Finally starting to choose

Throughout Ericsson’s long history, a phenomenon referred to these days as “skunk works” can be seen as a common thread.

This expression was adopted in the 1940s as “skonk works” by a group of engineers at American plane-maker Lockheed. The term was borrowed from the popular Li’l Abner series, which featured the unfortunate Big Barnsmell, the only worker at a company called Skonk Works, where he earned his living making concentrated skunk oil. The engineers at Lockheed were working on secret assignments in isolation from the rest of the company, and reported to the CEO and nobody else.

The expression subsequently began to be used for the kind of work that did not belong to official tasks, work being done without the consent of the management or at least in parallel with the normal reporting routines. It was a form of civil disobedience that could at some stage turn out to be beneficial for the company – or perhaps not.

There is an obvious romantic luster surrounding the concept of skunk works, another take on the misunderstood genius doing great deeds in his isolated room. At the same time, it could be claimed that Ericsson would hardly exist today without skunk works, at least not as an autonomous company. Åke Lundqvist’s behavior in relationship to the group executive, for example, displayed many features of a skunk works. And much of the IP project in the 1990s in Ericsson was undertaken in a skunk-works spirit.

The unruly, decentralized culture that developed at Ericsson in the 1990s probably provided an advantage during the years of extreme growth, but conditions changed during the crisis years. With Svanberg as CEO, the focus shifted dramatically to centralization, improved procedures and shorter lead times. Is there still scope for skunk works in such a culture?

Svanberg says: “It is a question of choosing what to do and what not to do. We have finally started to choose, and that is the same as winding up our skunk works. Success is built on focusing energy and giving it one direction in the organization. Have we succeeded in creating a process that encourages ideas? Can we combine order and creativity? If we can achieve that, skunk works will not be of interest.”

He refers to a basic document produced in the spring of 2003: “It deals with creating a context. If you would categorize anything as important, then it has to be listening to your staff. And if we can devise a good strategy on this basis, through a process in which everyone is involved, we destroy the justification for skunk works.”


Attitudes to skunk works vary, however. Jan Hedlund, trade union representative, says: “There is obvious concern among the unions that when power is centralized the skunk-works element will be eliminated. To some extent it already has been. Everything has to be much more methodical today.

“Rigid hierarchical discipline is not a characteristically Swedish feature. You are not obliged to have the same opinion as your boss. This is, of course, an attitude that can go too far. The greatest threat to creativity today is that there are no extra resources in critical situations. Everything has to be lean.”

Gunnar Sandegren, whose roles have included leading Ericsson’s work in the 3G standardization process, says: “Carl-Henric’s time as CEO has led to centralization and a focus on managers. Managers are often the only ones that count. And Carl-Henric does not accept substitutes either. You have to be on the go 24 hours a day – and you cannot keep that up.”

At the same time, Sandegren says, managers now have to know every detail: “In the past, managers had people they could rely on. There is no scope for that today. I am sure this is for the better: many managers knew far too little about what was going on. It is important to have all the figures in your head.”

A company in crisis, being forced to make cutbacks, may well have to eliminate skunk works. “But not a company that wants to expand and be creative.” And the situation in the telecom world has changed: “Ericsson is supposed to be expanding in a market that is no longer growing. And conditions today are not necessarily comparable to what they used to be,” Sandegren says.

Author: Svenolof Karlsson & Anders Lugn

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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