Governance of a company in a fast changing business and technology environment

This paper contributes to the current corporate governance debate through describing changes that have taken place in Nokia during the past decade. It can be seen that traditional ways of corporate governance and management do not apply for companies operating in a fast changing business and technology environment. The transformation of Nokia from a Nordic conglomerate to a global synergetic communications company is visible in a number of changes in the structure and principles of governance. From closed ownership, closed domestic markets and a board composition reflecting ownership, Nokia has moved to opencapital markets, open global markets, and a board composition based on professional diversity and balanced dynamics of the board and the markets. In global markets, companies can be seen as being owned by a collective called 'the market', which is impossible to identify. The market reacts as owner to eventsinside and around the company. For the company, it is necessary to be very sensitive to these reactions in any situation. Since markets focus on short-term developments, the role of the board in a company should be to have a long-term perspective. The case of Nokia supports the hypotheses found in the corporate governance literature that governance systems are pushed by the market to become more efficient and different systems may generate satisfactory outcomes. However, the case study also shows that if markets are allowed to control alone, a short-term, “quarterly earnings”-thinking reigns. Therefore, the role of the board in a company should be to provide stability. Stability is built on gradually evolving platforms like values, competencies and processes as sources of product leadership and cost leadership and customer satisfaction.