Nokia – A Story of the Decline and Eventual Rise of Finland’s Economy

Since the beginning of the Nokia debacle in 2011, around ten thousand people working for the communications giant have lost their jobs in Finland, a significant number if we consider that we are talking about a country that has around five million inhabitants.

The loss of power of Nokia meant, at the same time, the decline of a country that had grown rapidly thanks to its main company, Nokia, leaving behind a terrifying scenario.

The story of Nokia and Finland was that of a well-matched marriage until the failure of one caused a crisis in another. This union produced 4% of the country’s GDP and constituted 21% of Finland’s total exports. In 2006, Nokia dominated 46% of the global mobile phone market.

For Finland, the resounding success of the company meant a profound transformation in its business model and its economy went from being in a deep crisis to becoming one of the most specialized communications in the world.

The growth of Nokia not only promoted that Finland had become one of the countries that had – and still has – one of the best qualities of life in Europe, but also helped to convert the education system of the country into that of one of the most acclaimed in the world.

Nokia alone produced 4% of the country’s GDP and constituted 21% of Finland’s total exports.
Its success increased progressively, in addition, the need for workers who were highly specialized in communications and technology, but also created many jobs that did not require so much specialization in the field. In this way, it was very likely that in Finland you worked, directly or indirectly, on something related to the communications giant. Nokia was responsible for 2% of direct jobs in the country and just over 2% of indirect jobs.

The collapse of Nokia and the recovery of Finland

Despite the amount of work that has been lost since the beginning of the collapse of Nokia, the truth is that it was not a surprise in the country. Aware that the company was unable to cope with the speed with which the mobile phone market was changing – caused, in large part, by the emergence of Apple, Android and new smartphones, the Finns became aware of the need to change a model that had worked very well up to that moment: to grow thanks to the economic monopoly of a single giant company that acted as a mother company for many others around the world.

Thus, the Finnish government began to allocate more money to finance and support small projects and companies: the budget allocated to this cause amounted to 550 million euros. In 2012, the start-up of an event was launched, Slush, based in Helsinki, which seeks to bring together entrepreneurs and investors and has been repeated annually since then.

The idea of ​​creating such an event came to minds like that of Peter Vetersbacka who, in 2007, considered it a problem the very low number of students who wanted to start their own company. Two years before, in 2010, a group of students created the start-up Sauna, which seeks to accelerate the growth of new businesses by attracting investors and which remains, today, very popular, backed by the University of Aalto.

While it was no surprise, this transformation has not been an easy path for those who worked at Nokia or for the country’s economy. Suddenly, many highly qualified workers specialized in technology and communications were out of work; some, after practically working for Nokia for their entire lives.

However, where some could see a scenario without hope and doomed to failure, others have been able to understand that this new scenario could also become an opportunity to promote the necessary change of that economic model and diversify it. In short, all that talent that has come out of the doors of the communications giant has transformed the scenario into a torrent of ideas that have revolutionized the economy.

Between software and startups, Finland is hot again

From a market with a constant demand for software programmers to small businesses and start-ups, Finland is coming back. With a GDP slowly recovering and an unemployment rate that is falling slowly, the old engineers and programmers of Nokia are the new entrepreneurs of the country, and have also given way to a new generation of students and recent graduates eager to carry forward their own projects, such as the videogames and mobile games, Rovio – maker of the well-known Angry Birds, or Supercell -with Clash of Clans.

Secondly, education tech startups abound like Lightneer, founded by Veterbacka in 2016, which seeks to change the perspective of subjects such as chemistry or physics and turn them into something more dynamic. In terms of virtual reality, there is also a lot of investment in companies such as Quuppa, or mobile phones, with Jolla.

Startup Funding in Finland 2017

Nokia did not want to be left behind in this new wave of entrepreneurs. In 2011, it founded the Bridge program, which would last until 2014, a contest where the best start-up ideas were presented. By the end of 2013, more than a thousand companies had managed to get started thanks to this program, 400 of them located in Finland.

In 2015, Finland broke the record for investment in start-ups, with a total of $253 million from different sources – foreign and Finnish investments – increasing growth pattern 2.5X YoY. In 2016, it broke its own record, increasing investment figure by 42%.

The most interesting thing about this recent reality is that many of these new companies are, in fact, products of former Nokia workers. Quuppa, a bet for geolocation; HeiaHeia, a social network service; Wantlet, Applause, Fambit, Cluetail; Notava, Varjo…the list goes on and on. All of them bear the same mark: having been created and developed by former engineers and Nokia workers.

The Nokia debacle marked the end of an era. However, in hindsight, the results could still  be considered positive. Where there is diversification, there is creativity. And where there is creativity, there is a greater possibility that the next Apple will be created.

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