Ericsson is no stranger to change — for 140 years, it has been at the cutting edge of innovation and technology, from manufacturing some of the first telephones, to managing networks today that process 40 percent of all the data in the world, to a position on the front lines of the 5G revolution.
With that in mind, even as so much has changed since February and some of the answers may reflect that pre-COVID business world, we have decided to share our interview with Leten. We believe Leten’s insights and the themes he discusses remain very relevant to today’s leaders.
Spencer Stuart: Being a top company in the telecommunications industry requires being innovative, but also being efficient enough to be profitable. How do you help leaders balance those two?
Ronnie Leten: I think it's always a balancing act. On the one hand, when you only think about efficiency in terms of cost-cutting, I tell you, you will be a very boring leader. If all you talk about is cost, cost, cost, people will leave.
You should always be thinking about innovation as, how can we do things better? There's always a better way. I call it “weed control”; do it every day and think of it in a different ways. If you don’t do weed control, after five years you have to call in the landscape architects, and they come in with bulldozers and it costs you a fortune. That’s called restructuring.
For companies like Ericsson, as the technology gets disrupted, you will need to shuffle your workforce around. Maybe you had expertise in analog technology and for the future you need to understand digital software. Too many companies wait too long or forget to do this, and then they’re forced to do a restructuring.
How do you go about creating a company culture that reinforces this?
I think there are two conditions that create a culture over time. One is to have really strong values that make sense for all the group together and to live up to them. The other is to win together. It's very difficult to create a culture on the losing end.
What are your experiences trying to change culture? You came from Atlas Copco, which has a very strong culture.
One value we’re aiming for at Ericsson now is transparency. We speak in a fact-driven way, we respect each other.
I'm a believer in a high level of transparency because if you are transparent as leader — in an organization and in a society — then everything becomes fact-driven. Everyone only sees the facts. You understand that when things are going wrong, then we all need to work harder together. When people start to hide or postpone important communication, you end up slowing down the whole organization.
How have you seen the role of board chair changing?
I don't know if the fundamental task has changed. The content has changed a bit, because we talk a lot about sustainability, corporate governance and all that, perhaps more than we used to. But the real fundamental issues I try to work on are mostly the same.
I work on succession and that indirectly means working on the talent — measuring CEO performance and determining the process for finding future leaders. I need to have a plan B and a plan C. Plan B is if the planes crash, what do I do today and tomorrow? And plan C is what can I do within three, four years? The board needs to be planning for this, and we need to make sure the CEO is, too.
A second big thing for the board chair is asking, Are we going strategically in the right direction? This is where we’re assessing the trends. It’s like biking — cycling with a headwind is tougher than cycling with tailwind. So where can we get a tailwind? That is important. People talk this is a strategy and all that, but the important thing we talk about is doing good portfolio management, seeing everything you do, and figuring out what’s going to change in five years.
The third one is “show me the money.” We talk about efficiency because you need to make money. I always say you guys are not paid for doing your best. That's what you promised when you signed the contract. You and I already agree to do our best every day… but you are paid for results. Results give you freedom, so fight for your freedom.
Looking at the technologies making an impact on the telecom industry, what roadblocks do you see in the development of 5G, AI and the Internet of Things?
The biggest roadblock is us — that we don't master it, and we need to catch up in our competence. You have heard more and more talk these days about the rescaling of society. It’s a lot like what happened between the first and second world wars, as society moved from horses to combustion engines. That’s where we are today with the shift from analog to digital.