Tag Archives: paper industry

Lego businessman on bench

Maximizing Shareholder Value

“On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal. … Short-term profits should be allied with an increase in the long-term value of a company.”
This statement came from the one person who might have been the best CEO ever to run the trick of maximizing shareholder value. It was Jack Welch who said this to Financial Times in 2009.
When I came to STORA (now Stora Enso) in 1996, the first words I heard from the CEO Lars-Åke Helgesson were that his job was to increase shareholder value. To me this was back then a major surprise; I thought that the products were the core. Well, that’s what it all comes back to in the paper industry – tonnes! There was soon a chicken race between the newly formed Stora Enso and International Paper. IP had always been the biggest of them all – in tonnes. This race continued several years, seemingly resulting in big bonuses for the kamikaze pilots Jukka Härmälä and John Dillon.
Early on, I started to believe that it was the customer that should be in focus. This was however not often a standpoint we saw in leaders of the paper industry. They often referred to their business as “the industry”, and were regarded as highly arrogant by most of their customers. This attitude was present on almost all levels, the standard answer to a complaint on poor performance in a printing press being it is not paper related. An answer that actually never resulted in happy customers.
Recently, there has been some improvement in the attitude from paper companies. I have even heard the concept of “customer success” being mentioned by at least one CEO. It may never be to late to change…

For more comments on shareholder value not being a wise strategy, please read Steve Denning’s column in Forbes: The Dumbest Idea In The World: Maximizing Shareholder Value.

Killing creativity…

Youngme Moon who is the Donald K. David Professor of Business Administration and Senior Associate Dean at Harvard Business School has compiled an “anti-creativity checklist” that gave me a total flash back to my earlier employer. I believe I heard at least 80% of her sentences. Numbers 1-4 relate to colleagues which make them less relevant. Most of my colleagues were just as frustrated as I was. Number 11 is about underestimating your customers – They’re not ready for that, or That’s not what they’re asking for – I heard that just too often.

Please enjoy the video!


Innovation is not a big issue in the paper industry

RISI recently published their list of the top 50 movers and shakers of the paper industry. The list comprises the usual suspects, but also a few amusing surprises. No. 5 on the list is Steve Jobs, since Apple’s products have changed consumer behavior faster than any other. The only innovator from within the paper industry is Mikael Lindström of Innventia at No. 42.

If there is one thing the pulp and paper industry needs in the 21st century, it is innovation. It must find new ways and new products to make – not just simply turning pulp into the commodity of paper.
Fortunately there are some very able and creative brains on the case. One of them is Mikael Lindström, adjunct professor, and research manager at Sweden’s Innventia, a research institute working for the pulp, paper and packaging industries. Since 1998, Lindström has been the senior research manager, for the New Materials and Composites division as well as a “principal investigator” for biomimetic fiber engineering.
Lindström has developed a concept for integrated materials – Hierarchic Design – using pulp as one of the major ingredients which has been presented both at scientific conferences and twice during the prestigious Design Week in Milan. This included market pulp producer Södra’s Parupu children’s chair and a designer lamp, both made out of DuraPulp. The lamp has very recently won Sweden’s biggest and most prestigious design prize, Design S. The bi-annual award is granted by the Swedish Design Association.
Mikael Lindström, Innventia innovator

Print is Eternal – or…

The following is the first few lines in a hilarious discussion between more or less extinct media types.

Moderator: Welcome to Obsolete Anonymous! I’ve gathered you all here to welcome our latest member, the Print Industry.
Print Industry: Hello, everyone. But there’s been a mistake. I don’t belong here.
(chuckles all around)
Print Industry: I’m serious. I’m not obsolete. I’m relevant. Print books have been around for hundreds of years. They’re never going to be replaced.
VHS Tapes: Yeah, we all thought like that once.
LP Records: It’s called denial. It’s tough to deal with at first.

You can read the full text at A Newbie’s Guide to Publishing. Thanks to Patrick Henry at the Print CEO blog for the alert.

Johnny Johnsson

Johnny kicks ass at last day on the job…

Johnny Johnsson was celebrating his last day at work with a three-hour presentation of his achievements as company doctor at Stora Enso Fors over a period of more than 20 years. During the first 10 years, Fors became the healthiest company in Sweden. In 2004, he was presented with a medal by the Swedish king His Majesty Carl XVI Gustaf.
His impression of the recent development in the Stora Enso group was however less than positive. Centralisation and efforts to create a global identity have created anonymity. Endless reorganisations, rigid company directives, shared service centres, outsourcing (Bangalore!) and centralised software systems (SAP) have reinforced this negative development. Only by developing a local identity in a global context can a positive company culture be established.

Bitter return to home

Helsingin Sanomat has summarised the rise and fall of Finnish paper industry’s conquest of American and European paper companies. In the year 2000, the three companies Stora Enso, UPM and M-real were all very confident that their acqusitions were truly adding value to the owners. Ten years later, the truth is that it all was a gigantic loss of money.
See also another Helsingin Sanomat article on the same topic.

Dumbest business decision of the decade

The Swedish business paper “Dagens Industri” has listed ten candidates for the not so flattering distinction “dumbest business decisions of the decade” in Sweden. Stora Enso tops the list for the decision to acquire Consolidated Papers for EUR 4.9 billion in the year 2000.
Stora Enso’s CEO Jukka Härmälä and Chairman Claes Dahlbäck burned additional billions in restructuring the North American paper company, before finally divesting the remaining assets to NewPage for EUR 1 billion in 2007. The deal also comprised 19,9% of the shares, which recently became practically worthless.
On top of this, the duo sold Finnish and Swedish forest resources and hydropower assets, just before the booming of wood prices and cost of electricty.
The total loss for Stora Enso has been between EUR 5 and 7 billion according to the newspaper.