Move to London?
The most difficult thing to explain was, however, the move of the head office. Shortly before 1900, the major issue had been whether L.M. Ericsson & Co. was to move its head office to St. Petersburg. Just before 2000, the major question was whether Ericsson would move its head office to London.
In the latter case, the idea was raised by Ramqvist and Tom Hedelius, a representative of a major stockholder, Industrivärden, and deputy chairman of Ericsson’s board.
A series of major companies had previously moved their head offices from Sweden as a result of mergers and acquisitions, more or less with the acceptance of Swedish politicians (ABB, Astra, Stora, Pharmacia, Nordbanken). Hedelius declared in business daily Dagens Industri: “We on the board cannot assume responsibility for not placing the head office in the best possible place”.
Ramqvist says: “During most of the 1990s, virtually all of Ericsson’s business was being done outside Sweden. The company was operating in 140 countries. There was no reflection of this in the executive team. One contributing factor was the difficulty in recruiting people to top positions in Sweden because we could not offer the same terms here. The high taxation levels were a particular obstacle. A lot of companies shifted their operational management out of Sweden. But for some reason Ericsson attracted the fiercest criticism.”
In Ericsson’s case, Ramqvist says, there was never any talk of moving the registered office, only sections of the operational management. “The aim was to make Ericsson as strong as possible by broadening the recruitment base for its top management – not an unreasonable idea or strategy, and there was certainly nothing preposterous about it.”
It is obvious that both the board and the executive were divided on this issue. Peter Wallenberg, who left Ericsson’s board in 1996 and the board of Investor in 1997, was not involved in the day-to-day discussion of the question at the time. But as a senior member of the Investor sphere, his opinion still mattered. He now says in 2009:
“I was against the move to London. I could not understand the thinking behind it. This business of moving head offices was in the air at the time. A number of major Swedish companies were toying with the idea of moving away, because of Swedish tax regulations, so that they could employ people from abroad and so on.
“I was against the move because I consider Ericsson to be so fundamentally Swedish. My opinion was that the move would damage the company’s reputation abroad. It would also have other consequences for production in Sweden, for instance. The management cannot be too far from production; separation like that gives rise to various problems. These were the feelings I had about the idea.”
CREDIT WHERE CREDIT IS DUE
Many opinions have been expressed about Ramqvist, both in his role at Ericsson and elsewhere. One outside expert is Bertil Thorngren, who kept careful track of what was going on in telecoms as head of strategic development for Televerket/Telia.
“I would say Ramqvist’s achievement where R&D investments were concerned were decisive for Ericsson during his first years as CEO. At the same time, some criticism is justifiable in other areas, like AXE-N.
“This was not just a question of the radical increase in R&D, against the judgment of an uncomprehending army of analysts. Ramqvist also accomplished the radical shift from fixed to mobile right through the group. Sales on the mobile side had risen dramatically even though Ericsson did not throw anything like the same weight into its mobile R&D. “On the fixed-network side, the reverse was true. This did not mean a great deal for turnover but there was still the legacy of focusing R&D on fixed networks, including AXE-N. In other words there was a double imbalance. It is on these grounds – during this critical period – that there are arguments for a certain hero status for Ramqvist.”
In Thorngren’s eyes, Ramqvist was, at least during his years as CEO, “stubborn – and not greatly interested in listening to others and even less in embracing the points of view of the rest of the world”. Thorngren happened to be present when Ramqvist, true to the principle that attack is the best form of defense, harangued a trade delegation that had traveled from the US. “A lot of effort was required from the rest of L.M. Ericsson as well as Televerket to make up for this,” Thorngren says. “But perhaps the situation as it was then needed a ‘tough guy’ who could turn a deaf ear to potential objections. There is a time for everything. And credit where credit is due for what he in fact achieved.”
Author: Svenolof Karlsson & Anders Lugn