Nokia was the leader of the mobile phone market and then almost went bankrupt, while the reasons are numerous there are lessons to be learned. In the book Transforming Nokia by Risto Siilasmaa published by McGraw Hill, NY, 2019 the author offers some views. Mr. Siilasmaa was Board Chair for a number of years.

One of the challenges of the Board was what to do? Mr. Siilasmaa liked to map out different alternative scenarios.

Scenario mapping enables you to minimize the likelihood that you overlook something important and maximize the likelihood that you are prepared for whatever scenario eventually occurs.

The idea is picking 3 paths deciding whether they are positive or negative for the company, and defining specific actions that can taken right now and later to influence that future, you are more likely to be successful.

Scenario planning is a method of bringing discipline into thinking about the future and a tool for dividing big problems into manageable pieces, enabling you to deal with each piece separately. The strength of the exercise depends on the breadth and depth of your perspective: listing all the relevant alternatives and driving deeply into the key details of each possibility.

The scenario three is a living, growing organism. Each time you discuss your findings, you will find sub branches that need to be explored. New possibilities are revealed both positive and negative.

In the board setting, management does the homework.

The mapping of the scenarios is all

 

 

Nokia was the leader in the mobile phone industry and then almost went bankrupt, while the reasons are numerous there are lessons to be learned. In the book Transforming Nokia by Risto Siilasmaa published by McGraw Hill, NY, 2019, the author offers some views.  Mr. Siilasmaa was Board Chair for a number of years.

You can easily imagine if the company is going through many changes, the Board of Directors is facing many changes. As Chair, Mr. Siilasmaa wanted the Board to operate differently and came up the Golden Rules.

1. Always assume the best of intentions from the actions of others. Operate openly, honestly  directly and expect others to do the same.

Give everyone the benefit of doubt. Agreeing to the rule allows for the leader to listen to criticism and have a constructive discussion.

2. Our philosophy is data driven and based on analysis. We always aim to analytically map out the alternative future scenarios for the company and strive to understand the triggers and levers related to those scenarios.

This means it obliges you to find out how things really are. To be successful management needed to change how it worked with the board.

3. Be well educated in the company’s business and deeply engaged in the discussions with the management. Expect the management to support you learning more and be open, straight forward, and engaged in its dealings with the board.

The idea is the board becomes familiar with the issues to be a brain trust. When something works you both win and when something fails, you move on and try again.

4. Be prepared to debate, but do it in an informed  unemotional, respectful manner. Affirmatively support the decision even if you did not win the debate.

Disagreement is important, if there is no way to hear worries why be there?

5. Firmly and respectfully challenge management while keeping in mind that the board is successful only when the management is successful.

The board should assist top management to come up with the best possible strategies. Absolute challenge and absolute support.

6. We seek to constantly improve in everything we do. All board members are expected to contribute to the improvement of our work, tools, and processes as well as the way we work as a team.

Continuous improvement is a good thing.

7. We encourage the management and board members to engage with each other outside the board meeting as well.

To improve it makes sense to talk outside of the formal forum.

One important caveat: management see the board members as consultants it is there call if they use the idea or not. The board member should write a memo to the other board members so all can learn

8. Our board is light on formality and heavy on substance.

A meeting without laughter is not a good meeting

Linking to dividend paying stocks, there was a Chair of a Board who once was quoted in the press the AGM should be over in 15 minutes. In view of that statement do you think directors disagreed with the Chair? Eventually the company parts were sold, could it have been a different story?

There are more questions than answers, till the next time  – to raising questions.

 

 

 

 

 

 

 

 

 

 

 

 

 

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Nokia was the leader in the mobile phone industry and then almost went bankrupt, while the reasons are numerous there are lessons to be learned. In the book Transforming Nokia by Risto Siilasmaa published by McGraw Hill, NY, 2019, Mr. Siilasmaa offers his views. Mr. Siilasmaa was Board Chair for a number of years.

The core of entrepreneurial leadership requires behaving as a paranoid optimist. This means underneath all the fear and confusion around you, you can be an optimist because you are convinced you will find a solution to the problems confronting you. At the same time you are paranoid about what can go wrong.

In practice, paranoid optimism calls upon leaders to explore a full spectrum of scenarios: the best case, the worst case, and the options in between. By imagining the unthinkable, you will not be surprised and can generate strategies that will help you avoid it. The result you can radiate an unwavering certainty of eventual victory.

Practicing paranoid optimism sharpens your foresight, expands your options, and helps you to respond to crisis and cope with change. As the Scouts motto be prepared.

Linking to dividend paying stocks, when you evaluate them given they should have the resources to be prepared for different options, are they?

There are more questions than answers, till the next time- to raising questions.

 

 

 

 

Nokia was the leader in the mobile phone industry and then almost went bankrupt, while the reasons are numerous there are lessons to be learned. In the book Transforming Nokia by Risto Siilasmaa published by McGraw Hill, NY, 2019, the author offers some views. Mr. Siilasmaa was Board Chair for a number of years.

In every downturn there are options one is to walk away and let someone else do the heavy lifting, if you stay you need principles to operate on. Mr. Siilasmaa’s is based on Entrepreneurial Leadership:

1. Hold Yourself Accountable. You need to care deeply about everything that happens or have ownership. If it is broken have it fixed, if it needs cleaning clean.

2. Face Facts.  Facts are a welcome opportunity, never a negative. Embracing bad news is the only way to make sure people will tell you and the rest of your team what is really happening. Never get angry at facts or the people who bring them forward, show gratitude.

3. Be Persistent.  You do not have to like the facts, but you must believe there is a solution.

4. Manage Risks. Risk management means choosing which risks to take, with open eyes, and in a deliberate analytical manner.

5. Be a Learning Addict.  Every challenge, every problem, every piece of bad news is an opportunity to learn and improve. To stop learning is to stop living.

6. Maintain an Unwavering Focus.  One way or another everything comes down to your products and your customers.

7. Look to the Horizon. Always look to the horizon, even when putting out the fires at your feet. As a leader of you do not, no one will. In a healthy organizatio, the top management spends a large portion of it’s time worrying about the distant future.

8. Build a Team of People you Like and Respect. Happy people do better work for a long time and loyalty breeds loyalty.

9. Ask Why. We tend to ask what questions rather than why. The why questions forced people to think, why do you think this is a good strategy?

10. Never Stop Dreaming. Some people see things as they are, and ask why. I dream of things that never were and ask why not? ( Robert Kennedy using a quote from George Bernard Shaw).

Linking to dividend paying stocks, we are drawn to a stock because of its profitability and its ability to pay dividends, but stay for the management style. A profitable company should be one that you would want to work for. In this example Mr. Siilasmaa’s principles of leadership should be easily found in many other companies. Are they in your investments?

There are more questions than answers, till the next time- to raising questions.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nokia was the leader in the mobile phone industry and then almost went bankrupt, while the reasons are numerous there are lessons to be learned. In the book Transforming Nokia by Risto Siilasmaa published by McGraw Hill, NY, 2019, the author offers some views. Mr. Siilasmaa was Board Chair for a number of years

When a company is restructuring it is hard on everyone connected to the company. In some companies, the senior people are taken care of, Nokia went down a different path

The program was called Bridge based on 4 principles:

Nokia would accept our responsibility, rather than blame others or the market,

Nokia would actively lead rather than expecting government to step in

Nokia would involve all relevant parties as full partners.

Nokia would communicate openly.

Bridge offered 5 paths, or bridge, to a new life. Employees could opt to transition: to train for a new job at Nokia, study at a post secondary education, start your own business, find a job at another company, or do something different

Nokia contributed training, career counseling, equipment and $500 million in financial support.

The Bridge program resulted in 60% of employees knowing the next step when they left the company. It helped start 1,000 new companies and 18 months later a survey said 85% felt reasonable the way they were treated was good or very good.

Linking to dividend paying stocks, all companies strive to be successful employing people and they get attached to the company. Economies go through cycles and change, how you let people go also defined the culture of the company. Generally for the profit making companies more is expected, how did your investments do?

There are more questions than answers, till the next time – to raising questions.

 

 

 

Nokia was the leader in the mobile phone industry and then they almost went bankrupt, while the reasons are numerous, there are lessons to be learned. In the book Transforming Nokia by Risto Siilasmaa published by McGraw Hill, NY, 2019 the author offers some views. Mr. Siilasmaa was the Board Chairman for a number of years.

In many ways, board members and investors are similar because each is dependent on the information provided by management. In most cases, management wants to give positive information, that is normal. Mr. Siilasmaa says if the culture allows it, and many do not, you need to know:

Are we discussing the right things?

Are we discussing the right topics the right way?

Are we comfortable challenging the leader’s opinions?

It is more enjoyable to discuss good results  but how do you make profits and why is that going to continue at the margins the company is doing? Is a great things to know before you leave.

We all love success and want to be more successful. The problem with success is not examining the downside:

Bad news does not teach you or your team. If someone is replaced because they brought bad news then bad news will not be brought up in the future.

Your team does not dig for negative or bad news. This is a two way street.

Decisions are constantly postponed and watered down.

There is often just a single plan with no alternatives. To see alternatives and present them to others requires trust, the ability to discuss bad outcomes and an open communication.

Linking to dividend paying stocks, we all like to hear good news, however if you never hear bad news in good times when the economic cycle changes how will you be prepared to tackle the coming changes? As investors you can make money if stocks go down, fix themselves and come back, sometimes this means a culture change at the top, do you see it now?

There are more questions than answers, till the next time- to raising questions.

If you owned a mobile phone before 2008, it was probably a Nokia. The company had a dominate share, the features were cutting edge and Nokia seemingly had a license to print money, investors were happy. A short time later, in less than 10 years the mobile phone division was sold to Microsoft at  discount. What happen and how Nokia came back is the book Transforming Nokia by Risto Siilasmaa published by McGraw Hill, NY, 2019. The book written by the Chair of the Board has lessons to be learned and trying to avoid the problems through paranoid optimist and senario based planning.

In 2008, Nokia had 44% marketshare of the global markets of smartphones, that translated into Nokia sold 115 million phones, Apple sold 1.7 million phones. The reality the Apple phones did not work well, however the hype and to swipe rather than to press buttons sent Apple and Nokia’s market capitalization similar.

Nokia used the Symbian software, Apple had its iOS, Google owns Android. The good thing with Symbian system in was owned by a variety of companies and became a global standard. The bad thing is as the public wanted apps, the ability to add was in technology time a very long time. It would take 48 hours to add, and 2 weeks to know how the app was working or required fixes. As the market changed from hardware to software, the Symbian software was not as good as the competition.

Another change was in chip technology, as chips became more powerful, a Taiwanese company called Mediatek was offering inexpensive chips which allowed many manufacturers to compete at the low end of the market and threaten the mid market.

In the book the two biggest trade shows are held in Las Vegas for the Consumer Electronics Show and Barcelona, Spain for the Mobile World Congress. These shows help people see the trends in the industry.

Linking to dividend paying stocks, every industry has a conference or two, for your industry fund out where they are and watch for the trends. Nokia went from global leader to a seemingly bit player partly because of trends and what the industry believes the consumers want and the networks will provide.

There are more questions than answers  till the next time- to raising questions.

 

 

 

 

 

 

 

In late July, P&G wrote down its Gillette business by $8 billion resulting in a net loss of $5.24 billion in the quarter. According to the article by Amelia Lucas of CNBC, the one time non cash was to adjust the carrying value of Gillette’s goodwill and intangible assets.

P&G are still confident in the business as they sold $6.22 billion of men’s razors and $1.28 billion  of women’s razors.

Gillette nas a 52.8% market share of men’s razors.

The competitive nature of razors are men growing beards, Dollar Shave Club owned by Unilevet and Harry’s owned by Edgewell Personal Care.

The stock moved up 4% of the day of the announcement.

Linking to dividend paying stocks, a great dividend stock has and continues to be P&G, it does show the investor even though P&G is one of the best marketing machines with a number of billion dollar products it faces challenges from changing markets. P&G did the right thing and it is a credit to their management, did your investments do the same?

There are more questions than answers, till the next time- to raising questions.

 

 

10 years ago the last recession ended, economies go in cycles so when is the next one? The reality is we do not know but the classic line is if your neighbour loses his/her job it is sad, when you lose your job it is a recession.

Ben Casselman of the New York Times News Service offered some indicators:

1. The unemployment rate  if it rises and the rate of change is going higher. Because of the nature of the keeping of the data the rate is seen as a lagging g indicator. However, in the past with unemployment low and trending downwards there is less than 1 in 10 chance of a recession in a year.

Note baby boomers are retiring at a rate of 10,000 a month which helps keep unemployment rates lower.

2. The Yield Curve – the curve shows the difference between short and long term rates, when long term are lower the curve is inverted. At the moment,the Federal Reserve believes the chances of recession are one in 3.

3. The ISM Manufacturing Index – each month the Institute for Supply Management surveys purchasing managers about their orders. Ratings above 50 indicate expansion  less than 50 slowing down.

4. Consumer Sentiment- what we consumers buy drive the economy. At the moment the index is flat.

Linking to dividend paying stocks, experts will examine a variety of information to determine where an economy we are. Individually if you are able to live on less than your income you will have savings. Some of the savings go into investment and over the long term if the bulk of your investments are in dividend producing stocks, you will be able to weather any recession and plan for the future

There are more questions than answers, till the next time- to raising questions.