s to develop a technology that made it possible to hook up far more phones than before to radio networks. The Nordic cellular system that began operation in 1981 was not the world’s first, but with its excellent coverage, comparatively low prices, and unique feature of international roaming, it rapidly become the world’s most heavily used. Its technical standards were later adopted in countries around the world – Spain, Russia, Thailand, even Cambodia. As a result, the Nordic region’s big telecom-equipment maker, Ericsson, got a head start in the business of supplying cellular network equipment that it has never relinquished. And Nokia, which made one of the first phones for the system, got in on the ground floor of the mobile-phone industry.

Kari Kairamo, who became CEO in 1977, came from the forest products side of the business, but he saw Nokia’s future in technology. Mobile phones alone didn’t seem nearly enough at the time, so he plowed the profits of his traditional businesses into buying a German TV maker, Ericsson’s computer business, and a U.S. paging company – to list just a few. And since executives who had spent their careers dealing with paper, rubber, and cable had no idea where to start with such businesses, Kairamo turned to the young engineers in his electronics division, and to a few young outside recruits with international experience, to run things.

Ollila, who had been Nokia’s account officer at Citibank, came onboard in 1985 as vice president of international operations. At age 35, after just a year at the company, he became CFO. But in the late 1980s, Ollila wasn’t the only ambitious young Finn in an important job at Nokia. Pekka Ala-Pietela, who joined the computer division as an applications consultant in 1982, was head of business development for mobile phones; Matti Alahuhta, who started as an R&D engineer at Nokia Electronics in 1975, was running part of Nokia’s telecom networks business; Sari Baldauf, an academic who joined in 1983 as part of what she thought would be a three-year research project on international business, was president of cellular systems; Olli-Pekka Kallasvuo, who signed on as a lawyer in 1980, was Ollila’s No. 2 in finance. While this may seem like far too many Finnish names for one paragraph, they’re important: Ala-Pietela is

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now Nokia’s president, Alahuhta is head of mobile phones, Baldauf runs the network equipment business, and Kallasvuo is CFO.

The five have worked together for so long that they can converse in a kind of shorthand. “We communicate daily,” Alahuhta says of Ollila. “But our communication is very compact.” The five are also seen by many at Nokia as an inseparable unit. Around Nokia, you don’t hear so much talk about Jorma this or Jorma that. It’s almost always Matti and Sari and Pekka and Olli-Pekka and Jorma, or some combination.

Before they could become this happy team, though, Nokia’s leaders had to go through some desperately hard times. In December 1988 the charismatic but moody Kairamo killed himself. That tragedy was just the beginning. The mobile-phone business, which in 1987 was No. 1 in a still-infant global market, ran into a wall and began losing money. Its workers and managers were used to shipping phones by the tens, not the tens of thousands, and couldn’t keep up with rivals like Motorola that actually knew something about mass production. The TV and computer businesses also struggled. Then, in 1991, the Soviet Union collapsed. Finland’s neighbor and chief trading partner suddenly wasn’t buying anymore, and the Finnish economy went into a tailspin. Nokia’s old-line businesses stopped churning out cash, and its big shareholders – a who’s who of corporate Finland at the time – had too many problems of their own to have much patience with the troubled conglomerate. The low point came in 1991, when Nokia’s biggest shareholder, a bank, tried to sell its stake to Ericsson. Ericsson didn’t want it.

The turnaround started with Ollila. In February 1990 he was put in charge of the mobile-phone business. “What I was told by my seniors was, ‘Look, you get six months to make a proposal on whether we sell it or what we do with this business,’ ” Ollila says. “After four months I said, ‘No, we’re not going to sell this one.’ ”

The phone business had become paralyzed by low morale and disorganization. And Ollila, it turns out, has a gift for straightening out such problems. He hit the factory floor in Salo, about an hour west of Helsinki, to listen to workers and tell them his plans. He streamlined an R&D department that had gotten terribly tangled trying to prepare for the new European digital cellular standard called GSM. It was Ollila’s defining career moment. “That was my university,” he says now.

After a boardroom shakeup in 1992, Ollila was named CEO. He immediately put members of his generation in charge of Nokia’s key businesses, while he and Kallasvuo, whom he named CFO, began to map a course for the company. “It was Olli-Pekka and me, sitting in the head office trying to figure out what to do,” Ollila says. “We had unhappy Finnish shareholders, unhappy international shareholders. The only thing you could do is to start building a base for very meaningful stock performance.”

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Ollila had courted foreign shareholders since his early days as CFO. One of the first to come aboard was George Soros, in 1986, although he stayed for only a couple of years. Nokia had listed its shares on the London Stock Exchange in 1987, in Frankfurt and Paris in 1988. But in 1992 the company needed big money fast, both to buy out antsy Finnish shareholders and to raise cash. The place to find such money was the U.S.

Streamlining the company and courting big investors obviously wasn't enough; Nokia also had to sell a lot more phones. Crucial to this was a decision made before Ollila became CEO, when he was still running the mobile-phone division. He and a couple of colleagues came to the prescient realization that mobile phones would become mainstream consumer products. And consumers like brands. Up to then Nokia’s phones had been sold under a bunch of different names: Mobira, Radio Shack, cellular operators' private labels. In 1991, OUila’s team decided on Nokia as the only brand and hired a young 3M marketing executive, Anssi Vanjoki, to figure out how to make Nokia a household name. Vanjoki did a lot of research into the history of companies that had developed successful brands: Nike, Daimler-Benz, Philip Morris. The crucial element, he discovered, was a “holistic” approach: thinking about the brand in every aspect of design, production, and distribution – and getting around to advertising only when other elements were in place. This wasn't rocket science; it's how many consumer products are conceived. But nobody had applied such thinking to mobile phones.

At the time, Nokia already had a digital phone in the works for the soon-to- be-launched Europe-wide GSM system – the first GSM call was made on one of these phones in 1991. But that year the company decided to create a phone for all three digital standards: GSM, the similar TDMA standard that appeared likely to prevail in the U.S., and Japan’s. The innards would have to be different in each region, but in keeping with the new holistic approach, the look and feel of the phone would be the same everywhere.

The first phones shipped at the end of 1993. The 2100 series, as it was called, was Nokia’s breakaway product. The goal was to sell 400,000; Nokia sold 20 million. The vast majority were GSM phones: Nokia has still barely made a dent in the Japanese market, although it has done better than any other non-Japanese manufacturer; in the U.S. digital was so slow to arrive that by the time it hit big, Nokia had moved on to newer models. But by learning from the Japanese market Nokia was able to come up with better phones. And besides, with Europe’s GSM becoming the global standard, dominant everywhere but in Japan and the Americas, that's where the money was. With the 2100 series’ success, Nokia’s operating profit went from negative in 1991 to $1 billion in 1995 (it was almost $4 billion in 1999). And the project – managed by a young executive, based away from Nokia’s headquarters, with input from different

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parts of the world and different parts of the company – provided a blueprint for how to get things done.

Mitchell, a production manager at Nokia’s phone factory in Fort Worth, is nowhere near the top of the organization chart of the 55,000-employee company. But like just about any Nokia middle manager one comes across, he’s perfectly comfortable explaining the company’s philosophy. “There are certain shared systems we keep as standard, but you’re allowed to be creative.”

While others on the management team are perfectly capable of debating the merits of WCDMA or GPRS or HSCSD or whatever other wireless acronym you can throw at them, they, too, usually stand back and let others deal with the specifics. “The objective is to always have decisions made by the people who have the best knowledge,” says Alahuhta.

The result is one of the least hierarchical big companies on earth, a place where it is often profoundly unclear who’s in charge. “People who join Nokia spend a few months trying to figure it out,” says Kevin Knowles, a human resources manager at Nokia’s U.S. headquarters in Irving, Texas.

But how does Nokia keep it from spinning out of control?

One answer is financial discipline. The rule, Ollila says, is that if the revenue of a business line isn’t growing at 25% a year, and there appears to be no prospect of such growth in the near future, Nokia wants out.

Another is that there are a few people in the organization whose job it is to enforce a certain amount of order. Some are obvious, like CFO Kallasvuo. Then there’s Korhonen, now senior vice president of operations, logistics, and sourcing, whose job is to keep the independence and creativity of Nokia’s phone-manufacturing facilities around the world from getting out of hand. And there’s chief designer Nuovo, who went on Nokia’s full-time payroll in 1995. Design ideas bubble up from all over; he's the gatekeeper. “I’m responsible for the continuity – the face and soul of the product,” he says. “It has to go through me.”

Finally, a crucial aspect of keeping Nokia on track is something that at first sounds deeply dubious: a drawn-out series of meetings every year called the Nokia Way. The process starts with gatherings all over the world to brainstorm about what Nokia’s priorities should be, then makes its way up to top managers, who distill the discussion into a strategic vision for the company, which then percolates back down through the ranks by means of a prodigious number of PowerPoint presentations.

Now Nokia is a big, strong company taking a leading role in the move toward linking wireless and the Internet. But it's not the only one. Motorola and Ericsson have become similarly focused on what Motorola calls the “Web w/o wires.” South Korea’s Samsung has emerged as a formidable competitor in the phone business, and an array of U.S. companies, from Palm to Phone.com to Microsoft, want a piece of the mobile Internet action and are likely to get it.

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None of this is necessarily bad news for Nokia – the more time and money other companies put into promoting and developing new products for what Nokia calls the mobile information society, the bigger the overall market will be that Nokia hopes to get a slice of.

Now more than half of Nokia’s employees are outside Finland. And while most of the company's operations around the world still have at least a Finn or two in leadership roles, key jobs are increasingly going to people who didn't grow up in a sauna.

PROJECT ASSIGNMENT (one for your choice)

1.Draw up a work programme for your company using the experience of some British companies you have read about.

2.Draw up a consolidated report on managers’ work of several British companies. Give disadvantages in work of Russian managers and submit your proposal explaining how these problems can be solved.

3.Carry out a contrastive analysis of Russian and foreign companies using the information you have read and your own knowledge and experience.

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VOCABULARY

А

access [´ækses] доступ

accessories [ək´sesəriz] принадлежности, арматура

accomplish [ə´kʌmpliʃ] совершать, выполнять; завершать; совершенствовать

accountant [ə´kauntənt] бухгалтер

accuracy [´ækjərəsi] точность; правильность; тщательность acquire [ə´kwaiə] приобретать; овладевать

acquisition [ˏækwi´ziʃn] приобретение

adjust [ə´ʤʌst] приспосабливать; улаживать; устанавливать; регулировать

advancement [əd´vɑ:nsmənt] продвижение; успех; прогресс advantages in smth [əd´vɑ:ntiʤiz in] преимущества в чём-л. advertisement [əd´və:tismənt] объявление; реклама advisory [əd´vaizəri] совещательный; консультативный agenda [ə´ʤendə] повестка дня

agreement [ə´gri:mənt] соглашение; договор

get a general agreement [´get ə ´ʤenrəl ə´gri:mənt] достигнуть об-

щего согласия

non-exclusive agreement [ˏnɔniks´klu:siv ə´gri:mənt] соглашение,

не исключающее участия других сторон aim [eim] цель; намерение

allocate [´æləkeit] давать, распределять

alter [´ɔ:ltə] изменять

amenable [ə´mi:nəbl] податливый; поддающийся amount [ə´maunt] количество; сумма; итог amount to [ə´maunt tə] составлять; равняться

annual [´ænjuəl] ежегодный

anticipate [æn´tisipeit] опережать; ожидать; предвидеть; предвосхищать appraise [ə´preiz] оценивать; расценивать

approach smb [ə´prəuʧ] выходить на кого-л. (с предложением) approximation [əˏprɔksi´meiʃn] приближенное значение

169

area [´eəriə] территория, участок

arrange a meeting [ə´reinʤ ə ´mi:tiŋ] устроить совещание

arrangement [ə´reinʤmənt] расположение; классификация;соглашение; приспособление

array [ə´rei] масса, множество;матрица, таблица

ascertain [ˏæsə´tein] устанавливать, выяснять; удостоверяться, убеждаться assess [ə´səs] оценивать

asset [´æset] ценное качество; ценный вклад; pl активы; имущество assume [ə´sju:m] предполагать; допускать; принимать

audience [´ɔ:diəns] публика; аудитория

authority [ɔ:´θɔrəti] власть; полномочие; влияние; основание avoid [ə´vɔid] избегать

awesome [´ɔ:səm] устрашающий; испуганный

В

be [bi: ] существовать; быть; происходить

be bound to do smth [bi: ´baund tə ´du] быть вынужденным (обязанным) делать что-л.

be dependent on smb [bi: di´pendənt ´ɔn] зависеть от кого-л.

be in charge of smth [bi: in ´ʧɑ:ʤ əv] быть ответственным за что-то

be likely to do smth [bi: ´laikli tə ´du] быть вероятным, возможным что-л. сделать

behaviour [bi´heivjə] поведение; манеры

benchmark [´benʧmɑ:k] отметка уровня; отметка высоты; исходный пункт

benefit [´benifit] выгода; польза; прибыль bond [bɔnd] облигация; долговое обязательство

boost [bu:st] поднимать, повышать; повышение в цене borrow [´bɔrəu] занимать, брать на время

brand [brænd] марка; сорт, качество breaker [´breikə] выключатель; прерыватель brisk [brisk] живой; оживленный

broadcast [´brɔ:dkɑ:st] радиовещание

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C

cancel [´kænsl] аннулировать, отменять career [kə´riə] карьера; успех

carry out [´kæri ´aut] выполнять; осуществлять cash [kæʃ] наличные деньги

cashier [kæ´ʃiə] кассир

cater [´keitə] поставлять провизию; обслуживать; угождать centre [´sentə] центр; бюро; помещать в центре

be centred on smth [bi: ´sentəd ´ɔn] быть сосредоточенным на чём-л.

chairman [´ʧeəmən] председатель

challenge [´ʧælinʤ] вызов; проблема

chief [ʧi:f] глава; руководитель; начальник; основной; важнейший

circulate [´sə:kjuleit] распространять

circumstances [´sə:kəmstənsiz] обстоятельства; условия; материальное положение

clerk [´klɑ:k] служащий

wages clerk [´weiʤiz´klɑ:k] бухгалтер по заработной плате filing clerk [´failiŋ´klɑ:k] регистратор

paying clerk [´peiiŋ´klɑ:k] бухгалтер по расчету зарплаты collaborate [kə´læbəreit] сотрудничать

commodity [kə´mɔdəti] предмет потребления; pl товар company [´kʌmpəni] компания

competitive [kəm´petətiv] конкурентоспособный; конкурентный competitor [kəm´petitə] конкурент

component [kəm´pəunənt] деталь, компонент

comprehensive [ˏkɔmpri´hensiv] исчерпывающий; обширный; всесторонний

concept [´kɔnsept] понятие, идея; концепция

concern [kən´sə:n] забота; беспокойство; дело; отношение; участие; интерес

be concerned about smth [bi: kən´sə:nd ə´baut ] быть встревожен-

ным, озабоченным

concession [kən´seʃn] уступка; концессия conclusion [kən´klu:ʒn] заключение, вывод

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draw the conclusion [´drɔ: ðə kən´klu:ʒn] приходить к заключению, делать вывод

consequence [´kɔnsikwəns] следствие, последствие consider [kən´sidə] рассматривать, учитывать

consideration [kənˏsidə´reiʃn] рассмотрение, принятие во внимание take into cosideration [´teik intə kənˏsidə´reiʃn] принимать во вни-

мание

constraint [kən´streint] принуждение; напряженность consumption [kən´sʌmpʃn] потребление; расход

contract [´kɔntrækt] договор, соглашение, контракт; подряд

draft a contract [´drɑ:ft ə´kɔntrækt] составить проект контракта convenient [kən´vi:niənt] удобный; подходящий; пригодный conventional [kən´venʃnəl] обычный; общепринятый; стандартный convince [kən´vins] убеждать

copywriter [´kɔpiˏraitə] составитель рекламных объявлений counterpart [´kauntəpɑ:t] двойник; противная сторона crew [kru:] бригада рабочих

crucial [´kru:ʃl] решающий; критический cumulative [´kju:mjulətiv] совокупный, накопленный

current [´kʌrənt] текущий; современный; находящийся в обращении customer [´kʌstəmə] клиент, покупатель

D

data [´deitə] данные

day-to-day [ˏdei tə´dei] повседневный deadline [´dedlain] крайний срок deal [di:l] сделка; общаться; иметь дело

make a deal with smb [´meik ə ´di:l wið] заключать с кем-л. сделку dealings [´di:liŋz] деловые отношения; торговые сделки

have dealings with smb [həv ´di:liŋz wið] иметь деловые контакты с кем-л.

debt [det] долг

deliver [di´livə] доставлять; поставлять details [´di:teilz] деталь; подробность

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