Nokia’s new Technology Committee – good idea, poor execution

With the dust settled following Nokia’s Annual General Meeting now is the time to look at whether any of the changes will have a meaningful impact on the business.

Nine of the board members have been re-elected, each receiving a handsome payment of at least €160,000, and one new member has been introduced, the former Head of Nokia Networks Sari Baldauf. A dividend payment of €0.19 per share for the 2017 financial year has been set, and all the committees reporting into the board have been settled. Interestingly enough, the business has also decided to introduce a new one, the Technology Committee, but is it worth paying attention to?

The committee currently features six members, Bruce Brown, Jeanette Horan, Louis Hughes, Edward Kozel, Olivier Piou and Risto Siilasmaa, with Kozel acting at the Chair, and a mission statement to review Nokia’s innovation and technology strategies. The committee will meet at least twice a year, with the agenda being defined by the Chair in conjunction with the Nokia management team. The four objectives of the team will be as follows:

  • Provide opinion and advice on Nokia’s approach to major technology innovations
  • Assess trends which may result in disruption or opportunity
  • Evaluate risk and opportunity in the Nokia R&D programme
  • Judge Nokia’s technological competitiveness

When we first saw the news about the committee we liked the idea, but now we are not too sure. The theory is sound, but the execution seems to be poor.

On the surface the concept of an independent technology committee evaluating strategic and R&D decisions is a nice idea. When evaluating your own work, there is a tendency to be biased; a fresh eyes and minds to provide feedback is a sound theory, and could provide alternative thoughts to improve the foundation and direction of strategies. It takes a very mature person to open themselves up to critique from outside influences, but ultimately it can prove to be an excellent way to do business. Unfortunately, Nokia doesn’t seem to have done this.

The current committee is made up of individuals who were already working with Nokia in one form or another, being full-board members or contributors to another committee. This is a fresh perspective on the definition of ‘independent’, as most of these individuals would have already contributed to the Nokia strategy, directly or indirectly, in one form or another.

Brown has been a board member since 2012, Horan since 2017, Hughes since 2016, Kozel since 2017, Piou since 2017, while Siilasmaa is the current Chair of the Board of Directors having served since 2008. Nokia is essentially asking for validation on strategic thinking from its own cogs. Rubber stamping its own work offers questionable benefits.

Secondly, when you look at the individuals who are on the board, you also have to question whether this is the most innovative thinkers available to the business. There is no doubt these individuals are incredibly intelligent and astute businessmen and women, however looking at the CVs raises some questions. Brown is the former CTO of Procter & Gamble Company, Horan was a MD at IBM prior to the positive turnaround, Hughes’ experience was at Lockheed Martin and GM, Siilasmaa was CEO at F-Secure until 2006 before hitting the Board of Director circuit. These will all be very accomplished individuals, but whether this is the right experience to dig Nokia out of its slump and make it competitive again is another question.

Bringing Kozel and Piou onto the committee look like good moves however. Piou was CEO of Gemalto until 2016, while Kozel held various management team positions in the likes of Range Networks, Open Range and Deutsche Telekom over the years. This is the sort of experience which might provide alternative thinking to the Nokia norm, creating more creative and assertive decisions.

Nokia had an opportunity to do something very interesting with the technology committee, but after digging a little deeper it looks like little more than window dressing. We wouldn’t expect anything too revolutionary to come out of this apparent PR exercise.

Samsung refreshes board with scandal-free members

It has been just over a year since former boss Lee Jae-yong was arrested and charged for his alleged role in a political and corporate scandal, and now Samsung has a refreshed board and new structure.

Samsung Electronics has held its Annual General Meeting of Shareholders in which new members have been elected to the Board of Directors. A few fresh faces will provide a suitable amount of new opinion as the business continues to repair a tarnished reputation. We can only imagine that at the end of 2016, the team were looking back at the disaster which was exploding phones relieved that they would only be in the press for the right reasons from now on. How wrong they were.

Lee is of course a free man now has been released from prison now after a successful appeal. He will be on probation for a year, but is back in the business and on the board. This has been poorly received by the community on the whole, as there is a feeling that any moves made by Samsung to improve transparency and decision-making will only be undermined by the presence of Lee.

In terms of the changes, President and former CFO Sang-Hoon Lee has been elected to the board and will take the role of Chairman. This is the first time the role of Chairman and CEO has been separated, and perhaps a PR governance move from the team which need to generate some positive headlines.

“The separation will further empower the Board of Directors and enhance its independence,” said Oh-Hyun Kwon, the out-going Chairman. “The Board will be able to evaluate the Company’s performance more objectively and have greater authority and efficiency as a decision making body.”

The bosses of the three divisions have also been elected, Presidents Kinam Kim (Device Solutions), Hyunsuk Kim (Consumer Electronics), and Dongjin Koh (IT & Mobile Communications), while three new candidates have been nominated for independent positions.

While the Galaxy S9 and S9 Plus were the major device launches at Mobile World Congress this year, the Samsung team will almost certainly be hoping for a quieter year. While it might be considered out of the ordinary to be praying for a scandal-free 12 months, this would certainly be against trends for Samsung.