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Nokia CEO Stephen Elop speaks during an award presentation at the close of the Nokia World 2010 conference at the ExCeL Centre in London, September 15, 2010. (REUTERS/Luke MacGregor/REUTERS/Luke MacGregor)
Nokia CEO Stephen Elop speaks during an award presentation at the close of the Nokia World 2010 conference at the ExCeL Centre in London, September 15, 2010. (REUTERS/Luke MacGregor/REUTERS/Luke MacGregor)

Nokia chief rallies troops to arrest decline Add to ...

In a now-famous memo to employees of troubled Nokia Corp. , the world's largest phone maker, its friendly new Canadian CEO struck a tone that many thought apocalyptic.

Nokia, wrote Stephen Elop, "was standing on a burning platform. And we have more than one explosion - we have multiple points of scorching heat that are fuelling a blazing fire around us."

To Mr. Elop, the only course of action was quite simple: Jump, and take "a bold and brave step into an uncertain future."

In an interview on Friday, the chief executive officer says the memo came from remarks he made in a speech to employees, whom he said appreciated the honesty with which he summed up their problems and the way he spoke optimistically about the future.

"It was a clear statement of the challenges; it was a call to arms," Mr. Elop said in an interview before a speech at McMaster University in Hamilton, where he showed a slide with an oil rig in flames. "The memo was a step on the journey."

Nokia, a global giant dating from 1865, has corporate roots in everything from forestry and rubber galoshes to toilet paper and wireless-network building. In the latter, the company is still an international force, and has been since the early days of cellphones.

But although the company remains the world's largest handset maker by volume of shipments, particularly to emerging markets, it has failed to produce a smart phone that sells well with consumers. It has seen its market share wither in developed countries and has struggled to make its Symbian operating system appealing, in the face of Apple Inc.'s iOS and Google Inc.'s Android.

One of Mr. Elop's first major moves was partnering with his former employer, Microsoft Corp. - where he headed the massive business unit responsible for the Office suite of products - so that Nokia's handsets would run the Windows mobile operating system. Mr. Elop said he made the final pitch for the monumental alliance to Nokia's board the night before he appeared on stage in London with Microsoft's CEO Steve Ballmer.

Despite the company's woes, Mr. Elop is optimistic about Nokia's future - about pursuing tablets "either directly or through partnerships" and about gaining traction in the smart-phone market. But he is fully aware that he was hired to save the company. He said he would not have accepted the task had there not been complete awareness within the board and company that "fundamental change was required" in order to save Nokia.

"I was hired at Nokia, obviously, to lead the company during a time where the market environment and the conditions are changing very rapidly," Mr. Elop explains. "We've taken decisive action, from a position of strength."

But the challenges are huge. The Nokia brand has wilted in the West, where many of the most lucrative wireless markets are. Mr. Elop says that by the end of April, investors will have a much clearer picture of the amount of "disruption" required within Nokia's ranks to stem the losses. Rumours have swirled of big layoffs to come, particularly among the thousands of in-house software developers nervous about what the Microsoft partnership means for their jobs.

"He needs to be able to continue to rally the troops, to maintain that sense of marching to a better future," says Charles Golvin, a principal analyst at Forrester Research. "The layoffs, the pain, is about to hit … They have to get devices in the market, and the longer they take to do that, the worse it's going to be."

The company was in such desperate need of radical change that for the first time it reached out for a non-Finnish CEO to lead the Espoo-based multinational, which is a national champion the same way Nortel Networks once was for Canada.

"There's a 10-year history of Nokia insiders trying to reverse the trend" of decline in the key North American market, said Martti Haikio, author of Nokia: The Inside Story. "Something dramatic had to be done."

Oddly, the dramatic shift at the biggest handset maker on Earth will come from an unassuming, genial Canadian with a background in software and networks, who grew up near Hamilton and talks hockey.

"My heritage as a Canadian has been a source of strength for me entering a Finnish company," he says, citing forestry, wintry cold and growing up in the shadows of a superpower as similarities between the two countries.

Mr. Elop has survived his first, long dark Finnish winter. It was no doubt aided by a frantic pace that has him darting around the world - he just flew in from Kuala Lumpur and will leave shortly for Seattle, before he's off to Europe again - trying earnestly to save a company.

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  • Updated August 23 4:02 PM EDT. Delayed by at least 15 minutes.

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