Nokia's new deal will need all Rajeev Suri's management wiles

Nokia achieved an extraordinary turnround in the 1990s, when it transformed itself from a timber-to-tyres conglomerate into a fast-growing mobile handset-maker. For the past five years, while its phone business was under siege from innovative competitors such as Apple and Samsung, the Finnish company has been trying to answer the question of whether it can achieve a second such revival.

Following last year's sale of its mobile phone business to Microsoft - widely painted as a defeat - a takeover of Alcatel-Lucent would be a stunning response, definitively establishing Nokia as one of the world's two largest telecoms equipment groups.

But such a deal would have to draw on all the management wiles of Rajeev Suri, Nokia's chief executive. He is the man who quietly forged what was once an equipment joint venture with Germany's Siemens into the company on which today's Nokia is founded.

Any big deal presents integration challenges. A cross-border merger is further complicated by the potential for cultural clashes, as Alcatel-Lucent knows only too well. Its 2005 combination was a head-on collision of US and French ways of working, which took years to put right. Ben Verwaayen, chief executive of the combined group until two years ago, summed up the mood at the company as "we need to fight internally" when he joined in 2008.

What Mr Suri has achieved so far with the division that evolved from Nokia Siemens Networks looks closer to the work done to revive Nokia in the 1990s, by building on a business that was already part of the company.

But his experience turning the fractious Finnish-German cross-border joint venture into a single company may serve him well as he tries to execute any Alcatel-Lucent deal. The Nokia chief executive has also worked on smaller takeovers, having led the acquisition in 2011 of Motorola Solutions' networks assets.

In creating the new Nokia, Mr Suri has applied Six Sigma, the quality improvement system first developed at Motorola in the 1990s, and also created a number of bespoke systems for cutting costs and improving efficiency and quality. He seems likely to try to implement these on a much larger scale if Nokia takes on Alcatel.

Mr Suri uses the "Nokia Business System", for instance, to give divisions the right to take decisions independently, while ensuring they follow best practice, discipline and accountability in areas such as investment, performance management and human resources. Coloured "books" are used to track different areas of cost-cutting. A black book monitors headcount reduction; green is for site closures; red for discretionary costs (travel expenses fell by more than a third after the system was brought in); grey and yellow for external and subcontracted labour costs; and purple for tracking the quality of products and services.

Mr Suri has spoken publicly of the importance of creating a common culture for the three operations now under his supervision: networks, the Here maps business, and the technology patent and licensing division. The group tracks the engagement of staff monthly, and uses a patented "customer perceived value" tool to monitor what clients think of Nokia's products and services.

But big acquisitions have a habit of unsettling, even undermining, tightly run operations. Mr Suri has repeatedly insisted that his strategy will focus on bolt-on deals, with strict attention to due diligence.

Over the past decade, Alcatel-Lucent will have developed a quite different system of cultural and operational controls. They may not fit easily with the Nokia approach. And that is before staff at both companies start to worry about whether they will find themselves in Mr Suri's new black book of job cuts.

An Alcatel deal would certainly bring Nokia out from the shadow of its past glories as a mobile phone company. But it would raise a big new management question: in attempting to meld the post-handset Nokia with its Franco-American rival, is Mr Suri taking on too much?

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation