Hai and thank you says it all

Stefan Björkman – TALKS WITH PETRI

Stefan Björkman explains the investment climate ahead of us, reveals his management secret, talks about a good company board, and what’s the purpose of glue in business.

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hello Stefan, how’s Helsinki?

Stefan: Helsinki starts to liven up a little bit here in the city center as well. Most of the people have stayed in the inner suburbs during the last two months. Today, you could see some other people, which is a relief.

Petri: You are the epicenter of cultural disruption and change. There’s a new museum exactly in the middle of Helsinki next to the railway station: Amos Rex. What’s the story behind that one? Why is it so successful that people are queuing for hours?

Stefan: Queuing for hours is a good big picture and it has happened. It was the first exhibition that was particularly exciting for people of all ages. There were at least three big reasons for success. One was that the foundation, I’m working for Konstsamfundet, has had the museum since the early sixties. The DNA of the team has always been to be at the forefront of modern art, also in the earlier museum. Although it was kind of a slightly less visible location and slightly smaller. But the President of Finland was at the opening of the earlier museum as well. We have some pedigree. 

With this came a lot of partnering also internationally, both with other museums, but also, for instance, the city of Helsinki, in terms of marketing. We took a lot of risk with the first exhibition and tried to jump to the future and managed to excite people in all generations. We were especially aggressive in convincing the different school classes to come to us. The seven and eight-year-olds took their granddads and -moms in the hand and stood there in the queue with them for two or three hours so that also the parents would see this immersive digital Japanese art that we had as the first exhibition. There were a lot of things that made the success. Without the deep roots of 50 years, it wouldn’t have been possible.

Petri: You mentioned Japan. You have a special relationship with Japan. You managed to do something which is considered rather hard for Westerners to do, do some successful business, and gain a foothold into the market. Can you elaborate a bit on what happened?

Stefan: We did everything not by the book. In a respectful manner towards the local business community and culture. You could say that we were kind of disrupting the elevator scene before that word was really popular. We were a young team and we didn’t understand how hard it was.

I had a keynote speech also for a conference organized by the Economist Intelligence Unit in Tokyo where it was myself and one guy from the US and one guy from the UK describing how to enter the market in Japan. I was the last and I said that we can’t rely on our government’s efforts on trade, so we just have to do the hard work.

Essentially, I would say that doing it in a guerrilla way so that you are constrained in terms of resources, show respect for the local customers and listen to them, but not too much. You can do it also in Japan but it takes a lot of legwork. I met with a few thousand real customers on job sites and listened to them. And tried to understand how we should work our way forward. 

It’s not the question of a story of a lonely hero. Kone had attempted to enter the market for almost 20 years. There was a substantial network of contacts and goodwill and we could also benefit from those. And there was an opportunity that the Japanese government wanted to open up some field to show to the rest of the world that the Japanese market is opening up. To a certain extent, you could say that Finland was a harmless partner to open up to, elevators were a harmless field and we happened to be there.

With macro we were in luck. We had a good network and, and we were young enough to seize the opportunity. Probably, I would have over-thought it today and we would have maybe made some consultants rich, but not made the business. To a certain extent inexperience can be of value as well.

 Petri: Do you recall any fun or hard stories? There must be something happening if you meet so many people there and you knock on so many doors and the particular moments you can recall?

Stefan: Maybe a general reflection that, especially for a Finn, why not for a Westerner in general, we think that it’s good that the rules are clear. For instance, contracts are clear. It sounds like a reasonable idea. Why would you want to have unclear rules and unclear contracts?

But in Japan, I understood the value of ambiguity that the contract shouldn’t be so clear that there isn’t leeway to adjust for the particular situation with the particular people confronted with a particular problem. This ambiguity leads to people trying to find the solution rather than litigate or going back to the contract.

Maybe a black and white person would have very much difficulty with this, but I thought that there’s quite a lot of value in ambiguity in this way that it forces amicable solution on the spot with the facts at hand not kind of theoretical fight in the courthouse.

Petri: You started your business career by going to Karhu Titan, a Finnish sports goods company, and you’re in the turnaround team. How did you end up immediately in the middle of a turnaround team while doing your thesis?

Stefan: There was a very young managing director at Karhu who went there to make the turnaround, and when he interviewed me he thought that he had a working capital problem. I had made a successful working capital project with Nokia Cables and a mutual acquaintance had recommended me. He thought he had a working capital problem and that I was the guy to come and help him with that.

I thought he worked at Amer Group, which was a big brand company, and he didn’t tell me that he was going to work for Karhu Titan. I read in the newspaper that the guy who had just employed me for the working capital problem in Amer was going to Karhu Titan. So I thought that was that summer.

I called him and asked him, this is a little bit unusual. He said, no, no, no, no. It was always the idea that you would come with me to this company. Okay, you could have told me. He was a little bit afraid I would say no if he would immediately tell what the situation was.

We looked at the situation and they were all kinds of problems in Karhu Titan but the working capital issue was the least of them. After a few weeks, I got a new assignment and I asked them what should I put in my title? And he said, glue. We are going to have at least 20 projects and I need you to be the glue that keeps everything together. I was what nowadays would be called a transformation office or something like that. There were a lot of impressive consultants running around doing stuff and I was in the middle of it. It was maybe not the perfect job to do the thesis because I had to do the thesis by night after work.

It was a very interesting time.

Petri: Stefan, the superglue. You didn’t get rid of turnarounds just by going to Karhu. They followed you in many companies, publicly listed, in VCs, and probably some other ones as well. Is that something you enjoy or it is just something that happens to you?

Stefan: Life happens. I haven’t sought turnarounds as such, but I’m a little bit easily bored if it’s just a situation where you should increase productivity by 2% from last year and manage operations. That’s not really me. I would rather build than do the more messy part of turnarounds. Usually you are not afforded the kind of luxury of just having the good part. If it’s change, it’s change. If it’s more positive it’s a much nicer job. I don’t particularly enjoy going through cost-cutting exercises.

Petri: We are in the middle of coronavirus and soon post-corona in some sense, at least in business-wise. What’s the advice you can give to those who are looking at their companies and they think what should I do? Should I do some drastic things? What are my options?

You’ve been there, you’ve seen it from the owner’s perspective, and I’m looking at your portfolio. What advice can you give?

Stefan: I think it’s always based on whether it’s a startup or it’s an established company and there is a disruption like this. It pays to think about what would be a really good company in the environment we are going into. When you have a picture of what would be a really good company then you think what is the bridge from where we are now to this good company? 

Many people start by thinking that what should we take away? Or where should we cut, and so on. I think then you lose hope. You have to have a positive goal. The road there might not be so enjoyable, but the only way to keep the spirit and also engage people is to set a goal, we are heading for this and it’s a good place. That would be the only advice I can give. Cutting for cutting sake is usually not a very good exercise for the owners or anybody else.

 Petri: What makes you happy?

Stefan: I’m a very curious person. I usually enjoy insights that there is some surprising small factoid that completes the puzzle and you kind of see the world from a different perspective. It can be a feeling, or it can be a small obscure fact that completed the puzzle. Now I somehow understand the world better. 

 I’m always on the hunt for slightly exotic history books looking at some local history or something like that. I enjoy when I come up with this feeling of at least having a puzzle completed at least for the moment. Then the world takes care of it so that it’s not so complete the next day but at least for an evening, it could be a good, Oh.

Petri: How do you define success?

Stefan: For me success is a collective feeling that many people together, I as a part of the team have achieved something that makes the world a slightly better place, at least for a while. 

Petri: You’ve been leading different companies. You’ve been in banking, you’ve been in insurance, you’ve been in pension funds, also doing startups in the finance field, and now in a third sector running a large foundation. Are there differences in culture and ways companies are managing them and how they can drive and be successful, depending on the sectors? Or are all of them basically all the same and it’s just a matter what type of values you have and what type of people you are having?

Stefan: Some of the parts are the same. People are people, systems are unfortunately systems, I mean IT. Capital is capital. There are many familiar things in any operation. I would say that for a generalist like me maybe seeing the familiar parts is one thing.

The second we already discussed a little bit. I think understanding the roots and the past is something that is done maybe too little in commercial companies. And, understanding the driving forces through the histories is much more important in the third sector as you are not compensating so much with money.

You are asking people to work for a good cause. And there I think at least here in the Nordics the values of young people have more in common with third sector work in this way than ultra-liberal commercial company or a very transactional company. 

To get the most out of your team. I think there are many things that are anyhow the same. I would even say that if you really want to simplify management two things: you can almost say that it’s what you learned at home. You say thank you and you say hi. 

If you want the third, people cannot perform if they feel unrecognized. The easiest way to get productivity low is to look through people and don’t even greet them. Especially if you work with your head. That will certainly take down productivity for a number of hours. And you don’t really feel like coming to work in a place where people don’t even say hi. It’s a very fundamental thing.

In the thank you part of managing is also being able to change people’s behavior but also giving the bad news, corrective feedback. People can’t take corrective feedback if they don’t also get positive feedback. I’ve read a few studies, in the pension world we studied this quite a lot, on what makes efficiency in the workplace.

You have to have roughly 80% positive feedback in order to get a 20% corrective feedback through. You can’t do it in such a way that you say, thank you, thank you, thank you. The only way is to thank people for the good work because for the most part people do good work.

And if you do this, the times you have other types of feedback you have enough goodwill. So, people will actually listen and also can take in the negative feedback and maybe think about it and correct their ways.

Petri: How do you do that in practice when you’re running a large company or organization and there’re so many people there? You probably cannot even remember all the people’s names and how does that happen in reality?

Stefan: You can do it in many ways. In the bigger organizations, I used to have a personal, small blog on the internet. It wasn’t ghostwritten by somebody and it was not even spell checked. Although I’m dyslexic, I thought it’s better that it is obvious that it’s me who has written it with all the faults in it.

A little bit commenting on everyday things, also business, remembering to just say hi. If you have nothing else to say you can thank people. It’s usually not wasted.

Petri: I noticed you’ve been quite active also in LinkedIn commenting on Amos Rex exhibitions and what’s happening. And some years back I think you had a project where you were writing a journal or something, was it blog posts daily that was probably related to your birthday. 

What did you learn from those?

Stefan: People react differently, but most people think it’s a neutral or a positive that you share some thoughts and maybe it makes you as a manager more approachable that doesn’t feel so distant. At least I felt the difference, people clearly had a lower hurdle to come and speak. That’s a value in itself and also being a little bit vulnerable. Maybe when you’re younger you would have more trouble with it. Vulnerability is also a good thing to a certain extent that you are not some mythical superhero somewhere. You’re a human being and people can speak with you.

Petri: What was unexpected or wish you knew before you started in some roles when you were new in a CEO position? You can choose the place in your career and you were fresh in that position. And then what happened later that was like completely out of place?

Stefan: Being from Finland I have also worked in Sweden a little bit. Working with very hierarchical cultures has been difficult. It’s both difficult to work with people who feel that they are very much above you. And it’s also very difficult to work with people that think they are very much below you.

In Finland we have a fairly low hierarchy and I’m maybe an ultra case of this. I have very much difficulty seeing things through this hierarchical lens. It doesn’t work for me. When I had this very small team in the beginning in Japan, and I came in the spring and there was a decision to be made where we should have the cherry blossom party of the company.

Having lived there for maybe a month, I thought it’s a little bit odd that I would be the one picking the park since everybody else has been living in Tokyo for their whole life. I asked my sales director who was the most senior in the team if he could please do it this time. Next year I’m surely up to it. And then I saw that the rest of the team had a long two-hour meeting. I thought that it isn’t this difficult, but I don’t understand everything that’s happening here. The next day I asked what did you conclude in this meeting?

Where are we going? No, no. We were just discussing what did you mean by not deciding yourself and delegating this question? There I understood that I have to take a completely different approach. You cannot assume that you could work with the Japanese team, as you would with the Swedish team, for example. That was a surreal situation. How can it be an almost full day question, which park we are going to have a cherry blossom party, for five people.

Petri: Where did you have it? How did you resolve it? When I was in Japan, I had a similar situation in different circumstances. I’m new in the city and they want to show me around. I asked where should we go? And the answer was always hai, hai. It doesn’t really lead anywhere.

Stefan: Finally I had a chat with the sales director, and he volunteered to tell his opinion if somebody were not to blame him for that he would say that there was this one park just a half a kilometer from us would be a good alternative. Then I said that in our next morning meeting, I will propose that. And then we lived happily ever after.

 Petri: How does it feel like to be the person everybody’s looking at the organization when you sneeze or when you look at someone or when you’re tired or the way you walk or talk or who you look at in the meeting. There’s some kind of speculation of what’s happening or what does he mean or what he’s thinking of me. Is there something you can learn?

Stefan: I’m not very self-conscious about that. Unfortunately, I’m very blind to that issue. I don’t spend very much time thinking about that. I’m a little bit blind for hierarchy and this comes a little bit with the territory.

So if I asked what’s your opinion? The actual question is, what’s your opinion. And there’s nothing else. People have told me it takes some time to adjust to me, so I have to live with that. But, I haven’t given that very much thought.

Petri: What is the most radical thing you have done over the years? 

Stefan: Radical in terms of what? Usually when I look at something new in the professional sphere I evaluate what are the familiar parts. In that sense, I haven’t felt that any of those changes from industry or geographically have been that radical, but I have to say that agreeing to move to Japan without having ever been there would probably be considered radical in some books.

That’s probably the most radical thing. Then some other person would also maybe think that leaving an established company on a mid-career to work with at that time very small startups in Helsinki was radical, but I had my personal reasons to do that.

Usually, I haven’t thought of it through that lens. More from the lens of what is familiar in the new thing, which may have given a little bit of comfort in moving.

Petri: You mentioned you love to read history books. How about in business or in other areas of life, what are the people you if not admire, but you think that you have learned something from? Maybe some hints and tips as well, who do you think are the ones that people should follow?

Stefan: I admire very much first-hand observation. I also like if it’s a new thing. I like to familiarize myself by walking around, looking, and sniffing, or whatever. But being really close to that idea. For instance, when I started here I spent very much time in the museum but also in the newsroom, which happens to be in the same building I work. Because those were the two areas that I had never worked in before. That’s why I also like and enjoy reading and listening to people who have immersed themselves in some things. Traditional business literature leaves me a little bit cold.

It’s too distilled. I think you can learn more, for instance, about a country by reading a good novel where the main characters are really living rather than having the how to do business in that country book. I have some difficulty reading also biographies. Usually it gets a little bit shallow and as I suggested earlier it’s anyhow a team effort. It may be tens or hundreds of years of roots that carry this hero to the goal. I’m more interested in the fundamentals and immersion than singular individuals or traditional business literature. I don’t know if that makes sense, but that was the answer.

 Petri: You’re also investing in your professional capacity. What are the themes or what are the things you’re looking at the moment and how do you think the world will change in the next five, ten maybe 20 years? Do you see that looking back the same amount of time that it’s sort of linear or do you think that there’re some discontinuities happening and it’s harder to predict what’s going to happen in the future?

Stefan: The things that we’ll be strong in 15-20 years have already been with us for a while. For instance, this emerging interest in environmental and these types of issues that have increased during the last few years I think will become completely mainstream. Of course, the investment climate will be rough. We have already seen that businesses have much shorter life spans and I don’t see very much going against that.

We will have a very choppy investment climate with maybe the exception of certain platforms. There probably will be some almost global platforms given that this world will break up in certain blocks over the next years. But also I would view cities as platforms for activity.

You have this hub platform idea that is valuable. The concrete products and concrete services might be very short-lived. How to navigate that as an investor will be increasingly difficult. I think having a clear vision that it’s not the product, it’s the capacity to produce new and to innovate, be then a city or, be then a company that is the fundamental value. And there you come then to the company culture. The culture or sustainability issues cannot really be detached from each other, at least not in the Nordics.

We are heading for an environment where you have to be much more pragmatic and philosophical at the same time. It’s difficult to get to grip on that but if you try to be too transactional, you will lose the good people. If you are again too philosophical, you will not have a business. You have to find a new balance and do this in an environment where at least for the next two to five years we will be low growth or worse. It could be very tough.

Petri: Sounds like a hard balancing act. Does it help if you’re sitting as an investment director in a pension fund having a very long perspective? How does it differ from a private foundation perspective versus then ETFs or publicly traded mutual funds or hedge funds where performance expectations and the cycles are shorter?

Stefan: The approach has to fit your inner nature. For a pension fund there will be pressures and also concrete regulations that are different. In our environment it’s very difficult for a charitable foundation to have investments that would somehow be contrary to the fundamental idea of what you try to achieve. You can’t invest in one way and then try to be credible in your charity and then have a different personality. I envy the hedge fund guys a little bit because they can be clearly in one corner and just do one thing.

 Petri: Are there any leaders in the value-driven investment or impact investment area in the world at the moment?

Stefan: I have tried to do a little bit of research and there are some people who are doing part of the things. This will be a kind of fragmented field just because of the nature of it. The investments have to somehow reflect the culture of the organization, as all the other activities. What is a good impact might vary a little bit from your vantage point. It is one issue to be very clear that the impact that, for instance we are striving for through the museum or our endowment side, the impact is not measured as investment income. We have to measure the impact of the museum in terms of does it make Finland a little bit better place that it’s a more open society, more conscious of culture or the impact of culture. If we do that right then the issue of did we invest the money in exactly the optimal way from a money management standpoint it’s not the only impact we have to consider. We are still in very early days in how to address this issue and especially how to think about the investments and actual activity that we do and somehow combine the impact of these.

 Petri: How do you get through hard times?

Stefan: So far, it’s been by trying to sleep, waking up in the morning and starting with relatively good humour left throughout the day. If you get sucker-punched, I might be out for a few days, but I’m a curious person and fundamentally optimistic. So, I will be back.

Petri: Superglue terminator will be back. You have also been in over 30 startups either as a board member or chairperson capacity. What have you learned from that journey?

 Stefan: The very fundamental thing you learn is that life is not fair. So you cannot program success. Even if everything would go right, you can anyhow end up in the wrong place. And sometimes success comes to people for all the wrong reasons. I have been thinking that maybe you get more experienced, but I question if you get wiser.

Petri: Are you getting more cynical?

Stefan: I’m not saying cynical either but the belief that there is an in-built justice in things is weaker than when I was younger.

Petri: Do you think this is a regional thing, it happens in other parts of the world the same way, or are there some characteristics that may be different in different places?

Stefan: No, but this comes back a little bit to the issue of the roots. Even if it is a young startup, you will have people that have their network. You will have by some coincidence certain investors or at least a certain combination of investors. There might be some coincidence in terms of timing of some bigger industrial players that would be the natural exit for certain startups.

There is a lot of coincidence also and you cannot discount that. Even if you would have the absolute best team with the best product but if the context doesn’t fit at just the right moment, it will not be ten. It will be seven and a half, and that won’t do. It’s a little bit like we discussed how I managed to get Kone into Japan.

It was to a certain extent an accident, but without being proactive, we wouldn’t have been able to seize the moment. You need both. It is also good for entrepreneurs to know that it’s a really high stakes game that there are many windows. And they might be closing and opening a little bit unreasonably from your point of view. You shouldn’t try to over rationalise how the world works.

Petri: If you are a startup founder and you’re having a growth company and you’re thinking that now I need more experienced, more professional or a different type of board. What’s your advice? What type of persons should you search for and what’s a good mix of people and skills and expertise?

Stefan: You need different types of people on the board. I would maybe more think about what culture you want to foster rather than what competencies the different board members have. If you want to grow it’s good to collect the board where at least the majority of the board members are inclined to grow.

It’s very difficult to move in the opposite direction from the board. And I think people overvalue competence and undervalue culture in this respect very often because you are impressed by the competence or the experience of a person. In the board work the culture and the spirit the person is bringing are at least as important as the competence.

There are two types of valuable experience. One is generic, maybe myself more of that, you have seen a number of things, and you can somehow relate to that given these circumstances what are reasonable odds and give some guidance that of course, you can try that but I’ve seen 50 guys attempt and nobody has managed to scale a wall that high in that time with that budget. That’s one type of experience.

The other type is that you have a very detailed knowledge of a business model, which is close so that you can really hone in what really brings the profitability because the generalist can’t help there. They can just advise you that you are close enough. They can get you into break-even, maybe in good luck. In order to get really a profitable business model, you need people that have executed and really know the details of what makes things tick.

For instance, when you are doing cloud services or person-to-person services or whatever concrete approaches that you have taken to the business. The board should be able to advise you on both. Generalists take you close to break-even and at least one person who can then advise you how you actually make the EBITDA positive by a margin.

Petri: What is your favorite word? 

Stefan: I have to stick to curiosity.

Petri: What is your least favourite word?

Stefan: l like almost all words, but only is a word that usually creeps in at the wrong moment. This is the only option, or we only have this or something like that. So only it’s usually bad news.

Petri: What turns you on creatively, spiritually, or emotionally?

Stefan: Like I said finding the last piece of the puzzle.

Petri: What turns you off?

Stefan: Whining, negative attitude even before things have started to go wrong.

Petri: What is your favorite curse word?

Stefan: I have to say it in Swedish.

Petri: Go ahead.

Stefan: Fan.

Petri: What sound or noise do you love?

Stefan: A summer breeze that results in a little bit of waves on the water and maybe some leaves rustling a little bit.

Petri: What sound or noise do you hate?

Stefan: Drilling. I don’t care if it’s dental drilling or somebody in the neighbouring apartment drilling something, but it’s awful.

Petri: What profession other than your own would you like to attempt?

Stefan: I have never worked in my proper profession as an engineer. Maybe I should try that sometime.

Petri: What profession would you not like to do?

Stefan: I think I’ve chosen wisely not to be an engineer. I would be very worried about the bridges that I would have calculated or the machinery I would have designed. So I think I’d better stick with the current approach.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Stefan: I think I would like to start something with my three sons. It will be somewhere in the future.

Petri: Do you have any last words, any wise words or silly words for the audience?

Stefan: Hi and thank you!

Petri: Thank you, Stefan. It’s been a pleasure.

Stefan: Thanks.