x Abu Dhabi, UAEFriday 21 July 2017

Outsider Elop invited to Nokia's inner circle

Stephen Elop is the first non-Finn to take charge of Nokia, but for company insiders his is a welcome appointment.

Olli-Pekka Kallasvuo, Nokia's former chief executive, hands over the leadership to Stephen Elop.
Olli-Pekka Kallasvuo, Nokia's former chief executive, hands over the leadership to Stephen Elop.

At first glance Stephen Elop, 46, the Canadian former Microsoft apparatchik, appears a strange choice as the new chief executive of Nokia, the world's largest phone maker.

For one thing, he has never worked for a mobile phone manufacturer. After cutting his professional teeth in the US fast-food industry he occupied a string of executive positions at US software companies, culminating in a stint at Microsoft where he helped to broker a partnership deal between the Seattle software giant and Nokia. But what really stands out about the Finnish phone maker's new chief is that, unlike every Nokia head since the pre-telecommunications era back in 1871, he is not Finnish.

Mr Elop, however, is doing all he can to hide that fact and has relinquished his Microsoft smart casual blazer and open-neck button-down in favour of a sober suit, white shirt and tie. Like most other senior Nokia people, he is also a family man and is married with five children. With his close-cropped ginger hair, pale skin and sleek, well-fed appearance he looks every inch the sun-starved Scandinavian executive.

It is, however, when the North American begins to speak about Finland that his unfamiliarity with Nokia's homeland becomes most apparent. He admits his knowledge of Nokia's home capital of Helsinki comprises "just spending a weekend in downtown Helsinki, getting to know the people and so forth". Mr Elop is also a keen follower of the Finns' national sport of ice hockey, albeit from the Canadian side of the stands.

"In the weeks and months ahead, I have a great deal to learn about Nokia, but I also have a great deal to learn about Finland," he says. In most other global companies, appointing a chief executive from a country outside the company's homeland would pass without comment. But Nokia occupies a special place in Finnish culture after rescuing the country from an economic depression in the wake of the collapse of its main trading partner, the former Soviet Union.

Senior Nokia executives also have an ingrained habit of weaving a kind of Nordic folklore around the phone maker's global success. Finns, they say, understand better than anybody the crucial importance of any type of hand tool in a bitterly cold climate in which having the right one can mean the difference between life and death. When introducing Mr Elop to his new Nokia colleagues in Helsinki, Jorma Ollila, the chairman and former chief executive, stressed the need for "Finnishness" in a Nokia chief executive.

"He does have a very strong cultural sensitivity and a grasp of the importance of Nokia's somewhat special heritage where there is a lot of Finnishness about it," said Mr Ollila, reassuring his colleagues that their company's national heritage would be in safe hands. But many of Nokia shareholders do not share the company's view that Nokia's innate Finnishness is its greatest strength. Some are known to have been clamouring for a foreign, preferably US, chief executive to transform what many now see as Nokia's ailing and outdated hardware-dominated strategy.

Coming from a US software background, Mr Elop is taking the helm at a time when Nokia is at a crossroads. After more than 20 years spent establishing its global dominance as a mobile phone maker, Nokia is now discovering that its customers want internet-based services as much as they want sleek mobile phone designs. It is when Mr Elop begins to talk about the way Nokia must adapt to the "fundamental change" taking place within the communications industry that he begins to shed his recently adopted Finnish sheep's clothing to show the teeth of a ruthless and pragmatic software wolf with a long history of running with the pack.

"It is the case in the technology world when there are fundamental moments where critical change takes place," says Mr Elop. "When cellular telephones first became popular, it was another dramatic change in the way we all communicate. And, of course, the advent of the browser-based internet was something that affected all of us in the way we live our daily lives." He added that the arrival of new trends such as cloud computing and social networking have combined with previous technological innovations to create new challenges and opportunities for Nokia.

"If you put all these pieces together, you quickly recognise that these elements are combining to create a moment of fundamental disruption," says Mr Elop. He dismisses the competition from newcomers such as Apple as inevitable in an era of change and believes that Nokia has an unique opportunity to leverage its size and strengths to redirect its strategy and establish new software services for its customers.

He has already indicated to key staff that regions such as the Middle East and Africa are about to receive the full thrust of his new software-oriented strategy. He believes that, while success in developed markets such as the US is important, a major foundation for future growth is the company's strength in developing markets such as the Middle East. Nokia was already using the Middle East as a testing ground for many of its new software services 18 months ago but the new chief executive has made plain his desire to accelerate that strategy.

By supplying software to run local content and by gradually extending smartphone-style applications across all consumer groups, Mr Elop hopes Nokia will establish a long-term dominance in the Middle East. But the question being quietly asked by shareholders and staff is whether Mr Elop will have the personal drive needed to transform the world's biggest mobile phone maker into a software player. Mr Elop does, however, have one strength he shares with the Finns - a powerful work ethic. As a student, it is said he graduated near the top of his class while working a 40-hour week to pay his way through university.

He also devoted his week's holiday between leaving Microsoft and joining Nokia to attending and speaking at the Nokia developers' conference.