At the first meeting of the group management team on April 14, the first with the new CEO, the critical success factors sketched on flight BA0183 were a major theme.

The members of the management team were given the preparatory task of ranking the seven factors in terms of their perceptions of Ericsson and Nokia. 

 A week earlier Sténson had asked 10 analysts and 10 journalists to make the same ranking.

The results were strikingly similar in both the internal and external assessments. Ericsson’s management team ranked research and development high, their own decision making and working procedures lowest.

The management team’s discussion of the success factors can also be summarized with the following simple principles:

 They had to be a united team that shared the same vision. “A good executive team is characterized by frank, open and, not infrequently, tough discussions in which different opinions and judgments are tested against each other,” Svanberg says. “But at the same time it is crucial for management to display a united front to the rest of the world. An executive team that displays disagreement and uncertainty can never manage successfully.”

Another principle is headed ‘seek the truth’. Everyone’s cards have to be on the table. Unsatisfactory circumstances and setbacks must never be ignored. Internal politics, secretiveness and coteries have to be opposed. The focus must be the company’s shared, overarching objectives.

Other principles:

Professionalism – being good at your job, seeing things as a whole and in context, but not being afraid of the details.

Know the numbers. Managers must not only be expert about their operations but also about the figures.

Faith in the individual. Every single employee wants to succeed. When provided with good conditions, individuals achieve good results.

Lead by being good examples. Leaders should provide their staff with energy, not drain it from them. 

Communication is the most important leadership tool. And communication must be consistent, effective and take place all the time.

Win people over

Large organizations often suffer from internal politics. Deals are arranged between friends. If you want to get something done, it pays to be a member of the right club.

Up until the crisis, the first thing you had to know at Ericsson was who owned the product code. This was the person who could make things happen. A commom thought was: “Where should I begin? With him, because he had most power.” But there is no law of nature saying that internal politics and cliques have to develop. Informal structures emerge when a company’s processes and procedures do not work.

Svanberg was criticized early on for his avoidance of conflict, for not being tough enough with the cliques. But that is not his way. “I spend more energy on winning people over than on overcoming them.”

One example: A member of Ericsson’s staff who wanted to supply a good product or service to a customer could find himself contending endlessly with the company’s bureaucracy, lack of interest at headquarters or other hurdles. In the end he would abandon the official channels and make sure the customer got what he needed informally, with the help of friends or contacts.

“It is wrong to criticize the individual. He does what he does because he has to, if he wants results. It is the company’s processes and procedures that have to be changed,” Svanberg says.

Author: Svenolof Karlsson & Anders Lugn

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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