For 2005, Ericsson reported unprecendented financial results; strong results for the last quarter of the year, too. In november, CEO & President Carl-Henric Svanberg, joined our Alumni Conference to share his views on “Creating Value for the Client”. Here, we learn: how customer confidence
in Ericsson technology, operations, people & values provide key competitive advantages and global presence.
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How has measuring value
creation changed at Ericsson during your tenure as CEO?
On a superficial level, you can always say that for any company, the bottom line is the final measure
of value creation. However, I think that there are three things that are especially important at Ericsson.
First, we never compromise on our technology leadership – Ericsson is the technology leader in the telecom
business, and that is the base for our value creation. Secondly, we create value by operational excellence,
by which we mean to do everything in the smartest possible way, without losing the high quality
standards that for us technology leadership requires.
Thirdly, and this I believe is a real change from before: our way of thinking outside and in – starting
with what the end user wants, and helping the customer fulfil that, while at the same time optimizing
profits.
How have alliances grown in importance for value creation?
Our closest allies are our customers, and in the old days, we had
different customers in every country. Now, there are some 20 operators that are absolutely dominating
telephony in the world. That means there are fewer allies by number, but at the same time, they are
operating in virtually every country in the world, and all business is local in the end. Ericsson is a
truly global company with operations in some 140 countries, so we have a good base for helping our global
allies in their local business everywhere.
What are the three most important elements of value creation at Ericsson?
Again – technology leadership, operational excellence and the outside-in thinking.
What makes value creation at Ericsson different from value creation at your competitors?
Our size and global presence is something that creates economies of scale – this is crucial for creating
value at Ericsson.
I would in this respect also like to stress the importance of our core values – Professionalism,
Respect and Perseverance.
How will value creation change in the next decade?
I am flattered that you ask, but I really am no oracle. However, one trend that we can see coming in the
telecom industry is that the operators increasingly are expecting us to be a one-stop-shop – that is, we
are expected to have an extensive offer when it comes to both products and services. Periodically, firms
seem to diversify and then concentrate on core business.
Where is Ericsson in the cycle?
Ericsson has always strived to be a partner to its customers, offering them a combination of telecom
products and services. This is our core business. However, we are in a fast moving business, and virtually
everything we are selling today is different from what we sold 20 years ago. And my prediction would be
that in 20 years from now, we will be creating value in a way that we can not imagine today.
Ericsson has experienced mostly very strong results, punctuated by less profitable
periods. Is smoothing out performance an objective? Or should we expect that in the dynamic sectors in
which Ericsson competes, ups and downs are the only way to achieve long term performance?
I guess you are referring to the IT hype at the end of the 90ies, followed by the slump in the telecom
sector. No, I would not say that a bumpy road is the only way to achieve solid long term performance.
However, we do not give guidance on our future results. Having said that, I will not deny that a smooth
profit curve, endlessly pointing upwards, always is something to strive for!
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