This Week in Leadership (Sept 20 - Sept 26)
Why job switchers aren't getting that much more money. Plus, leadership lessons from Angela Merkel and her very long tenure.
Olli-Pekka Kallasvuo is both passionate and humble. He’s passionate about his company and his people, and humble about himself and his accomplishments. He even jokes that as chief executive he lacks charisma. And yet, Kallasvuo has provided leadership and a guiding hand during nearly every phase of Nokia’s historic transformation from industrial company, producing a varied assortment of goods ranging from electrical cables to bicycle tires and boots, into the mobile telecommunications industry.
During the course of Kallasvuo’s career, Nokia shed its nontelecommunications businesses, invested in forefront technologies, and eventually changed its entire focus to mobile technologies and services. While that course may have been risky, it succeeded in transforming Nokia into the world’s largest mobile telecommunications producer, measured by market share, with more than $50 billion in revenue, 123,000 employees, a global footprint and one of the world’s most respected brands. Nokia is as well known in Rwanda, India and Sri Lanka as it is in the European Union, Latin America and the United States.
Trained as a lawyer, Kallasvuo joined Nokia as corporate counsel in 1980, when the firm was just beginning its historic transformation. Although he says he is not a numbers person, Kallasvuo became Nokia’s chief financial officer in 1992, after succeeding in a number of strategic and financial roles. Among his positions, Kallasvuo served in 1997-98 as corporate executive vice president for the Americas. In 2006, Kallasvuo assumed his current role. He is also chairman of the board of Nokia Siemens Networks, a joint venture of Nokia and Siemens.
The discussion on leadership that follows took place between Kallasvuo and Gary Burnison, chief executive of Korn/Ferry International, at Nokia’s offices in White Plains, N.Y.
You lead a global company with 125,00 people. As chief executive, how do you make sure the firm's values cascade down through the entire organization?
KALLASVUO: We don’t cascade down. We “cascade up.” Let me explain. Like most companies, we have a set of values. But the words alone are not important. The important question is, what do they mean to us? The last time we looked at our values, we wanted to involve our employees, to see what they thought. So we arranged what we called “Nokia Cafes,” which were meetings in different parts of the world. They were opportunities for employees to get together and start discussions about our company’s values. We had something like 25 of these cafes. After they were over, representatives from each of these meetings went to a regional meeting, where the discussions continued. These people were not appointed by management. These were employees who just stood up and volunteered. We then had a final meeting at our headquarters in Finland for two days. There were about 45 people there who were truly passionate about Nokia and our values. They came representing their countries, and they spent two days together. In the afternoon of the second day, I joined them in the discussion. I went not to approve or disapprove anything, but I could sense the passion, energy and commitment they had as they explained how they got to where they were — and what it all meant. It didn’t take long to realize I didn’t really even have the option of saying “no.” It was an “aha” moment! It was like a monster had been unleashed, but in a positive sense. The process enabled employees to determine our values and what they meant. There was one item that I didn’t like all that much, but that’s how it goes! After this, we let everybody know where we were in the process and in our thinking. Then we had a nonstop, 72-hour Internet discussion. Management put in our contributions and discussed what the values meant to us. And out of 60,000 Nokia people who could take part in the Internet discussion, 10,000 participated. So, when it comes to values, it was not only the outcome, it was also the process that made people to buy into it.
So you view it not as cascading down, but as the organization's values and culture cascading up.
KALLASVUO: Yes, cascading up. And it makes you quite exposed. You see, I realized I could not call it off. This was it, whether I liked it or not. And, of course, in truth, the values that were arrived at were very much in line with our earlier thinking. They changed a bit. But the important part was that people had the possibility of expressing themselves and feeling invested. You really cannot simply order a change in culture! It's not like, "We have been going here and now we are going there." Unless you explain why — and it needs to be credible and the rationale needs to be there — you can’t get away with just issuing an order. In today’s communication environment, with people having discussion forums and blogs, you have to have the kind of credibility that comes from explaining why.
Do you consider yourself a leader?
KALLASVUO: I do not consider myself a leader, but I do like leading people. I like the exposure as well. I like it because you really have to put yourself into it and you have to stand out. You have to, as I say, expose yourself in a way. To me, the most important leadership word is courage.
Why courage and not, say, confidence?
KALLASVUO: Confidence is one-dimensional, but courage is more complex. I say that because as a leader you have to be at some ease with the possibility that you may fail. People need to understand that when a risk has been taken, the leader has decided to take that risk. They need to understand why it has been taken. If they do, then people will tend to follow you. Taking risks requires courage.
Are you thinking about personal failure or corporate failure?
KALLASVUO: They go hand-in-hand. But I was just now referring to personal failure. You have to be at ease with failing personally.
I agree with you wholeheartedly.
KALLASVUO: If you don’t have that, you start playing it safe. People notice that, and they won’t follow you. You have to know what you are doing. But you also have to have the courage to take risks and to be at ease with uncertainty and with potential failure as well.
In my view, failure is a good thing — as long as you learn from it.
KALLASVUO: If you don’t fail, you are not doing what you are supposed to do. Failure is always there. On the other hand, you’d better not fail too often!
It must be quite exciting to lead such a dynamic company as Nokia. Do you ever wake up in the morning and pinch yourself that you’re the chief executive?
KALLASVUO: No. I don’t. Maybe it’s too mundane. You go to work, you work hard, have meetings and do things that aren’t particularly wonderful in that way. But for me, the wonderful part is the people part of what I do and also learning new things. I love having the possibility of getting excited, and I am testing myself almost on a weekly basis. Am I excited? Is the stuff we are doing — the possibilities we are pursuing — exciting on a company level and on a personal level? From that kind of excitement you get the energy. If you lose your ability to get excited, people will notice.
What do you think your employees want? Money is of course important. But my sense is that people really want to be part of a journey, they want to be stimulated, they want to grow, they want to be part of a winning team. Do you agree with that, or do you think people are motivated by other things?
KALLASVUO: People want to be part of a winning team, and people also want to have a sense of belonging. They want that very much. They want to know that they belong to a team and that their work is important. Work takes so much of our time. So we need to have those dimensions as well — that sense of belonging, that sense of purpose. In fact, I think it has helped us a lot that what we are doing helps people, especially in the emerging markets where mobile communication has changed people’s lives in a very practical manner. People like to feel that what they do helps other people. We are doing that as a business, of course, but that sense of purpose, in our case, has been very important. As a result, people think “Connecting People” has been wonderful as our corporate slogan. There is a positive dimension to it. Because it says — if you read it right — that connecting people is important to us and that we are providing that connection. This sense of purpose has helped us a lot. People who have never heard a dial tone and have their first communication device in their pocket, they can now help themselves. Take India as an example. India is a self-employed economy. Think what wonderful benefits mobile communication has brought to India’s carpenters and gardeners, and to people who have one-person businesses. Or think about someone who is living three days from a doctor in Rwanda. The possibility of telephoning a doctor when a child is sick, as opposed to traveling three days, is very big. Our people talk about this a lot. It has helped in our case. And it gives our people a real sense of purpose.
So, would you say that having a sense of common purpose and a vision for the company is important to what you do every day?
KALLASVUO: Yes. But I think it’s more than that. People need vision and they need direction. But they also need concrete action. They need victories. They want to have the possibility of celebrating. Vision alone is not enough.
People need successful execution, is that what you are saying?
KALLASVUO: Yes. People need to see the execution. They need to see progress.
How do you do that?
KALLASVUO: There is no shortcut. Really doing it, and then communicating it, is what it takes. Telling them, “This is what we did this month and this is where we have made progress.” And also telling them, “This is where we have not made progress.” The granularity of the information people want and need is now much, much more than in the past. People are blogging and on the Internet. They are discussing everything. When I was younger, people within the company thought that there were some things that we should not talk about to everybody. But now, with blogging and our global communication culture, everything is discussed openly. And everything is very transparent. If a product is late, people start blogging about that. It’s not just people in R.&D. who know about it. Everyone knows. Hence, the granularity of information that people need, for good or bad, is much greater now. You don’t get away with, “O.K., we going to go this way now; please follow us.” You need to give them much more, and sometimes doing that is really demanding.
Do you think it’s positive that people are so closely connected?
KALLASVUO: Yes, of course. I think it’s great. But I also think that sometimes it’s a double-edged sword, because sometimes people don’t really know everything and the wrong conclusions are easily drawn. I’ll give you an example of what I mean. Last year, for the first time in the company — since we have been predominately a hardware company — we started measuring the number of active users of services that we provide. We targeted that we wanted to have 80 million users by the end of 2009. Why 80 million? Because I felt we needed a number. Whether it was 70 million or 90 million doesn’t really matter that much at this point in time. We needed a number so that people could rally around it. Then what we decided to do was: let’s make it visible to everybody, on a weekly basis. Let’s put it as an incentive target, even though not everybody can have an impact on it. Let’s expose ourselves openly in a way that everybody knows, although if you say 80 million and get only 35 million, it’s not going to be very good for morale. So, we put monitors up in our offices to see how it was going on a weekly basis. I was really nervous about that, because this can really backfire. And, as I was leaving the office one night, they were putting up the monitors and I saw somebody working on one, a communications person. I said to that person, “I really hope this will work.” And, he said, “No, problem. We will have it by the morning!” He thought I was talking about the monitor! So you need to communicate clearly, which takes effort. We made our target, and it was a happy ending. But you need to expose yourself as a leader, because people need more than just a direction. They need to know how they are doing. They need to see their progress. That’s my feeling.
In your industry, the product life cycles are very short. How do you keep up with all of the changes that occur?
KALLASVUO: Yes, they are so short. The clock speed is very high. But there is more than one answer to your question. In fact, I have been thinking about it for a long time and I asked myself, Who were the typical people running companies in the past? In the 1930’s and 40’s, they were run mostly by manufacturing people. All the intelligence was inside the company. In the 1950’s, the person typically running a company had a different background: sales and marketing. Then what happened? Shareholder value came up and we had all these M.B.A.’s and finance people. Now, the business challenge is different. Think of all the information that is out in the marketplace, think about all the diversity that is in the marketplace, all the communication that is instant and is constantly happening globally. The question is, How do you sense what is happening and then create products and services based on that sense? These challenges are different from the past. The intelligence is no longer on the inside. It is outside, and you need to sense that, especially if you are in a business where the clock speed is very fast or the cycle is very short. In those businesses, if you are six months late, you have lost one-third of the market if the life cycle is, say, 18 months. So the question is, How do you sense what’s happening globally? How do you understand people in different parts of the world? How do you conceptualize it and create solutions?
Do you have people solely focused on this?
KALLASVUO: Yes. For example, we have anthropologists who travel to remote areas trying to understand how people are leading their lives. These are people who we don’t hear about for three weeks. They are somewhere in the jungle. And, of course, we have them in the urban areas as well. They are trying to find out what’s important, because everything changes so quickly. This is a major challenge and a major opportunity as well.
And this translates into products, like smartphones, and tells you where they should be headed?
KALLASVUO: My mobile phone used to be basically for voice communication. And then it started changing, and more and more functionality was added. The mobile device industry was quite good at capturing value from adjacent industries; as a result, things like the camera component were added. Nokia became the biggest camera manufacturer in the world. And now when you buy a mobile device, it comes with a camera included in the price. O.K., this is simple so far. But now, people want more. They are in the stores and are saying, “I want a solution to my music needs.” So, now we introduce new concepts, like phones that come with music, and we make agreements with record labels and we say the music is yours for one year when you buy the product. So, this means that the device now comes with a camera, yes, but it also comes with music. Now from a business logic point of view, it’s the same. You get paid for that functionality. But, from a skills and capabilities point of view and a business dynamics point of view, it’s not the same. One is a hardware component added to the device: a camera. The other is content and services, which is software, basically. So this means that new skills, new capabilities, new partners and new people are required. Going from being a hardware company to a company that’s also content- and servicesdriven is a major change. We have many people who are struggling with that.
What's the best leadership advice you've gotten in your career?
KALLASVUO: Fortunately, I’ve gotten a lot of good advice. But one that I have been thinking about is more like advice on a personal level. When I became the chief financial officer of Nokia in 1992, I was young and far too inexperienced and all the rest of it. But nevertheless, I was given the job. So, I was told that it’s very important to remember that you are not only a person or an individual. You are also a representative of a system or a corporation called “us.” Sometimes you might be saying, as a person, “That’s O.K.,” but as a leader in an important position, you have to step up in a different way. I was thinking about that recently because I am a private person.
I am too.
KALLASVUO: And I realized that I cannot be so private any more. I have a role and responsibility as a senior leader at the company, to present an example. I’ve really taken that to heart. It was very important and very good advice.
Are you saying that as a senior leader, it’s no longer good enough just to articulate the strategy or the company’s values? You now are the company, and you have to live its strategy and values too?
KALLASVUO: Exactly. That was something I hadn’t thought about. I was simply: I am the CFO. So it was very good advice.
How did you make the transition from being a numbers guy — the CFO — to a guy who is leading the business?
KALLASVUO: But I am not a numbers guy!
Before I became chief executive, I was the CFO of Korn/Ferry International and that is exactly what I said too. I am not a numbers guy!
KALLASVUO: Yes. It’s a paradox. I was CFO for many years, but I’m not really a numbers guy. I started as a lawyer. My problem was I was a bad lawyer because I was too interested in the business side of things. I would close one eye and sometimes two trying to find a business solution to an issue. I decided I would try to do something else. I got involved with strategy and finance and then became CFO. But I did it more as a strategy person than as an accountant.
When you were at university, did you ever think you would eventually lead such a large company?
KALLASVUO: No. I wanted to make a living and not disappoint my parents.
So how does someone become a leader?
KALLASVUO: I think you grow into it. I don’t believe there is one leadership style. There are certain qualities: you need to respect people, you have to be honest, and you have to have courage. But people lead in different ways. People are not alike. I’m not saying one type of a leader is good and another is bad. But just as you grow as a person, you grow as a leader too. And you learn when you are leading people. I’m sure there are some people who are natural leaders who have charisma or something similar that makes people follow them automatically. But that’s not me. So, you learn and you practice and you grow into your leadership role.
Do you think leadership is about charisma or authenticity?
KALLASVUO: I don’t have great charisma, so I have to say it’s the other! I have been saying this internally. When we hit difficult times — when the global economy was really suffering — I held these town hall meetings. And I said, quite often, that we all know how companies change. They change if there is a crisis or if they have a charismatic leader. Then I said, “Well, we have a crisis!” I think people took that very well. I had not been thinking about it. It came out automatically. I even saw people blogging about it in the audience. One blogger even said that line was priceless.
When you make decisions as a leader, you have to have a great deal of confidence that, at the end of the day, it’s your decision. Do you agree?
KALLASVUO: I would say courage and confidence, as I mentioned before. You need both, and they are not the same thing. But when you make decisions in a company like ours, you are typically not alone. Sometimes, of course, you need to step up and say, “This is my call.” But only sometimes. In my view, making decisions is a team sport. So when we make decisions, we typically do it with the senior team. This company is so big and complex that if I started to make decisions on my own, it would be like shooting from the hip. I would make a lot of mistakes. Having said that, sometimes there are moments when you simply have to say, “This is what we do.” And sometimes that’s also what people want to hear. It’s quite interesting. Very often people say, “Oh, it’s difficult!” and someone says, “O.K., then, this is what we are going to do.” And, very often, after that, there is relief because a difficult matter has been decided. Then it’s, “Let’s move ahead!”
As the leader of Nokia, what’s your work-life balance like?
KALLASVUO: My children are out of the house. They are 28 and 25, and my wife is an experienced business person. So, she knows what I’m doing. She is not working actively now; mostly she does board assignments. But, frankly, my balance is not good and I’m O.K. with that. I’m completely O.K. with that. On this point, I say to people, “Don’t do as I am doing; do as I am telling you.” So, what I’m doing is O.K. with me and I’m fine with it. But typically people should have a good balance between work, family and themselves. People very often put themselves aside, and the balance becomes work and family. That’s not good either. You should take yourself into account too. The advice I have been trying to give is that you should have a triangle with work and family and with 25 percent of your time devoted to yourself.