THE LUNCH

Stephen Elop: Putting Nokia back in the race

HELSINKI — The Globe and Mail

Stephen Elop by Anthony Jenkins (Anthony Jenkins/The Globe and Mail/Anthony Jenkins/The Globe and Mail)

The café area in Nokia’s slick, airy headquarters in Espoo, hard by the Baltic Sea just beyond Helsinki, houses a display that traces the evolution of Nokia’s mobile phones. One of the first, from 1985, is portable in the same way a cement block is portable. With a power source the size of a car battery, it weighed 15 kilos and cost in the neighbourhood of $10,000.

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Shortly thereafter, the Nokia revolution started. The phones got ever smaller, affordable and innovative. By 2003, Nokia was rolling out (primitive) Internet tablets with touch screens and durable little handhelds with dirt-proof keypads and 30-day standby time.

By the middle part of the last decade Nokia was the undisputed global leader in mobility and Scandinavia’s proudest corporate son. The tech giant, once better known as a maker of tires, rubber boots and cables, was responsible for 4 per cent of Finnish gross domestic product, 25 per cent of its exports, 35 per cent of its R&D and fully one-third of the value of the Finnish stock market.

The party ended in mid-2007, when Apple’s iPhone landed with the force of a nuclear bomb. After a period of denial inspired by arrogance, Nokia went into crisis mode and a global search was launched to find the ultimate Mr. Fix-It. He came in the unlikely form of Stephen Elop, a tech geek bred in little Ancaster, Ont., now part of Hamilton. To say that few CEOs face a greater turnaround challenge is like saying Greece has a little debt problem in need of a cure.

Mr. Elop bounds into Salutorget, an elegant but buzzy Scandinavian bistro on historic Helsinki’s harbour with all the high-voltage charm of a bowling ball salesman trying to nail his sales target. The smile is big, the handshake firm, the voice strong and confident.

It’s Saturday, and there is no need for a tie. Nokia’s first non-Finnish boss wears jeans, a crumpled blue shirt and travelling blazer (after lunch, he’s off to London). The endless airplane and hotel meals seem to have caught up with him since the last time we met, in London 13 months ago, when he tied Nokia’s future to Microsoft, his previous employer. His belly is more pronounced – though, at 48, still looks like he could thump a man half his age.

For someone who is ultra-organized and efficient, Mr. Elop is surprisingly flustered at times. He has a terrible memory for dates and keeps asking his PR staffer for help in figuring out where he worked when. At one point, he has trouble remembering his age and it takes him a while to figure out the year of his marriage. He tells me he recently left his iPad on an airplane and never got it back. I wonder whether his next tablet will be a Nokia. The rumours say the company has one in development with Microsoft.

Mr. Elop avoids the reindeer and other traditional Finnish sub-arctic fare and opts for scallops to start, then filet of beef served with horseradish and hot mustard. Having eaten reindeer the night before, and craving something Italian after a week on the road (I live in Rome), I go for the risotto, though in deference to my latitude, I start with the blintz, served with roe, red onions and a heavy cream (delicious!). Mr. Elop opts for sparkling water, no wine.

His grandfather was a wireless operator in the Second World War and his father a Westinghouse engineer who designed electrical transformers for power plants, so he comes by his love for electronics and gadgetry honestly. “My younger brother will remember that he received a transistor radio for Christmas,” he says. “I took it apart and it never worked again.”

Mr. Elop is the middle of three boys. His mother was a chemist (his parents still live in Ancaster). He seems to have had a normal, suburban Ontario upbringing, but his desire to toil in the tech world was never in doubt. At McMaster University, in Hamilton, he did a five-year combined degree in engineering and management. After his first year, he wrote the user operating manual, called the Orange Book, for the campus’s new computer system.

When he graduated from McMaster, in 1986, the tech world was on fire. Mobile phones smaller than shoe boxes were still fantasy gadgets but Microsoft and Apple were coming on strong, companies were appointing information officers and secretaries were swapping IBM typewriters for PCs. Mr. Elop plunged into this world and joined a small software development and consulting firm in Toronto called Soma. “It has nothing to do with the drug,” he says. “My mother said, ‘Do you really have to move that far away to find a job?’” Soma was a remarkable success. Proof? The lads sold it to Lotus Development, the maker of Lotus 1-2-3 spreadsheet software, in the early 1990s. He then consulted for Lotus and a high-flying fast-food chain called Boston Chicken, which he later joined as chief information officer.

The “Chicken,” as it was known, gave Mr. Elop his first senior executive role at a publicly traded company. He hasn’t forgotten his junk-food lingo. “When you went into a Boston Chicken and ordered quarter-chicken, white, with mash and corn, when that was rung up, that would signal all the way along the supply chain the need for more potatoes to be put on a truck a thousand miles away,” he says.

The Canadian poultry boy lasted until 1998, the year Boston Chicken filed for bankruptcy amid allegations of sleazy executive behaviour. “A lot of us left not long [before the bankruptcy]” he says. “We were not happy with what was going on.”

Mr. Elop quickly landed another top job, this time at Macromedia, the San Francisco company that gave the world Flash, the multimedia technology used to add animation and graphics to Web pages. Macromedia was a wild ride for Mr. Elop. He joined near the peak of the Internet bubble and watched it deflate. “The lesson I learned is that the laws of gravity apply,” he says. “When gravity apparently is suspended, it will come back.”

By the time Adobe Systems bought Macromedia, in 2005, Mr. Elop was Macromedia’s CEO – his first top job. He joined Adobe, lasted a year, then landed at Juniper Networks, the California maker of networking equipment, as chief operating officer.

And then the big man from the big company – Microsoft – banged on his door and turned his life, his family’s life and ultimately Nokia’s, upside down.

Nancy and Stephen Elop have five children between ages 13 and 20 – an adopted Chinese girl, a son and triplets, all girls. Nancy is from Wyoming, Ont., just east of Sarnia. They met at McMaster and married when they were young. Nancy and the kids live in Redmond, Wash., Microsoft’s home.

Since Mr. Elop spends only one-third of each month in Helsinki, moving the whole family there made no sense. Typically the city is a once-a-week layover on his ceaseless world tours. “I have this pattern of going right around the globe,” he says.

Mr. Elop was first approached by a Microsoft talent scout just before Thanksgiving, in 2007. The scout told him “Steve Ballmer wants to see you.”

They talked technology, including mobile technology. Mr. Elop could tell that Mr. Ballmer was interested in him, and Mr. Elop was definitely interested in Microsoft, but there was no job offer. A couple of months later, there were more meetings with Mr. Ballmer, several other senior Microsoft executives and Microsoft chairman Bill Gates himself.

Mr. Elop begged not to be left in professional limbo and before he knew it, Mr. Ballmer’s plane had landed at Kitchener-Waterloo Airport. Mr. Elop picked him up and drove him to their suburban house in tiny Acton, Ont., near Guelph. “ I took him into the rec room in our basement and we spent the better part of the afternoon and evening talking. For my wife it was a good thing because she got to ask what schools are like in Redmond. Mr. Ballmer cares about family life,” he says. A few days later, he was appointed head of Microsoft’s business division, where he was responsible for the Microsoft Office products.

Two-and-a-half years later, Nokia came knocking and he was made CEO of the world’s biggest mobile phone company, complete with a $6-million (U.S.) signing bonus.

At the time, Nokia was a mess. It was losing market share and value at alarming rates. The iPhone and Google’s Android phones were quickly making Nokia’s clunky gadgets irrelevant. In the United States, the Nokia brand has been all but eradicated. As late as 2004, Nokia had controlled as much as 40 per cent of the American mobile phone sales.

Mr. Elop’s arrival did nothing to halt the rot, at least at first. The shares fell 47 per cent in 2011. They’re down again this year, taking the plunge since the 2007 peak to an astonishing 75 per cent. Apparently, investors are not convinced that Mr. Elop’s decision to ditch Nokia’s home-grown Symbian operating software in favour of Microsoft’s for all its new products will work.

Indeed, I ask Mr. Elop why he went only with Microsoft, which has been a perennial dud in the mobile space, instead of hedging his bets by glomming on to both the Microsoft and Android operating systems. “Focus,” he says. “If you have a multiple-hedging strategy while you’re going through a significant transformation, then what you’re saying is that everyone in the company gets to decide what’s important. The focus gets divided.”

As for Microsoft’s newest mobile software itself, Mr. Elop beams. He pulls out four of Nokia’s new Microsoft-powered Lumia phones, one of which, the Nokia 808 PureView, has a 41-megapixel camera, enough to give photos disturbingly clinical definition. The Lumia phones are sleek, fast, attractive and are winning awards. The high-end Lumia 900 won the best smartphone award at the Consumer Electronics Show in Las Vegas in January. The PureView won the best new device award at the Mobile World Congress in Barcelona in February. The Lumia 800, Nokia’s first Microsoft product, and another model called the Lumia 710, sold more than 1 million units in the last quarter of 2011. Mr. Elop declines to update the figure, but his smile suggests sales are strong, though undoubtedly nowhere near iPhone or Android levels.

Shortly after Mr. Elop joined Nokia, he used a brutally honest internal memo to employees – promptly leaked – to read them the riot act. He said Nokia is “standing on a burning platform” and that only a radical overhaul of culture and technology would save the one-time corporate champion.

Mr. Elop won’t say whether the worst is over for Nokia. “Very hard to predict,” he says.

But he’s optimistic, to the point he’s ready to douse the “burning platform” metaphor. He already has a new metaphor and it is Lasse Viren, Finland’s most famous runner. Mr. Viren fell in the 10,000-metre event in the 1972 Munich Olympics, picked himself and went on to win gold and set a world record. “That’s us,” Mr. Elop says. “We’ve stumbled, we’re back on our feet and we’re running again.”

_____________________

CURRICULUM VITAE

ROOTS

Born 1963 in Ancaster, Ont., now part of Hamilton.

Graduated in 1986 from McMaster University with a BA in engineering and management.

PERSONAL

Based in Helsinki, but circles the globe about three times a month, without benefit of a company jet.

Wife Nancy and their five children, aged 13 to 20, live in Redmond, Wash. The 13-year-olds are triplets, all girls.

PASSIONS

Mr. Elop is an avid recreation pilot.

Mobile phones galore. He travels with a dozen and uses each one.

Hero

Lasse Viren, the Finnish long-distance runner who fell in the 1972 Olympics and went on to win gold in the 10,000-metre event (Mr. Viren won four golds in the 1972 and 1976 games).

Follow on Twitter: @ereguly

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