Carl-Henric Svanberg is the ice man built like a paratrooper who says he wants
to lower his profile. Quite how he hopes to do this by accepting the
chairmanship of BP is anyone’s guess.
At home in Sweden he is chief executive of Ericsson, the country’s industrial
bellwether and top exporter, and he is better known than Sir Richard Branson
and Sir Terry Leahy put together. His year-round tan, topped up at the helm
of his yacht, does no harm to the image of a corporate linchpin who runs one
of the top builders of the mobile-phone networks that are fast covering the
planet.
I am welcomed to his low-key campus headquarters at Kista, a few miles north
of Stockholm, with a firm clap on the back as a reward for attempting a few
words of Swedish.
“My picture is always in the newspapers,” he sighs, part-way through our chat.
“It is not because I do many interviews. I look at the newspapers and think,
‘What have I said today? Wow.’”
Exasperated by life in the Scandinavian goldfish bowl, he was thankful — if
surprised — that his separation from Agneta, his wife of 26 years, did not
receive more attention in the Swedish tabloids. But if he wanted to lie low
after so long in the corporate spotlight, why did he accept the role at BP?
He says he was surprised to be asked. “I could see the rationale — both
companies are related to core parts of societies and complex technologies —
but I had to digest the idea.”
His appointment to BP was greeted with a chorus of “Carl who?” by people
outside his industry and country — which amused the man who has 82,500 staff
and revenues of £4.2 billion so far this year. “It was great. I loved it,”
he laughs.
It is a long way from the raw north of Sweden, Svanberg’s birthplace, to the
British Museum where Tony Hayward, BP’s chief executive, welcomed him to the
BP “family” with a toast before the oil giant’s top brass and City bigwigs
last Tuesday.
Svanberg came in from the cold a long time ago. Feted for turning round
Ericsson, which racked up losses of $8 billion (£4.9 billion) between 2001
and 2003, he has come almost full circle. His first act on becoming chief
executive in 2003 was to sell a building in London’s St James’s Square that
had acted as a dual headquarters and base for Ericsson executives.
The buyer was BP. So when Svanberg starts work in January he will inhabit the
same office that his Ericsson predecessor, Kurt Hellstrom, once sat in. “The
very first decision we took as a management team was to close the London
office,” he says.
Such coincidences will do little to ease concerns over whether Svanberg, an
engineer, was the best choice to chair BP, which is often embroiled in
political rows or under attack on its environmental and safety records.
There was no disguising that the search took longer than hoped. Nor was
Svanberg the first to be asked. Peter Sutherland, the outgoing BP chairman,
who is recovering from throat cancer, sat on the Ericsson board at the start
of Svanberg’s tenure and knew he had begun to plan his exit. Nevertheless,
the BP board believes it has the right man.
“He is comfortable in his own skin and has nothing left to prove,” says Sir
William Castell, the chairman of Wellcome Trust, who also sits on BP’s
nominations committee. “We have a great young team at BP and we wanted a
chairman who could come in and be a true team leader — a globalist who can
drive shareholder value.”
Svanberg is used to being an outsider. At Ericsson, he was the first incomer
in 60 years to be named chief executive when he was recruited in 2003. The
133-year-old company that Svanberg describes as “a crown jewel for Sweden”
was in a parlous state.
Spending on networks had to be frozen when the dotcom bubble burst. Ericsson
had almost gone bust, tapping shareholders for an emergency $3.5 billion and
announcing plans to axe 50,000 jobs. Its travails affected the national
psyche — one in eight Swedes owned shares directly in the company and many
owned them through pension funds.
In his quest to boost profits, Svanberg chopped another 13,000 jobs. “I
thought it is only high profitability that will create the room to drive
your own destiny.”
His vision of consolidation proved correct. Rivals such as Marconi and Nortel
fell away. Ericsson bought pieces of both. Mergers such as Alcatel-Lucent
have been a catastrophe. Today, 40% of all mobile calls are made on
Ericsson’s networks. China and India are two of its biggest markets.
Svanberg also diversified the company from selling equipment into maintaining
mobile-phone networks and not just those it has installed itself. Customers
in Britain include 3 and T-Mobile. About 40% of its income now comes from
such services.
“Carl-Henric built the confidence and the belief in the future,” says Michael
Treschow, Ericsson’s chairman and chairman of Unilever in Britain. “He is an
excellent team leader and has built an even stronger company than before the
crisis.”
Svanberg leaves the company ready to benefit from the upturn in traffic. The
International Telecoms Union reported that the number of mobile broadband
subscribers exceeded fixed connections last year. Beyond the 4.5 billion
mobile users today, Svanberg is eyeing the ultimate prize of an estimated 50
billion “intelligent” devices — embedded in, say, doors and fridges — that
will need a Sim card to communicate. They all demand bandwidth and that
means investment.
There are problems on the horizon. Spending on 3G networks has yet to offset
lower spending on legacy networks. Third-quarter profits were flattish
before restructuring charges but dived 72% to £72m afterwards, causing
concern for investors.
There is also the threat from Huawei and ZTE, two Chinese rivals that have
sprung to prominence by offering cut-throat deals. “We began to spot them in
2004 or 2005 and by 2006 we knew their names — or at least we could
pronounce them.”
Svanberg attributes his fascination with building things to his father, who
provides his closest link to the energy industry. He was the chief
accountant for Vattenfall, the hydro-electric company, and gave his son an
interest in science by pointing out engineering feats such as giant bridges
and earthmoving machines.
His job kept the family on the road. Svanberg’s father would oversee the
finances on each hydro-power project and then move on to the next one. “I
moved 10 times before I was 20,” says Svanberg. “I became a bit of a nomad.”
His can-do nature stems from the same genes as those of his older sister, who
lost both legs and her sight because of diabetes but carried on working.
“She was a very, very strong girl,” he says. “In many ways it was an
incredibly tough destiny she had to deal with. Happiness is not all about
everything going right. There is a happiness in every life.”
Svanberg was born in Porjus, inside the Arctic circle. When he got the
Ericsson job, the company wanted a photo of his first home. “I said take a
picture of any of the houses and I will back you up. It is a very small
village and they all look the same.”
A physics degree got him a job at Asea, the engineering company that is now
part of ABB, and assignments in Latin America and Africa. After nine years,
he went to Securitas, leading the spin-off of the lockmaker that is today
Assa Abloy, from where he was poached to head Ericsson.
At Assa, Svanberg honed his persuasive charms by acquiring 100 firms in five
years, earning the tag of the “gentle conqueror” and boosting the share
price 20-fold. Most of the firms were family owned. “It was like buying a
family treasure,” he says. “You had to qualify like a bridegroom, prove to
them that you were a good place for the company to go.”
But this diplomat is not afraid to speak his mind. A huge row blew up in 2006
when Svanberg called for a change of Swedish government from the Social
Democrats, who had been in power for 12 years. They lost the next election.
Svanberg already has a house in London but plans to buy another. One of his
children works in the City and another is coming over to live in a year’s
time.
His handover at Ericsson to Hans Vestberg has already begun, allowing Svanberg
to devote a third of his time to BP and attend a key strategy meeting
recently.
He is a big proponent of green energy at a time when BP is being accused of
pulling back from wind and solar projects.
“If we didn’t change anything and just continued as is, we would triple the
world’s energy consumption by 2050. That is not sustainable,” says Svanberg.
“This is the time that we should cut carbon dioxide emissions. Everybody
understands that.”
In his new role, those are just the sort of comments that will get him noticed.
The life of Carl-Henric Svanberg
VITAL STATISTICS
Born: May 29, 1952
Marital status: separated from wife Agneta; he has three children
Universities: Linkoping Institute of Technology (MSc physics), Uppsala
University (BSc business administration)
First job: project manager at the Asea engineering group
Pay package: £2.3m
Homes: Sigtuna, north of Stockholm, and London
Car: black Volvo V70
Favourite book: Stieg Larsson’s Millennium trilogy
Film: A Beautiful Mind
Music: Bruce Springsteen
Gadget: Sony Ericsson Satio
Last holiday: sailing, “somewhere in the world in warmer waters”
WORKING DAY
The outgoing chief executive of Ericsson wakes up at 7am and drives the 20
minutes from his home in Sigtuna, Sweden’s oldest city, to Ericsson’s
headquarters at Kista. He works from an understated corner office and has 10
directors reporting to him plus the heads of key countries, such as America
and India.
Svanberg attributes his management style to the many years he spent in the
Scouts. “I think I am pretty involving in my leadership style, getting
people on board.” He tries to leave by 7pm and typically travels three days
a week.
DOWNTIME
Just like Tony Hayward, BP’s chief executive, Carl-Henric Svanberg’s passion
is sailing. He doesn’t think it is a coincidence. “Many of us [chief
executives] have such intense jobs that just to lie on a beach and do
nothing simply wouldn’t do,” he says. “Sailing gives you peace of mind and
it is quite intellectually challenging as well. It is a good way to clean
your brain.”
Launched in Stockholm in 2001, Svanberg’s 21-metre yacht has yet to return
home. He sails warmer waters such as those around Fiji once a year.
He played ice hockey to a high level in his youth and is on the board of
Djurgardens IF Hockey team in Stockholm.
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