INTOUCH : Stig Ehnbom on A different way of doing business

When the first oil crisis struck in the early 1970s, New Zealand introduced car-less days and, with most other Western economies, returned to “normal” relatively quickly. By contrast Sweden, with 80 percent of its oil imports used for heating and transport, decided that within 50 years it would not be dependent on oil for either.
Currently, Swedish oil imports account for just 25 percent of fuel used, and it’s expected that by 2020 it will be independent of oil for those activities. The Swedish Department of Industry can show 20-year plan for every sector and with global warming becoming an issue, some sectors are already planning much further ahead. This well-developed process of long-term planning is at the heart of the experiences that Scandinavia is willing to share with New Zealand companies and, indeed, the rest of the world.
Denmark, Finland, Iceland, Norway and Sweden are the main Scandinavian (Nordic) countries, and together with Greenland, the Faroe and Aland Islands have combined population of just over 25 million. Denmark, Finland and Norway have similar populations to New Zealand (between 4.5 and 5.5 million people each) and Sweden has nine million, according to 2007 Nordic Statistic Agencies’ reports. Such similar population levels in islands interested in developing knowledge-based economies ensure that successive New Zealand governments have kept close watch on Scandinavian business philosophies and activities.
Scandinavia has long history of smart industrial development and many large, multinational companies have developed from range of early innovations – witness ABB, DeLaval, Electrolux, Ericsson, Grundfos, Nokia, Sandvik, Scania, SKF, Tetra Pak and Volvo among others that are active in New Zealand.
Underpinning the success of such companies is the recognition that it’s often necessary to “think outside the square”. For example, in typical Scandinavian company considering investment in new product, the order of questions would likely be, “Are we able to do it?” followed by, “What is the world market for this product?” then, “What is its unique selling proposition?” “Can we work with alliance partners?” and eventually, “What is the margin and cash flow?”
Outside Scandinavia, the question related to profit and margin usually comes first, and expectations tend to be for very early profitability and dividends.
Scandinavian companies generally resist the temptation to outsource manufacturing to low labour cost countries such as China, on the basis that unless the product is intended for local consumption the social problems at home as result of this activity could be catastrophic. Instead, they have encouraged countries like China to outsource their own production to Scandinavia, to take advantage of high productivity levels and the ability to sell items at premium using the label “Made in Sweden/Denmark/etc”.
There are big cultural differences between Scandinavian countries, but after many armed conflicts over the past 1000 years the benefits of cooperation have been learned well. Although quite different, Scandinavians usually work together well and reach consensus on the most complex issues. Everyone seems to know that arguments and conflicts will only produce delays, hostility and low morale. People in Scandinavia have reputation for being able to strike good balance between environment, social and financial objectives in business, with strong social awareness across all societal strata.
The most ‘Scandinavian’ company is probably Scandinavian Airlines (SAS) which is owned 3/7 by Sweden and 2/7 each by Denmark and Norway, with each national shareholding divided 50/50 between the respective governments and their public. At one stage, more than 40 trade unions were involved. Without exceptional abilities to work together it would be hard for an organisation to operate efficiently and effectively.
And despite 50 years of debate, Ford has still not shut down Volvo Car manufacturing in Scandinavia and nor has GM closed Saab. Those companies realised they needed the knowledge contained within these organisations to establish centres of excellence, which could not be enhanced without keeping product development and production close to education centres.
Scandinavian countries constantly rate in the top 10 most productive and competitive countries worldwide. There is strong feeling that over-investment in technology during the dot-com boom is now paying off. This has enabled the Scandinavian countries to afford to maintain higher level of social welfare compared to other countries, which in turn is making the people less reluctant to change.
Scandinavians generally seem to understand the bigger picture on range of issues. In Denmark, it was suggested that people voted against adopting the Euro currency because they feared their taxes would be lowered, and they believed they received good value from the high taxes they pay.
Across Scandinavia, the word for “business” literally translates as “nourishment for life”. There is clear understanding that business pays for everything – ie, the standard of living, jobs, welfare and security, and that there must be close cooperation between business, academia and governments (politicians).
Lifelong learning is second nature to people in Scandinavia, with high participation in part-time education and training, participation in night classes and the tradition of study circles (learning without teachers to enhance learning-to-learn skills).

“Surviving 2020 and beyond – NZ-Scandinavia Business Summit” will be held at the Spencer on Byron, Takapuna, Auckland, on November 7th. Billed as being “for decision-makers who wish to commit to active participation in the transformation from ‘business as usual’ to ‘business as sustainable’,” this interactive forum is limited to the first 100 registrants.
There was an early focus on the environmental impacts of industrial activities and in Sweden, legislation was passed in the early 20th century to ensure forestry remained sustainable. Today there is strong belief that Scandinavian countries will benefit from globalisation because of their significant investment in research and development (three times the OECD average) and technology, good quality products, leading world brands, good education on all levels, good management, good manufacturing competence and world-class logistics expertise.

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