Read our exclusive two-part e-interview with Dan Steinbock, author of The Nokia Revolution: The Story of an Extraordinary Company That Transformed an Industry.

Be sure to look out for part two of our e-interview with Dan, coming your way soon!

MWorld : Nokia has been the subject of many articles. Why did you feel the need to write The Nokia Revolution?

Steinbock: Around 1994, one of Nokia’s senior managers asked me to write the story of the company. At the time, I had to decline, due to other commitments. But I did begin to follow the company more carefully. In the past years, my Finnish and international students have written many papers and several theses on Nokia as well. With the Internet Revolution in the United States, I could not help but notice another revolution that involved not only the wired Internet, but the mobile Internet as well. And in that revolution, Nokia plays a leading role.

Furthermore, Nokia remained relatively unknown internationally until the late 1990s. Thereafter, the coverage has been very extensive, but lacking in depth. As I have read one feature after another, I couldn't get rid of this feeling of "yes, but…" Today, Nokia is a global player, yet its roots are deep in Finland. Although it makes less than 2% of its revenues in the Finnish base, almost 50% of its strategic production remains in Finland. As I felt I knew the Finnish and the international side of Nokia, I thought I could provide a more comprehensive perspective to the firm.

MWorld: What are some common misconceptions about Nokia?

Steinbock: Until recently, many people thought that Nokia was a Japanese company. After all, the name of the company "sounds" like Sony or Sanyo. A more substantial misconception pertains to market expectations. In markets, there is a tendency to idealize a successful underdog; and this tendency is often proportionate to the lack of knowledge on the company.

When the Nokia story became more familiar in the late 1990s, the company was perceived as invulnerable. Inflated expectations generated inflated valuations. This, of course, was not the company’s fault, but originated from the logic of the markets. Yet, a company should be assessed in terms of its real-life drivers, not expectations. It was for this reason that I added the last chapter in The Nokia Revolution. It deals with the drivers of Nokia’s success, which, indirectly, illustrate how and when Nokia might fail.

MWorld: From forestry to cable and electrical power, from cellular phones to the mobile Internet, Nokia has re-created itself again and again. What factors account for the company’s amazing adaptability?

Steinbock : Though almost 140 years old, Nokia has endured Russian oppression, a Bolshevik revolution, a struggle for independence, a tragic civil war, a worldwide depression, two world wars, reparations, cyclical recessions, and the premature deaths of its key executives. Ultimately it’s the vision of innovation that accounts for Nokia’s extraordinary ability to survive.

But even this story is changing. From the mid-1860s to the late 1980s, Nokia was a big company in a small country. Today, Nokia has a global strategy. The company has demonstrated time and time again that it can beat adversity. Now it must survive the test of global leadership -- and that is the hardest of all challenges.

MWorld: How has being Finnish given Nokia an edge over its U.S. and Asian rivals?

Steinbock : Through most of Nokia’s history, the Finnish background has been more of an obstacle than an edge. It kept Nokia in the margins of the European Union for decades. It kept Nokia outside the U.S. Marshall Plan, which made the technology catch-up very hard. Ironically, the company’s success stems from a national tragedy. When Finland lost two wars to the Soviet Union, the country had to pay severe reparations. This turned Nokia into a major cable manufacturer, which in turn prompted its diversification into electronics in the late 1950s. A decade later, Nordic cooperation accelerated digital investments and mobile developments in all Nordic countries.

The competitive dynamics that gave Nokia an edge over its U.S. and Asian rivals emerged only in the late 1980s, when the EU made GSM a mandatory standard in Europe and Nokia seized the opportunity. Of course, the fact that the country is small is an asset of sorts as well. It forces one to do more with less; and, internationally, a Finnish company that can succeed in one industry is not perceived to be as threatening as an army of Japanese firms, which can capture leadership in several industries.

MWorld: Nokia is virtually a household name. How did the company make its brand so ubiquitous and memorable?

Steinbock : There are two chapters to the story. The first one is a century old.

In 1905, Nokia’s name still conjured a river in Finland. Over time, however, the brand name proved so strong that, by the 1920s, the Finnish Rubber Works -- one of Nokia’s precursors -- started to use it. Galoshes branded the early Nokia; rubber boots and winter tires represented the company until the end of the 1970s. Like a generation of Finns, I grew up associating Nokia with rubber boots, winter tires, and toilet paper.

The more recent chapter stems from the early 1990s, when Nokia opted for a "global focus" strategy. When the company was still a smaller rival, global branding meant costly investments. But over time, such expenditures would pay off. Like its Japanese models, Nokian executives think in the long-term. Today, most consumers recognize only the "big three" mobile vendors: Nokia, Motorola, and Ericsson; possibly they recognize Siemens or Samsung.

By the year 2000, Nokia had the world’s 5th most valuable brand. That has protected the company from price wars, which can turn into a nightmare, as Ericsson and Motorola have seen.

MWorld: What accounts for Nokia’s impressive ability to know when to listen to the customer...and when not to?

Steinbock : Necessity and crisis. Unlike its rivals in the 1980s and early 1990s, Nokia couldn't take any of its customers for granted. It had to fight for each. When it finally attracted more and more customer segments, it had little desire to start the fighting anew. It’s far cheaper to retain a customer than to keep trying to attract new segments. Through its history, Nokia has understood this concept almost instinctively.

But there’s more than necessity to the story. It was Nokia’s financial crisis in 1992 that resulted in the new strategic leadership. Like Ollila, these execs knew that the future was digital cellular, not analog. Had the company remained complacent and content with its existing customer base, its digital transition would have been delayed. This was Motorola’s mistake and why it has struggled for half a decade to catch up with Nokia. If a company competes in an industry in which strategic advantages must be renewed with each new technology generation, then senior execs must know when to listen and when not to listen their customers. If the timing succeeds, the company thrives; if the timing fails, the company fades into history.

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