Episode 6
People Podcast – The secret behind the success of Atlas Copco
What’s the secret behind our company success? Excellent strategy, a strong leadership or being at the right place at the right time? Tune in and learn more.
Transcript
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::At Atlas Copco, we strive to be the most attractive industrial company in our target markets.
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::Our strong culture of innovation is the result of having great people on board, committed and encouraged to grow and reach the full potential.
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::With the belief that passionate people make the difference, we are exploring a new channel to deep dive into topics within people management.
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::We call it the People Podcast for those of you who listen to our previous episodes.
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::Welcome back.
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::We have decided to podcast on a quarterly basis and the program today is our 6th release.
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::I'm Cecilia Sandberg, Head of HR for the Atlas Copco group.
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::Today I have the privilege to have Hans Ola Meyer retiring CFO for Atlas Copco Group.
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::Joining me. Our topic today will be the success of Atlas Copco.
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::What is the secret source? Actually excellent strategy, strong leadership or mainly being at the right place at the right time.
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::We will have the opportunity to learn from Hans Ola's extensive experience reflecting about what took us here and more importantly, what will take us ahead and focus areas that will future prove us as an organization.
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::Please join us.
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::So most welcome.
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::Thank you very much, Cecilia.
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::So why don't we start from the beginning? And why don't you tell us a bit about your passion for finance and where did the journey start? And where has this passion taking you? Well, there were certainly no passion for finance, as you put it from the start, I was a typical sports guy, did everything in the sports field, so to speak, but happened to end up at Stockholm School of Economics.
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::And then after that, I came to work at Atlas Copco
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::in 1978 that group accounting and controlling, and that's basically where I got hooked.
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::If I use that word, you are worried about it.
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::It was a fantastic way of getting an overview and an insight into an international company and with a great culture and everything.
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::And it sort of promised that you could do many different things.
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::So that was great for me.
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::I think you've done a great journey and I know we could probably spend the whole podcast just talking about all your different missions within the group.
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::But let's go back to the topic then.
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::And one of the first things that you learn in Atlas Copco stability, profitability and then growth.
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::And how is this, in your opinion, impacted what we as an organization are all about? I think the way it comes about is starting from the focus on results.
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::And if you deliver results and then you are sort to speak allowed to grow.
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::So it's that sequence of stability, profitability and growth comes natural from that focus of results.
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::And if you then deliver results again and again, then you really can create sustainable, profitable growth.
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::That's where we are today, I would say, but it sounds so simple when you say it like that.
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::So could you perhaps share an example that will make this come to life.
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::Yeah.
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::To be honest, if you look at the group's performance right now, I guess I could take many, many, many different examples of that because it's such a great performance.
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::But one, it's difficult to take one specific, perhaps.
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::But but if I have to, one that comes to mind is what happened in the industrial tools business in 2008.
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::And you remember it was the part of the great financial crisis in the world.
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::And so on, the impact all shattered the profitability of industrial technique, basically, and the industrial tools business, the profit disappeared completely.
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::And instead of just putting all efforts to win the revenues back, the management took a deep breath, so to speak.
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::And look that we need to find a structural ways not to have this repeated again.
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::And I think that they rebuilt the manufacturing structure, which creates stability, emphasize the need to grow the service business, which gives both resilience and better profitability.
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::And only after that, all efforts were put on innovative products and growth and everything like that.
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::So in 2020, if we now look at another crisis, it only took three quarters for the business to regain the profitability level of the past for the same type of business that we had.
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::I think that's a good example.
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::It's a very good example.
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::Thank you for sharing that I was around in industries at the time, so I remember it.
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::And I think what you're saying is signals the importance of an agile organization in a very good way.
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::But let's look into strategic success factors.
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::And what, in your view, has been the fundamentals of Atlas Copco in the past? Yeah, there are, of course, many things.
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::But if you start from great technical skills in engineering and marketing so that you can really create innovative products and customer solutions within then also profitable niches, because if there is no profit to share, then it's very difficult to develop, sustainably over time.
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::And then you have on top of that stable organizational structure with decentralized responsibility and added, on top of all, that the passionate people that want to perform, I mean, then you have I mean, it's big words, but I think it really is about that.
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::No, no, I agree.
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::So I think indeed, I mean, without passionate people, no innovations or strong customer solutions.
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::And if we look into disruptions or other important milestones.
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::And so throughout the history of Atlas Copco, what would you say, pave the wave? Well, it's difficult not to say the divisionalization and I touched upon the decentralized organization before late 1980s, beginning of the nineties as probably the most important one in my mind, of course, the technical skills and the customer application skills was also there before.
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::But the division and business area structure with a lot of empowerment and accountability, of course, as well of the organization was, in my view, a main milestone.
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::I met so many companies in Sweden and internationally that also have very good engineers.
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::They have global presence, not the least, not companies.
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::We see that a lot good customer insights, even the profitable service business, and perhaps even in their mind, a very good company culture.
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::So it's there.
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::But what I've not seen many examples of is that combined with a very stable organizational structure.
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::So I keep coming back to them.
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::And that's why I picked it before.
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::And it sort of creates trust in the structure.
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::And many other companies have seen new management coming in and gone.
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::And new management again comes in.
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::And what it creates is uncertainty about what is really the frame.
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::And then you create passive organization because the framework is not set, so to speak.
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::But of course, within that frame, there is always a better way.
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::So everything has to be challenged.
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::But that's very, very important for me.
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::No, but I think well said answer, I can only agree.
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::I think change it for the sake of changing has never been a productive way forward.
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::I think we can agree to that.
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::And so let's talk about the three Horizons that we mentioned quite a lot in Atlas Copco and to secure the sustainable results, develop and defend core, build new businesses and then create options.
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::Could you elaborate a bit on what does this actually mean? I must say, I think it's a brilliant concept that someone coins Atlas Copco quite some time ago, but it's still extremely useful, and I know that Mats uses it still very actively.
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::And I think it's about the good manager having to manage and create results, which is what you see and do every week.
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::So that's the first horizon, but also then to invest in improvements, it could be investing even in companies and other things, but improvements of all sorts second horizon, and then also to inspire and motivate the team to look for new business opportunities.
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::That's our third horizon.
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::And the challenge is really to do all of that at the same time, or at least during your tenor as manager of something.
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::Then you have to work with all three at the same time.
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::No, it is a real challenge for sure.
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::I think another thing that we typically say in Atlas Copco is that we are product driven and customer focus.
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::What do we mean by this? And how do we relate this to sustainable, profitable growth? In your view, it relates back to the focus on results and profitable niches.
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::For me, you can't be or a company or anyone can't be outstanding on everything.
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::So you have to focus on where you have your strong competence base and that's the technical skills and the customer applications that we talked about.
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::And if you want to deliver results, you have to stay and improve on that base, so to speak, or very close to it, at least.
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::But if you don't do that, you end up doing things that is not exactly what the customer needs.
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::And then you have even wasted excellence, perhaps.
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::But you don't create sustainable, profitable growth.
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::No, it's really true what you're saying.
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::So should we maybe looking into the future and going forward, where do you see our opportunities and how do we then continue creating lasting value for all our stakeholders? You really put the finger on the multi billion dollar question that I get from investors all the time, basically.
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::But it's very difficult to come with different answers suddenly.
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::So I come back to what I say, stay true to the basic elements of sound business principles.
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::And I think we have a lot of those sound business principles, and we have touched upon them already in this little conversation.
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::But then again, stay curious and always willing to change.
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::But keeping those principles in mind all the time now, I think staying curious with an open mind for change is certainly something we proud ourselves at the enough of Atlas Copco.
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::And this mindset also connects to our call values and culture.
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::And how would you, in your word, then describe these values, Hans Ola? Of course, they're super important.
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::And I think if I just look personally, I wouldn't not have had more than 35 years in this group if those values didn't resound with me, so to speak.
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::And I think there is always a better way is one thing so curious and challenge, as we say, respect for all people.
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::There is very little of hierarchy in terms of no, I can't talk to that person and so on and so forth and coupled with a down to earth attitude.
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::If I put it like that, I've never met managers in Atlas Copco that believe they are bigger than what they really are and so on, I think, well, I mean, probably are some examples.
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::But anyway, that's the culture, I think, and then also to put the team in front, so to speak as a team is always stronger than any individual, and that gives results.
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::And those are both counts.
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::Not the words or your position doesn't count to speak.
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::No, I think you're putting a very strong message there and walk the talk.
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::Don't just talk the talk.
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::Right.
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::And I really agree on your comment in relation to a strong team outperforms the individual.
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::So, if your key that we're getting a little bit more personal with our listeners now, what are your personal lessons learned the past 30 plus years of working for the group? And is there most proud moment in your career that you can share lessons learned? It would take us three hour Podcast to go through everything I've learned.
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::But on the proudest moment, perhaps there are, of course, many proud moments when I felt proud personally, but also extremely proud of belonging to this great company.
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::But then again, you said personally, I get a bit personal.
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::I was very proud of myself, actually, in Ecuador, 1981, halfway down to the Amazonas when I managed to help the customer of the very first water Shram drill rig sold in the country ever to start the machine after they had spent half a day trying themselves.
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::And we don't have time to go into how I came to be in that position or what happened.
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::Really? But yeah, that was a proud moment.
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::The customer was very happy.
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::That's good.
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::Exactly.
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::Well, I agree with you.
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::No, it's a podcast episode by itself.
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::Okay, let's come back to that.
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::Okay.
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::So if you would meet your younger you, what professional advice would you have given yourself? It may sound strange for a guy that has had the same position now for the train last 22 years, but actually the advice would be try to do even more different things.
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::You know, life is much shorter than what you think.
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::So be curious also in that respect.
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::And it's always welcome Atlas Copco.
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::I've always felt that if you can show that you have been in different yes, positions and situations, that is always a very, very good asset, take the opportunity for her.
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::Right.
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::I think we got some very wise words from a wise friend here.
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::So we're getting closer to the end and we started out asking ourselves the success of Atlas Cocoa.
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::What is the secret sauce? Excellent strategy, strong leadership or mainly luck.
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::So, Hans Ola, here it goes.
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::The big question.
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::What is the secret sauce? Yeah, well, like Coca Cola and their recipe, we can't say no, but seriously, like most professional chefs, I would say it's the combination of some excellent raw material that make it not just one thing, but we have touched upon it.
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::The passionate people, the culture, the business principles.
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::And I come back to the stable organizational structure.
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::I think that is the source, so to speak, that had made it profitable.
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::Yeah, right.
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::I fully agree.
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::And if you would give a final message to our listeners with as a legacy of your impressive professional journey, how so what would that be? A final message as legacy of my professional journey? Well, I'm sorry to see that sounds a bit too pretentious for me, but okay, then it is what it is or things are what they are.
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::In other words, accept the facts, don't make up excuses, explain if you have to and then just deal with it.
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::Accept the things you can change.
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::Right? Show courage to change the things you can and have the wisdom to know the difference.
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::I think that was a super powerful message and a perfect ending.
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::And then I take the opportunity now to say thank you from me to you for being a great colleague during these years.
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::And I have really appreciated the collaborative spirit between us and the friendship and last, but not least, thank you so much on Hans Ola for joining me today and sharing your experience and reflections from your fantastic Atlas Copco journey well.
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::Thank you, Cecilia.
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::Let me reiterate them.
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::That's been a great pleasure to work with you.
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::So super.
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::Thank you so much Hans Ola and to our listeners.
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::Thanks for joining us all the best and take care.
