So what is Ericsson’s secret?

In many of the technological conflicts, Ericsson’s (and Nokia’s) success has been based to a great extent on what we would describe as a Nordic “mindset”. The culture provides the strength. The approach is to create solutions that can be used by everybody. The end users are ordinary people. The technology has to function reliably, safely and without any fuss.

We describe these values as Nordic because they are obviously central to the Nordic countries. In 1748, Montesquieu placed the “source of liberty” in Europe’s northernmost countries. In a harsh climate, the effective use of resources and reliance on the individual were survival factors.

Consequently, trust and the availability of information are factors that offer better chances of survival. Transparency, objectivity and the avoidance of verbal extravagance enhance possibilities. A group has access to broader knowledge and more skills than any individual.

From this point of departure, one ends up naturally with the open-source concept and the feeling that patents and intellectual property should be managed in the fairest, most reasonable and non-discriminatory way, as described in the FRAND approach.

“Everyone on board” is a slogan that is used, with minor shifts of meaning, by both political blocks in Sweden. When Ericsson got Svanberg as CEO, someone who strived to ensure he was a leader, it is hardly surprising that he took this as his motto. It is a question of getting everyone to join in and to focus their energy to the same ends. To succeed, a leader has to practice what he preaches.

THE FUTURE

Our praise for the Nordic heroes of telecommunications is not to suggest we believe they are smarter than other engineers in the rest of the world. They are no more and no less intelligent than anyone else. Yet time and again, they have been the best at solving problems in the telecommunications world that really matter.

As we describe in this book, they have looked for solutions based on firm foundations. They have benefited from this approach even when time was short. Examples can be found in SRA’s success in coping with the demands of the American AMPS technology in the early 1980s and Nokia’s ability to develop small GSM phones – using a method described by Nokia’s Heikki Ahava as “quick and dirty”.

Time after time, Ericsson and Nokia have hit upon solutions that adapt different systems and approaches to each other. Ericsson has been doing this globally for a century. Nokia is based on a century-old Finnish tradition. Finland has always allowed competition in its telephone networks, equipping them with more types of exchanges, 134 in all, than any other country in the world.

Nobody can doubt that creativity, enterprise and dynamism are features of American culture, but where ideas about telecommunications are concerned, the Nordic concept has triumphed. American attitudes endorse individual approaches, short-term thinking and proprietary solutions locked behind patents. The Nordic attitude encourages cooperative attitudes, long-term thinking and openness.

Does this mean the Nordic concept will triumph in the future as well?

That all depends on the people living in the Nordic countries. There is nothing to say that the solutions, products and deals that have led to success up to now will go on succeeding tomorrow. On the contrary, each new victory has to be won for itself. Ways of working need constantly to be reviewed and reassessed.

Perhaps Ericsson’s greatest risk is that too many of its people will lose focus after a period of global leadership and stable profits. This has happened in the past. The last time it did so, their cousins from the garage outfit on the other side of town came charging in to conquer the world once again. But who can guarantee that a new upstart will be ready next time?

Long-termism is stronger than the short term. Openness outperforms protectionism. Simplicity will trump complexity. The principle of “everyone on board” is more powerful than “the select few”. Culture will beat strategy – every time.

Author: Svenolof Karlsson & Anders Lugn

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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