A Nuance on the Burning Platforms Memo - Nokia Board and Nokia Chairman Reprimanded Elop For That Mistake

I came across this interesting article in Finland's largest newspaper, Helsingin Sanomat (published more than a month ago on 29 Sept 2013) about Elop's tenure while Nokia CEO (the article is in Finnish of course). It is mostly a biographical story of the departing Nokia CEO but it includes an interesting passage about the Burning Platforms memo, which may ring particular bells to our readers who were here in 2011 and lived throught its aftemath. Plus it sheds some light on the negotiations with Microsoft. So let me do my translation of that passage into English (I will include the Finnish part also at the end for those who know Finnish and might want to read it to compare)

Early on Elop experienced friction with the Board. He made decisions quickly and at his own initiative and did not always remember to inform the Board, which at this time was still led by past CEO, Jorma Ollila. Elop's adviser Stephen Miles confirms that during Elop's tenure at Nokia, he and Elop discussed a lot about how Elop might be better able to inform the Board, and get it to sign onto the proposals of his management.

Nokia Board members were particularly annoyed by for example the famous memo where he compared Nokia's situation to a man standing on a burning oil platform, who had to decide whether to jump into the freezing sea. The emotional memo was published internally in February 2011, a little before the Windows partnership was revealed to the world. The purpose of Elop's memo was to awaken the organization to the necessity of change. It ended up also condemning the company's Symbian phones, which Nokia had intended to sell for another 150 million units.

The leaking of the memo into the public domain did not make it easier for Nokia sales staff around the world. Many have estimated the memo to have been very expensive to Nokia, as Symbian phone sales became ever more difficult. At the Nokia Board, the memo was seen as a severe error in judgement, and Elop was given stinging feedback from Jorma Ollila. The cooperation with the Board would improve over time. In the Spring 2011 Shareholder Meeting appointed Elop as a Member of the Board.

With hindsight we know that the selection of Windows sealed in the end the sale of Nokia's handset business to Microsoft. After a couple of years, the Lumia phone sales did not meet expectations. and Nokia's worsening economic condition forced the Board to the painful decision.

The exact role of Elop in the sales process is not fully known. He did participate in the negotiations which included members of the Board, active management of Nokia, and outside advisors. Nokia Chairman of the Board, Risto Siilasmaa has emphasized, that he led the negotiations with Microsoft. The negotiations got to speed in February, when Siilasmaa and Ballmer met at the mobile industry fair in Barcelona. One is unlikely to ever know, what kind of bilateral talks Ballmer and Elop engaged in, if any.

So what is the news here. First, that the Board disapproved of the Burning Platfoms memo. No surprise there but nice to see it now reported in Finland's largest newspaper. Also that Jorma Ollila actually reprimanded Elop about it. Good to know. Now - that tidbit of recollection.. someone once wrote a few months after the Memo, that Elop must have been spanked recently, because he had already changed his mind on about a dozen mistakes in his memo.. Remember that? Now we know who did the spanking. It was big JO.

Also, no surprise from what we've seen of Elop's style, but yeah, he clearly was doing his thing without bothering to tell the Board and the Board had to chase him afterwards about what he had been up to... So even more proof that yes, the actual damaging decisions and especially those damaging communications (Memo, timing of Windows announcement, sudden MeeGo death announcement etc) came before Elop had 'remembered' to inform the Board. Why was he doing this? He had his cool bonus that he was working towards.. Nice to 'forget' to inform your boss, eh?

Lastly, we now know Elop was personally involved in the Microsoft sale - WOW what a conflict of interest and even Helsingin Sanomat speculates that Elop may have had private meetings on his regular trips to Redmond (because contrary to his original promise, he did not bring his family from Redmond to Finland.. the family was a convenient excuse to go meet up with his pal Ballmer, especially now that we learned that his marriage was so much a wreck, that the divorce proceedings were started already in 2012...)

For those who might be new to this story or this blog - the Burning Platfoms memo was indeed the costliest memo of all time and this was the first blogsite in the world to call it damaging to Nokia, at the time when we weren't even sure if it was written by Elop. The final count of the cost of the Memo is here. Meanwhile, on Elop - his time at Nokia was a disaster. His predecessor, Olli-Pekka Kallasvuo was fired after four years. Elop didn't last three years. The Nokia disasterous corporate performance under Elop is discussed here. And the most bizarre twist to the story - that Elop was paid 25 million dollars for having destoyed the Nokia handset business - yes this is true and was confirmed by Nokia that it was in his contract - that story is here. The Financial Times has just compared this heist to the worst greed we've seen on Wall Street, and counted that in his bizarre bonus package, Nokia shareholders paid Elop one million Euros for every 1.5 Billion Euros of Nokia value that Elop destroyed during his 3 years. The damage Elop achieved at Nokia is the worst management-caused damage in Fortune 500 sized-company history, worse than New Coke was to Coca Cola, worse than Toyota had with its brakes problems, worse even than the BP oil spill was to BP. If you just want the numbers to do your own analysis. Pure numbers-only Elop history is here.

So yeah, I know we are pretty well done with Elop - not quite, I have to do the final numbers of course now that we have the last Nokia Quarterly Results under Elop, and I have something quite spectacular coming up shortly on this blog (will there be pictures?...) 

 

From Helsingin Sanomat, recreated the above translation, in original Finnis:

Alkuvaiheessa Elopilla oli kitkaa hallituksen kanssa. Hän teki päätöksiä vauhdikkaasti ja omin päin eikä aina muistanut informoida hallitusta, jota vielä tuolloin johti entinen toimitusjohtaja Jorma Ollila. Elopin neuvonantaja Stephen Miles vahvistaa, että Nokia-aikana hän ja Elop keskustelivat erityisen paljon siitä, miten Elop ottaisi paremmin huomioon hallituksen ja saisi sen sitoutumaan toimivan johdon esityksiin.

Nokian hallituksen jäseniä ärsytti esimerkiksi Elopin kirjoittama kuuluisa muistio, jossa hän vertasi Nokian tilannetta palavalla öljylautalla seisovaan mieheen, jonka on tehtävä päätös hyiseen mereen hyppäämisestä. Tunteikkaasti kirjoitettu muistio julkaistiin yhtiön sisällä helmikuussa 2011, hieman ennen kuin Windows-yhteistyö kerrottiin koko maailmalle. Elopin muistion tarkoituksena oli herättää organisaatio muutoksen välttämättömyyteen. Siinä sivussa hän tosin tuli haukkuneeksi yhtiön Symbian-puhelimet, joita Nokia oli ajatellut toimittaa maailmalle vielä 150 miljoonaa kappaletta.

Muistion vuotaminen julkisuuteen ei ainakaan helpottanut Nokian myyjien tilannetta maailmalla. Monet arvioivat sen tulleen Nokialle kalliiksi, sillä Symbian-puhelinten kauppaaminen muuttui entistä vaikeammaksi. Nokian hallituksessa muistiota pidettiin pahana arviointivirheenä, ja Elop sai siitä kitkerää palautetta Jorma Ollilalta. Yhteistyösuhde hallituksen kanssa parani sittemmin. Kevään 2011 yhtiökokous nimitti Elopin hallituksen jäseneksi.

Jälkikäteen tiedetään, että Windowsin valinta käyttöjärjestelmäksi sinetöi lopulta Nokian matkapuhelinten myynnin Microsoftille. Lumia-puhelinten myynti ei parin vuoden jälkeenkään vastannut toiveita, ja Nokian heikkenevä taloustilanne pakotti yhtiön hallituksen kipeään ratkaisuun.

Elopin täsmällinen rooli myyntiprosessissa ei ole täysin selvillä. Hän oli mukana neuvotteluryhmässä, johon kuului hallituksen jäseniä, Nokian toimivaa johtoa ja ulkopuolisia neuvonantajia. Nokian hallituksen puheenjohtaja Risto Siilasmaa on korostanut, että hän johti neuvotteluita Microsoftin kanssa. Neuvottelut pääsivät vauhtiin helmikuussa, kun Siilasmaa ja Ballmer tapasivat Barcelonan matkaviestintämessuilla. Sitä tuskin saadaan koskaan tietää, minkälaisia kahdenkeskisiä keskusteluita Ballmer ja Elop keskenään kävivät, jos kävivät.

 Full article at Helsingin Sanomat website here.

Comments

[Interested to know]

Tomi, the world's been lucky to have you following this mess from the beginning. If only the shareholders would have listened :(

[Paul Lee]

I bought a brand-new Nokia N9 from eBay a couple of months ago for $249 and have been using it on daily basis with T-Mobile. I have to admit it's quite user-friendly, except for navigation app. It was certainly better than Android and iOS two years ago. But, Elop effectively destroyed it right after its birth two years ago.

I guess if Microsoft wishes to commit suicide, they are free to choose Elop as their next CEO, who is experienced to destroy a big company!

I am wondering why no body can stand up to stop Nokia device units sales. In this dynamic world of smartphone business, Nokia could be saved within a few months or more with its vast IP portfolio. With the Qt (I know it's sold to Digia) SDK and Qt Creator soon be available for Android and iOS, Nokia still has a chance to undo Elop's damage and quickly rises to the front runners of Android phone maker.

Who could stand up among Tomi Ahonen, Anssi Vanjoki, Thomas Zilliacus, etc. to rescue Nokia from falling into the death road of Nokia + Windows = No-Win in two years?

[Magnus Jørgensen]

This is nice to know.
All the MS fanbois out there telling me that, Elop only did what the board had instructed, where wrong after all.
He acted on his own accord..
Sometimes even without informing the board.

And now we hear that Elop might cut away all the XBox and Bing fat, if he becomes CEO of MS. I wonder if he ever gets a position in that league again...

[Interested to know]

That talk of Elop possibly considering cutting anything is BS- just like how he talked about giving Android a fair shake at Nokia. This is just the same PR tactics again.

Elop seems like the perfect CEO to follow Ballmer. He's stupid, myopic and comfortable around train wrecks.

[Earendil Star]

Disinformation is being ramped up before Nokia's shareholders' meeting.

Also price is being driven up to appease shareholders. We'll see the real performance once the shareholders' meeting is over and it approves the sale (make no doubt about it).

Any allegation that THTRH Flop was not in agreement with the board is ludicrous.
If it were so, the Board would have fired him.

No, the Board had made its mind up BEFORE hiring THTRH Flop. Once the decision was made, two outcomes were considered:

1 - Plan A) Nokia adopts WP, and WP is successful (yeah, we know how that played out). Nokia may remain independent, but it is no longer in control of its future. Real profit goes to MS. Nokia limps along as a low margin, captive OEM to MS.

2 - Plan B) WP is such a (P)OS that its (unreasonable) choice as SOLE (P)OS leads to a Nokia crash. Eventually, MS gets up Nokia for peanuts, thanks to THTRH Flop. MS has bought some more time to try and attempt the rescue of the real burning platform: WP. Make no doubts about it: MS has the means to try, insist and possibly be successful in the attempt.

THTRH Flop was just a puppet. He is now reaping the benefits of executing was he was told to do (otherwise he would not have received the pay package he received from MS, nor gone back to MS, and be one of the lead candidates for the CEO post at MS).

Jorma is now trying to hide his responsibilities from what happened. But we know better.

As for THTRH Flop, I really wish him to become MS CEO. This would be a beneficial move for all.
Go Stephen, go.

[Sander van der Wal]

Selling Nokia's Symbian phones became *more* difficult. Which means that the phones sold badly, and the memo made things worse. It was not that the phones sold brilliantly and the memo sank them, or that the phones sold just below market average and ghe memo made that worse.

Then, apparently it is possible for Microsoft to plan 3 years ahead to get Nokia for a song, and at the same time it is impossible for Microsoft to plan ahead 3 years in advance to make everything else they do a complete success too.

This is very much a tinfoil hat argument. An entity is either brilliant, and all their devious and cunning plans execute to perfection, or they are fallible as the rest of us and the result of their actions is due to luck, preparation and errors.

You cannot say that Microsoft planned this all along and not explain why everything else they did failed completely.

And, you need to take into account the damage that Microsoft is suffering in mobile. For Microsoft to be able to buy Nokia for a song they had to manufacture the WP 7.5 disaster which resulted in them loosing two years in mobile. And which resulted in Apple and Samsung becoming how much richer? 50 Billion dollar? And being better entrenched to boot, the value of which is orders of magnitude higher.

Arbuing for a theory that has the bad guy deliberately loosing that kind of money compared to the competition is insanity.

[Pekka Perkeles]

Is this ever going to end?

[pirater un compte facebook]

Nous allons présenter les différentes méthodes utilisées pour pirater Facebook, afin qu’ils puissent apprendre à faire et apprendre à vous protéger. Ces jours-ci tout le monde se plaint qu’ils ont piraté son compte Facebook et veux le récupérer, aujourd’hui, c’est devenu un problème assez important en raison du manque de connaissances sur la façon dont les choses fonctionnent sur Internet. Cet article va vous donner des informations pour tous les utilisateurs de Facebook qui sont curieux de connaître sur le piratage de Facebook et que votre compte a été compromis par des pirates et les spammeurs. Facebook est un endroit assez sûr, pour la plupart, il est impossible de briser le système de sécurité de Facebook, on dit la plupart du temps, car il a été montré à quel point il est facile de sauter la question de la sécurité de amis Facebook et comment ils peuvent pirater les comptes Facebook à l’aide amis communs, si vous êtes victime d’un piratage Facebook est plus susceptible d’être dû à vos erreurs, et non parce que Facebook a eu un coup de main dans ce domaine. Avant de discuter des méthodes pour pirater les comptes Facebook, il est important de préciser une chose, «les programmes de pirater Facebook n’existent pas vraiment. Il existe de nombreux programmes de pirater Facebook faux de 007 Facebook hack, pirate Facebook ID. Ces programmes sont en fait des logiciels malveillants créés pour capturer des données sensibles telles que les e-mails, informations de carte de crédit, numéros de téléphone, Qui peut être utilisé à des fins de marketing.

[ashok pai]

what is really rankling is that the finnish people have swallowed this heist with nary a word of dissidence. what have we come to ? nokia was a a sizeable chunk of finland's GDP. to lose its crown jewels so easily is a sorry state of affairs. this almost seems like the nation was robbed by a common thief from microsoft

[ashok pai]

@Magnus Jørgensen,
I wish he gets hired as the ceo of microsoft. they really deserve this idiot as their leader! imagine the ruin he could bring about in microsoft. we really need some good old revenge - it's best when served when its hot!

[Spawn]

Thank you, Tomi, for picking up that vital detail in the burning-Nokia saga.

After all I was right too that its Elop himself only doing that. And yet I was wrong on his motivation. Not ego but a 25 million lust. Yet this isn't the main message attached. Ifs not about Elop since we are all aware of his damage mission and now also of his motivation. Its about the processes that made him allowing to execute this mission.

JO, the Nokia BOD. WTF? Elop "forgets" to "communicate"? Skips, no ignores, no powers off, the whole Nokia Board and is free, jobody stops him, in doing whatever he likes to do? How the heck was that possible? What was the reason the Nokia BOD lost efective any control, any power, wasn't able or willig to do its job when Elop joined?

Something smells. I repeat my take that every single member of the Nokia BOD was put on pressure to keep down, close eyes, let Elop do. May it be money they received or promisses to not leak there dirty secrets, collected via NSA, to the public. The Nokia BOD was nothing but a puppet-show during past years.

[Spawn]

@Earendil Star

> If it were so, the Board would have fired him.

As it looks that was not possible. The spanking, as in change of some of Elop's stupid decisions, was only applied to mostly irrelevant parts. The main burnjng-strategy stayed intact and was successfully executed. From preventing Nokia to do anything else then WP, Android, to destroying all alternates left, Meego and later Meltimi. From moving away to the most successful Nokia markets, like China and Africa and South-america, to the least successful one, US. From the Skype to the Sales-channel boykot. From ongoing and increasing carrier-relationship damage to shifting from Nokia's device-competition to Microsoft's ecosystem war.

Smoke in the mirrors to suggest that the switch back to the old, before Elop, product-naming was a prof of Nokka BOD still working. No, the Nokia BOD stopped working when Elop joined. Why? That is the essential question.

> No, the Board had made its mind up BEFORE hiring THTRH Flop.

And then had to stick with that during all those years of hard and increasing downfall? Come on. What happened is that Nokia BOD lost control, was not able to do anything any longer. That happened before the memo, so much is clear. It may have happened before Elop's appointment even when stated otherwise by JO. That explains why...

> Once the decision was made, two outcomes were considered:

Those two options where the only options left for Nokia before the burning-Nokia memo happened. The decision was done, Elop executed, Nokia BOD was left to read-only whats going to happen.

> Jorma is now trying to hide his responsibilities from what happened

I question that he had any option to stop Elop's burning mission. I question the whole Nokia BOD had any responsibilities - as in ways to do otherwise, to adjust and change - left.

[Jamie]

Thanks Tomi for translating that Finnish piece albeit it is a poor attempt to wash JO and his Nokia BOD. They were either clearly asleep on the job or purely incompetent as Elop flop continued to destroy a great company.

In my humble opinion, Elop flop is criminally responsible for destroying Nokia and JO, Risto and Nokia BOD were complicit or collaborators in those actions. There was no way one could have been aloof to what was happening even when viable projects (N9, Meego, Qt, etc) were thrown under the bus, factories were being shut down, sales channels destroyed and good people shown the door not in one quater but for 3 consecutive years. I can understand some persons may have been incompetent but all members of the board including two chairmen of Nokia ? There was indeed collusion and only some external investigators can get to the real root of Nokia's decline. The idea that Nokia's sale was settled over a cup of coffee between Risto and Ballmer, is someone's pure imagination.

Now regarding the future, somehow I do not see what other verdict investors can give than the writting on the wall. It is the bitter truth. I would urge the Finnish/European anti-monopoly authorities to reject this sale. The sale is only meant to give one monopoly (MSFT) a major share in handset business. The way this sale has been conducted smacks of monopolistic ways of destroying competition and acquring market share. It should not be allowed to go through.

It is also not in the interest of Nokia shareholders to sell the business at such a low price (similar price to what Telefonica is selling its Czech affiliate). Your business is worth a lot more that whats on the table.

[glutamine]

If some one wishes to be updated with newest technologies therefore he must be go to see this site and be up to date daily.

[B a r o n 9 5]

All is well that ends well.

The Nokia failed WP phone business gets shipped to Microsoft along with Elop. If Elop and WP are so bad, you guys will get your revenge, so cheer on. And Nokia has an extra $7B and the share price gets a 50% bump.

Under the terms of the sale Nokia can buy Jolla and launch Nokia branded smartphones again about 18 months after the early 2014 expected deal close date. And Meego/Sailfish/Nokia can kick Google/Android, Apple/iOS, and Microsoft/WindowsPhone ass and dominate the world.

So - why aren't you guys happy and cheering?

Nokia gets rid of Elop and WP, Nokia has the $7B to invest. Nokia re-launches Meego, who is being improved by Jolla.

Nokia takes over the mobile world again? Awesome right?

Except for the fact that you *know* that Microsoft and Elop will make Windows Phone a great third ecosystem and Jolla/Meego has no chance.

That is why you are upset?

[ashok pai]

@B a r o n 9 5
"Nokia takes over the mobile world again"
that's a stretch, even if you were *sarcaustic*
could have been done now than later! it's like throwing away the baby with the bath water and say we could make a few anyways.

[Jamie]

@Baron95, with this deal, MSFT is getting away with anything in the company we know today as Nokia: just name it - Elop has sold off most Nokia properties, and I would not be far from the truth to say part of the money to pay for Nokia comes from those proceeds. MSFT is taking everything, including feature phones, Nokia brand on phones, All employees, kadre even HR department (whole sale). What Nokia built over decades, entire departments, sales channels, all gone in one stroke of a pen.

Flop was not stupid, an argument that has been pushed by some to excuse his plunder of Nokia. He was sent on a mission with a handsome bonus of 25 million (partly paid for by Nokia) to top it up. This bonus defended clamsily by Nokia chairman, and you say, Nokia BOD were not partners to the crime ?

Ok, why doesnt MSFT take their THTRH Flop for CEO, Nokia can sell them Lumia range at market rates but leave rest of Nokia to find its own destiny ? The gains in kind for the Lumia range are a major achievement for MSFT that has had little success in this area. Nokia on the other hand should close this dark chapter and review future strategy inline with current market.

[RottenApple]

@Jamie:

Yes, Microsoft is taking everything - even the feature phones.
Think about that last part for a minute or so - even the feature phones! - a part of the Nokia operation they have no interest in whatsoever because it won't help them keep WP afloat.
Can't you just imagine that Nokia themselves know that this is a dying business that will take immense costs to wind down?
So why did MS buy it? The only answer imaginable is that they couldn't get the parts they wanted without it. So much for a one sided deal.

Let's face it: Nokia's mobile business is a loss making operation. Microsoft needs it, though, because without it they'd be out of mobile. It has been also shown time and again that it was an inflexible monster. If Nokia really wants to continue in mobile, it's better to start fresh. The stuff they just sold won't help them get back up again.

And whether Microsoft can make it a success remains to be seen. Microsoft has the money, yes, but since so much depends on the Nokia brand it may easily crash and burn since MS is a highly unpopular brand.

[Asko]

1) I believe Elop was fired from Nokia's CEO position and the 25 million dollars is a severance payment.

2) And Nokia cannot get better price for its smartphone business until the Windows Phone exclusivity contract with Microsoft ends. It is very likely that Nokia will have to pay Microsoft a lot of money to break it prematurely.

BTW The HS article reminds me about some ADHD people that I have met and that are very difficult to control.

[Jamie]

@RottenApple, Can you imagine that those "dumb" feature phones made a profit this last quater ? Please note that they are the only Nokia phones with a keypad which for most people in developing world who need a basic phone, dual SIM and mobile money (very popular in Africa) it is enough. It has been argued here that there is a market for Querty keypad equiped phones and Nokia has made very good ones. MSFT has seen that leaving this part of the business behind might just give Nokia a lifeline and Flops mission would remain incomplete. The deal shows clearly that MSFT has no wish to see Nokia resurgence. Even though MSFT does not need this part of the business, they wish to make sure Nokia has little chance of a comeback in handset business. See how smaller handset makers have struggled. And Brand is everything in this business just ask HTC, Sony, HP, or even MSFT.. It is a hard market for unknown brands. There was a very good article in HS by a fomer Nokian who set up Benefon.

I therefore do not think starting a fresh is as easy as it sounds. The key personnel experience, skills and teams developed in 3 decades cannot be replaced overnight especially when there is such limited cash and all properties sold at throw away prices - even Nokia HQs is now rented. Makes me conclude that there was systematic and deliberate action to destroy Nokia by CEO Flop. The Nokia Chairman and Executive board have been either incompetent or working in collusion with Flop.

MSFT will start to downsize, fire emplyees as soon as the business has moved over to their side. It will be theirs and there is no reason to keep extra weight that "add no value". It may not succeed but it is the one and only chance MSFT has in the smartphone wars. So they will stickout for the long term even if it means buring cash for now. Nokia on the other hand has not that time. Nokia needs fortunes to reverse Now.. This deal had to be but why agree to such conditions and allow MSFT take everything ?