As this is being written in August 2009, Ericsson has been around as a company for 133 years and four months, and has a leading global position in its market. Things have not always been like this: Ericsson’s position has shifted, the nature and extent of its business has changed radically, and on more than a few occasions the company has been close to ruin.
It could be claimed that what is called Ericsson today is as much the legacy of Åke Lundqvist as of Lars Magnus Ericsson. Lundqvist’s 12-year stint as CEO of Svenska Radio Aktiebolaget (SRA), later Ericsson Radio Systems (ERA), from 1977 to 1988 launched the company on a trajectory unmatched in any other Swedish company before or since: invoicing for radio telephony rose by nearly 40 percent annually for 20 years in a row.
At the same time, SRA owes its thanks to its elder sibling LME for much of this success. Big brother paved the way and opened doors for junior.
Ericsson today is the technology leader, but it has not always had this position. On the contrary, several times the company has missed fundamental technological changes and made grave errors in its assessment of technological developments and demand for its products.
L.M. Ericsson was, for instance, late in developing automatic exchanges and was not tempted into this field by Sweden’s Royal Telegraph Agency (Kungliga Telegrafverket) until the 1920s.
TELEVERKET DRIVING FORCE
When digital exchanges had to be developed in the 1960s, Televerket was the driving force behind the process – and cooperation on the AXE took place in the jointly owned company called Ellemtel.
And when the Nordic telecom agencies were discussing mobile telephony 10 years later, L.M. Ericsson displayed a monumental lack of interest.
In spite of this, in 2009 Ericsson is successful, a world leader in its sector and profitable when many of its competitors have been brought to their knees or even wiped out. What is the explanation? Despite all the mistakes it has made in 133 years, Ericsson has never succumbed, and has demonstrated its strength time after time.
When such behavior is repeated over and over again, it is clearly not a coincidence. So what are the success factors that have sustained the company through all the crises and recessions over the years?
Author: Svenolof Karlsson & Anders Lugn