Atlas Copco CEO: Culture, performance, mistakes and accountability

ago, one of the first companies I met was Atlas Copco in Stockholm. And wow, what a company.

I've been following them closely ever since and they just never seem to stop surprising on the

positive side. And one of the things that is driving this is the unique corporate culture,

the way they basically produce some of the best CEOs in the world. And today we are really lucky

because we have Mats Ramström joining us, who is now stepping down as a CEO. So now that he is no

longer the CEO, he can tell us all about it. Very welcome, Mats. Thank you so much.

Just want to kick off first, how would you describe the corporate culture at Atlas?

I think it's a competitive edge for the company. It's not so tangible what it's all about, but

we are trying really to set high standards for ourselves. Not so difficult, really, but we're

talking about, you know, respect for people, show them up, showing up on time, prepared,

take ownership. And we have this new excuses culture where you actually need to deliver.

And so the decentralized, we are recognized for that. We give a lot of freedom to people,

but we also give them a lot of accountability to get the job done. And to build that culture,

you need to trust people. And we normally say that the one that is closest to the problem or

the opportunity is also closest to the solution. So we work a lot on that to make sure that we

don't need to escalate a lot in the organization. And then I think the customer focus that we should

really bring tangible values to our customers, and otherwise it might not be worth doing,

as we spend a lot of time on that. We talk about raising red flags when we see things going in the

wrong way, that that is absolutely okay. And I had this job interview the other day, and

the person I interviewed finalized the interview by saying, she said to me, I'm sorry for this,

but she said, you cannot bullshit your way to the top of this company, you need to deliver. And I

think that summarizes a little bit what we are trying to accomplish here with the decentralized

organization that people actually are accountable to deliver results, or making changes that we

continuously improve. So Mats, when we met in Stockholm, you said, one of the things at Atlas

is that there is always a better way. And I remember I met the CFO a long time ago, and he

said, you know what, you come into our leader group meetings, and even when things are really well,

you get the impression that we are just about to go bust, because we are focusing in always on just

how we can improve things. So how do you create this kind of relentless pursuit of improvement

in the organization? This one thing by one of our owners, I think it's good. The only

tradition worth keeping is the one of change. We talk about there is always a better way,

and it's really embedded in the culture. And sometimes we might be too critical,

but we always ask us the question, can we do this in a better way? So we really,

really encourage people, curiosity, don't be afraid of change. And we use these three horizons

to make sure that we really look for, we are present, what can we do short term?

But then we talk midterm, but also we talk in the future, and that's very much linked to

the global trends. What do we need to explore to understand this in a better way?

And then the financial performance is extremely transparent.

So it seems like you put numbers on everything, and in order to make everybody accountable,

just tell me about that process. No, but we are, as I see it, at least quite a

high performance oriented company. And it might sound scary to many, but I think high performance

people like that. And the way for us to do that in the decentralized model is to give the trust.

But at the same time, every month we do up to 600 profit and loss and balance sheets.

So we know really to benchmark in between, we know when to call to congratulate someone for

a fantastic job, but we also call to see if we can support to improve the business. And everything is

measured against what we call a mission, which is the assignment you get when you get a new job.

So with the authority, the decentralized, it comes with a very clear responsibility

and accountability for the result as well. So that's how we do it.

You cannot really hide enough of Coco anywhere.

Tell me about this mission. I thought that was really interesting. We don't have that,

right? But when you get a job at Atlas, you basically set a three-year target.

How does it work?

No, but let's assume that I would hire you in a position for something. And then we as a group,

we believe that maybe what is the full potential plan for this financially? Should we change the

way we go to market? Is there products missing? So we set kind of a little bit of a framework.

We say, well, this is what comes with the job. But I think the interesting part is the vision,

which we say is then that the one that's been employed in this position gather his team to say,

how do we accomplish this? What kind of resources do we need? How do we get it done? And we call it

the full potential plan. And then they counter with this and say, well, if you want this,

I need these resources. I need a little bit more of that. We need to help me up with

competence in this area. So it becomes a very friendly handshake where both have been part

of developing the plan. And as you said, it's normally between three to five years. So

I think it's short enough to be very tangible, but maybe long enough to be visionary and some

stretch goals there. And we believe that it creates not just the focus on the results,

but it creates a focus on the right activities to drive the result. And activities must come

before the result comes. So we are kind of trying to create a common view on the activity that

needs to happen. And in the same way, you put your management team and the employee in the same boat

and say, well, this is what we agreed upon. This is what we're going to try to do. So sometimes

we have success and sometimes we fail and then we change. But I think that togetherness,

that we have built this plan together has been very important for feeling that I own this plan.

So when you fail at Atlas, what happens?

I mean, we can discuss about failure. And if someone takes an initiative, I think business

and risk goes hand in hand. You need to take new initiatives to try different things. And

if it comes with the best intentions and of case it doesn't succeed in the way we hoped for,

is it really a mistake or is it the learning? And we tend to believe it's more about learning.

We don't want to repeat the mistakes, but do we want to penalize someone for trying? I don't think

that creates a good culture. So for us, it's not so much a mistake. It's learning. We move on.

We try something new, but we will not penalize people for being ambitious and trying things

because we need those actions. How do you share the mistakes across the organization?

We are quite open, actually. We meet between general managers. We meet between

divisional presidents. And the best sessions we have is normally when we share success

and things that we could have done better internally. And people are not afraid of

sharing since we have this culture of that we need to move forward all the time. So there's

kind of an openness between them. And we are trying to build this, even if you're quite a

big company, we're trying to build the networks between people so that they can reach out without

me knowing and learn from each other as well. Mats, what's the biggest mistake you have made

at Atlas? Wow. It's patience, I think. I'm very brought up in this Swedish way that you

give a second chance, which I think is a good thing. But sometimes they say that patience

considered to be virtue, but maybe hurry up should be one instead. The one thing I think

that we might end up with soon, and you can connect. I was thinking about the other day

that you can connect on Teams, or you can connect on Zoom. And I think it's a fantastic tool where

you can reach out to anywhere, anywhere in the world. But if we use those tools,

not to meet each other, then I think that would be probably my biggest mistake.

And because I think that culture innovation happens in these meetings, where people actually

get together. So I try to say, well, these are the good things with these new tools.

Don't stop traveling, don't stop meeting with people, don't stop, you know, sharing. So for me,

I spend a lot of time in that to still to travel to make sure that people meet and arrange

things that people meet them. I think that could be a challenge if you stop meeting with people.

Now, how do you celebrate success at Atlas?

Sometimes we don't stop and celebrate. We are kind of hard on ourself. But yes, we do try to

stop. And last year, we celebrated 150 years. And I think that was a fantastic event. We could see

throughout history how we have constantly changed. But the cool thing with the celebration was that

we spent almost all time looking into the future, and making sure that we really understand the

opportunities going forward. This was just after the COVID years and we really put the company in

front of being industrial but also being a technology company linked to sustainability

and some of the megatrends. This concept of celebration is quite interesting. You know,

I saw an interview with a tennis player Federer, and they asked him, you know, how do you celebrate?

He said, well, I was young, I never celebrated anything. I just, you know, if I won a match,

later on that day, I was back on the court and started to train for the next one. But now when

I'm a bit older, if I win something big, I will actually take the evening off, have a glass of

champagne with my wife. We should really learn from him. It's a fantastic place.

Absolutely. Now, moving on to kind of career progression, what do you look for when you hire

people? Myself, I've always been triggered by finding people that are curious. The culture

fit is important. Don't you like to meet people that are passionate? Whatever you do, I like that.

It also helps you when you meet with customers. The willingness to learn, to continue to learn

new things, I think has been extremely important. And then the basics for us is everyone has a

customer. So you need to understand how you create value for your internal customer or for your

external customer. So experience comes with the age, normally you can say, but I think it can be

really accelerated. The one thing that I get a lot of questions is the work-life balance. And

I'm not so comfortable with that question. And the reason being that it sounds almost like

work is something negative and the balance and the spare time is the positive part of it. And

for me, the work I've done over the many years, if I wouldn't enjoy the work part, if I wouldn't

feel passionate about that, and that gives me energy, maybe I'm in the wrong job. So for me,

you need to, of course, there needs to be space for other things in life. But I think it's important

also to feel that you stepped into something you believe it's fun, it's passionate. And if you lose

energy every day, then you should look for something else. So maybe when I get the questions

too early in an interview, maybe I start to hesitate a little bit what's important.

We had Elon Musk on the podcast recently, and he talked about the ultra hard culture,

where you work 100 hours and so on for a period of two years now. How much do you work?

Yeah, I mean, the higher up you go, the more you think then you actually do physical work. So

I try to be always available. I don't count the hours and we normally say that we work until we

are successful. I don't demand people to, you know, work 80 hours a week, but I do demand that

we are successful. So that's what I don't really measure time in that sense. I mean,

you can work a lot of hours by getting nothing done. So I think the result counts and

people can find different ways of being successful. So for me, it's not the hours,

it's the result. A lot of the hiring you do is internal hires. What are the pros and cons on

this? Yeah, the experience that we get with an internal hire and knowing customers internally

or externally, I think puts a foundation for success. All that said, though, that we

could miss out on new ideas, of course, diverse experience. So we do hire externally as well,

but maybe it is 85-15. So, but what we do get is this really good understanding.

And then we open up all jobs with exception of mine to what we call an internal job market. So

you need to drive your career yourself. You need to find what path you want to take. And therefore,

we get people, everyone knows they have an opportunity. I think that's a very good thing.

Instead of that, the job has been promised to someone else. So you can always apply,

but you need to show the drive and the success to actually be qualified to get to the next level.

But we do both. But we do see that our customers are getting more and more. They want expertise

knowledge. So it takes a few years to build up the competence that we need.

You are keen to get young people into big roles. How do you make sure that happens?

Yeah, I do. I believe that people have much greater potential than they think themselves

sometimes. So if someone is passionate and drive and are willing to learn,

I'm willing to give them a chance. I became a general manager when I was 33. So someone gave

me that trust. And I want to pay that forward to the next generation. And so far, it's not so much

about age, it's more about the competence and the drive. And we are willing to help if someone has

a shortcoming in some way, if it's finance or sales, whatever it might be. So we can always

help out. But I also like to work with people that has that drive and energy. And likewise,

the other way around is I don't think that's so engaging with someone that has a lot of

competence but have a negative view on a lot of things. So I really like to promote people that

has the drive. And how do you see that a young person is ready for a big role?

I mean, at the end of the day, for us, you're judged by your results. So that you are ready

for a new, bigger role, it's normal that you have done very well for yourself in the present role.

And we do not do career planning. But we do help people with the gaps if they say,

well, I like to move into this position, this is my ambition. Then we have internal external

trainings that can help them out to make sure that they have the experience that they can actually

apply for the for the next role. How do you work with mentorship?

We do. We do for special categories, the trying to help people then to have a mentor,

it could both be internal and external. And I think the mentors rule in many,

many times it's just to help them believe in themselves that they are ready for,

for the next step. On the other side, isn't a good leader, isn't a good leader,

mentor almost every day. And I think that's even better if we can have good leadership

on a daily base to people. Of course, I understand there are things you want to

don't want to bring up with your boss, maybe that you need a mentor for. But we use both.

But I'm really trying to have a coaching culture from from our leadership so that our team is

available to the employees on the daily base. And I think that's even more important.

And the mentorship program is it's decentralized?

It could be both. It could be a region that runs it. And we normally try to go

between the business area so they get exposed to other leaders. It could also be external

proven that someone wants help with something, then we can help them to find someone outside

the group. But normally it's regional. We don't do so many group programs, but we are eager to,

you know, network between the divisions and the business as they get to new,

new, new business and other people as well.

Mats, moving on to leadership, you mentioned that Atlas Copco is 150 years old. And the

incredible stat here is that you've had only 12 CEOs during 150 years.

True.

They can hardly be a company in Europe with that kind of, with those kind of numbers, right? With

that kind of duration of leadership. It's just incredible. What explains this?

Yeah, when we talk about good leadership, we're talking about creating sustainable results.

And I think the important part is sustainable, that we do something that is really, really good

for our customers that comes to the benefit for our employees. And of course, society,

but also then the shareholders, but we always start in that order. So I think sustainable

results is one of the more important things. And the older I grew and higher up I get in

the organization, you realize that leadership is a lot about actually making other people,

it's not so much about yourself, it's about making other people see their full potential,

executing on their full potential, to really be there to ask the questions and try to figure out

how you can get people to the next level. So I think it's a lot about the people, caring about

people, making sure that they get the resources and the ability then to reach their full potential.

And I think that also with the 23 division and four business areas, all divisional presidents

have the full value chain. So they can practice just like a CEO on everything from R&D to sales

and logistics. And I think that's a way of building talents in the organization as well.

But good leadership for me is really to surround yourself with talent, and maybe the talent you

don't have yourself to build that diverse team. And I think as a team, you can be very,

very successful. And that's what we are trying to do in Atlas Coco.

How has your leadership style developed with experience and age?

That's a good question. I had my last management meeting last week. And since my management team,

they had a dinner, then we had some speeches. And if I summarize that, what came out of it,

some of them I am proud of, some I'm not so proud of. But they also, they said that they felt that

always stand behind the people and the promises that I made to them. That's one of the things that

they always said that, okay, you do that, you go back, back us up. So I think that is one key,

key things that they liked about it. Really changing the company from industrial to

to be more of a technology company has been another key for them that they can see that,

which I think is really, really good. I think that is also how we position ourselves for the

future and to be linked to the good macro trends. Then on the less positive side, I think they also

believe a bit too stubborn, too straightforward sometimes. So I need to work on that.

We also talked a little bit about this setting high standards,

focusing on the results. So I think it's been, that was the feedback I got. And I recognize a

lot of these things and appreciate that they were so honest with me as well to bring up the things

that I could do better. The straight talking, how does that work when you are a global company and

you have different cultures in different parts of the world? I mean, it's not everywhere you can be

a straight talker. For me, it started with when I was fairly young, I had to let someone go.

And I talked to this person, I said, well, due to these reasons, I have to let you go.

And it was one of my toughest discussions when I was at a young age. And the person

was not angry, but he left the day after he came back into me and said,

you know, I'm not so upset with you, Mats, but I'm very upset with my previous bosses and my

colleagues that they have not brought this up to me before. And I do realize that in some part,

that honesty and being straightforward is an honest way to help people actually to

improve performance. So from that day on, I promised myself at least to be very straight

when I see something that's good, or something that I think should could improve, more or less

to give people an opportunity to improve. And when I started 2017 with the group,

I was a little bit afraid that I came from industrial technologies. And then the compressor

was the biggest business area, we had vacuum and also power technique. And I felt, well, okay,

so how will my way of doing things be accepted. But when I started to meet our people around the

world, I realized that the Atlus Cocker culture is so strong. It's almost, you know, as strong

as the local culture with some adaptation, but it was really easy to feel at home and focus on a

lot of things that we discussed in the beginning. So for me, it's been fairly easy actually to be

straightforward. And the culture is the important part that brings, it's the glue that brings us

together independently of where we're from, independent of gender or religion. I think

it's the thing for us. The Scandinavian leadership model is quite consensus driven.

How does that work? For me, it's been like, I normally say to people that Swedes, I take us

as an example, and say that, okay, it will take a little bit time until we get to the decision.

I will listen to you all. But just to be clear, at the end of the day, I will take the decision.

But I think consensus takes a little bit more time until you make your decision.

But then on the other side, then everyone is on board. They understand why we do things. And then

execution in a decentralized organization works much better. I think if you have the other way,

it's more top down that the leader takes the decision without people understanding the reasons.

Then you need to explain the reasons when you actually started the process. So maybe I don't

think there is a winner among these two ways of approaching things. But I think either you gain

speed in the beginning, or you gain speed in the execution. And I think we are, I mean,

you could say that we are a Swedish head office company, but we are not so Swedish in the way we

do things. It's fairly direct. And it's very, very international to think we do.

Do you think there's something happening in the world and the way we

live and work and think, which makes the Scandinavian leadership model more advantageous?

For me, it's been independently, I love sports. And when I see strong teams being built,

I think you engage people. I think that's a way in the Scandinavian part that they engage them,

we ask them questions, even if they might not have the key knowledge, they are asked to feel

that they are part of something bigger. So for me, it's always been an upside to that,

to engage people and making sure say hello, you know, have respect for people always return phone

calls, etc, etc. It doesn't matter. Everyone is important. If you're in this organization,

you're important. Otherwise, you wouldn't be here. So for me, that way of engaging people

have been fantastic. And I just steal from sports, how they can see how they build their teams.

And you know how they engage people. I love that. You mentioned returning calls. When we

met in Sweden, you talked about some rule of thumbs that you have an Atlas. So when do you

how quickly do you return calls? And we normally say that we should return phone calls within two

hours and and all mails within 24 hours. Sometimes you can say, well, I will not be able to get to

your, you know, mail today, I will respond tomorrow. But we are eager that the people

standing in front of the customers know that they will get an answer. Because otherwise,

it could be that yes, I've seen your mail, but I don't have an answer. So I have not returned your

phone call. But at least you need to be there need to be present. And that is a it's a very

simple but extremely good way to make sure that you you have the speed in the organization.

And you know when to expect someone to return a phone call or a mail.

I think the returning of calls and mails is so interesting. You know, if you if you return an

email within one minute, it can be one sentence and people are impressed that you are so quick.

If you if you return, you know, in 24 hours, it needs to be it needs to be a paragraph. And if

you are like three days, it needs to be a page. And so you save a lot of time by being quick.

That's a good that's a good insight. I think good.

Do you think there is a trade off between empathy and execution?

Not at all. No. Why? I think you need it to be able to execute quickly.

And you need to know your people. You cannot manage anyone, people in the same way.

You really need to understand what the situation they are, what competence they have,

and take advantage of their strengths, making sure that that is part of the execution. So

not at all. I think everyone in a high performance company, I had this excellent

interview with one of our new presidents. And I tried to explain to him that,

OK, in this job, we're going to expect this and that and that. And he's been with the company

for quite a number of years. And he looked at me and said, you know, that's the reason why I'm in

this company. I like this. And I'm like, yeah, good point. So no, I don't think there's a conflict.

Now, you are moving on to become a board member of ABB, which, by the way, now has a Norwegian CEO,

interestingly. But what does it take to make a good board? What is a good board for you?

When I look at my board, I like when they're leaning forward. They're challenging me.

Is there a better way to do things? They share their experience. And I think that's

they're available between the meetings to me. They respond quickly to things that I like to discuss.

They have the experience of things that I need. And sometimes they're a difficult decision,

and you need to bounce that off with someone. I've been very lucky with my chairman. We have

always had a very good connection. I think we speak on at least on a weekly base. But the other

thing is that they stay out of the operational things, which I find also that there is a very

clear line between the giving advice, you're helping, but you're the one executing. You're

the one executing on the strategy. I do present the strategy for them, of course. And they say

we'd like this part, but they challenge. So for me, it's been the clear line between what's my

responsibility and their responsibility, and that I can take advantage of the experience that they

have. But I think we should have boards that are leaning forward, that understands the business,

that has time to visit our sites to understand what we do. And that's exactly the intention for

me now. And I already have a program with ABB that I'm going to visit sites and countries to

understand the business, because I don't want to be just using my present experience. I need to

understand what they do and how they accomplish value for their customers. So for me, it's been

a very good balance with the board I have had in Nafas Koko. Is it important that board members

have industry knowledge? I think you need both in a board. People with industrial knowledge,

financial knowledge, so on and so forth. But the one thing that I've been thinking about to run

our company, the 172 billion internal, where it's difficult for me as the CEO just to understand

all the applications and all the products. So you cannot expect that from a board member,

but to have the experience to be able to, without telling me or anyone else, just saying,

have you thought about this? What do you do about pricing? I think that experience is very

valuable to me. That's what I see. Should board members be shareholders?

Absolutely. Why? Yeah, I think they are part of the future of the company. We have a commitment

to our shareholders, and I think they should be on that journey with us and show that they are

engaged in the company. Now, you have one big shareholder, the Wallenberg Group, which has been

instrumental in developing Atlas and a lot of other very fine Swedish companies. What is the

advantage of having a big long-term shareholder? As I mentioned in between them, that in my case,

I have a Påke Wallenberg and Johan Forssell on my board representing the big owner investor,

I think they have 17%. And of course, to be able to have a long-term owner with a long-term interest

in the company makes it possible to make investments in R&D that will pay off in a few

years, to build new facilities, to do things more long-term that is needed to be successful.

And they see it more like when we sell it 150 years, so what do we do the coming 150 years?

Then they have knowledge about the company. They are very good sounding board in between meetings,

and they can say, okay, if you look at these acquisitions, for example, we really support

that this is where we're heading. So for me, it's been very good to have someone that is solid,

long-term, and also there to help and give advice. Well, Mats, it's been incredibly useful,

a lot of fantastic advice here, and we look forward to following the progress for the next

150 years as well. Thank you. Thank you so much.