The Titanic feeling
Just after New Year in 2000, many failed to realize that Ericsson and the entire telecommunications industry would end up facing a severe crisis.
Carl-Gustaf (“Calle”) Leinar, later CEO of Trygghetsrådet, an organization dealing with career-change and work placement issues, had been appointed head of HR at Ericsson in Sweden in 1996. He describes how pleasant it was to join the company. After several arduous years in the defense materiel industry with a company called Celsius, it was a relief to be in a company where he did not have to fire people.
“The feeling was that the sky was the limit. You could do whatever you wanted to; it was a first-class ticket to the future. I kept thinking that it could not possibly be as good as it seemed. There was a feeling of invulnerability, a Titanic feeling. Admittedly Ericsson had had its problems from time to time, but the crises had always passed. Now, at the end of the 1990s, everything was on the up, and in 2000 Ericsson’s share price hit an all-time high.”
The informal structure within Ericsson was powerful and the official organization could be ignored, Leinar says. “The management consisted of a few wise old men and Britt Reigo, head of HR. And if their decisions did not suit you, you did what you wanted anyhow.”
Ericsson at the time consisted of 32 different legal entities. Many had their own local links and cultures that were stronger than the overall Ericsson culture. “You soon found out that the commercial cultures were different north and south of the city. As head of the mobile section, Kurt Hellström could say that he did not give a damn about what they thought in the south. Both sides felt antagonistic to each other.”
At the same time Ericsson was a humane employer. “We were kind and caring; it felt like a family business,” Leinar says. This had its downside when the crisis came, when managers had to lay off friends and family.
Ulf J. Johansson, who renewed contacts with Ericsson in 1999, saw a company that was very different from the one he had left 10 years earlier. “At ERA in the 1980s, we had been enormously cost-conscious. In those days you had to be. It was shocking to see how the operation had grown and how much padding there was. It was dramatically overweight,” he says.
Åke Persson offers a glimpse of what was going on the group’s executive management: “At every meeting with Kurt we decided to stop hiring. The heads of all the business divisions committed themselves not to hire any more staff. Then at the executive group meeting the following month, we still had 4,000 more employees in the company. And it was like that every time. Everybody could see deals that could be landed and that needed more staff, nobody could see any real threat,” he says.
Author: Svenolof Karlsson & Anders Lugn