The upwardly mobile Finn

Financial Times: The upwardly mobile Finn

“Now established as one of the world’s most feted business executives, Mr Ollila is poised for an entirely different challenge as non-executive chairman of oil giant Royal Dutch Shell, a company in the midst of its own corporate transformation from sister Anglo-Dutch companies to a single entity.”: “…his reputation as a stickler for corporate governance standards should help Shell put behind it last year’s scandal involving over-stating its reserves.”

Saturday 6 August 2005

By Christopher Brown-Humes and Hugh Carnegy

Published: August 6 2005

It is one of those tantalising “what if” questions of recent corporate history.

Only three months before Jorma Ollila became chief executive of Nokia in January 1992, the Finnish banks that then controlled the company were in talks to sell the group to Ericsson, its great Swedish rival.

Ericsson walked away. The Swedes had their beady eye on the mobile telephony operation that Nokia had tucked away in its sprawling portfolio of businesses. But they were put off by Nokia’s heavily loss-making consumer electronics division.

Had a takeover occurred, the world might not have heard much more of Mr Ollila, and his spectacular transformation of Nokia into the world’s biggest maker of mobile phones would never have happened.

Now established as one of the world’s most feted business executives, Mr Ollila is poised for an entirely different challenge as non-executive chairman of oil giant Royal Dutch Shell, a company in the midst of its own corporate transformation from sister Anglo-Dutch companies to a single entity.

What can Shell investors and managers expect of this man from the north? “The obvious issue is building a new Shell after the merger that is global and unified and able to address what needs to be done in the energy industry,” says Mr Ollila, speaking yesterday to the FT after a brief summer holiday spent partly in France and partly at his retreat in the Finnish woods.

He is also in no mood to take things easy after deciding to step down as chief executive at Nokia. “I feel at the age of 54 I am extremely fit, physically and mentally. I feel I still have a lot to contribute.” Much has been made this week of the fact that he is neither Dutch nor British – widely regarded as a good thing as Shell aims to forge a united, streamlined organisation and culture out of its clumsy old ­structure.

Mr Ollila is, of course, a Finn. From a small town in the thickly forested Finnish hinterland, he shares many of the understated characteristics typical of his countrymen.

“Jorma combines a high level of intelligence with an exceptional level of organisation, but he is not the life and soul of the party. He is not a great speaker nor an American style extrovert,” says Björn Wahlroos, chief executive of Sampo, one of Finland’s biggest financial services groups, who has known Mr Ollila since the mid-1980s.

Mr Ollila himself likes to quote Lao Tse, an ancient Chinese philosopher, who said: “A leader is best when people barely know he exists. When his work is done, his aim fulfilled, they will all say: ‘We did this ourselves.’ ”

That is not to say Mr Ollila is a shrinking violet. He forged the new Nokia with steely determination and has a reputation for rigorous control, including a tendency to badger journalists he feels have strayed off message about the company.

He has been a relentless international networker, joining the board of Ford Motor company, playing a leading role on the European Roundtable of leading industrialists and belonging to the Bilderberg group, the conclave of top politicians and business leaders. Above all, Mr Ollila has a reputation for being a highly disciplined manager.

Martti Häikiö, author of Nokia: The Inside Story, says: “Mr Ollila is very systematic and very good at building long term structures. But he’s also good at organising quick fixes of problems.”

But Mr Ollila’s crown as king of the mobile world has slipped a bit in the past 18 months. For years, Nokia defied analysts’ predictions that it could not sustain its heady combination of a global market share that neared 40 per cent at its peak in 2002 and handset margins of above 20 per cent.

Then, in April 2004, the company was forced to issue two profit warnings in quick succession, after it misread trends in the handset market, particularly the popularity of clam-shell models. Nokia phones, once the ultimate in mobile cool, had lost some of their design edge. The group’s market share fell briefly below 30 per cent, although it has since climbed back to about 33 per cent. Moreover, margins have increasingly come under competitive pressure from a revitalised Motorola and Asian rivals.

Mr Ollila is having none of this. “We are very pleased with where we are. Our market share is beyond comparison in a global electronics industry. Our margins are at the top of the ­industry.”

What is undeniable is the way Nokia stormed to the top of the mobile world in the mid-1990s, under Mr Ollila. A former Citibank man, he had been at Nokia seven years when he took over as chief executive. It had been, at times, a traumatic period. Kari Kairamo, the company’s charismatic leader, committed suicide in 1988 when Mr Ollila was chief financial officer. The group, founded in 1865 as a forestry business, was struggling to manage a botched expansion into consumer electronics and computers that saw it combine television production with tyre-making and even power generation.

But quietly in the background, Nokia (like Ericsson) had built up pioneering expertise in mobile telephony. While most of the world tended to scoff at the clunky, brick-like early mobile models, the Nordic countries enthusiastically embraced the technology, establishing a common standard for mobile operating systems in the early 1980s.

Mr Ollila, who headed the mobile division in the two years before taking over as chief executive, was convinced the company’s future lay in what was set to be one of the fastest-growing new consumer technologies seen for decades.

His skill was not simply in re-focusing a sprawling conglomerate, says Björn Wahlroos. “He is unique in having realised that he was sitting on a product that, with the right investment and direction, could go really global – there were no limits. That took real guts.”

The question now for Shell is what relevance Mr Ollila’s track record will have to a company with a wholly different culture, in a wholly different industry.

Mr Ollila’s admirers say his experience of successfully managing Nokia through a period of rapid growth into a huge multi-cultural, multi-lingual global group means he is well equipped to oversee Shell’s corporate re-engineering. Moreover, his reputation as a stickler for corporate governance standards should help Shell put behind it last year’s scandal involving over-stating its reserves.

Mr Ollila sees his “renewal capability” and his creation of “a corporate culture where the next steps can be taken by the new management team” as his chief contribution at Nokia. That is what he will now need to apply at Shell.