Quarterly-report capitalism

During the 1990s, Ericsson’s world was turned upside down. Radical commercial shifts flowed from deregulation and explosive growth in GSM. And Ericsson was also obliged to adopt quarterly-report capitalism. Economists developed theories about stockholder value, maximized profit and cash flow; politicians jumped on the stock-exchange bandwagon and extolled the virtue of investing in funds; cohorts of experts, pundits and analysts expounded on the true value of shares.

This offered the media a new field to investigate, a new stage on which to create drama. Ericsson gradually became the quarry of the scandal sheets, even if some publications masqueraded as business journals. CEOs began to be described as if they were synonymous with their companies, their photographs published irrespective of the subject.


One category of journalists began to demand the attention of the CEOs and – with self-assumed authority – their resignations. They worked only in black and white: Lars Ramqvist was described to readers as arrogant, Kurt Hellström as awkward and Carl-Henric Svanberg as overly accomplished and successful.

They were less interested in describing what Ericsson is, and what it takes to run and evolve a company of its kind. Just like his predecessors, Svanberg spends much of his time working with colleagues and customers, but he is assessed by the general public on the basis of how he comes over on television. “I cannot complain about that, because that’s what the world is like,” says Svanberg in this book. What else could he say?

It is more relevant to consider what the owners consider important. What are the customers thinking? What do the employees feel?

One important factor behind Ericsson’s success is its mainly Swedish ownership. On many occasions the owners have stressed the importance of a long-term approach. They have been supportive and offered security, maintaining their distance rather than obsessing over more short-term interests. A commercial undertaking based on providing infrastructure can hardly benefit from frequent shifts in its owners’ concerns.

This stance is reflected in the fact that L.M. Ericsson has avoided being acquired by ITT or IBM, for instance, and has also avoided making too many acquisitions when companies like Nokia and Qualcomm have been for sale.

Author: Svenolof Karlsson & Anders Lugn

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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