Stephen Elop

Stephen Elop
Elop in 2008, while president of the Microsoft Business Division.
Born	Stephen Elop 1963-12-31December 31, 1963 (age 62) Ancaster, Ontario, Canada
Nationality	Canadian
Education	McMaster University (B.Eng.Mgt., computer engineering and management, 1986)
Alma mater	McMaster University
Occupation	Business executive
Years active	1986-present
Employer	Boston Chicken (1992-1998) Macromedia (1998-2005) Adobe (2005-2006) Juniper Networks (2007-2008) Microsoft (2008-2010, 2014-2015) Nokia Corporation (2010-2014) Telstra (2016-2018)
Company	Nokia Corporation
Title	President and chief executive officer, Nokia Corporation
Term	2010-2014
Predecessor	Olli-Pekka Kallasvuo
Successor	Risto Siilasmaa (interim), Rajeev Suri
Known for	First non-Finnish chief executive of Nokia The "burning platform" memo Nokia's exclusive adoption of Windows Phone Sale of Nokia's devices business to Microsoft
Spouse	Nancy Elop (m. 1987; div. 2014)
Children	5

Stephen Elop (born December 31, 1963) is a Canadian business executive who served as president and chief executive officer of Nokia Corporation from 2010 to 2014, the first person who was not Finnish to lead the company. He previously ran Microsoft's Business Division, was chief operating officer of Juniper Networks, president of worldwide field operations at Adobe, and briefly chief executive of Macromedia.

Elop is principally known for two decisions taken in his first six months at Nokia. In February 2011 an internal memo he had written, comparing the company's position to a man standing on a burning oil platform, leaked to the press. Two days later he announced that Nokia would abandon its own Symbian and MeeGo operating systems and build its smartphones exclusively on Microsoft's Windows Phone.

The strategy did not succeed commercially. Between Elop's appointment in September 2010 and the sale of the handset business in 2014, Nokia's share price fell about 62 percent, its overall mobile phone market share roughly halved, its smartphone share fell from about 33 percent to about 3 percent, and the company recorded cumulative losses of about 4.9 billion euros. In September 2013 Nokia agreed to sell its devices and services business to Microsoft for 5.4 billion euros, and Elop returned to Microsoft to run the Devices Group. He was made redundant from that role in June 2015.

His tenure generated a persistent theory in Finland that he had been placed at Nokia to prepare it for acquisition by his former employer, an allegation he has denied and which the two book-length accounts of the period both reject. A payment of about 18.8 million euros made to him on his departure became a political controversy in Finland, with the prime minister describing it as outrageous.

Early life and education

Family and childhood

Stephen Elop was born on December 31, 1963, in Ancaster, Ontario, the second of three children. His mother was a chemist and his father an engineer at the Westinghouse Electric Corporation. Both continued to live in Ancaster into their son's executive career.

His grandfather had been a wireless operator sending morse code from ships in both the First and Second World Wars. Elop has credited him with an early interest in communications technology and has said he learned a great deal about the subject from him, a connection he later noted when he took charge of a telephone company.

McMaster University

Elop entered McMaster University in Hamilton, Ontario, in 1981, studying computer engineering and management, a combined degree that paired technical training with business education.

After his first year he wrote the user operating manual for the campus's new VAX-11/780 computer system, a document known on campus as the Orange Book. During the same period he helped lay about 22 kilometres of Ethernet cable across the university, building one of the earliest computer networks in Canada.

He graduated second in his class with a bachelor's degree in 1986.

McMaster's Faculty of Engineering named Elop the second recipient of its L. W. Shemilt Distinguished Engineering Alumni Award in 2007, and awarded him an honorary Doctor of Science in 2009. Since January 2016 he has held a position at the faculty as Distinguished Engineering Executive in Residence.

Career

Early roles

Elop joined Soma Inc., a Toronto software development firm, after graduating. Soma was acquired by the Lotus Development Corporation of Massachusetts, and Elop moved with it, serving as director of consulting.

In 1992 he became chief information officer of Boston Chicken, the American restaurant chain, where he remained until the company filed for Chapter 11 bankruptcy protection in 1998. The role was an unusual one for an executive later associated with the software industry, and Elop has described it as formative in teaching him how technology decisions affect an operating business rather than a product.

Macromedia, 1998-2005

Elop joined Macromedia's web and information technology department in 1998 and spent seven years at the company, rising through a series of senior positions: general manager of the e-business division, executive vice president of worldwide field operations, chief operating officer, and finally chief executive from January 2005.

For family reasons he kept his home in Limehouse, Ontario, and commuted to California by air rather than relocating.

Macromedia during his time there shipped widely used software including Macromedia Studio 8, and Elop pushed the Flash Player towards mobile devices and towards streaming video, a market Flash dominated until it was displaced by HTML5 in the 2010s. He also pressed the development of Dreamweaver as a mainstream web authoring tool. Colleagues nicknamed him "The General", a reference to his military-style haircut.

His period as chief executive lasted about three months. In April 2005 Adobe announced its acquisition of Macromedia in an all-stock transaction valued at about $3.4 billion, combining the two companies' document management, web publishing and online video tools. Macromedia shares were valued at $41.86 under the terms, above the prevailing market price of $33.45, and the outcome was regarded as favourable for Macromedia shareholders.

Adobe, 2005-2006

Elop became president of worldwide field operations at Adobe following the merger. He tendered his resignation in June 2006 and left on December 5 of that year. His compensation at Adobe comprised a salary of $500,000, a bonus of $315,000 and a severance package of $1.88 million.

Juniper Networks, 2007-2008

Elop served as chief operating officer of Juniper Networks for exactly one year from January 2007. He drove an internal overhaul of the company's operations and was credited with improving operational efficiency. Juniper's share price rose about 75 percent over the course of 2007.

Late in 2007 he was approached by Steve Ballmer, then chief executive of Microsoft, and met him several times along with the chairman, Bill Gates. Juniper's chief executive Scott Kriens had intended to name Elop as his successor, and learned of the Microsoft offer before he could do so. Elop later told Bloomberg that the conversation in which he told Kriens he was leaving was the most difficult professional moment of his career.

Microsoft Business Division, 2008-2010

Elop joined Microsoft on January 11, 2008, as president of the Business Division, responsible for Microsoft Office and Microsoft Dynamics, and as a member of the senior leadership team. The division was the largest single source of revenue at what was then the world's largest software company.

During his tenure the division shipped Office 2010, launched Office 365 and contributed to the introduction of Windows Azure, producing record profits. Businessweek credited Elop with pushing Microsoft towards cloud-delivered versions of its programs, and argued that this helped the company hold off startups attacking its traditional licensing model. He acquired a reputation as an operator and a change agent.

On August 12, 2009, the Business Division formed an alliance with Nokia to bring Microsoft Office Mobile to the Symbian operating system, Elop's first significant dealing with the company he would shortly lead.

Chief executive of Nokia, 2010-2014

Appointment

Nokia announced on September 10, 2010, that Elop would become chief executive, replacing the dismissed Olli-Pekka Kallasvuo. He was the first non-Finnish director in the company's history. The chairman, Jorma Ollila, said that "Stephen has the right industry experience and leadership skills." A number of analysts immediately predicted closer cooperation between Nokia and Microsoft.

His tenure began on September 21. His family remained in Canada. Nokia disclosed on March 11, 2011, that it had paid Elop a $6 million signing bonus, described as compensation for income forgone at his previous employer, in addition to an annual salary of $1.4 million.

The company he inherited was in difficulty. Nokia's overall mobile phone market share in the third quarter of 2010 was 28.2 percent, its lowest since 1999 and a fall of 8.5 percentage points year on year. On Elop's first day the company announced a further delay to its flagship handset, the Nokia N8.

First months

Elop emailed every Nokia employee on his first day asking what they wanted changed and what they did not. The openness was noted internally as a departure from the more bureaucratic style of his predecessors. He spoke to staff about his record at Microsoft, telling them that the company had competed successfully with Google in productivity software and could compete with Apple as well, and he called for open dialogue inside the company.

In the fourth quarter of 2010 he initiated an internal review known as Project Sea Eagle, one purpose of which was to assess whether Nokia should adopt an external mobile operating system, either Android or Windows Phone. Elop concluded against Android, in part because of conflicts between Google's services and Nokia's own, particularly between Google Maps and Nokia's mapping business, and in part because of a strategic judgement he recorded at the time: that as Hewlett-Packard had become synonymous with Windows hardware and Nokia with Symbian, Samsung would become synonymous with Android, and that other Android manufacturers would see their margins compressed.

Microsoft offered terms: platform support payments of about $1 billion a year for at least three years, permission for Nokia to use its own mapping service on Windows Phone devices, and patent protection.

The burning platform memo

In early 2011 Elop circulated an internal memo titled "Burning Platform", which likened Nokia's position to that of a man on a burning oil rig who must choose between the fire and the freezing sea. The word platform carried a second meaning, referring to operating systems such as Symbian, Apple's iOS and Google's Android. The memo referred to a new strategy to be announced on February 11.

Its central argument was that the terms of competition had changed:

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren't taking our market share with devices; they are taking our market share with an entire ecosystem. This means we're going to have to decide how we either build, catalyse or join an ecosystem.

The memo was not written for publication. Engadget leaked it on February 8, 2011, and it circulated very widely. Some in the media treated it as a necessary warning, Engadget calling it one of the most striking chief executive memos it had seen. Nokia's board took a different view: it regarded the memo as a misjudgement, and Ollila criticised it sharply at a board meeting.

The memo, together with the strategy announced two days later, gave rise to the phrase "the Elop effect", coined by the former Nokia executive Tomi Ahonen, who described it as combining the Ratner effect with the Osborne effect: publicly disparaging one's own products while announcing a replacement long before it can be bought. Elop told the Financial Post that the memo was "a very powerful statement of the reality of the situation without a lot of marketing polish on it."

Google's Vic Gundotra tweeted "Two turkeys do not make an Eagle" shortly after the leak. The phrase had originally been used in 2005 by the Nokia executive Anssi Vanjoki about BenQ's purchase of the Siemens handset business.

The Windows Phone decision

At a press conference in London on February 11, 2011, Elop announced a strategic partnership with Microsoft under which Nokia's smartphones would run Windows Phone, with Symbian and MeeGo phased out. The final decision was taken the night before the announcement. Elop quoted Winston Churchill: "The pessimist sees the difficulty in every opportunity, but an optimist sees the opportunity in every difficulty." Ollila supported the alliance and predicted a strong recovery.

Asked why he had not chosen Android, Elop said: "The fundamental thing we were looking at was the ability to differentiate. As a member of the Android ecosystem, there were ways that we could see that we could differentiate, but we were worried over time how much differentiation we could continue to maintain or extend."

The decision was widely characterised as placing all of Nokia's weight on a single platform, and was compared to Elop's earlier concentration of Macromedia on Flash.

The first Nokia Windows Phone, the Lumia 800, shipped in November 2011 in a body almost identical to that of the Nokia N9, the company's only MeeGo device, differing mainly by the addition of a camera button. The N9 had been well reviewed for its hardware and its software design, although reviewers noted at launch that it had no application ecosystem and was unlikely to develop one. Elop confirmed that MeeGo development would not continue regardless of the N9's reception, a decision that attracted criticism.

Sales fell throughout the transition. Nokia's smartphone sales declined 34 percent between the third quarter of 2010 and the third quarter of 2011, from 27.2 million units to 16.8 million, and then more than halved again in the following year, to 6.3 million units.

In June 2012, without advance notice to Nokia, Microsoft announced that Windows Phone 8 would not run on existing Windows Phone 7 devices because of changes to the kernel. The announcement stranded the Lumia 900, launched only months earlier, and damaged confidence in the platform.

Elop defended the choice again in late 2012 and 2013. "The single most important word is 'differentiation'," he said. "Entering the Android environment late, we knew we would have a hard time differentiating." Asked whether he regretted the decision, he said the concern had been "the very high risk that one hardware manufacturer could come to dominate Android", and observed that by 2013 Samsung had become that manufacturer. A Guardian journalist accepted the point, citing the decline in HTC's revenue over the same period.

Nokia's best-selling Windows device was the Lumia 520, a budget handset, an outcome that indicated continued weakness at the profitable high end despite favourable reviews for the Lumia 920 and the camera-focused Lumia 1020.

In December 2012 Elop told the Finnish broadcaster Yle that the company was doing its best work and that "it's not us saying that, it's the people around the world," and thanked Finnish shareholders for their support during what he called Nokia's darkest days.

At Mobile World Congress in February 2014, Elop appeared on stage to unveil the Nokia X, the company's first Android handset, a reversal of the exclusivity announced three years earlier.

Redundancies

Elop announced in 2011 that about 11,000 employees would be made redundant as part of a restructuring, and in June 2012 a further 10,000 redundancies along with the closure of several facilities. The cuts fell heavily on Finland, where Nokia had been the largest private employer and a substantial part of the national economy, and they shaped Finnish public opinion of Elop for the remainder of his tenure.

Sale to Microsoft

Ballmer told Risto Siilasmaa and Elop at Mobile World Congress in February 2013 that selling Windows Phone devices earned Microsoft only software licence fees and made little sense on those terms. In March 2013 he told them Microsoft wished to begin acquisition negotiations immediately.

At Nokia's annual general meeting in May 2013, after the two years Elop had been given for the transition, shareholders pressed him on the absence of results. Several said they were losing patience. Elop replied that there would be no reversal of the Windows Phone decision. Analysts criticised him for having closed off alternatives.

Talks reported in June 2013 had faltered over price and over concern about Nokia's declining position. By that month Nokia's overall handset share had fallen from 23 percent to 15 percent since Elop's arrival, its smartphone share from 32.6 percent to 3.3 percent, and its share price by about 85 percent.

On September 3, 2013, Microsoft agreed to buy Nokia's devices and services business for 5.4 billion euros, about $7.2 billion. Elop stood down as chief executive to become executive vice president of the Microsoft Devices Group. At the press conference he said Nokia had much to be proud of: "We have transitioned through a period of incredible difficulty and we are now delivering the best products we have ever delivered, while simultaneously having changed our culture and the way we work." He said he felt sadness at the change in what Nokia stood for.

Siilasmaa served as interim chief executive of the remaining company before Rajeev Suri was appointed. The devices business became Microsoft Mobile on April 25, 2014.

Nokia remained the second largest manufacturer of mobile telephones overall at completion, on the strength of its basic feature phone sales. In smartphones specifically it did not appear among the top eight manufacturers.

Microsoft Devices Group, 2014-2015

Elop returned to Microsoft in 2014 as executive vice president of the Devices Group, describing the team's mandate as helping people do more and putting the whole of the Microsoft experience in their hands. The group shipped Nokia-branded and later Microsoft-branded Lumia handsets, launched HoloLens and the Microsoft Band, and spun Nokia MixRadio out to Japan's Line Corporation.

He was made redundant on June 17, 2015, as part of large job cuts in the Devices Group. Satya Nadella said that "Stephen and I have agreed that now is the right time for him to retire from Microsoft. I regret the loss of leadership that this represents, and look forward to seeing where his next destination will be."

Telstra, 2016-2018

Telstra, Australia's largest telecommunications company, announced on March 16, 2016, that Elop would join in a newly created role as Group Executive for Technology, Innovation and Strategy.

Speaking at a Telstra conference in September 2016, Elop cited Nokia as an example of a company capable of assessing itself and transforming when necessary, referring to its subsequent success as a network equipment supplier, and argued that Telstra likewise needed to become more of a technology company.

He left Telstra on July 31, 2018, as part of a restructuring.

Later roles

APiJET, a Seattle joint venture between Aviation Partners and iJet Technologies producing real-time aircraft data analytics, named Elop chief executive on September 17, 2019. He relinquished the chief executive role by January 2021, remaining on the board and serving as senior adviser.

As of December 2025 Elop was acting chief executive and chairman of the board of Nintex, a workflow automation company based in Bellevue, Washington, following the departure of its chief executive Amit Mathradas.

Business philosophy and management style

Elop's public reasoning rested on the proposition that competition in mobile devices had ceased to be about hardware and had become a contest between ecosystems, meaning operating systems together with developers, applications, payments, advertising, search and location services. The burning platform memo is the fullest statement of that view, and it was correct as a diagnosis: the industry did consolidate around two ecosystems. The contested question is whether the remedy followed from the diagnosis.

He favoured decisiveness and concentration of resources over hedging, an approach he had applied at Macromedia in committing the company to Flash. Applied at Nokia it meant refusing to develop Android devices alongside Windows Phone, on the reasoning that a hedged commitment would fail to differentiate and would signal weak conviction to developers.

He was an operator rather than a product visionary, and was recruited at both Microsoft and Nokia for that reason. His record at the Microsoft Business Division and at Juniper rested on execution and cost discipline rather than on new product categories.

His communication style was direct and, at Nokia, unusually candid for a chief executive of a listed company. The candour that staff welcomed in his first weeks became a liability when the same frankness about Nokia's weaknesses reached customers and carriers.

Controversies

The Trojan horse theory

Elop faced sustained speculation, particularly in Finland, that he had been installed at Nokia to prepare it for acquisition by Microsoft. Critics nicknamed him "Trojan.Win32.Stephen.Elop" and similar variants in the style of antivirus threat names.

Asked directly about the theory by an attendee at Mobile World Congress in 2011, Elop said: "The obvious answer is, no. But however, I am very sensitive to the perception and awkwardness of that situation. We made sure that the entire management team was involved in the process. Everyone on the management team believed this was the right decision." He denied the accusation again in 2014.

Both book-length accounts of the period reject the theory. David J. Cord, in The Decline and Fall of Nokia (2014), argues that each of Elop's decisions was defensible at the time it was taken and cites the testimony of other executives who participated in making them. Operation Elop, written later in 2014 by journalists from the Finnish business paper Kauppalehti, likewise rejects it, concluding that Elop "made monumental mistakes, but all in good faith."

The departure payment

Elop received a payment of about 18.8 million euros after the sale of the handset business. The controversy was intensified by the disclosure that his contract had been revised on the same day the transaction was announced, and by the chairman of Nokia's board giving incorrect information about the contract in public before correcting himself.

Elop had filed for divorce shortly before leaving Nokia, and cited this in declining to renegotiate the payment, saying he could not accept a reduction because his wife would be entitled to half of it. He also benefited from a preferential Finnish tax status applying a flat 35 percent rate to income regardless of size, where Finnish taxpayers generally pay progressive rates. About 70 percent of the cost was borne by Microsoft as part of the acquisition, mostly through accelerated stock awards.

The payment became a political issue. The prime minister, Jyrki Katainen, told Finnish television that it was "quite outrageous" and could not be justified given the country's economic difficulties. The finance minister, Jutta Urpilainen, wrote that in addition to the general toxic atmosphere it might threaten social harmony. Nokia employees and investors expressed similar concerns.

A quotation he did not give

A remark has been attributed to Elop online, supposedly made at the end of a speech to the Nokia board after the Microsoft acquisition: "we didn't do anything wrong, but somehow we lost," said to have been followed by tears from Elop and other executives. The Microsoft Azure architect Clemens Vasters published an article on LinkedIn describing the account as fabricated, noting that the full press conference video is publicly available and contains neither the quotation nor the emotion described.

Performance record

The commercial results of Elop's tenure are not disputed, whatever view is taken of his intentions. Over the period Nokia's share price fell about 62 percent, its overall handset share roughly halved, its smartphone share fell from about 33 percent to about 3 percent, and cumulative losses reached about 4.9 billion euros. Critics argue that the announcement of a platform transition before the replacement products existed destroyed demand for Symbian devices that were still selling in volume, removing the revenue Nokia needed to fund the transition. Defenders argue that Symbian was not competitive and that its decline was already under way.

Personal life

Elop married Nancy, from Wyoming, Ontario, whom he met while studying at McMaster. They have five children: triplets, comprising two girls and a boy, a daughter adopted from China, and another son.

He filed for divorce in August 2013 after 26 years of marriage, having separated in October 2012. The divorce was finalised on July 3, 2014. He listed for sale the $5 million house in Redmond, Washington, that he had bought in 2008 and lived in with his family.

Elop has described his Canadian origins as "a significant source of strength in the world", adding that "I will forever in my life be a Canadian, first and foremost."

He is a recreational pilot and has owned a Cessna CitationJet. He supports the Vancouver Canucks ice hockey team. During his years at Macromedia and Adobe he has said he reserved weekends for his children, which was part of the reason he kept his home in Ontario and commuted to California.

External links

• McMaster University Faculty of Engineering