The relationship between Nokia and Finland was like no other in corporate history. Never before was there such a close relationship between a company and the country in which it was founded.
To the Finnish people, Nokia, one of the oldest companies in Finland, was more than just a business; it was a source of national pride and the country’s fortunes were closely tied with those of the company.
Nokia was the company that put Finland on the map, making the country an international player in the global economy. Not only that, but Nokia saved the country from a huge economic crisis.
In the late 1980s, with the collapse of the Soviet Union – one of Finland’s biggest customers – the country’s exports nearly dried up and by 1991 industrial output fell 9%. The country was in its biggest crisis since World War II. Nokia, being one of the Finland’s oldest and biggest companies at the time, was facing a crisis of its own. The country’s woes had hurt the company, and it was fighting for its life. The crisis reached its peak when, in 1988, the group head, Kari Kairamo, committed suicide.
Nokia tried to sell up to Ericsson, but the deal fell through and the crisis continued.
Up until that point, Nokia had focused on a number of different industries, like paper, rubber, chemicals and, since the 1970s, electronics and telecommunications.
In the early 1990s, in a state of sheer desperation, it decided to gamble it all on a brand new, emerging technology: cellular phones.
This was a huge risk: cellular technology was still in its infancy and the worldwide adoption was a tiny fraction of a percent.
Leveraging its experience in telecommunications space, the company developed a network based on the GSM standard, and developed the first prototype mobile GSM phone, which the prime minister, Harri Holkeri, used to make the first commercial GSM call in Helsinki.
From there, Nokia went on to release the first commercial GSM cellular phone on the market: the Nokia 1011.
The phone was a brick: it weighed nearly 500g and the 195mm x 60mm x 45mm form factor made it almost as big as a brick. Nonetheless, the phone was a massive success and launched one of the most successful brands in cellphone history, one that was to become the leader of the mobile phone revolution, a global force and a household name. Nokia followed up the 1011 with the 2010 and the 2110, both of which were successful. The company continued to produce a series of big hits and, by 2000, Nokia was an unstoppable force in the global cellular market, commanding a whopping 40% of the market.
Finland rode on Nokia’s phenomenal success. According to the Wired blog, by that time Nokia accounted for 4% of Finnish GDP, 70% of Helsinki’s stock exchange market capital, 43% of corporate research and development, 21% of total exports and 14% of corporate tax revenues. At its peak the company employed 35000 people. For a small country with a population of just over 5.5million, this was a huge boost.
Unfortunately, this was not to last. In the early 2000s, Apple decided to take a similar bet that Nokia did nearly two decades prior: they decided to gamble it all on mobile phones.
Apple’s CEO, Steve Jobs, and his team of brilliant engineers led by Jonathan Ive and Imran Chaudhri, developed the iPhone, which was subsequently released in 2007. The iPhone was met with mockery from Nokia’s executives, but the device was to become Nokia’s undoing.
Over the next six years, Nokia fell, and hard. The once ruler of the global mobile kingdom, the company that made half of all the mobile phones sold in the world, was blown almost out of existence by Apple, Google and Samsung.
In 2011, in a last-ditch effort to save themselves, the company made yet another crucial mistake, one that would seal its fate: Nokia partnered with Microsoft to offer the mobile version of the Windows operating system on their phones. The Windows mobile operating system was quirky, troublesome and poorly supported by developers, which led to its failure, taking Nokia down with it.
By 2013, Nokia could not sustain its mobile phone division any longer. The company suffered the ultimate indignity by selling its mobile to Microsoft for $5billion. That was the moment that signified the end of Nokia’s reign.
For the Finnish people it was a day of national mourning, a day when they had to swallow their national pride. One might think that, with Nokia’s troubles, the Finnish economy might have suffered yet another crisis. The reality, however, was that the country was not as badly affected as one might expect, because they were ready for it thanks to advance planning.
In the way that Finland recovered from Nokia’s fall, is a valuable lesson that all countries, and South Africa in particular, can learn.
