CEO Of The Year

Even as dozens of other high-tech industry executives are obsessed with wiring the planet, Jorma Ollila, chairman and CEO of Finland's Nokia Corp., is equally intent on bringing people, words, data, and the Internet together anywhere and anytime without wires. Ollila, IW's 2000 CEO of the Year, calls it creating the Mobile Information Society. "What the Mobile Information Society really achieves for us is that it helps us to increase our quality of life by making the most of our limited supply of time. It helps boost our efficiency. It allows us to do more. To achieve more. It empowers us to make more of ourselves," he says. If that seems unabashedly ambitious for a former Citigroup Inc. banker, so be it. Indeed, promoting a culture of risk-taking has been one of the major themes of Ollila's eight years as chief executive of Nokia, the world's largest mobile phone maker that recorded 1999 revenues of US$19.92 billion (19.77 billion euros). "If you don't fail throughout your career at certain points, then you haven't stretched yourself properly," contends Ollila. At Nokia there is a palpable culture of tolerating mistakes and encouraging people to learn and develop. And Ollila, who holds master's degrees in political science, economics, and engineering, works every day to sustain that culture. For example, there's the attention he pays to personnel decisions. "Every single appointment . . . is a signal . . . that this is the kind of thing we are encouraging -- this is the kind of personality, behavior, and experience that we want to bring into this team," says Ollila. "It is the most powerful signal of all," he asserts. What's more, Ollila regularly rotates the responsibilities of Nokia's four senior executives. Since 1992, when Nokia's board elevated Ollila to CEO from the presidency of Nokia Mobile Phones, no one's job has stayed the same. For example, Olli-Pekka Kallasvuo, Nokia's CFO, spent 1997 and 1998 in the U.S. as corporate executive vice president for the Americas before returning to corporate headquarters in the western Helsinki suburb of Espoo to take responsibility for corporate finance, investor relations, acquisitions, and real estate. "We are a young team, and we've learned always to be flexible," Ollila emphasizes. That holds true for the 50-year-old Ollila himself, whose stint as CEO has had three phases. For his first four years as CEO, growing the telecom business was necessarily coupled with divesting the then-conglomerate of such mature, noncore businesses as cables and tires. "It was somewhat of a schizo-phrenic situation. You see the [growth] potential, [but] then you have to spend so much time restructuring the other businesses," he recalls. Ollila describes his role from the summer of 1996, when most of the divestitures were completed, until very recently, as being "a team leader for a team that is 100% focused on organic growth, evolution, and growing a customer base in a business which is your core and which you feel good and comfortable about." These days, his job as CEO is changing again. With market competition increasing and mobile communication technology advancing, Ollila says that he has to find ways of renewing Nokia. Software is his new growth paradigm. "We are already a software company, and we will be increasingly so in the future," Ollila states. The numbers confirm it. Better than half -- about 60% -- of Nokia's 20,000-person R&D staff are software engineers. Ten years ago, they constituted about 33% of R&D employees. "The evolution of the software content of what we do in R&D is a good description of real, deep, fundamental change in a business like ours," says Ollila. "If you think this is just a business of manufacturing and sending out boxes in which you have either base stations or mobile phones, you . . . are playing a losing game." For nearly four years, Ollila has been playing a financially winning game. In 1999 Nokia's operating profit soared 57% above its 1998 level to $3.94 billion. Net sales, at $19.93 billion, were 48% higher. And earnings per share (EPS) advanced 51% to $2.26. For the first nine months of 2000, Nokia's financials remain very impressive. Operating profit rose 56% to $3.45 billion (4.05 billion euros). Net sales posted a 57% increase to $17.97 billion. And diluted EPS gained 58% to 48 cents. But this year Nokia has picked up some financial static. For example, following Ollila's July 27 prediction that third-quarter 2000 EPS would come in below the 18.9 cents posted in the second quarter, Nokia's share price fell about 25%. Indeed, third-quarter diluted EPS was 16.2 cents. A month ago, in a cover story called "The Big Wireless Gamble," Britain's Economist magazine asserted that "the sheer smartness of Mr. Ollila and his close-knit team of fellow Finns" is "now being tested more profoundly" than at any time since the early 1990s. Among the challenges: intense Japanese competition. "The [stock] market is what it is. You live with that," says Ollila, his previously conversational tone turning suddenly sharp. "You just do the best you can on a daily basis, the right balance of short-term and long-term actions. . . . That's the only attitude [to have] to avoid losing sleep unnecessarily." As for market competition, Ollila concedes nothing. "I don't think there is any other company which is better placed than we are to tackle the next paradigm" of software-intensive applications and services, he asserts. "I don't think the Far Eastern companies have an edge. We do -- in the way we understand user needs." Since 1992 Nokia has had 15 significant market firsts, including the first digital phone for global system for mobile communications networks, the first mobile phone specially designed for Asian customers (a large full-graphics display and Asian language interfaces), the first mobile phones with user-changeable covers, and the first mobile phone with a unique short-message chat function. This past September alone Nokia began shipping a wireless-application-protocol(WAP)-enabled, advanced-design business phone, opened a third-generation systems integration center near Paris to support both consumer and corporate mobile Internet applications, and joined with telecom rivals Motorola Inc. and L.M. Ericsson Telephone Co. to develop a common standard that will allow people to retrieve local information and conduct e-commerce anywhere in the world. (Current mobile positioning systems, which make "location-based" services possible, are incompatible.) Characteristically, when Nokia announces a new model or service, the collective pronoun we is used. All over Nokia many people, including Ollila, talk of teams. Indeed, the company's headquarters building by the Gulf of Finland -- where interior designer Iiris Ulin's natural materials complement Finnish architect Pekka Helin's transparent glass-and-steel structure -- symbolizes people from different disciplines working together. Ollila "has that ability to create teams around himself, where they discuss and brainstorm, and sort of converge towards a certain view," notes Gran Lindahl, president and CEO of Zurich-based ABB Ltd. and IW's 1999 CEO of the Year. "But then," he says, identifying a critically important aspect of Ollila's management approach "he takes responsibility and says, 'O.K., fine. Now we do this.'" Ollila believes that people at Nokia are empowered, able to speak their minds to him and everyone else in the 60,166-employee company. "That's extremely positive for the innovation of individuals and [the] organization," he says. "But we are, at the same time, a very pragmatic organization, he stresses. "We don't analyze problems to death. We're pretty determined about timelines [and] about getting things done. Somebody has to take the responsibility and say, 'O.K., this is it. This is what we are going to do,'" he insists. "Otherwise you just have a lot of fun in discussing things -- and nobody takes the ball and carries it. It's all very well passing it around in a circle. But somebody, at the right point in time, has to grab it and run." In fact, one of Ollila's accomplishments at Nokia has been to make it possible for many people to grab opportunities and run with them. Thirty-one-year-old Johanna Tikka is an example. Based at Nokia's office in Mexico City, she spends about half her time assisting Sampsa Lahtinen, Nokia's general manager in Mexico, and the other half designing Web pages and handling corporate communications. She joined Nokia in 1994 and for three years worked at the company's Oulu R&D center in the north of Finland. She studied Spanish on her own and in 1997 moved to Mexico to work for Nokia Local Sales & Marketing. "This is an organization where, if you want to prove yourself, if you want to develop yourself, and grow yourself, we will give you the platform," Ollila says. "Here is this young lady who is in the middle of everything," he says, referring to Tikka. "This is what we want to do -- to create a platform that is attractive to young people, that is a little bit special in terms of a working environment. Getting results is always part of it. But [providing] the platform is fundamental." It's also essential to understanding Ollila as a person and a CEO. "He has [a] sense for diversity in cultures -- what it takes to one day address a colleague or company in Finland, then the next day youngsters in the San Francisco Bay area, and the next day businessmen in China or Japan," notes ABB's Lindahl. "He has [the sensitivities that] it takes to step into the cultures of his customers, and, of course, for all of the people he has employed all over the world," Lindahl says. Yet business is not the sum total of Ollila's life. Notes his friend Lindahl, Ollila has a wide range of interests and takes care to see that his family is part of his life, "which is not always so easy in that job." Some 150 miles north of Helsinki, Ollila and his family have a "summer cottage" where they, as Ollila says, "take time aside" together. About his well-rounded life, Ollila observes, "You can't be a good people manager unless you have a balanced life yourself."