Siilasmaa, Transforming Nokia

Risto Siilasmaa, the chairman of Nokia, has written a real-life business thriller, one that he lived through and, along with Nokia, survived. Transforming Nokia: The Power of Paranoid Optimism to Lead Through Colossal Change (McGraw-Hill, 2018) takes the reader from the height of Nokia’s success in the global smartphone market in 2008, when it had a more than 50 percent share, to the company’s near bankruptcy in 2012, to the sale of its iconic smartphone business to Microsoft, up to today, where it is a top player in wireless infrastructure.

Siilasmaa had founded and served as CEO of F-Secure for 18 years before, at the age of 42, he was tapped to join the Nokia board of directors in 2008, a year after Apple introduced the iPhone. The timing couldn’t have been worse. Although Nokia tried to respond to the onslaught of competition in the smartphone market, it was plagued by technological, leadership, and cultural issues. It brought on a new CEO, an American from Microsoft, in the fall of 2010, who launched Project Sea Eagle, “a sweeping internal review of Nokia’s capabilities and competitiveness.” As a result of this review, Nokia decided to partner with Microsoft on the Windows Phone. In response to this decision, a Google senior vice president tweeted, “Two turkeys do not make an eagle.” Unfortunately for Nokia, he was right.

It was under this grim set of circumstances that, in May of 2012, Siilasmaa became chairman of Nokia. In the second part of his book he describes how he transformed the company. He attributes this in large measure to being a paranoid optimist, one who combines “vigilance and a healthy dose of realistic fear with a positive, forward-looking outlook.” In practice, he writes, “paranoid optimism calls upon leaders to explore a full spectrum of scenarios: the best case, the worst case, and the options in between. By imagining the unthinkable, you won’t be surprised and can generate strategies that will help you avoid it. As a result, you can radiate an unwavering certainty of eventual victory because you have already imagined the worst that could happen and have constructed a response.”

And many unthinkables did happen along the way. The negotiations with Microsoft to sell Nokia’s “crown jewels” were fraught with unexpected hurdles. Siemens wanted to get rid of its share of Nokia Siemens Networks, which over the course of six years had posted a cumulative operating loss in the billions. Could Nokia buy Siemens out even though it didn’t have the funds? Was it wise to do so? What should the company do with its digital map business, HERE, and its patent portfolio? Should NSN merge with Alcatel-Lucent—and in three weeks, as the executive chairman of NSN suggested? (The unrealistic time frame was scrapped.) “Merging with Alcatel-Lucent would increase NSN’s market share in the global wireless infrastructure market from 18 percent to more than 30 percent, leapfrogging over Huawei and closing in on market leader Ericsson.”

Nokia today is indeed “a company reborn.” “Out of some 100,000 employees, fewer than 1 percent held a Nokia badge in 2012.” The route to its rebirth makes for fascinating reading.