Nokia Wirelessly Takes on the World

Helsinki-based Nokia has achieved a remarkable business turnaround. After losing US$213 million in 1991-92, the old-line Finnish conglomerate, founded in 1865 as a forest-industry operation, has totally transformed itself.

Now, Nokia is the No. 2 world player in the burgeoning mobile phone market, breathing down mighty Motorola’s neck. And global growth is simply exploding, with 36,000 Nokia employees in 45 nations. 1996 revenues were $8 billion; in 1991, they were $3.2 billion.
“Nokia is gaining market share everywhere,” says Merrill Lynch analyst Neil Barton.
In 1992, though, “many people thought of us as a paper and cable company,” says Olli Kallasvuo, Nokia Americas executive vice president. “That is where our focus zoomed in very clearly.

“Nokia’s key strategic element has been concentrating on those telecom areas that have the highest growth potential. So we have sold off a lot of businesses, profit-making businesses, that did not fit. We are certainly not finished with what we set out to do back in 1992.”

Growth Expands $35 Million

Nokia House Project

That Kallasvuo is now sitting in his office in suburban Dallas, heading up Nokia’s snowballing business in the Americas, bears witness to that “unfinished” business.
More evidence stands a few miles away at the $35 million Nokia House, Nokia Americas’ new headquarters in the 12,000-acre (4,800-ha.) Las Colinas development in Irving. Scheduled for late 1997 move-in, Nokia House has continually expanded to deal with Nokia’s snowballing growth.

“When we started planning Nokia House about 19 months ago, it was going to be a 165,000-sq.-ft. (14,850-sq.-m.) building,” says David Woodcock, Nokia Mobile Phones director of facilities, who’s spearheaded the real estate project. “In six months, the manpower plan drove it up to 200,000 sq. ft. (18,000 sq. m.). In another six months, the manpower plan drove it to 300,000 sq. ft. (27,000 sq. m.).

“With 1,000 people at move-in, it will be basically full, so I’m already looking at other new space options, including adjacent Las Colinas sites.”

Nokia has some 3,000 other Dallas-area employees, based at manufacturing and distribution operations in the Alliance Gateway business park in Forth Worth and in CentrePort, at Dallas/Fort Worth International’s south end. In addition to the Dallas Americas R&D hub, Nokia also has R&D based in San Diego and Boston.

Another Nokia manufacturing plant in Reynosa, Mexico, has been up and running in for 17 months, and the company has a newly opened 60,000-sq.-ft. (5,400-sq.-m.) National Service Center in Melbourne, Fla. Finally, a new joint-venture plant with Gradiente Electronica in Brazil is on the drawing board.

“When I started in 1994, as the first facilities professional Nokia hired in the U.S., we had one small U.S. factory,” Woodcock says.
All this from a Finnish firm that many analysts said was far too small to go global in the cut-throat telecom business.

Strategic Keys

Here are a few key elements from Nokia’s intensely focused strategy, drawn from the December/January Site Selection cover story.

? Global cross-platform manufacturing:
Plants are configured so any Nokia phone can be manufactured in any plant, with most production lines turnarounds within 24 hours.

? Inordinately fast decision-making:
Nokia’s structure and culture facilitate very quick resolutions and rapid implementation. Major new real estate projects, for example, are approved in mere weeks, not months; and after top management’s sign-off, corporate real estate is empowered to implement the plan free of time-consuming top-level micro-management.

? Minimized market risks:
Nokia’s rapid globalization has sharply reduced its Euro-dependency, with less than half of total revenues coming from the continent.

? Centralized R&D and currency risk:
Nokia’s centrally controlled R&D keeps manufacturing operations in sync. And its centers are small and cost-effective, but also on the cutting edge, due to non-capital-intensive R&D strategic partnerships. Centralizing management of currency exposures is vital, with less than 10 percent of sales in Nokia’s home-market currency.

? Single-minded focus:
Unlike many firms, Nokia has largely gone global alone, with only one acquisition, choosing to boost speed, flexibility and focus. Numerous divestitures have also firmly focused operations in fast-growing telecom sectors.

? Corporate culture preservation:
Nokia intensely screens prospective employees, and then inculcates new hires in its culture. Many new key employees are assigned corporate “mentors.” Nokia has even brought much of its once-mobile Americas sales force so “they can have a home and feel they are part of Nokia,” says Americas Director of Facilities David Woodcock.

? Empowerment:
Employees are not only given freedom to add value — they’re expected to, and are rewarded accordingly.

? No language barriers:
All employees are required to speak English. Even all e-mails are in English.

? Young human capital:
Employees’ average age is only in the mid-30s. While short on experience, they’ve grown up with the technology that’s Nokia’s hot-wired heart and soul.