When Nokia chief executive Stephen Elop booked the Grand Tarabya hotel in Istanbul for the group's annual leadership meeting at the end of January, he planned a spectacular finale. As the meeting of 200 senior executives drew to a close, musicians introduced themselves into the room, playing Ravel's Bolero, until the whole orchestra was present for the climactic bars.
"My message was that the way we would succeed in the end was if each of us played our role, and each instrument came together to build this beautiful symphony," Mr Elop says.
The Nokia boss likes a metaphor. It is two years since he stunned the Finnish mobile telecoms company and the sector with a memo – quickly leaked – that warned Nokia was standing on a "burning platform". The company would perish unless it was prepared to jump into the icy water. Days later, on February 11, he announced the leap: a controversial alliance with Microsoft in smartphones to build a "third ecosystem" to rival Apple and Google's Android, and an accelerated pursuit of the "next billion" consumers in emerging markets.
At the time, there were still a few inside Nokia who doubted the situation was that dire. The company was, after all, the biggest handset manufacturer in the world. It was still infected with what one senior executive has called "the arrogance of Nokia". But if some could not yet smell smoke, they quickly felt the flames as Nokia implemented a deep restructuring.
Since then, Mr Elop has sought to tackle a trio of internal challenges identified in a two-part FT analysis in April 2011: to become more open, more accountable and more agile. But the company, which launched four new devices on Monday at the Mobile World Congress in Barcelona, has yet to answer adequately the most important question: will consumers buy Nokia's phones in sufficient quantities to guarantee its future?
Mr Elop is often asked whether he has a "Plan B" if the Windows phone plan falters, but there were, and are, few other options short of a break-up of the whole company. The choice of Android as a smartphone platform would have led Nokia into a fragmented, commoditised, overcrowded market. The Microsoft deal "was the only strategy that was really available to them," says Richard Windsor, an independent analyst and founder of the blog Radio Free Mobile.
Nokia has adapted its structure and cost base to this reality. The company, which employed 65,000 (excluding the Nokia Siemens Networks joint venture) in early 2011, now has 45,000 staff. It has closed or consolidated 200 out of 500 sites worldwide. Nokia used to launch about 50 new products a year; it now introduces 25.
Last year, Nokia sold and leased back its Espoo headquarters, just outside Helsinki. Some analysts interpreted it as a sign of the depth of Nokia's plight, but corporate controller Kristian Pullola says the decision signaled "nothing is sacred when it comes to driving the focus on cash". Nokia went through all cash flow sources to identify the "owner" of every cash-generating item.
Nevertheless, between February 2011 and mid-July last year – just after Mr Elop was forced to announce a further 10,000 job losses – the share price fell 83 per cent. Samsung snatched the mantle of world's biggest handset maker. In January, Nokia cancelled its dividend for the first time in its 148-year history.
Focus, Focus, Focus
Executives say what looked from outside like a deepening crisis reinforced Nokia's determination to reform its overcomplicated management systems. Mr Elop claims to have increased the "intensity of execution" of the strategy. "Focus" is the word Nokia executives interviewed for this article kept repeating.
For instance, Jo Harlow, who leads the smart devices division, has mapped Nokia's management structure against that of its US partner, to improve efficiency. Nokia created the roles of program manager, head of quality and head of engineering to match similar roles at Microsoft "so that engineers can talk to engineers, quality managers to quality managers, and so on.
"We have taken a lot of the fluff out of the product program development cycle so that [product developers] have mature innovations that they can implement . . . in a timely fashion," she says.
Examples include "optical image stabilization" – which produces steady video even when the camera is moving – on the flagship Lumia 920, and the entry-level Lumia 620's "dual shot", two-tone molded cover. Under the old Nokia system, she suggests, the company would have had to choose between an innovative product, brought to market late, or a punctual product with less innovation.
One reason was that decisions that should have been taken locally got stuck at committee level at headquarters. But in the "controlled mania" of producing a first Windows phone by the end of 2011, Ms Harlow says Nokia learnt to "give the teams the authority to run faster". At the same time, she says the company, guilty in the past of overcomplicating new products, has "made hard choices not to do something just because we could", in refining the Windows platform.
Juha krs, Nokia's head of human resources, says one side-effect of becoming smaller is greater co-operation. To his surprise, internal measures of staff satisfaction have continued to improve, even during the gloomy first half of 2012.
Bumps in the Road
But Nokia has also faced setbacks, notably in its attempt to strengthen the second pillar of its strategy: to sell more mobile phones in fast-growing markets such as China and India. The company admits it was slow to bring its most innovative full-touch featurephones into these markets in the first half of 2012, allowing Samsung and HTC to steal share.
Mr Elop tightened control. In June, he brought Juha Putkiranta, in charge of factories, supplies and logistics, and Chris Weber, new head of sales and marketing, into the senior leadership team. Both would now report directly to the chief executive. "We really ratcheted up the degree to which the senior leadership and layers below were involved in what was going on," Mr Elop says.