Jorma Ollila

Jorma Ollila
Ollila in 2013.
Born	Jorma Jaakko Ollila 1950-08-15August 15, 1950 (age 76) Seinäjoki, Finland
Nationality	Finnish
Education	Atlantic College University of Helsinki (M.Pol.Sc., 1976) London School of Economics (M.Sc., economics, 1978) Helsinki University of Technology (M.Sc., engineering physics, 1981)
Alma mater	University of Helsinki
Occupation	Business executive
Years active	1978-2018
Employer	Citibank (1978-1985) Nokia Corporation (1985-2012) Shell (2006-2015)
Company	Nokia Corporation
Title	President and chief executive officer, Nokia Corporation Chairman, Royal Dutch Shell plc
Term	1992-2006 (Nokia CEO) 1999-2012 (Nokia chairman) 2006-2015 (Shell chairman)
Predecessor	Simo Vuorilehto (Nokia CEO) Aad Jacobs (Shell chairman)
Successor	Olli-Pekka Kallasvuo (Nokia CEO) Charles O. Holliday (Shell chairman)
Known for	Transforming Nokia from an industrial conglomerate into the world's largest mobile phone maker First non-Dutch and non-British chairman of Shell
Spouse	Liisa Annikki Metsola
Children	3

Jorma Jaakko Ollila (born August 15, 1950) is a Finnish business executive who served as president and chief executive officer of Nokia Corporation from 1992 to 2006 and as chairman of its board from 1999 to 2012. From 2006 to 2015 he was chairman of Royal Dutch Shell plc, the first person from outside the oil industry, and from outside Britain and the Netherlands, to hold that position.

Ollila took charge of Nokia in January 1992, when the company was a loss-making Finnish conglomerate making rubber boots, tyres, cables, televisions and paper alongside a small telecommunications division. Finland was in the deepest recession of its post-war history, the collapse of Soviet trade having removed a large export market, and Nokia had lost more than $200 million over the preceding two years. Ollila divested almost everything except two businesses, mobile telephones and telecommunications network equipment, completing the withdrawal by 1996.

The strategy made Nokia the largest mobile phone manufacturer in the world, a position it first reached in 1998 and held until 2011. Net sales rose from about 3.1 billion euros in 1992 to more than 30 billion euros by 2000, an average annual growth rate above 30 percent, and the company's shares traded in New York rose roughly 2,000 percent between 1995 and 2000. At its height Nokia accounted for a substantial share of the market capitalisation of the Helsinki stock exchange and for a measurable fraction of Finnish gross domestic product, an unusual degree of concentration for a developed economy.

Ollila handed the chief executive's office to Olli-Pekka Kallasvuo in June 2006 and remained chairman for a further six years. Nokia's global handset share peaked at about 40 percent in late 2007, after his departure from the executive role, and then fell sharply following the introduction of the Apple iPhone and Google's Android operating system. His part in the company's later decline, and in particular whether the management structure he built left Nokia unable to respond to touchscreen smartphones, has been the subject of public disagreement with his successor as chairman, Risto Siilasmaa.

Early life and education

Family and childhood

Jorma Jaakko Ollila was born on August 15, 1950, in Seinäjoki, in the Ostrobothnia region of western Finland. He grew up in Kurikka, a small town in the same region, and attended the local elementary school, Kirkon koulu. The family was of modest means, and Finland in the 1950s was a largely agrarian country still paying war reparations to the Soviet Union.

He completed his secondary schooling at Vaasan Lyseon Lukio in Vaasa, on the Gulf of Bothnia.

Atlantic College

In 1967 Ollila won a scholarship to Atlantic College in Wales, the first of the United World Colleges, where he took his A-levels. The school had been founded in 1962 on the principle of bringing together students from countries divided by the Cold War, and the experience gave Ollila fluent English and an international outlook at a time when few Finns of his generation studied abroad. He has repeatedly described the scholarship as the single most important turning point of his life.

Universities

Ollila accumulated three master's degrees across three institutions and three disciplines. He took a Master of Political Science at the University of Helsinki in 1976, a Master of Science in economics at the London School of Economics in 1978, and a Master of Science in engineering physics at the Helsinki University of Technology in 1981, the last of these completed while he was already working full time in banking.

The combination was unusual and Ollila later argued that it explained his ability to hold together the commercial and the technical sides of Nokia, since he could follow an engineering argument without deferring to it.

Student politics and military service

Ollila was active in student politics and served as chairman of the National Union of University Students in Finland in 1973 and 1974. He was associated with the Centre Party, and the political connections he formed in this period remained useful throughout his career. He continued to take part in Finnish public debate long after leaving executive life.

As a conscript in the Finnish Defence Forces he received reserve officer training and was elected chairman of his course at the Reserve Officer School.

Career

Citibank, 1978-1985

Ollila spent eight years in corporate banking at Citibank. He was an account manager in the corporate bank in London from 1978 to 1980, an account executive in Helsinki from 1980 to 1982, and a member of the bank's Finnish management board from 1982 to 1985.

Citibank at that time was among the most demanding training grounds in international finance, and Ollila has said that it taught him to read a balance sheet with more scepticism than a Finnish industrial background would have supplied. One of his clients in Helsinki was Nokia.

Joining Nokia

Ollila joined Nokia in 1985 as vice president for international operations, responsible for investment deals abroad. The company he joined was run by Kari Kairamo, an expansive chief executive who had spent the early 1980s buying businesses across Europe in an attempt to build a Finnish multinational, and who had assembled an unwieldy portfolio spanning consumer electronics, cables, tyres, rubber footwear, paper, chemicals and computers alongside telecommunications.

In 1986 Ollila became senior vice president for finance, with responsibility for the financial side of Nokia's restructuring. He joined the deputy board in 1989.

Kairamo died by suicide in December 1988. His death, combined with the debt taken on during the acquisition spree and the collapse of the Soviet export market after 1991, left Nokia in serious difficulty. Losses exceeded $200 million across 1991 and 1992, the television business was consuming cash, and the board considered selling the mobile phone division to Ericsson, an approach that came to nothing.

Nokia Mobile Phones, 1990-1992

In 1990 Ollila was appointed president of Nokia Mobile Phones, then a relatively small unit. He had not sought the job and later recorded that he regarded it as a difficult assignment in an unproven market.

The division was nonetheless well placed. Nokia had been building radio telephones since the 1960s, Finland had pioneered the Nordic Mobile Telephone network, and the pan-European GSM digital standard was about to be adopted. Nokia had supplied equipment for the world's first GSM call, made by the Finnish prime minister Harri Holkeri on July 1, 1991, using a Nokia handset on a Nokia-built network.

Under Ollila the division's volumes and profitability rose sharply, and this record was the basis of his promotion.

Appointment as chief executive

Ollila was appointed president and chief executive officer of Nokia in January 1992, at the age of 41, succeeding Simo Vuorilehto. The appointment was not obvious: he was young, he came from finance rather than from the industrial core, and the mobile division he had run was not then the company's largest.

The four-word strategy

Shortly after taking office Ollila and his senior team set out Nokia's direction in four words: focused, global, telecom-oriented and value-added. The formulation was deliberately short so that it could be repeated without distortion through a company of tens of thousands of people, and it functioned as a test for every subsequent divestment decision.

The practical consequence was the dismantling of the conglomerate. Nokia sold or closed its television business, its personal computer business, its tyre and rubber footwear operations, its cable business, its chemicals interests and its paper operations. The withdrawal was substantially complete by 1996, leaving two businesses: Nokia Mobile Phones and Nokia Telecommunications, the network infrastructure arm.

The decision ran against contemporary opinion in Finland, where diversification was regarded as prudent and where Nokia's rubber boots were a national product. Ollila's judgement was that the mobile telephone would become a mass consumer product rather than a business tool, and that a company attempting to compete in that market while also making paper would lose.

Growth, 1993-1999

Nokia's results improved immediately. Profits reached roughly $2 billion in 1993. The company's market capitalisation multiplied about tenfold between 1991 and 1994.

Ollila's Nokia treated the handset as a consumer product rather than as a piece of telephone equipment. It introduced interchangeable coloured covers, ringtones, the Snake game, and a user interface that was consistent across the range, and it advertised to consumers rather than to network operators. The Nokia 2110 of 1994 established the design language and the startup tune; the 6110 of 1997 and the 3210 of 1999 sold in very large numbers.

The 1995 logistics crisis

The most serious setback of Ollila's tenure came in late 1995, when Nokia's supply chain failed to keep pace with demand. Component shortages, particularly of chips for digital handsets, combined with inadequate inventory and production systems to raise costs and depress margins. Nokia issued a profit warning in December 1995 and the share price fell about 20 percent in a single day.

Ollila's response set a pattern. Rather than treating the episode as a temporary problem, he assigned Pertti Korhonen, then 33, to rebuild Nokia's logistics from first principles. The resulting demand and supply network became one of the company's durable competitive advantages, and by the late 1990s Nokia's ability to forecast and deliver volume at low cost was a larger source of margin than any individual handset.

Ollila later characterised the crisis as more useful than a smooth year would have been, on the grounds that it exposed the weakness while the company was still small enough to fix it.

Market leadership

Nokia passed Motorola to become the world's largest manufacturer of mobile telephones in 1998. Net sales reached about $20 billion in 1999, with profits up 57 percent on the previous year.

The company became the dominant force in an industry that was itself becoming one of the largest in the world. Nokia's brand was consistently ranked among the most valuable globally, and it was for several years the most valuable company in Europe by market capitalisation.

Chairman and chief executive, 1999-2006

Ollila became chairman of the board in 1999 while remaining chief executive, a combination of roles that concentrated authority but that drew criticism from governance specialists.

The peak years of the business followed. Nokia sold about 140 million handsets in 2001 and held roughly 37 percent of the global market. Operating profits were about $3.45 billion in 2000 and $4.8 billion in 2001. The Nokia 1100, introduced in 2003 and aimed at first-time buyers in developing markets, went on to ship more than 250 million units and remains the best-selling mobile telephone ever made.

Ollila's strategic emphasis in this period was on emerging markets, particularly India, China and Africa, where Nokia built distribution and manufacturing and where its reputation for durable, low-cost handsets with long battery life was decisive. That business was highly profitable and it insulated Nokia from competition at the premium end for several years.

Reorganisations

Concerned that scale was costing Nokia the speed that had made it successful, Ollila reorganised the company twice. A 2004 restructuring split Nokia into four business groups, with horizontal functions cutting across them. The change was intended to restore entrepreneurial behaviour but a number of senior executives left during and after it, and subsequent academic analysis has treated the reorganisation as a point at which Nokia lost institutional knowledge and internal cohesion.

Ollila himself had identified the underlying problem, telling interviewers that rapid growth had brought a loss of agility. Whether the remedy worked is disputed.

Presidential speculation

In 1999 Ollila was approached about standing in the Finnish presidential election, at the suggestion of Sauli Niinistö, then finance minister and later president of Finland. Ollila, who was associated with the Centre Party rather than Niinistö's National Coalition Party, did not stand.

Departure from the executive role

Ollila announced in 2005 that he would step down as chief executive, and he handed over to Olli-Pekka Kallasvuo, the company's chief financial officer, on June 1, 2006. He remained chairman.

He announced on September 15, 2010, that he would leave the chairmanship, and did so on May 3, 2012. Risto Siilasmaa succeeded him. By that point Nokia's position had deteriorated severely: the iPhone had been introduced in 2007, Android in 2008, and Nokia's Symbian platform had proved unable to compete at the high end.

Ollila said in a February 2011 interview with the Finnish broadcaster Yle that he supported the partnership with Microsoft announced by Stephen Elop, and predicted a strong recovery. Nokia sold its handset business to Microsoft in 2014.

Royal Dutch Shell, 2006-2015

Shell announced in 2005 that Ollila would become its non-executive chairman, effective June 1, 2006, succeeding Aad Jacobs. The appointment was notable on two counts. He was the first chairman drawn from outside the oil and gas industry, and the first who was neither Dutch nor British, in a company whose governance had been shaped by the Anglo-Dutch division since 1907.

He was also the first chairman of the unified Royal Dutch Shell plc. The company had merged its two parent entities in 2005 following a reserves overstatement scandal in 2004, in which Shell was found to have overstated its proved hydrocarbon reserves by about 20 percent, leading to regulatory settlements in the United States and the United Kingdom and to the departure of the chairman Philip Watts. Ollila's appointment was intended in part to signal a break with the governance arrangements that had allowed the misstatement.

During his chairmanship Shell pursued large capital projects including the Pearl gas-to-liquids plant in Qatar and the Prelude floating liquefied natural gas vessel, and made a contested attempt to drill in the Alaskan Arctic that attracted sustained protest and was eventually abandoned in 2015. Shell also ended its wind power development during this period, the company taking the view that offshore wind could not be made to earn an acceptable return, a judgement that was later widely criticised as the sector grew.

Ollila was succeeded by the American Charles O. Holliday in May 2015. Shell's acquisition of BG Group, announced in April 2015, completed in February 2016 after his departure.

Other appointments

Ollila served on the board of Ford Motor Company from 2000 to 2008. He has been a director of Otava Books and Magazines Group since 1996 and of the Finnish forestry company UPM-Kymmene since 1997, and he became an advisory partner at the New York investment bank Perella Weinberg Partners in 2006.

He chaired the Finnish mining and metallurgy company Outokumpu from 2013 to 2018, and the Research Institute of the Finnish Economy (ETLA). Between 2005 and 2009 he chaired the European Round Table of Industrialists.

Ollila is a member of the steering committee of the Bilderberg Group. He attended the 1994 conference and every conference from 1997 to 2014.

Business philosophy and management style

Ollila's approach rested on a small number of repeated propositions.

He argued that strategy in a fast-moving industry is not a single decision but a continuous process of adjustment, expressed in a frequently quoted remark: "This isn't a business where you do one, big strategic thing right and you're set for the next five years. It's a big orchestration task."

He favoured cooperation over confrontation, including with competitors, and Nokia under his leadership worked with rivals to establish common standards on the view that a large standardised market was worth more than a defensible proprietary one. This was the reasoning behind Nokia's support for GSM and later for the Symbian consortium.

He rotated senior executives between roles deliberately, on the grounds that managers who had held several posts would understand the whole business and would be less inclined to defend a narrow interest. The practice produced a cadre of executives with unusually broad experience, although critics observed that it also meant few leaders stayed long enough to be accountable for the long-term consequences of their decisions.

He tolerated mistakes made in pursuit of a defensible plan and said repeatedly that a company which punished error would stop taking risks. He also placed weight on speed of decision, describing a preference for a good decision made quickly over an optimal one made late.

His management of Nokia in the 1990s is frequently cited in business education as an example of successful corporate focus, and the same case is used in later teaching as an example of how the capabilities that produce dominance can prevent adaptation.

Controversies

Disclosure fine

In 2014 Ollila was fined 3,000 euros by the Finnish Financial Supervisory Authority for failing to disclose in good time that he owned an investment company, Kestrel SA, registered in Luxembourg and worth about 8.2 million euros at the end of 2012. Georg Ehrnrooth was fined in connection with the same matter. Ollila said the omission was an oversight and that the company had not been used to hold shares in firms where he held executive positions.

Dispute with Risto Siilasmaa

In a book published in September 2018, Risto Siilasmaa, who joined the Nokia board in 2008 and succeeded Ollila as chairman in 2012, criticised Ollila's leadership style in strong terms and said that the two had fallen out in 2010. Siilasmaa described a board culture in which dissent was discouraged and information reaching directors was filtered, and said he believed Ollila bore some responsibility for Nokia's collapse. Ollila responded that the account was exaggerated and untrue.

The exchange, reported in Helsingin Sanomat, was unusual for its directness between two chairmen of the same company and it formed part of a wider Finnish debate about who was accountable for the loss of the country's largest industrial success.

Responsibility for Nokia's decline

Ollila's broader legacy is contested. One account holds that he built a company optimised for hardware volume and operational efficiency, and that this was the correct answer to the question the industry asked between 1992 and 2006. A second holds that the structures he created, including the 2004 reorganisation and a culture in which bad news travelled slowly upward, left Nokia unable to recognise that the basis of competition had shifted from devices to software platforms and application ecosystems.

Academic treatments have used the phrase "the curse of agility" to describe the pattern, arguing that Nokia's repeated reorganisations under and after Ollila produced short-term responsiveness at the cost of the deep software capability the smartphone era required. Ollila has acknowledged that Nokia was slow on software while maintaining that the company's failure was a matter of execution after his time rather than of the strategy he set.

Shell and the environment

As chairman of Shell, Ollila presided over a board that approved Arctic exploration in the Chukchi Sea and that withdrew from offshore wind. Both decisions drew criticism from environmental organisations, and the Arctic programme in particular generated large protests before Shell abandoned it in 2015. Ollila defended the company's position in public interviews on the grounds that global energy demand would continue to require hydrocarbons for decades and that Shell's role was to supply them as cleanly as was practical.

Personal life

Ollila married Liisa Annikki Metsola, and the couple have three children, Jaakko, Anna and Matti. The family has remained notably private by the standards of executives of comparable prominence, and Ollila has given few interviews about his domestic life.

He is a keen user of the Finnish sauna. His wife has described him heating it to about 100 degrees Celsius, and on one occasion he accepted a challenge from his children to swim in an icy lake immediately afterwards.

He published his memoirs in Finnish in October 2013, under a title translated as Against All Odds: Leading Nokia from Near Catastrophe to Global Success, written with the journalist Harri Saukkomaa. The English translation appeared in 2016. The Helsinki launch event in October 2013 required four security guards, and police removed protesters from the venue, a reflection of the resentment in Finland over job losses at Nokia during the years following his departure.

Ollila remains a participant in Finnish public debate on economic policy and competitiveness.

Honours and awards

Ollila was elected an honorary fellow of the London School of Economics in 2003 and was awarded honorary membership of the Institute of Electrical and Electronics Engineers. He holds honorary doctorates from the University of Helsinki, the London School of Economics, the Helsinki University of Technology and the University of Vaasa.

His state honours include:

• Honorary Commander of the Civil Division of the Order of the British Empire (2008)
• Commander Grand Cross of the Order of the Lion of Finland (2005)
• Honorary citizenship of Beijing (2002)
• Commander's Cross of the Order of Merit of the Republic of Poland (1999)
• Commander's Cross of the Order of Merit of the Federal Republic of Germany (1997)
• Commander, 1st Class, of the Order of the White Rose of Finland (1996)
• Officer's Cross of the Order of Merit of the Republic of Hungary (1996)
• Commander of the Order of Orange-Nassau (1995)
• Order of the White Star of Estonia (1995)

In popular culture

Nokia's early mobile phone years, and by extension Ollila's, are dramatised in the Finnish series Mobile 101, directed by Maarit Lalli and released in 2022, starring Oona Airola, Satu Tuuli Karhu and Aku Sipola. The company's rise and collapse is the subject of The Decline and Fall of Nokia by David Cord, published in 2014.

External links

• Profile at Sitra
• Contributor page at The Globalist