Martyn Warwick on Carl-Henric Svanberg & Ericsson
>> New Ericsson CEO Takes an Axe to Bureaucracy
Martyn Warwick
CommsDay
09/04/03
Carl-Henric Svanberg, the new CEO of Ericsson, the troubled Swedish telecoms equipment manufacturer and vendor took up his post this week. An outsider to the company that, in the past, has been run more like a government department than a commercial enterprise. Mr. Svanberg’s first act is to try to dismantle some of the massive bureaucratic superstructure that makes Ericsson such and unwieldy and slow-moving beast.
Last year, Ericsson came close to collapse as orders fell, sales stagnated and debts mushroomed. The company has quickly to raise SKr 30 billion (approx € 3.7 billion) from disgruntled shareholders to stay liquid and it remains likely that it will still be forced into a new share issue to provide a further cash cushion if, as is being rumoured, prospects do not improve and losses continue.
Analysts and the investment community will at last get some idea as to how Ericsson is doing when the company releases its Q1 2003 results on the 29th of this month.
One of Ericsson’s problems has been institutionalised overmanning and entrenched, bureaucratic work methods and systems. As Carl-Henric Svanberg says, “We are good at inventing products and good at selling our technologies but we are not good at organising workflows. We need to be simpler and clearer”.
Cutting bureaucracy will inevitably mean more redundancies among Ericsson’s staff. In the past, to work for Ericsson was to have a job for life and, although there have been far-reaching job losses in recent months, the attitude amongst many of those still in employment is remarkably complacent given the parlous state of the company.
Svanberg, who has from lock-making Assa-Abloy to loss-making Ericsson, has said that there will have to be job losses but has declined to speculate on how many redundancies may finally be necessary to bring the company back from the brink.
More than 50,00 jobs have gone in the past two years but analysts believe at least a further 10,000 redundancies may be needed. Ericsson currently has about 60,000 employees.
The new CEO unveiled a ‘revamped’ senior management team of 18 members. They are remarkable mainly in that they represent an almost unbroken line of continuity from the old team that was in place under Kurt Hellstrom and before Mr. Svanberg, the new broom, took over. Revolutionary it ain’t.
Oh, and if the new CEO wants to avoid criticism, not to say hooting derision, of his ‘new’ but nonetheless remarkably unchanged hierarchical company structure, he should perhaps reconsider the nomenclature of the post of the newly announced Senior Vice President and Head of Corporate Function, People and Culture. Per-leeze!
One can but assume it refers to what used to be known as ‘”Personnel Director”, who knows? It just sounds so bloody right-on and utterly woolly I wouldn’t be surprised to see Tony Blair rip it off for use in the British Cabinet. <<
