The company that built a country has lost its aura and relinquished the controls. by Gordon Kelly
Wired UK
Pride and diversity. Dependency and acquaintance. Pride and nostalgia. Sun and moon.
These are the answers given by Nokia's vice president of software, the research director ofETLA (the Research Institute of the Finnish Economy), Finland's minister of European Affairs and Foreign Trade, and the CEO of Jolla—now Finland's new smartphone hope. The question was: use one word to describe Nokia's historic relationship with Finland and one word to describe it in the future. For those of you confused by the last answer, it has to do with which orbits which.
The trend is striking, even from Nokia itself. The company that built a country has lost its aura and relinquished the controls.
It is telling that these answers come one month after Nokia sold its phone division and a decade's worth of patent licensing to Microsoft for €5.4 billion ($7.32 billion). They are no longer knee-jerk responses but calmly considered replies to the biggest and most significant economic deal in Finland's history.
"The morning the deal was announced, the mood was 'we have to save the country; everything is being taken away from us,'" says ETLA Research Director Petri Rouvinen. "As a foreigner it is almost impossible to appreciate the status Nokia enjoys in this country. Finland became global with Nokia, and Nokia was what made us recognizable internationally."
Rouvinen is not exaggerating. Exaggeration is a character trait frowned upon in a country of just 5.5 million people, which prides itself on rationality, modesty, and a love of salty licorice. Instead Rouvinen is highlighting the consequences of a remarkable country and company relationship unlike any other in the world.
How a company built a country
For a start, Nokia is older than Finland. Much older. It was founded in 1865 while Finland—after over 700 years of Swedish rule and 109 years of Russian rule—only attained its independence in 1918. The Nokia name appeared in 1871 when founder Fredrik Idestam renamed it after a small nearby town, and over the next hundred years it grew by continually switching industries. It moved from paper to rubber to robotics to chemicals and eventually to electronics and telecommunications in the 1970s. Yet where company and country bonded was with a mutual crisis.
In the late 1980s, Finland deregulated the money market, international loans increased, exports virtually dried up with the collapse of the Soviet Union, and in 1991, industrial output alone fell nine percent. At the same time, Nokia was fighting for its life after overexpansion in the 1980s. The full extent of its troubles was outed very publicly when group headKari Kairamo committed suicide in 1988. Nokia tried to sell up to Ericsson in 1991, but the deal collapsed when Ericsson wouldn't take the whole company.
With country and company struggling, both gambled in throwing their weight behind the GSM mobile standard. Nokia developed it and delivered the first domestic GSM call using Finnish operator Radiolinja. Finnish Prime Minister Harri Holkeri made the first commercial GSM call in Helsinki over a Nokia supplied network using a Nokia prototype phone. The first GSM phone on the market was the Nokia 1011. Nokia signed the world's first network roaming agreement with Vodafone in 1992, and GSM went on to become the world's dominant network standard.
Nokia drives Finnish GDP.
The eight years that followed Nokia's rise was unstoppable, and it carried Finland along for the ride. By 2000, Nokia accounted for a mind-specialized 4 percent of Finnish GDP, 70 percent of Helsinki's stock exchange market capital, 43 percent of corporate R&D, 21 percent of total exports, and 14 percent of corporate tax revenues. It was and still is unprecedented. Internationally, the massive company from the tiny country peaked in 2006, taking 41 percent of the mobile phone market worldwide.
For its part, Finland was pulled out of the most severe economic crisis in anyOECD countrysince World War II. It was transformed from one of the least information- and communication-specialized countries in the world to the most specialized. Finland heavily invested in Nokia with Tekes (The Finnish Funding Agency for Technology and Innovation), financing 26 percent of the company's projects in the 1990s, and Nokia gave back to Finland with huge tax revenue and an insatiable demand for highly skilled workers. The latter drove changes to an educational system whose schools are now ranked thebest in the world.
Finland workforce specialization.
"Our success story of the last 25 years has been pretty much defined by Nokia," argues Alexander Stubb, Finnish minister of European Affairs and Foreign Trade. "We used to be a top 30 country in the world out of 200. Now when you look at international standards and measures of education, competitiveness, GDP per capita, we're top 3. We became a very affluent nation with the rise of Nokia."
How a country outgrew a company
Crucially, Finland has also remained an affluent nation with Nokia's fall. Like everyone else, Finland saw it coming.
"If this had happened five years ago, it would've been a completely different story," admits Samuli Hänninen, vice president of software program management for Nokia's smart devices business. "Nokia was the first Finnish multinational global company. Nokia made us feel proud to be Finnish, but it also gave us the confidence for other ambitious Finnish companies to be born."
As Nokia began shedding jobs, the Finnish government responded with programs to drive small businesses. Tekes had its annual budget for funding new and innovative businesses increased to a remarkable €550 million ($751 million) (proportionally equivalent to €6 billion [$8.1 billion] in the US). The Finnish Ministry of Employment and Economy launchedVigo, a startup accelerator in 2009. Another key Helsinki-based startup event,Slush, attracted €40 billion ($54.2 billion)-worth of venture capital investors in 2012 and expects 1,000 startups this year.
By 2013VentureSourceannounced Finland had become the third largest country in Europe for equity financings with a 12 percent share of all investment into European VC-backed companies. Success is rubbing off on the youth of Finland, too. In 2010, students created the now highly popular Startup Saunato get new businesses off the ground, and 30 percent of the 19,000 students at Helsinki's newly formed Aalto University are members of "Aaltoes"—the Aalto Entrepreneurship Society.
None of which takes into account the relatively recent global success of Finnish companies Rovio, creator of theAngry Birdsfranchise, and Supercell, creator ofClash of Clans, which has been dubbed the "fastest growing game company ever." It is not lost on Finns that both companies found their success thanks to the rise of Android and iOS, the platforms which brought down Nokia.
In fact, such has been Finland's rise from Nokia's initial sling shot that in 2010, an Aalto University software industry survey found 77 percent of tech sector respondents believed Nokia's further decline would not be a threat to their business. That figure held so steady in subsequent 2011 and2012 polls that in 2013 Aalto stopped asking the question.
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