A road sign welcomes visitors to the Finnish town of Nokia – the namesake of the well-known mobile company.
When Microsoft took over Nokia in 2013, a vandal scratched out the name “Nokia” on the sign and wrote the word Microsoft underneath it.
The sale of the beloved company to the American tech giant was a huge blow to that pride.
But Nokia’s fall was far more serious than a sports team losing a match; it had serious consequences for the country’s economy.
At its peak around 2007, Nokia employed 35000 people, a large number for a tiny country with a population of 5.5 million.
The company had an almost insatiable appetite for engineers, and any young Finn graduating with an engineering degree was almost guaranteed a job at Nokia.
Unfortunately, the remarkable and unprecedented relationship between company and country did not last.
With the release of the iPhone in 2007, Nokia was almost wiped out.
About 12 years later, its employees has dwindled to a mere 3500 – just 10% of the original number. With the collapse of Nokia, one thing became very clear: Finland’s economy would take a severe knock and the country would spiral into a disastrous recession.
Except that it did not. The tiny Nordic country rebounded from the collapse of its biggest company and not only survived, but thrived. And like the fall of Nokia, this remarkable accomplishment is the object of international studies.
More importantly, Finland’s post-Nokia success can provide valuable lessons for developing countries like South Africa.
In fact we have the potential to do better, because we have massive advantages over them.
For starters, we have more land – a lot more. Finland occupies a measly 338000km2 compared to South Africa’s 1.2 million. Additionally, we have a population more than 10 times theirs, a climate ideal for agriculture, and an abundance of natural resources.
Yet, they’ve managed to become a key player in the global tech space, while we seem to be falling behind. How did they accomplish this?
Firstly, the Finns did not become entitled by their success. Instead, they leveraged the successes during the early part of this century to prepare their economy for the transition from depending on one large company to depending on many smaller companies.
Maybe it was due to their turbulent past, but they were wise to prepare for the worst. As any economist will tell you, for a country’s economy to depend on one industry is extremely risky; but to depend on one company is a disaster waiting to happen.
Secondly, the Finns realised very early on that a key element of this transition was education, and placed a lot of emphasis on education. The end result was an education system that many experts believe is the best in the world.
Finally, Finland understood that, due to the limitations imposed by the country’s geography, the future of their economy was going to be in the tech space, and specifically in entrepreneurship. So they turned their focus to the start-up ecosystem, and in typical Finland-style, they went big.
Rather than declaring certain locations in the country to be start-up hubs, they declared their entire country to be a start-up hub. And the results were phenomenal.