Olli-Pekka Kallasvuo: Nokia: The most global company there is

The mobile phone giant knows it must move with the times, but there are some things about itself it can't change, says Stephen Pritchard
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Nokia's chief executive Olli-Pekka Kallasvuo might have been expected to spend his first year in office building bridges.

His predecessor, Jorma Ollila, had, after all, had a very public disagreement with Vodafone's chief executive, Arun Sarin, at the 2004 3GSM trade show. There, the world's largest handset maker and the world's largest mobile phone group used keynote speeches to blame each other for the slow roll-out of third generation mobiles.

Instead, Kallasvuo seems to be taking the fight right to the operators, by launching mobile internet, music and gaming services that threaten the very revenues Sarin and his peers are relying on to pay for those expensive new networks.

If this bothers Kallasvuo, he doesn't show it.

"We've not been working in stealth mode," he points out. "It seems like a big change, but it's not. We announced we'd enter services last year, so it's been an evolution as opposed to a quantum leap. We've been having, and continue to have, good conversations with operators about different services."

Nonetheless, Nokia chose the former Billingsgate fish market in the City of London as the launch venue for the Ovi internet service – the word means "door" in Finnish – as well as an online music store and game downloads. It could not have sent a clearer signal to operators if, for the post-launch party, it had turned up at Newbury racecourse, a few hundred yards from Vodafone's Berkshire HQ, rather than London's Ministry of Sound nightclub.

Kallasvuo accepts that not all operators will welcome the new services. But he counters that there are plenty of mobile service providers that either cannot or would rather not develop features such as music downloads, and are happy to work with Nokia.

"It's really important to understand that there's not one operator strategy. There are many, many of them," Kallasvuo says. "Some are heavy on services, some not. Some like content and some do not. As a company we need to be able to work different operators' strategies."

However, it may be that the timing, if not the direction, of Nokia's strategy has been forced on Kallasvuo by the imminent arrival of Apple's iPhone in Europe. Apple, of course, wants iPhone owners to download music from the iTunes music store, and it could be that iTunes, rather than the mobile networks' more basic music services, is Nokia's real target.

Apple sold 270,000 iPhones in just two days. Impressive though that is for a new product, it is hardly going to dent Nokia's installed base of over 900 million handsets. But the iPhone's design, as well as its business model, is clearly causing ripples at Nokia.

Apple is rumoured to receive a share of subscription revenues from mobile operators in the US, and it is a model Nokia is willing to consider, Kallasvuo admits. "We are basing our thinking on a different model, but in the future it is one possibility to explore," he says.

When it comes to the iPhone's stand-out design feature, its touch-screen interface, Kallasvuo is less willing to concede ground to Apple. "The touch screen as such is of course not owned by anybody," he says. "We brought it to market five to seven years ago, and we will have touch screens on our S60 [Symbian] phones next year."

To some, Nokia's designs for a touch-screen phone might look like playing catch-up. For Kallasvuo, however, it is one of a number of changes in a company that, despite having one of the world's best known brands, with healthy profits and a global market share of 38 per cent, is viewed, in some quarters at least, as rather stuffy and staid.

Kallasvuo has moved to speed up product development. New phones should be ready in months, not years. He does not want to see Nokia repeat the mistakes of a few years ago, when its reluctance to develop "flip" or clamshell phones hit its market share. And it must also compete with increasingly competent Asian rivals, in particular South Korea's Samsung.

Kallasvuo's strategy for change was set out early on. "There is no doubt in my mind Nokia needs to become more flexible and even more responsive as an organisation," he told financial analysts shortly after his appointment last year. "I commit to drive the change within Nokia."

Yet Kallasvuo might not seem an obvious advocate of change. A "Nokian" who joined the company in 1980 as a lawyer and has worked there ever since, he moved into finance in 1988 and stepped up to chief financial officer in 1992. Spells as head of Nokia's US operations and as general manager of its mobile phone division prepared him to take over the top job last year.

But perhaps the stress on change is a riposte to those who said that Nokia should look outside the company for Ollila's successor. He is anxious to point out, too, that the company does now cast the net wider when it recruits leadership talent.

According to Kallasvuo, the aim is to bring greater diversity to the business, avoiding what he has described as a "soccer team with 11 goalies" and to move to a management structure that better reflects Nokia's global operations. Perhaps, too, the company will become just that little less Finnish, Scandinavian or even European in its outlook.

"We are based in many markets. Our customers are everywhere, our people are everywhere," Kallasvuo says. "As a manager you have a nationality and you are a patriot but as a manager you have to look at the totality. We are from many points of view the most global company there is, if you look at our customer base, the investors and where our people are."

But in person, Kallasvuo gives away some of the tensions between the demands of globalisation and the culture or even the soul of Nokia, which is still very much rooted in Finland. Finns have a reputation for straight talking but tend not to brag about their successes, and for all the gloss of a global brand, this is an issue Nokia sometimes seems to struggle with.

An example is the work it is doing, and has done for well over a decade, to reduce the environmental impact of its business. Many technology companies have shouted about their green achievements, but Nokia seems to hope it will be judged more on its actions than its words. "It's fair to say we've done more [for the environment] than we've actively communicated. That is a cultural thing," Kallasvuo says.

But perhaps he doesn't want to abandon his roots altogether. Market leadership and profits – €2.83bn (£1.92bn) in the second quarter of 2007 – do not represent the full picture for him. "We are very much a values-based company," he says. "I expect all the Nokians to make a serious effort to live in accordance with our values and I look for people [to hire] who find that easy.

"Responsibility comes first then, sales and profits. It is not a balance. We have do to the right thing above all. If you don't do that, people will notice. We have to walk the talk."