The New New Boss - Annika Falkengren

(Article first published in Currents 2 2005).

“I never felt that anybody looked at me differently because I was a woman. What made the difference was that I got the opportunity to work in line management where you can show results,” says Annika Falkengren, deputy CEO and soon full CEO of one of Sweden’s largest banks, the SEB.

Annika Falkengren was recently named the most powerful businesswoman in Sweden, but female bosses are a rare species in the private business sector of welfare Sweden. Women are found in many management jobs in the public sector, they have captured close to half of the seats in the parliament (45 percent), and eleven of twenty-two posts in the cabinet. Although 90 percent of Sweden’s women work, the private sector has been embarrassingly slow in letting women join the ranks of management, and even more so when you reach the top. Only two percent of the CEO’s of publicly traded companies are women, and although the number of female board members took a dramatic jump after vice-premier Margareta Winberg in November 2002 threatened with quotas, women are still few and far between in most boardrooms. This in a country that has been run by social democrats for most of the past three quarters of a century, not counting a couple of short-lived non-socialist interludes.

Annika was of course not selected as a CEO because she was a woman, something Jacob Wallenberg, the chairman of the board, made explicitly clear as he introduced the result of a yearlong executive search done by headhunters. She got the job for the same reason that Samuel Palmisano became the new CEO of IBM when Louis Gerstner retired. She had been a line manager in charge of SEB:s largest business area – Corporate & Institutions - that had produced the right numbers year after year, adding value to the bottom line. There may have been many good soft reasons to pick a female CEO in a company where 60 percent of the employees are women, but this decision was about competence and performance.

The symbolic significance of this decision may however not lie so much in today’s outcome, but in the fact that she might very well have been overlooked a generation ago.

“I am proud over the fact that the bank, for the first time in 50 years, picked the new CEO from inside. The SEB and the Wallenberg family is sometimes seen as rather conservative, so it is nice to be able to show that we as always are professional and modern in our thinking. We preserve the heritage, but view the world with modern eyes,” she says.

But change is coming and it is reaching the boardrooms as well: Half of the eight members of FSB’s board are now women, five of fourteen board members at Svenska Handelsbanken (SHB) are women, as are four out of twelve at Nordea. In this area however, SEB is a laggard: When Annika joins the board next year; only three out of twelve members will be women.

Annika has worked in the bank for almost half of her life (she is 43), and claims that she never experienced any glass ceiling or glass walls. “I work in the financial sector, which I think is an excellent sector to be in, as it is results-oriented. I’ve also had very good managers. My first manager, Mats Larsson, followed my career for ten years, and he meant a lot to me. I turned down a couple of job offers in the beginning, not feeling quite confident about my ability, but he pushed me ahead. There was no corporate policy to promote women; it was just that my manager felt that I was suitable, even when I couldn’t see it myself. I think that women tend to hesitate more before taking on a new task. We want to be so sure, while men just throw themselves into the game saying ‘I’ll take care of that!’ I was lucky in having a manager that believed in me, and then I started to work for CEO Lars Thunell, which also worked out well.” (He is 58 and will retire when Annika takes over the reins.)

“I never felt that anybody looked at me differently because I was a woman. What made the difference was that I got the opportunity to work in line management where you can show results. I felt safety in knowing that I had delivered ‘kronor’ and ‘ören’ (i.e. dollars and cents) to the bottom line and had happy customers. It shows,” she continues.

She may not have faced a corporate glass ceiling herself, but she is fully aware of the wider impact of her appointment. She wants to encourage other women to become managers, which is why she has addressed the Swedish-American Executive Women’s conferences founded by Renee Lundholm, president of SACC New York, and speaks at universities and business schools.

For Annika herself, this has been only one of the large changes to her life over the last few years. She married Ulf Falkengren and gave birth to a daughter about a year ago. Now she had the option of enjoying 480 days of paid parental leave - the standard in Sweden - but she was soon back at work. “I married the right man. I was on maternity leave for three months, and now he stays home taking care of our daughter until she is ready for day-care. So far that solution has worked well for us. I am also privileged in that I can afford to buy the services we need to make our everyday life manageable,” she says.

When asked about managerial role models, she says that she has many, but can’t single out one particular. She is grateful to her managers at the bank, and admires Jack Welch for his focus on human resources and quality. In the background there is also her mother, who was working outside the house until her father, a diplomat, was stationed in Thailand. “I had a very strong father figure who believed that anything I did was fabulous,” she laughs.

Her road to the top was never mapped out at an early stage. “There are those who come out strong, pushing with all their might, but things don’t always happen according to your plan. You must be ready to seize the moment. My first boss left the bank when he was 51 and wanted me to take over. I was only 37 then. It was pure luck. If he had stayed on for ten more years, I may have been doing something else. And then we have the fact that Lars Thunell retires relatively early… Don’t expect the road to be completely laid out. Find a job that you feel passionate about rather than skit around from base to base.” For her it was also important that she worked in a wholesale division, and she advices women to pursue jobs as line managers, which is unusual as many women choose to work in HR, marketing or communication. “There are few women as line managers, but that is where CEO’s are usually picked, not from the staff at the headquarters.

“One woman cannot change society. There needs to be more of us for it to be possible to say that Sweden has truly embraced the concept of women as leaders in the corporate world. SEB is pro-actively aiming at increasing the number of senior managers. For us it is a question of profitability. We cannot afford to miss out on 50 percent of the most talented people,” Annika Falkengren concludes.

Hans Sandberg

Jacob Wallenberg on Sweden’s Economic Future (2004)

(This interview was published in Currents Magazine No 2 2004.)

In Sweden, Jacob and Marcus Wallenberg are known as ”the cousins.” Both were born in 1956 and share the formidable task of steering the vast Wallenberg empire. Marcus is CEO of Investor AB, the nexus of the family’s financial and industrial power, while Jacob is chairman of another bastion of power, the SEB bank, whose history goes back to 1856 when A. O.Wallenberg founded it.

Currents interviewed Jacob Wallenberg, who is also a board member of SACC-USA. To a Swede, the Wallenberg name epitomizes big business, while internationally it often evokes the Rockefellers.But fact is that the forces of globalization have diminished the role of dynasties such as the Rockefellers and the Wallenbergs.Their power is certainly more challenged in today’s world, but the Wallenberg family still exerts strong influence over a wide range of corporate giants; companies like ABB, Astra Zeneca, Atlas Copco, Ericsson, Electrolux, Gambro, Investor, Saab, Scania, SEB, SKF, Stora Enso, and Scandinavian Airlines (SAS), just to name a few. This “Wallenberg sphere” captures about 40 percent of the value of all companies traded on the Stockholm Stock Exchange.

It is an open question if one of “the cousins” will eventually emerge as the dominant force in the family. In the meantime, it is actually Claes Dahlbäck, a veteran Wallenberg executive, who holds the reins as chairman of Investor. Jacob and Marcus sit on many corporate boards , including Investor’s, but Jacob’s home base is SEB, while Marcus’ is Investor.

Last November (2003), the social democratic Swedish government invited representatives of the business community to join in a discussion about economic growth. Since then, many business leaders have grown increasingly frustrated with the outcome of the ”growth talks.” Currents took this as a natural starting point for our interview.

CURRENTS: What are the conditions for economic growth in Sweden? Is it enough if Ericsson makes a comeback?
JACOB WALLENBERG: As you know, the Confederation of Swedish Enterprise has for the past few years communicated a very clear picture that Sweden’s standard of living has slipped. We have gone from being number two or four in the 1970’s to number 17 a couple of years ago. The challenge for Sweden is to improve growth in the business sector, so as to provide the necessary economic basis for an improved living standard.To do this,we need to address many issues, such as a focus on research and development, education, labor laws, and taxes that run the risk of pushing talented or successful people abroad. There is no single answer to th is challenge, and no single company can solve this problem. It t akes the joint effort of Sweden’s businesses, small as well as large.

What needs to be done?
I’m talking about long - term projects that generate increased growth over time. This is a competitive game where you have to attract capital, foreign direct investments, etc., into Sweden.

A lot of foreign companies invest in Sweden despite the tax system. Isn’t that paradoxical?
No. Companies will invest in Sweden, as it is a market of 9 million people. I’m talking about investment decisions made on the margin, about investing in research and development, venture capital investments, investments in private equity, and in companies.You then have to provide an environment that is as inviting as possible for foreign investors, and I think that we have a way to go before we can get back to the top of the standards-of-living list again.

What would make a foreign investor think twice before going into Sweden?
Sweden has, generally speaking, a high level of technical knowledge, international experience, and a very industrious and successful base to work from. We have a number of things that attract potential foreign investors. My only point is that when you relate to marginal investors, who are making decisions whether to invest in Sweden, Finland, Norway, or somewhere else in Europe, you simply need to look your best.

How important is the marginal investor overall?
Long term, he is certainly very important. Scandinavia is at the outskirts of Europe.We are at a disadvantage for geographical reasons, and have always known that. To attract investors, you therefore have to be better than the others.

Sweden has had very few new big companies started over the past 50 years. Are we going to push the old industries to get better, or look to new ones?
You cannot ignore the fact that the companies you call old are significant contributors to the Swedish economy, and that we could not survive without them. The challenge is to complement them with emerging technologies .Take SEB as an example. Over 25 percent of our retail business is conducted over the Internet, which is a meaningful number. You need to combine the old with the new, and have faith in new technologies.

The Swedish government’s latest longterm economic study found it hard to support the welfare system in the future, since a large and growing part of the labor market’s ”core” members prefers to study rather than to work, or “perceives themselves as unable to work.” Do we Swedes have the attitudes we need to compete in todays' global market?
Yes, I know. It’s a European attitude. The provision of social welfare is more highly prioritized here than in the United States, and the Americans therefore work more hours per worker and year compared to the Europeans. This is an obvious drawback from a competitive view.

Could we see this as a matter of consumer preference? Europeans choose to consume more publicly via a combination of monetary and political means, while the Americans choose to work the long hours, outsource the cleaning and laundry, and order in take-out food? The Europeans cook at home instead.

( Laughing) It starts with attitude. The great majority of the Americans believe that if their neighbors can be successful, so can they, and they are willing to work for that goal. In many parts of Europe, the attitude is somewhat different. The belief in success is not as strong, and people therefore prioritize other areas of life. This choice is made easier thanks to the social safety net, which is significant in many parts of Europe.

So it is a matter of an incentive structure?
No, at the core it is a matter of attitude, which over time grew into two different systems. Neither is perfect, but the fact of the matter is that Americans are more productive and therefore more competitive than the Europeans.

Which is the key issue?
Competitiveness, which brings us back to the Lisbon Agenda (for the EU).The whole point is to make Europe the most competitive economy in the world, even more competitive than the American economy. European leaders are not accepting the system’s shortcomings.
We have to find ways to compete fully with the Americans. Otherwise we will continue to have lower economic growth rates to the detriment of our living standard.

We have an enlarged EU and the Chinese market is important to some companies in your group? The outlook must have changed a lot over the past ten years or so?
Absolutely! China’s appearance on the world market has been an important ingredient in world growth, and most multinational Swedish companies play an important role in China. That goes for Ericsson, Atlas Copco, Tetra Laval, Volvo Trucks... the list is very long.
China has been the area of growth while other parts of Asia have floundered. It has become increasingly important for the living standard of many Europeans and Americans. China is increasingly important, both as a buyer and a competitor, and they are rapidly becoming more sophisticated.

And they do push education...
Yes, they are pushing education big time.

We also have growing new markets in the Eastern Europe. Will these and China change the outlook for the Swedish industry? Will it affect its interest in the U.S.?
China will of course take away some of the energy, but I don’t know if it will be at the expense of investments in Europe or the United States. I can’t judge that. But over all, I think that we all benef it from the globalization. China and the other markets offer improved opportunities for growth, and we all need growth.

Is there any reason to be concerned that its businesses will start to outsource a lot more to places like Shenzhen or Shanghai?
It is not outsourcing as such. It is production. China has proved itself to be a stable place for production and good quality. They are very competitive piecewise, and quality is not a significant issue today, which it was 15 years ago.
I am not concerned as a matter of principle, but if these changes come too quickly, which I think is part of the concern in the United States, you will be under some pressure if you are a politician.

Do the European or Swedish welfare systems — whatever you think about their size — provide a cushion that makes outsourcing less dramatic?
Short term, yes, but the important thing is to keep developing a country or a region so that you don’t have to close down large parts of your production. It is better to move the production piecemeal and bring in high-tech production in the meantime as a replacement.
That’s my whole point about Sweden, and that’s why we have to focus on research and development, education and so on. We have to create a high-value added environment and focus on production that can replace the lower value-added production, which for competitive reasons will move to low-cost areas.

During the Internet boom, suddenly it was cool in Sweden to start a company. But then the bubble burst and we had all these scandals such as Enron, and in Sweden, the Skandia affair. Does this hurt the entrepreneurial spirit?
First, let’s make one thing clear. You can’t compare Skandia to WorldCom and Enron, which are subject to crim inal investi gations. That is incorrect, certainly as it stands today.

But it still seems to be affecting the public mind?
( Laughing) Well, it is not the same kind of scandal. One is about criminal acts, while the other is not. In my book, there is a fairly wide difference between the two. We have an ethical and moral debate; we’ve seen serious problems in Europe and in the U. S. There are always people that will do bad things, but that doesn’t mean that everybody is bad.

Is there a problem of greed, and has it hurt the entrepreneurial spirit?
Human nature makes people want to make money. Adam Smith was very clear on that when he was talking about greed. The important thing is to channel that drive into something positive and that is indeed what Adam Smith tried to argue. This still stands today. Why else are so many people in the U. S. working so hard to make money, if it wasn’t for a drive of some nature? Does that drive away the entrepreneurial spirit?
No, I don’t think so! The entrepreneur has the same drive, but he has a very special skill, that is to make things happen.That skill is not less ened because somebody shows signs of bad morals. I don’t think so.

The American dream is based on the notion that with hard work, anyone can make it. But with things like Enron, you may start to think you need a buddy to make it — it’s not enough to be an entrepreneur.
Sure, but those guys are in cou rt , and a few of them are on the way to prison. They were caught and tried and sentenced. The enforcement is the key here. I certainly agree with you that the individual has to be able to trust the system. If someone is caught doing something that is against the law, he should be punished accordingly. This is the key and the Americans have been very clear about that.

Finally, a question about the Swedish-American business link. How important is it for Sweden’s business? What about it is so important? Is it cultural exchange, knowledge, connections?
No, it is the fact that the U. S. is the world’s largest economy. U. S. technological trends, market, consumer and political trends are key to understanding what happens in the world. These trends will over time show up in the rest of the world. Every international business person needs to spend time in the U. S. and try to understand it in order to gain a broader picture of events that affect you and your company. It is not sufficient to, for example,  only follow European media. You need a broader perspective.