Aalto Leaders' Insight 1, Spring 2014

A a l t o u n i v e r s i t y E x e c u t i v e Ed u ca t i on

Vol 1, Spring 2014

p u l i t z e r - W I N N I N G A UT H O R J H U M PA L A H IRI O N E A S T, W E S T A N D F I N D I N G H A PPI N E S S I N T H E M I D D LE supercel l: What can we learn from Finland’s mobile game wonder? tro u ble in th e b oa r d ro o m : Why can’t the CEO and board just get along?

5 sto r i e s: Aalto EE experiences teh r a n: New business rising in the Middle East

This is the inaugural issue of Aalto Leaders’ Insight - a magazine published and curated by Aalto University Executive Education.

This magazine is a library of insights. The five long form articles – we call them Books – focus on different aspects of leadership, business and self-development.

Aalto University Executive Education offers high-quality executive education (Aalto EE), professional development services for specialists and managers (Aalto PRO), and creative solutions covering the entire entrepreneurship lifecycle (Aalto ENT). Aalto University brings to our offering a multidisciplinary approach, together with innovative learning methods; this provides a unique combination of practical expertise with latest research.

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C O N TE N T S

S TA RT news, columns and insights Pages 10–25 Aalto EE goes Tehran. 11 Russia has its own rules.

Column by Riitta Kosonen. 15 New in science and research. 16 How to: Paula Kilpinen explains strategic capabilities 17 Our story: Lindström went international. 18 Make the most of complexity.

Column by Mikko Laukkanen. 21 Aalto EE news. 22 New in science and research. 24

— LO N G F O R M BOOK 1 Words of wisdom Pages 27–34 Free at last: Pulitzer Prize-winning author Jhumpa Lahiri talks happiness.

BOOK 2 Be st practice Pages 35–48 That’s super: What can we learn from the story of Supercell?

BOOK 3 Busine ss case Pages 49–68 Rollin’ with the Danes:Velorbis and the biking business of Copenhagen.

BOOK 4 Se lf-deve lopme nt Pages 69–76 Mr. Simple: Ben Nothnagel wants you to get your thinking back.

BOOK 5 Leade r ship Pages 77–89 It takes three to tango: How to make the board-CEO relationship work?

— S H A RI N G EXPERIE N C E S Participants, faculty and othe r Aalto EE alumni Pages 91–101 My story: Kai Kaasalainen. 91 Participant: Tommi Laitio went back to school. 94 Faculty: Will Cardwell lectures real-life entrepreneurship. 96 Co-operation: Terveystalo’s doctors get executive. 98 My mentor: Mary Gestrin holds the mirror to Björn Heselius. 10o

— Aalto Leade r s’ Insight Online Stream 103

fo r e wo r d

IN-DEPTH INSTEAD OF FRAGMENTS

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photo Alex Treadway

rint media has been carried to its death bed for a number of times, always presumably.

We decided to defy and make an effort to put together a format where print and digital coexist and beautifully complement each other.

It has been widely believed that the so-called generations X,Y and Z have lost their ability to focus into anything that takes an effort.We have worked hard to prove this wrong. It just takes a better narrative to focus.

Raising the bar isn’t bad, is it?

At least our team gets addicted to in-depth stories instead of busy fragments. We hope you share this pursuit.

This time my highlights are: Our Book 1: Our need for belonging never dies. Finding an intellectual, physical, social and business home matters a lot. It enables the personal success stories that don’t take a cheap reality show to exist.

Our Book 2: Can you imagine a business more fast-paced than gaming? Sorry, time out.

The importance of timing and letting go of your dar-

lings early enough are the clear and loud messages of this inspiring story. But what can we copy and transfer to our own industries or companies with a legacy?

Our Book 3: It is not about having a product or its performance. We are subscribing to lifestyles. From a hard-boiled business scholar’s perspective the highlight of this careful analysis is the fact that we can make – not only a living – but a profit out of it.

Our Book 5: T he boards are seen both as the alchemists and the firing squads of today. Taking a view on the back stage may compel us to take another perspective. Perhaps, we should focus more on getting the right people on board and at the board. ◆ Aalto Leaders’ Insight Online Stream: aaltoee.com/blog

Pekka Mattila , editor in chief Group Managing Director, Aalto University Executive Education Professor of Practice, Aalto University

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S ta rt n e ws , co l u mns & i ns i gh t s

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A a lto EE go e s T e h r an Aalto University Executive MBA program is now available in Tehran through an exclusive partnership with the Iranian Business School.This is the first global accredited EMBA program in Iran.

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ouzbeh Pirouz from Iranian Business School (IBS) is excited about the new co-operation. ”There is a clear lack of highquality management programs in Iran”, he explains in a phone call from Tehran. “We have them but not world-class ones. So what we looked for in the first place was world class quality.”

The Aalto EMBA program, ranked among the top 100 Execut­ive MBA programs in the world by the Financial Times, has now been brought to Iran through an exclusive partnership with the Iranian Business School.

Pirouz says they are impressed by the international standard and approach of Aalto EE. “At the moment, Iran is a country that is isolated from the global economy. In alliance with Finland, we can work on that.”

Pirouz himself is a Senior Partner at Pelican Partners, a private equity and real estate investment firm in London. He has been at the forefront of developing world-class management education institutions and programmes in the Middle East. He is a Trustee of several UK charities and was named the Young Global Leader by World Econovol 1/2014

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my Forum. He received his undergraduate and post-graduate degrees at Stanford University and Harvard University.

Pirouz says that the two teams from Iran and Finland are working together extremely well. He sees that the two countries have many things in common when it comes to education.

“A deep belief in education, and a strong engineering background.”

“In Iran, we have engineers with high-level technical knowledge but they are not updated with today’s management skills.”

Iran is a huge market with

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a relatively young population (64 per cent of citizens are less than 35 years of age).

It is said to be one of the last major emerging markets in the world.

“Universities are good, and 50 per cent of students are women”, says Pirouz. “In the Middle East, Iran is the most advanced country when it comes to education.”

The Aalto EMBA is offered to entrepreneurs, senior-level executives and individuals with significant professional experience.

The modules are structured around for the four key areas of strategy leadership, finance, and marketing. Participants will acquire globally applicable, multidisciplinary competencies based on the latest theories, principles and business practices.

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inland’s Ambassador for Tehran Harri Kämäräinen has followed the building of the partnership between Aalto EE and IBS from up close. He considers their cooperation to have a strong foundation: both countries’ interest and investment in education.

“If Iran were to participate in international school researches, it would fare particularly well, especially in natural sciences.”

According to Kämäräinen, Iran and its government recognize that the country has much to improve, particularly within business leadership education.This is why

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Miia Viitanen and Anu Sirkiä from Aalto EE visited Tehran in April. In the middle: Rana Pirouz from IBS.

cooperation comes at a welcome hour, he evaluates.

Especially British universities have cooperated with Iranians for a long time.

“Iranians have sent students abroad, and they have returned to Iran afterwards. Education has taken place outside the country”, Kämäräinen states.

“The cooperation between Aalto EE and IBS is interesting also because top know-how is offered in Iran for the first time.

This way a larger group of participants is offered the possibility for asquiring top skills.”

Iran has for milleniums been at the meeting point of different cultures. Connections to the East and West have been upheld throughout history.

Kämäräinen reminds of a rather surprising fact. There is prac-

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tically only one state between Finland and Iran through the Caspian Sea: Russia.

“When I was studying, it was possible to buy a train ticket for Tehran from the railway station in Helsinki. Hopefully this will be possible in the future as well.”

Kämäräinen says that the Middle East is a significant region in terms of economic development. Iran has nearly 80 million consumers and a high purchasing power.

Iran has made Western headlines mostly in major power politics. The cinema, literature and music of the country are slowly becoming recognized around the world.

Iranian culture dates back thousands of years.

“Finland has a good reputation in Iran and its high level of

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In leadership expertise, Aalto EE serves as a bridge between the West and the East, operating in Finland, Singapore, Poland, Sweden, South Korea, Taiwan, China, Indonesia, the Baltics, Russia – and now in Iran, Tehran.

education is esteemed. In Finland, Iran is relatively unknown, except on a superficial level”, Kämäräinen evaluates.

“Aalto EE is a about to embark in a region that is very important in world politics and trade.”

The Director for New Ven-

tures in Aalto EE is Miia Viitanen. She says that Iran is a highly tempting and interesting market region for Aalto EE. “The EMBA program has previously not been available in Iran. They have plenty of doctors, but no business leadership education to speak of.”

“We see great potential in business development and internationalization in general.”

Aalto EE will set a promise for Aalto Executive MBA graduates in Tehran to reshape the Iranian corporate landscape in a positive and sustainable manner. ◆

Th e I r an i an B u s i n e ss S chooL ( I B S )

is a not for profit institute founded in 2007 in Tehran.

The School’s singular goal is to hone raw entrepreneurial talent into expertise that will create a generation of business leaders equipped for a role on a global commercial stage, and hence able to revitalize Iran’s economic landscape in the 21st century.

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Busine ss in Russia: Start bui lding trust

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ussia’s share in the world economy is growing despite current instabilities. The country is a global energy giant with a negligible level of public debt. Also geopolitically, Europe has to be aware of what Russia is doing and collaborate in a way that brings stability in Europe. Shortly, Russia offers Europe potential as a trade partner, investment target and source of FDI. Russia provides approximately 20 per cent of fuel used in Europe, but otherwise Europe’s businesses with Russia are rather modest. Only approximately 3 per cent of Europe’s exports are targeted at Russia and China. As regards investments, EU countries could increase their role, as most “European” FDI in Russia constitutes roundtripping off-shore investments from Cyprus, the Netherlands and Luxemburg. There is potential for more: Russia’s infrastructure, production and service sector need foreign input in order grow.

Russia is also a big consumer market and the growth of its retail sector is among the fastest in the world.

Why are business relations so modest? Because of bad experience and distrust. Russia has joined international trade agreements, but constantly violates and circumvents them. Russia ranks poorly in international business climate comparisons and domestic surveys.

Defects in business environment include extensive bureaucracy, corruption, unfair competition, preferential treatment of domestic firms, and hostile takeovers assisted by corrupt authorities.

The western economies have been quite armless in protecting their rights in Russia. This is due to an inadequate understanding of the non-transparency issues in Russia. Russia is still a transition democracy without free media and clean elections.

This undermines social, political and economic transparency. Paying bribes is often seen as a means to survive and escape massive bureaucracy, unclear legislation and predatory behavior of authorities.

Foreign firms suffer from the inherent nontransparency and lack of trust in Russia. The dilemma cannot be solved by more legislation and punishments. Instead, the focus should be put on building shared values and norms in international business.Transparency cannot be introduced top down by authorities, nor can it be pushed by western firms alone. Rather, it must be supported by more comprehensive socioeconomic and political cross-border structures. Furthermore, building these structures should be established on highlevel scientific research that draws from thorough empirical field work. Being politically and economically neutral, universities play a key role in enhancing this type of competence. ◆

Riitta Kosonen is a Professor and Director of Center for Markets in Transition (CEMAT) at the Aalto University School of Business. She is in charge of several multidisciplinary research projects, which provide scientifically rigorous

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and societally relevant research on emerging markets, especially on Russia and China, and on the competitiveness of the Baltic Sea Region in the global economy.

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Wan t e d : E x p e rt s of t h e Ic y Wat e r s [engineering]

Competition for the Arctic regions intensifies.

Aalto University’s new top research unit produces experts and research on the Nordic seas.

At the end of 2013 Aalto University became responsible for heading the new international Research Centre of Excellence in Arctic Shipping and Operations. Other institutions involved in the research centre include the University of Helsinki, Norges teknisk-naturvitenskaplige universitet from Trondheim, Norway, and the Memorial University of Newfoundland in St. Johns, Canada.

During the next five years, the top research unit will be supporting eight dissertation theses inves-

WO N D ER F I B ER – E C O - F RIE N D LY FA S H I O N [ a rt s & d e s i g n ]

Eco-friendliness is a strong trend – and a consumer choice – in all aspects of design. Environmental considerations are especially challenging within the fashion industry, which operates on a fast cycle.

Ioncell fiber manufactured from cellulose and developed at Aalto University may be

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tigating risk management of arctic operations.

The operation is funded by the UK-based Lloyd’s Register Foundation. The new research unit is the first of its kind in the Nordic countries.

“Due to global warming, industrial and political aspects of the Nordic regions are growing significantly, which has increased research on Arctic technology and resulted in international competition”, says Professor Pentti Kujala from Aalto University’s Department of Applied Mechanics.

Research that focuses on Arctic regions calls for genuine expertise. In addition to long distances, significant weather fluctuations and unpredictable behavior of ice conditions pose major challenges.

“Significant advances in this field are only produced through persistent research and development work that involves a balance of theoretical modeling, laboratory tests and full-scale observations”, Kujala states.

one of the key solutions for the future. The material is stronger than cotton or viscose. These types of innovations will be sought after in the future, as demand for textile fiber is expected to grow nearly twofold by 2030.

The raw material for Ioncell fiber is birch cellulose from pulp mills.

The manufacturing method was developed by Professor Herbert Six­ta’s research group and based on a technique developed at the University of

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Helsinki.

“We reached a breakthrough in developing the process about a year ago, and progress has been rapid ever since. Producing fiber and thread is still a laborious process, but compared to last autumn we have been able to multiply the amount of produced fiber threefold”, Sixta reports.

The innovation was presented for the first time at Marimekko fashion show in March 2014.

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L e ad w i t h ca pab i l i t i e s How to recognize the strategic capabilities of a company?

How to maintain a competitive edge even when individuals change?

Head of Solutions and Impact at Aalto EE, Dr. Paula Kilpinen, whose dissertation concerns strategic capabilities and capability development, answers these questions.

are invested in. Capabilities must be allowed space to grow, particularly at the customer interface and in product development. In some cases capabilities can be acquired outside the company.”

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What are corporate strategic capabilities?

“Strategic capabilities are not skills of individuals but of the organization.What is a company renowned for? What makes it better than its competitors? Strategic capabilities are often discovered by answering these questions. Yet corporate leaders should be aware that capabilities must be developed. If a company revolves around its old basic skills, it may be outpaced by others. Being stuck in the past can be labelled as negative capabilities.”

Yet are competitive assets and special skills not the skills of talented individuals?

“Strategic capabilities should not rely on individuals.They must be spread within the organization and its culture. Strategic capabilities should not be tacit knowledge that can disappear along with an individual. They are also hard to copy or buy, as

they are deeply rooted within the processes and routines of the company.”

Can these kinds of capabilities be developed?

“Absolutely. It all begins with corporate strategy: the management must have a unified vision for which strategic capabilities

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Can companies have useless capabilities?

“Yes, and they should be let go.

They take up resources, and are not relevant for the company’s success. For example Nokia had Symbian, its own operating system that slowed down their transformation process. Giving up certain capabilities are painful decisions. They should be made in time. Unfortunately the markets do not always favour bold, unique strategies, but familiar and safe ones. This calls for a particularly strong vision from the management. One has to see beyond the current result: which strategic capabilities and which new capabilities will be necessary in the future?” ◆

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CEO Juha Laurio and Chairman of the Board Jukka Roiha were photographed at the Lindström headquarters in Helsinki.

L i nds t rö m : sma l l s t e p s ma k e b i g l e a p s During the course of 166 years, the small Helsinki-based textile service company has spread in over 20 countries.The success story of Lindström, which currently focuses in textile rental, has taken dedication, direction and perseverance.

1848 Dye master Carl August

Lindström establishes a small textile dye house on the current parliamentary hill in Helsinki city center. The dye house is named C.A. Lindström & Son.

1880s Lindström sends his son on an educational trip to Europe.While travelling through Denmark to Berlin in Germany

W.E. Lindström is familiarized with the Central European novelty of dry cleaning. Upon his return home he incorporates the technique into his father’s company and expands the company’s operations.

1920s The company’s owner family changes. Uusi Pesula Oy asquires Lindström’s stock in

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1922, and the company has been owned by the Roiha family ever since.

1970s The company makes

a significant change of strategy, as the original textile dye industry is no longer lucrative. ”My father foresaw that it did not have a future any more”, says Jukka Roiha, the current Chair-

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man of the Board. ”It was a big decision to give up the domain that the company had originally been founded to serve.”

Lindström focused increasingly on laundry and cleaning services.

1992

The company strategy was altered again. The company gave up laundry services and once again centralized its operations in textile rental. This is when Lindström’s process of internationalization also began, partly unintentionally. ”The thought had stirred in the back of my mind”, Jukka Roiha remembers.

Before taking charge of the family company, he had lived and worked in the Netherlands and Germany. Due to the corporate acquisition of 1993, Lindström was presented with the opportunity of expanding its operations into Estonia. ”It was something that just seem to surface. At this point we laid out our first internationalization strategy. It was simply jotted on a piece paper, but looking back on it now, it has taken place surprisingly well”, Roiha says. ”We decided to take small steps and enter countries where our line of operations is unfamiliar. In many countries we have been the first on the market. So we have taken a rather different route from other names in the industry.”

aimed to create signifi“In many countries initially cant business there in three years we have been and attain major profit, it would have been possible. Growing the first in market. not through small steps takes a lot of So we have taken time and perseverance.” a rather different 2014 Lindström has subsidiaries in 23 countries. 40 per cent route from other of the company’s EUR 303.2 names in the million revenue derives from outside Finland. industry.”

Internationalization was believed to best take place through strong concepts. The textile service was condensed and clarified into an easily replicable form.

The method for spreading an international concept were modeled after McDonald’s, for example. ”We wanted to learn how concept leadership works.

To learn to operate everywhere in a very similar way.”

2000s Internationalization

continued to take place according to the original strategy. Lindström’s current CEO Juha Laurio provides India as an example: ”Since 2007 we have operated in India, and within seven years we have attained large volumes according to European standards.

We currently operate in nine cities in India. But if we had

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”At the change of the year the figures turned so that currently 50.5 per cent of employees work abroad”, CEO Laurio states. ”We will continue with the same strategy of taking small steps. I believe that this way operations can grow without restrictions.”

“The challenge is to make the company truly international, instead of a Finnish company operating internationally. We have systematically made the operations of our headquarters more international. People without a Finnish passport work in all of our departments.”

Chairman Roiha ponders on the next challenge. ”Lindström’s story has taken courageous choices. Not reckless ones, but necessary ones in terms of boldly revising the company’s strategy. Even when times are good.” ◆ Read more about Lindström’s Superior Service Program customized by Aalto EE at www.aaltoee.com

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C r e at i on of a magn e t i c mono p o l e [science]

“It feels incredible to be a part of such a major breakthrough” Together with colleagues from the US, Aalto University researchers have created and photographed synthetic magnetic monopoles under laboratory conditions. The results were recently published in Nature magazine.

Although predicted over 80 years ago, the fundamentally quantum-mechanical configuration of the monopoles has not previously been observed in any

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physical system.

“Our achievement opens up amazing avenues for quantum research. It feels incredible to have been a part of such a major breakthrough”, says delighted Dr. Mikko Möttönen.

“The creation of a synthetic magnetic monopole should provide us with unprecedented in-

An artistic illustration of the synthetic magnetic monopole.

R e s e a rch : M u s i c so u nds b e t t e r i n a sho e box - ha l l [engineering]

Aalto University researchers have found that music is perceived to have greater dynamic range in rectangular, shoebox-shaped concert halls than in other types of halls.

From a shoebox hall’s sidewalls, strong reflected sound is audible to listeners from directions where human directional hearing sensitivity is the highest. Sound reflected from the sidewalls strengthens especially strong higher overtones that players produce during a whole orchestra fortissimo, but not during pianissimo passages. Therefore, the shoebox-shape affects the perceived dynamic range even if the space itself amplifies all of the passages.

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sight into aspects of the natural monopole,” says Professor David S. Hall from Amherst College, USA.“It’s not every day that you get to poke and prod the analogue of an elusive fundamental particle under highly controlled conditions in the laboratory”, he continues.

A magnetic monopole is a particle just like an electron, but with a magnetic rather than an electric charge. Some 80 years ago Paul A. M. Dirac, one of the founders of quantum physics, discovered a quantum-mechanical structure allowing the existence of magnetic monopoles.

Dirac’s original framework has now been experimentally realized for the first time.

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music. For this reason, a concert hall’s ability to transmit the orchestra’s dynamics is one of the most important criteria for good acoustics. Our study is the first to explain the way concert hall influences the perception of dynamic expression,” Dr. Jukka Pätynen says.

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The chao s around you – make the mo st of it

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he world of business keeps getting more and more complex, and we either learn to manage this complexity or become overwhelmed by it. At least that is the common explation for why older and perhaps simpler ways of organizing business operations no longer yield the results they once did or when justifying why our organizations must endure yet another painful restructuring.

We are hardly alone in feeling overwhelmed by complexity. When IBM surveyed 1,700 global CEOs in 2012 on the challenges they face and their predictions for the future, an overwhelming 8 out of 10 reported that they anticipate their business environments to get more complex in the future, while more than half said they felt unprepared to deal with this change. All this discussion on increasing complexity opens up two central questions: 1) Is our contemporary business environment really that much more complex than that of earlier generations of business leaders or is this an illusion we have created for ourselves; and 2) If the business world really is increasingly complex, how should managers deal with it without getting overwhelmed?

To address the first question, we can look to the work done by Boston Consulting Group’s Institute for Organization. The Index tracks the number of performance imperatives a rep-

resentative sample of international companies commit to in any given year. At the start of their tracking period in 1955, companies would typically commit to between four to seven imperatives, while in 2010 the figure was between 25 and 40.

To manage all these strategically important imperatives simultaneously, organizations develop complicated coordination processes and control mechanisms, which further complicate managers’ lives.

BCG found a 35-fold increase in the amount of time top management spends on coordination work for the same time period.

So if continuously increasing complexity is the new normal for business, successful managers must find ways to deal with it in ways that help them get both clarity and new insights amid a confusing and disorganized world. In her work on mindfulness, Ellen Langer from Harvard University argues that by teaching yourself to actively notice new things around you and by forcing yourself to second-guess your own immediate reactions to new events, you can actually shift from seeing complexity as something to be tamed, but instead as a source for great novel ideas and healthier organizations.

Whichever way you or your organization choose to deal with complexity, keep in mind that the world is unlikely to get less complex any time soon.

We may as well make the most of it. ◆

Mikko Laukkanen is Head of Thought Leader­ship at Aalto EE. In his doctoral thesis he examined the challenges of modern-day innovation

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initiatives and reasons for their failure. Doctor Laukkanen is a frequent lecturer in Aalto EE executive programs.

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D i ss e rtat i on : A c t loca l a l so i n H R [business]

S ta rt- U p C e n t e r com pan i e s c r e at e d ov e r 2 , 0 0 0 jobs [business]

Aalto Start-Up Center companies have created more than 2,000 jobs.The turnover of companies that are part of the StartUp Center Business Accelerator has grown at an exceptional rate. Combined turnover of all 161 alumni companies rose to around 300 million euros.

The Business Accelerator has been part of the school since 1997. For more info: www.start-upcenter.fi

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mobility is a significant driving force, both between companies and geographically. According to Lu, labour mobility can be prevented with increasing employee commitment to the company. For example compensation practices, performance evaluation and career planning increase commitment.

In addition, major differences between generations cause challenges for companies in China. The post-80s and post-90s generations are highly motivated, but eager to seek higher-paid positions and have a higher tendency to move between companies. They also expect fast career advancement.

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In order to prosper in China, foreign companies must localize their HR practices. Localization will be successful if carried out by local people.

These are some of the findings presented by Wei Lu, M.Sc. (Econ.), in her doctoral dissertation for the Aalto University School of Business.

Even experienced companies face problems when trying to find competent workers in China. High labour

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1 . 8 m i l l i on fo r sma l l foot p r i n t i nnovat i on

S oon 3 D p r i n t e r s w i l l p rod u c e l i v i ng c e l l s

[business]

[engineering]

Tekes, the Finnish Funding Agency for Technology and Innovation, awarded funding for the Aalto University School of Business’ New Global project as part of its 2013 round of funding for major strategic research openings. The New Global is a multidisciplinary innovation research project aimed at creating innovations with a small resource footprint for low-income emerging markets and new business opportunities for Finnish companies. Professor Minna Halme, a frequent lecturer in Aalto EE programs, is the project’s director.

3D printing has been presented as the breakthrough innovation of recent years, when in fact the technology has been developed for decades. “People are not necessarily aware of the fact that 3D printing has been under development since 1985”, says Professor Jouni Partanen, who works as Professor at Aalto University School of Engineering. He is currently leading a study on 3D’s possibilities in medicine. Partanen himself leads studies in artificial tissue engineering technology, involving the printing of live cells. “It is a question of industrializing cell biology activities”, Partanen phrases. “The objective is to find out how cell biology processes and even medical tests are possible within an industrial process.”

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R e ach i ng to t h e To p – A a lto Executive DBA The Aalto Executive DBA is a structured program in Business Administration for talented individuals with considerable managerial experience. It has both real world relevance and academic rigor.

In addition to executive positions, DBA graduates typically work in various expert positions in corporations and the public sector, as business school senior lecturers and as entrepreneurs in the professional services sector.

The DBA research project – finalized in a publicly defended DBA thesis – typically has strong linkages to business and managerial practice. DBA candidates can, for instance, conduct a siz-

able research project for their employer.

Compared to some more scientifically oriented doctoral programs, the DBA studies and research place emphasis on the application of theories – the creation and testing of an entirely novel theory is not a necessity. The requirements for coursework are essentially the same as for any DSc or PhD program at Aalto School of Business

wan t to L e a r n how to N e got i at e ?

Ta l e n t u m and A a lto EE to coo p e r at e i n p u b l i sh i ng Talentum and Aalto EE have signed a cooperation agreement on the publication of a book series.The series will contain topical professional literature of

See Aalto EE blogs at: www.aaltoee.com/blog

Visit aaltoee.com to find out what the Strategic Influencing and Negotiation program can offer you.

high academic quality with a practical touch, authored by renowned and recognized experts.

The first book in the series will be published this year.

The cooperation agreement enables Aalto EE to focus on its core business while actively participating in the publication of high-quality business literature.

The series will be developed and vol 1/2014

– 60 credits in 10 doctoral level courses. The main difference to the DSc and PhD programs is the flexible part-time study structure of the Aalto Executive DBA and the strongly applied nature of the doctoral thesis.

Riitta Lumme-Tuomala, Director for Russia and Talent Management at Aalto EE, writes a blog on her experiences at the Aalto Executive DBA. “If I was convinced and – if academia allows the word in this context – thrilled about my topic, talent management, before the seminar, I am even more so now. Getting so many viewpoints, research method clarifications and philosophies to lean on, gave me a lot to work with”, Lumme-Tuomala wrote in April.

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the books selected jointly.

“This cooperation expands our ability to better cater to the needs of our interest groups – our customers, alumni and faculty. Our cooperation with Talentum also opens up a publication channel for the professors of Aalto University,” says Mikko Laukkanen, Head of Thought Leadership, Aalto EE.

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A a lto EE r an k s i n t h e g loba l to p 5 0

Aalto EE has maintained its position among the top 50 executive education providers in the annual Financial Times Executive Education ranking. In 2014,

keep t h e c u s tom e r at t h e co r e Managing service products or integrating services into an existing business is challenging.

Listening to and co-creating with clients is a key to development. Aalto EE Leading Service Business program gives organizations new perspectives and tools to accelerate business and create new services. The program is designed for top and senior executives working on strategic and operational issues

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Aalto EE achieved a global ranking of 48th. Aalto EE was particularly strong in overseas programs: by this criterion,Aalto EE ranked seventh in the world.

In addition to overseas programs, corporate customers appreciate the value for money and new skills and learning provided

by Aalto EE, as well as the diverse teaching methods. In a Nordic comparison, Aalto EE ranked first in three areas: faculty diversity, new skills and learning and quality of participants. ”The role of these rankings is frequently criticized, since they favor institutions operating in global metropolises and there are gaps in their data-collection methods. In spite of all this, they

provide us with an important mirror for developing our operations as the only global operator in Finland,” says Aalto University Professor Pekka Mattila, Group Managing Director of Aalto EE. Open enrolment and customized programs are ranked separately in the FT Executive Education ranking. The overall listing is based on the total rating achieved in these two categories.

The ranking is based on customer feedback and statistics provided by the schools. The Financial Times only ranks the top 50 executive education providers. Globally, executive education and MBA programs are offered by around 4,000 institutions.

in service management and looking to develop new services.

“Aalto EE’s Leading Service Business offers valuable insight and networking opportunities for professionals dealing with one of the most pressing and promising issues in business today - moving from product centered business to service driven”, says Paula Bello, D.A. Senior Design Specialist at KONE, and participant at Leading Service Business program in 2013.

Bello says Aalto EE’s program gave insight into both the challenges and opportunities in leading service business and a good

understanding of how peers are dealing with similar issues.

“We had an excellent group of experienced professionals attending the program, which made the discussions very constructive and beneficial. It was a true eye opener to realize how everybody was dealing with such similar issues.”

“There is huge business potential in service.As new dimensions surge – such as digital – it is increasingly important for design to keep the customer and end-user at the core.”

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For more info: www.aaltoee.com

illustration jarkko hyppönen

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m e rg e r c r e at e d a unique p o rt fo l i o Aalto University’s commercial executive development and continuing education activities have been operating under the umbrella of a single company since March 1, 2014. The activities of Aalto University Executive Education Ltd (Aalto EE) have been extended to include the commercial professional development activities of both Aalto University Professional Development (Aalto PRO) and the School of Business’ Small Business Center (PYK).

The new entity operates as Aalto University Executive Education Ltd and serves its customers through a three-brand offering. Aalto EE provides executive development services; Aalto

PRO provides development services for experts and managers; and the new Aalto ENT brand will offer services in the field of entrepreneurship.

Aalto University Executive Education employs around 120 people and has total annual net sales of around EUR 20 million.

photo junnu lusa

J aana Tamm i s to appointed D e p u t y M anag i ng D i r e c to r of A a lto EE

The merger does not entail any changes for customers.

“The merger enables us to offer customers services that cover an even wider and more comprehensive range of organizational needs, whether they cover senior executives, specialist personnel, or are more entrepreneurial-related,” says Professor Pekka Mattila, who has headed up Aalto EE since 2011 and will continue as Managing Director of the reorganized company.

“Our international network, our expert staff, and our close links to the know-how of Aalto University ensure that all our services are of a high standard,” continues Mattila.

For more information about the unique portfolio of executive education and professional development services visit www.aaltoee.com and www.aaltopro.fi

tivity. Tammisto has been working as Senior Advisor at Aalto EE since 2012. She has developed Aalto EE’s Asian operations and has been working as Director of Integration since January 2014, when Aalto University started to integrate its executive development and continuing education activities within Aalto EE. Her previous positions include Managing Director at Suomen Matkatoimisto and Sales Director at Kaleva Travel.

Jaana Tammisto has been appointed Deputy Managing Director of Aalto University Executive Education and a member of the management team. Tammisto focuses on managing the company’s concept-based business operations and its sales acvol 1/2014

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B oo k 1 [ WORDS OF WIDSOM ]

f r e e at l as t Jhumpa Lahiri is a Pulitzer-winning author whose story moves from India through USA to Italy.

Reetta Räty met with Lahiri in Finland.

In this exclusive interview the author reveals where she has been happiest.

Photos Touko Hujanen.

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A

bus has been standing amidst traffic between Agra and Delhi in Northern India for two hours now. I am laying in the backseat of the bus reading. I have folded my scarf into a pillow. Delhi has about 22 million inhabitants and is one of the largest cities in the world. Agra has one of the world’s seven wonders, the Taj Mahal mausoleum, which Shah Jahan built for his wife who died aged 39 during the birth of her fourteenth child.

Yet being stuck here in Indian traffic does not make one think of the size of the city or its historical tragedies. The attention is drawn to the clip of Indian reality outside my window: colours, sounds, overall chaos where trucks, water buffalos, rickshaws, monkeys and thousands of human fates are visible all at once.

Incredible India where traffic is never just a line of cars. Magnificent India where it is always worth carrying a camera, and a book.

What I have in the backseat of the bus is the American-Indian novelist Jhumpa Lahiri’s most recent book Lowland.

J

humpa Lahiri is a writer awarded with the world’s most prestigious prizes. Her most recent novel Lowland was just published in Finnish (Tulvaniitty, Tammi 2014). This is why Lahiri is currently sitting in the publisher’s auditorium on Korkeavuorenkatu street in Helsinki, reciting a section that describes the book’s two brother protagonists.

Since childhood Subhash had been cautious. His mother never had to run after him. He kept company, watching as she cooked at the coal stove, or embroided saris and blouse pieces commisioned by a ladies’ tailor in the neighborhood.

Lahiri is in Finland with her husband Alberto Vourvoulias-Bush and her children Octavion (b.

2002) and Noor (b. 2005).The children are sitting on the front row of the auditorium as her husband snaps photos with an iPad. The audience includes reporters, authors, avid readers and Minister for Foreign Affairs Erkki Tuomioja.

Lahiri appears exactly as attractive as in the photos within the covers of her works. Dark hair, matte skin and a narrow face. She is smaller than I thought, and does not do grand Italian gestures or talk in an exaggerated American style.

Lahiri talks to the crowd about the events of Lowland that take place within the naxalite insurgency of 1960s India. One of the brothers in the book ends up in the United States, and no event takes place without some psychodrama related to family relations.

At he book signing after the event, the author says that she did not anticipate such eager Finnish readers. People standing in line all seem to utter the same thing: ”I am a big fan of yours. Thank you so much for your books.”

The power of Lahiri’s narrative lies in her ability to depict relations between cultures and families in a particularly recognizable manner. It is rather evident that the experiences derive at least partly from her personal life story.

The story of Jhumpa Lahiri takes place in India, the United States and these days also Italy.

L

ahiri is 47 years old. Her parents are Indian, who moved to the West already in the 1960s.

The author herself grew up on Rhode Island on the US East Coast.

She received a Pulitzer prize in 2000 for her first short story collection Interpreter of Maladies, which is mainly about Indians who have emigrated to the States. Such as Lahiri’s parents.

“My childhood felt very heavy”, Lahiri says and looks me straight in the eye.

“My childhood felt very heavy”, Lahiri says. She did not feel Indian nor American. “There was just a lot of confusion.” a alto leade r s’ i n si g h t

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Jhumpa Lahiri visited Helsinki in April, 2014.

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We are sitting at the cabinet of a hotel in Helsinki a couple of days after the publisher’s event.

Lahiri drinks green tea. She has a serious basic expression, even timid.Yet her speech is direct and confident.

The heavy feel of her childhood stemmed from the fact that Lahiri is American and Indian, but not at home in either country or culture. Her family had moved to the US, but she felt like her parents did not come to terms with their decision.

Elder of two sisters, Lahiri did not know what was expected of her. Should she be Indian, American, or something else?

“There was just a lot of confusion, a lot of back and forth and conflict in terms of what I am supposed to do, how I am supposed to act.”

Lahiri’s father worked as a librarian at Rhode Island University and her mother researched Bengali literature. America had so much more of everything than India did, but only in material terms.

“I was out of control in an existential way”, Lahiri says.

Her parents missed India, but at least they had acquired an identity: the identity of an Indian.The daughter was a complete in-betweener.

“The signals I was getting were so confusing that I did not know how to read them.”

The daughter grew up asking her parents and herself: why are we even here, in the United States.

“I mean, if you don’t want me to adopt this culture, if you don’t want me to dress like an American, to act like an American, to see things like an American, to look like an American,WHY ARE WE HERE?” “There was always this terrible ambivalence because of the choice they had made.”

Lahiri is not agitated but she talks intensively.

The conflict of her childhood is clearly a matter she has processed thoroughly. When she was younger it was hard to put into words. It was a vague, dark feeling that made her feel homeless.

Something was missing. But what was it?

An identity, perhaps.

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eing an immigrant child or child of immigrant parents is not all that peculiar, especially in the US. Lahiri believes that her parents were people who externally built a home: they possessed the language skills, work, a house, but in their hearts they were always looking to the past, India. This made adjustment particularly difficult.

“I think if I had different kind of parents, who were more like yeah, we come from India, but we are here in the US, because it is a great country, we really like it - then I would have been a different kind of person.”

“But they were not like that. They were always looking back. They were always kind of guilty about being in the US. As a result, I was not able to feel any one way.”

Lahiri reveals how sceptical her parents were towards the United States.Yet it was the culture of her schoolmates and friends, it was her life.

“They would always be watching the news, criticizing all the politics, criticizing the foreign politics, criticizing everything. And I would wake up in the morning, go to school, pledge allegiance to the flag, and think: my God, my parents, what were they thinking, do they have any idea that this is what their child is doing?”

“I felt weird about that.”

L

ahiri’s words and writing give the impression that not only was she slightly confused as a young person, but also unable to explicate her emotions. Only becoming a writer made her an interpreter of these feelings.

The tone of the books is often hard-edged, yet very prosaic.

Lahiri manages to describe the feelings of a migrant or a person living in the “wrong” place as an outsider, for she is now a narrator instead of the experiencer.

The narrator’s voice is strong, as it conveys thoroughly experienced emotions.

When Jhumpa Lahiri was young, her family visited Calcutta along the Ganges River on

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“In India, you are up against poverty all the time.

It changes the way you approach your own life.” a regular basis. Lahiri is particularly explicit when she describes Calcutta, and confident, too. She is clearly describing familiar streets, habits, food, a way of life.

When it comes to Lahiri’s works, they often revolve around a yearning for life instead of one.

So what does an Indian living in the United States yearn for, exactly? What is she missing?

“I think: everything”, Lahiri says. “From the physical world, the look of things, the plants, the colour of the sky, the smell… to more emotional aspects, such as people, family, a sense of being from somewhere, and not being a stranger.”

Indeed. The colour of the sky. That is also different in India, and it cannot be purchased from ethnic shops, even if you lived in America, where money buys anything.

Lahiri sighs and addresses the subject of her parents again.

“They missed a huge range of things. The way of life, the attitude, everything was so extremely different in the United States.”

The way of life - what about it? Isn’t United States THE country for all kinds of people, all possible cultures?

“Well, it is a place of all kinds of people and things, BUT”, the author says and highlights the last word, “compared to what my parents were used to, it was a much more isolated kind of life”.

In Calcutta, Lahiri’s mother lived on a hectic street in an apartment building with neighbours and relatives above and below, side by side.

“In Calcutta, there is a lot of spontaneous interaction with people. There people still, even now, will come by without telling first.They just come to say hello, have a cup of tea. This really struck me when I was young because in America nobody would do that. They call, they make an appointment. It is much more organized. Nobody

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comes by unless you invite them.”

Instead of exotic, Lahiri’s India is communal. Of course America has citizens from numerous countries, but they have locked themselves behind their own doors. According to Lahiri, another difference between America and India has to do with people and relationships.

“In Calcutta, family was the organizing principle. The whole life was about family events: from births to weddings and funerals, family is the setting for the whole life.”

And an Indian family celebration is not simply a celebration, but a force that holds families together.

“Ceremonies were ways of seeing people, keeping that sense alive that I belong to this larger group of human beings that I am connected to through blood, and… In America, they don’t have that at all.”

D

iscussions about India always include the notion of poverty. Extreme poverty. This case is no different. But with Lahiri there is no sense in lamenting India’s poverty. Instead, we ponder how it shapes the outlook of a person living in India, perhaps even more than religion, cultural traditions or, say politics, do.

“In India, even if you are living a comfortable life, like that of my relatives, you are aware of poverty”, says Lahiri.

In India poverty is always visible.

“You cannot live in that country not knowing that for some people, life is very, very, very hard.

You are up against that reality all the time. And I think it changes the way you approach your own life. I think you think: okay, I have a nice house, and a table, and clothes, but the person who is coming to wash my dishes has practically nothing.

You are aware of that all the time.”

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What does Jhumpa Lahiri think of India?

“A certain intensity of life.That’s India. Intensity of life.”

“I think in America, at least where I grew up, people were very sheltered from that kind of reality. So they turned their attention to other things, because they don’t have to think about poverty.”

This was another difference that Lahiri perceived in her childhood home. Her parents had seen Indian poverty from up close, the end of the Second World War, and endless political chaos.

Her father was born in 1931 and her mother in 1939.

Lahiri says that her father in particular was bothered by the ignorance of Americans towards suffering in other parts of the world.

“We really could not waste food in our house.

My father would say: I lived through a famine.We had food to eat, but hundreds of thousands of people dropped dead because they had nothing to eat. For him, to take too much food, to take a bite from an apple, and then toss it away - this is something you see in America all the time - he would be just horrified, he would be almost morally offended when he saw this kind of waste.”

This is how many post-war generations feel in other parts of the world, too. Except that in Lahiri’s parents’ world the memory of a lack of everything is not history, but geography. India is a place across the sea, a reality at this moment. It can be accessed by plane, if one wishes to get on it.

Despite all the longing and scepticism Lahiri’s parents did not move back to India. Why not?

“No. They didn’t go back”, Jhumpa Lahiri says and finishes there.

T

he bus trip from Agra to Delhi is still advancing at a very slow pace. The driver thinks a truck may have broken down on the road.

A police officer arrives on the scene, but is unable to do anything.

We are stuck.

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A group of water buffalos is trying to get in between cars and buses. Monkeys are hanging on the edge of a stonewall, and one of them has a plastic bag over its head. There is a rickshaw with six passengers and a baby. A bunch of young men lies on mattresses on a truck. A barber has established a business on a street corner: a chair and a mirror.

Children are waving, men are winking and whistling, and the majority of women are dressed traditionally in saris.

I am reading Lowland – events have now moved from Calcutta to the US. Lahiri has comprehensively researched the history and motives of the Maoist naxalite movement. She says that she has, in fact, been working on the novel, for the duration of her writing career. The story was sparked by a report by her father on the actual events of his hometown Tollygunge during the time of the revolution. She wrote one piece on the most tragic events years ago and returned to the theme later, when the story had developed and she had interviewed a number of former Maoists.

The historical events provide shape for the work and a particularly interesting read for a trip in India. Nevertheless, more grand than physical places in Lahiri’s texts are human relations.

That was the day she told Drew the truth about her mother.That she has left and never returned.

– – She told him how she used to sit inside the closet where her mother had kept her things. Behind the coats she hadn’t taken with her, the belts and purses on hooks that her father hadn’t given away. She would stuff a pillow into her mouth, in case her father came home early, and heard her crying.

– – Drew held her as she listened. I’m not going anywhere, he said.

The night is getting darker in the bus and reading is becoming difficult.The driver says that traf-

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fic is getting heavier as after nine pm also trucks are allowed on the road to Delhi.

I close the book, sit up and look out of the window.

A truck driver next to me is lifting his hands to indicate that indeed we have no choice but to wait. His car is painted turquoise and we are both on the verge of laughing, for India really is crazy.

I

tell Jhumpa Lahiri in Helsinki that from a Finn’s point of view India is mostly mindblowing. She recognizes the feeling, but it is not her experience of India. The country is so familiar.

“I am so used to going there from such a young age.”

When Lahiri speaks of India she does not speak of the mystical East where people believe in reincarnation and that time is cyclical. She does not speak of religion, arranged marriages or Hindu temples. She does not draw dramatic lines between the East and West. Perhaps because both are so familiar to her that they do not appear to be opposites.

How do you feel in India: a foreigner or at home?

“Both. I feel I am a foreigner but not totally.

And it doesn’t feel like ‘I am at home’. I feel relatively at home.”

During her time at school people were baffled by her trips to India.To them India equalled poverty, misery and beggars.

“Nobody in America would think: wow, how exciting, you’re going to India, what you gonna see, what you gonna do, nothing like that. They just said: are you gonna be ok, do you have to have lots of shots, are you gonna come back alive?” ”They were sort of terrified because I was going to this nightmare place where everyone is begging and everything is dirty. All these stereotypes, they just saw one big Mother Teresa thing in India.”

What is India to a person who considers it almost a home? What does Lahiri think of it?

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“There are things in India that I don’t experience in other parts of the world but in India….”, Lahiri starts and stops to ponder for a moment.

“A certain intensity of life. That’s India. Intensity of life.”

I

t is an exceptionally warm Saturday for April.

A silent Mannerheimintie is visible from the hotel cabinet windows. The author should head back to Rome today, but she has decided to inquire if she can stay for a day longer. ”This is my first time in Scandinavia. It looks like a lovely place, I would like to see a bit more of it”, she says without any particular attempt at flattery.

Lahiri has answered all the questions during the interview so calmly and analytically that when she suddenly uses a superlative, and on happiness of all things, the listener slightly flinches.

“The past years that I have lived in Rome have been the happiest years of my life.”

The happiest years of my life.That sounds beautiful.

For the last couple of years Lahiri has lived in Italy with her husband and two children.

Now she says that it has been a happier time than ever before.

“Obviously, it has something to do with Rome.

But there is more. Something about freedom.”

Freedom. A word like happiness that resonates beautifully when pronounced in a sombre and definite way.

Freedom. Happiness. Rome.

Lahiri began to study Italian years ago.

“I don’t know why. It was a slow, very under the surface type of need. Both English and Bengali, neither feels completely my own.”

And Italian? ”Even less my own.”

Language is a valid reason for a change of scenery and perspective. Lahiri is currently writing a non-fiction book in Italian.

In previous interviews she has stated that lan-

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l o

…Reading “For me, the act of reading was one of discovery in the most basic sense – the discovery of a culture that was foreign to my parents. I began to defy them in this way, and to understand, from books, certain things that they didn’t know. Whatever books came into the house on my account were part of my private domain. And so I felt not only that I was trespassing but also that I was, in some sense, betraying the people who were raising me.”

( Jhumpa Lahiri, New Yorker, June 13, 2011) … L a n g uag e s “’I spoke Bengali absolutely without any exception until I was four years old. When I started going to school, I was terrified, partly because I could only speak one language.’ She picked up English quickly, though her parents, especially her mother, never liked her speaking it.”

“Her love for the (Italian) language began 20 years ago, when she visited the country for the first time. On her return to the US, Lahiri started taking Italian lessons, and eventually got a PhD in Renaissance Studies.”

(The lives of Others by Somak Ghoshal, Live mint, Jan 25, 2014) … Ro m e “For many years I had a map of ancient Rome hanging in assorted apartments in Boston, where I wrote most of the stories in my first book. This was nearly 20 years ago, when I’d only read and heard about Italy, before I’d ever come to Rome. Now I live here, with the city spread before me. It still feels unreal. When I’m working, I’m more aware of the sky than of the city. I look at clouds, at seagulls.

It’s almost like being at sea.”

(A Writer’s Room, New York Times, Aug 26, 2013)

guage and writing feel like a home, when nothing else in the world does.

But now another place besides her desk feels like home. Rome.

Lahiri speaks of it as if it is a newfound lover. ”It is the first place where I feel very free. As free as I have been able to feel from the past.”

Lahiri says that, after all, she is grateful for learning to find her own way in the world because of her past.Without a national identity there was no readymade framework for life: I do this because I am an American, I do that because I am Indian… ”I think I feel free in Italy because I know it is not my country. I am not Italian, I am not connected to it in any way, I wasn’t raised there, I have no connection there apart from my interest in it.” ”So I think being in Rome, I just feel distanced

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J h u m pa Lah i r i on …

from that complexity of the past. I just feel energized in a new way, and I feel alive in a new way.”

These are big words but they do not sound overblown against the backdrop of Lahiri’s past.To feel alive in a new way. This is an enormously wonderful feeling, and as with Lahiri’s texts, it is relatable, even if one has not just moved to Rome.

A new country, new culture, or a new life situation after a crises. Once you notice the colour of the sky again, the dreams you wish to carry on, the taste of red wine. The stance shifts from selfreflection to new horizons. ”Italy makes sense to me. It is not confusing. It is my choice to live there.” ◆ Read this interview in Finnish online: www.aaltoee.fi/blog

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B oo k 2 [ b e s t p r ac t i c e ]

That ’ s s u p e r !

Gaming company Supercell’s net worth went from zero to three billion dollars in three years.

Juhani Mykkänen learns the seven rules to Supercell-like success.

Graphics by Jarkko Hyppönen.

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L

et us do a little thought experiment.

You and a few friends get together to set up a company.You hire the best talent you can find.

Your employees give it their all, but your first product is a total flop.You feel sorry for yourselves for a brief moment but promptly pull yourselves together. You decide to abandon that first failed idea and focus on the next ones.

Fast forward a year. Something happens. You create two products that turn out to be massive hits. Your company starts making money faster than Facebook on its best days.

Your company now employs 100 people. Each one of them is making you millions of euros a year. Obviously you’ve done something right. But what?

This little thought experiment is actually the nutshell version of the story of Finnish gaming company, Supercell.

Now let’s tell it again, and this time with the right numbers: Supercell makes mobile games for tablets. Its CEO Ilkka Paananen founded the company with five friends in the summer of 2010.

Supercell’s first product, a game called Gunshine, was a total flop. The two games the company launched in 2012 were not.

Last spring, for example, those games, Hay Day and Clash of Clans, had 8.5 million daily players generating $2.4 million a day.

And in October of 2013, Supercell and two Japanese companies, GungHo Online Entertainment and SoftBank, made a big announcement: the Asian companies had agreed to buy a 51 per cent stake in Supercell.

The deal was done at $1.5 billion.

But the true extent of Supercell’s meteoric rise became clear when the company announced its 2013 earnings last February.

At the tender age of three, Supercell ranked in €672 million. And €349 million of that was profit.

a alto leade r s’ i n si g h t

When you delve deeper into how a story like this can possibly be true, it becomes clear that every company and leader on the planet can learn at least seven things from Supercell’s success.

Lesson 1: P r ac t i c e Ask people what Supercell’s secret is and they’ll tell you that it’s so successful because its founding partners had practiced at two other companies before launching this one.

Serial entrepreneur and Microtask CEO Wili Miettinen has followed Supercell’s story from the beginning. According to him, ”Supercell is unlike most startups because it’s already one of the biggest gaming industry veterans out there. They’ve had lots of practice – been there, done that.”

Supercell’s CEO Ilkka Paananen has 13 years of experience in the mobile gaming industry. That’s a long time considering it hasn’t even been seven years since Apple introduced the first iPhone.

Paananen launched his first mobile gaming company, Sumea, in 2000. It did well enough that it was snapped up by the global game developer Digital Chocolate in 2004.

At Digital Chocolate, Paananen found a mentor in Electronic Arts founder and American gaming guru Trip Hawkins. Paananen himself has said that the time he spent at Digital Chocolate felt like he was getting his ”gaming MBA”.

One source close to Supercell said this: Paananen and his friends ”got sick of the way things were at Digital Chocolate because it was so management driven. The Americans were telling them what kinds of games to make. They started daydreaming about what it would be like if the guys who were actually making the games could make that decision.”

He said the same thing in an interview with the online gaming magazine Gamasutra last year: ”It’s going to sound really naive and simple, but the single biggest lesson that Mikko [Kodisoja, Supercell co-founder and creative director] and I

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a a l t o l e a d e r s ’ i n s i g hsto u r c e :

ihs & app annie

have learned is that if you really want to build the next generation of games company, it’s actually all about the people”.

So: Lesson 2: H i r e th e b e s t p e o pl e a n d g i v e th e m tota l fr e e d o m There’s a reason why Supercell is called Supercell.

It was founded by six men: Ilkka Paananen, Mikko Kodisoja, Niko Derome, Lassi Leppinen, Visa Forsten and Petri Styrman.Their philosophy was that games shouldn’t be made by teams of dozens or hundreds of people. They should be made by small commando teams of half a dozen developers with unlimited freedom – supercells.

Or, as it says in Supercell’s company values: ”The freedom to make quick decisions and take risks.” ”A lot has happened over the years, but it’s still that original idea – that massive shift in thinking – that allows them to soar”, says Miki Kuusi, the main organiser of Slush, one of Europe’s biggest startup-events.

Ilkka Paananen has said his goal is to become ”the world’s least influential CEO”. Here’s what Kuusi says that means in practice: ”Instead of putting together teams with a hundred mediocre developers, they use small starting line-ups with only the most talented developers.

And those developers have the freedom to do exactly what they want. The company is really just the facilitator.”

For example Clash of Clans – which has made millions and been the top-grossing iPad game in 122 countries – was developed by a team of five guys in six months.

So what do these super-teams actually do?

The first step is finding the best people, an idea rooted in the fact that Supercell’s six founding partners were all top talents. ”It’s really hard to entice the best talent with money or shares”, says Wili Miettinen. ”For example the best developers are only in-

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terested in two things: what amazing things are they going to get to work on and who are they going to get to work with. If you want good developers, you have to have amazing developers working for you to lure in new talent.”

Once the team is assembled, Supercell lets its members – led by a team leader –prioritise their own time.When someone comes up with a good enough idea, the team pitches it to the CEO.Then the testing and development starts.

Supercell makes free-to-play games. The idea behind free-to-play games is that they’re free to download, but players can pay to progress faster.

That means you can pay to play and progress more in the same amount of time.

In Hay Day, for example, a player runs his or her own farm. Obviously you’re going to want to feed your chickens so they’ll start laying eggs. That takes time.You might have to wait half an hour or so for your chickens to lay eggs. Or, you could pay a few euros for a handful of diamonds which you can then use to get your chickens to lay their eggs on command.

And if you haven’t before, you’ll definitely reach for your wallet once you realise there’s no more room in your storage shed and the game tells you it will take four hours to build one – unless you pay.

Now back to the team. After the team gets an idea for a game and they’ve gotten the green light from the boss, the testing and development phase starts. A small team creates a prototype that Supercell employees play internally.

With Clash of Clans, for example, Supercell realised it probably had a hit on its hands after a weekend-long internal gaming session. ”I made a score card with zero to five stars on it and asked everyone to fill it out anonymously”, the game’s development team leader Lasse Louhento told the newspaper Helsingin Sanomat. ”Almost every single card had five stars on it, and I couldn’t believe everyone felt that way.”

Continuous testing is extremely important, because – as Miki Kuusi explains – no one can re-

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ally claim to have ”years of experience” with developing free-to-play games. That’s why Supercell’s autonomous teams have set out to become the best in the world. And they’ve done it through trial and error – by succeeding and failing. And that brings us to the next lesson.

Lesson 3: F a i l a n d s ta rt a ll o v e r a g a i n In the thought experiment we started with, we imagined being founders of a company whose debut product was a flop. For Supercell, that debut product was Gunshine, a real-time multiplayer

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game developed to be played on Facebook.

Many who have followed Supercell’s rise to superstardom have said it was this moment of failure – and the company’s ability to overcome it – that was like a litmus test for its entire future.

It’s 2010–2011. Gaming industry startups are focused mainly on developing games for Facebook.

The market is dominated by a company called Zynga and Supercell wants in on the action. Facebook’s user base is growing exponentially and Supercell believes it can successfully reach hundreds of millions of users. ”Supercell simplified its idea into one beautiful slide”, Miki Kuusi says.

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Clash of Clans is about build­ ing a village and preparing your troops for battle against other clans.

“Supercell has talented teams with unlimited freedom.

The company’s CEO has the trust of both inverstors and the board.” ”It showed two things – the value of one World of Warcraft [the world’s most popular massively multiplayer online role-playing game] player, $10.00, and the fact that Zynga had 200 million players.”

According to Kuusi, Supercell decided to capitalise on the fact that Facebook had harnessed a massive number of users but almost no one was offering them challenging, high-quality games. ”What if we made real games for Facebook?” they thought at Supercell. And that became the company’s main strategy But they hit a bump in the road. Gunshine was a good online role-playing game – Supercell wouldn’t even know how to make anything less.

But it wasn’t what Facebook users were used to.

The game got good reviews for its technical merits. But Facebook users were used to simple and easy-to-play games, not games like Gunshine, where you’re part of a resistance movement fighting against the corporate elite amongst an army of zombies.

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Soon after Supercell launched Gunshine, they realised it wasn’t as big of a hit with players as they had expected. Petteri Koponen, chairman of the board and one of Supercell’s first angel investors, described the situation in the company at that time in an interview with Helsingin Sanomat: ”We could have made $10,000–$15,000 a day. A lot of startups would have been happy with numbers like that, and it would have been enough to make us a profit. But it wasn’t what we were looking for.”

They had pinned all their hopes on this game.

They had used it to collect millions in seed capital. And when the moment of truth finally arrived, it fell as flat as a pancake. ”Imagine”, Miki Kuusi says and continues: ”You’ve got kids to feed, a mortgage to pay, investors who have millions at stake. And you know it’s just not taking off. Imagine what that feels like.”

So what do the folks at Supercell do next?

They reflect, weigh their options and hold an emergency meeting.

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And then Supercell’s CEO Ilkka Paananen sends Petteri Koponen an email: Let’s dump everything we’ve done up until now.

We’ve got a new strategy in mind.

Lesson 4: G e t th e t i m i n g r i g ht Zynga published its earnings right around the time Gunshine launched. The numbers weren’t particularly impressive. Paananen and the rest of the management realised that Facebook wasn’t necessarily the rainbow that would lead them to millions of players and that pot of gold.

But the year before, in the spring of 2010, Apple had released the iPad. It sold 15 million units in less than a year.

Supercell had developed a set of tools they could have used to create all sorts of games for Facebook. Now it looked like all that work had been done in vain, too.

The team came to a decision.They went to the board with a two-word strategy: tablet first.

It was one of the best business decisions made on the planet that year. ”They decided to focus on mobile and tablets right when the free-to-play sector was headed for a massive hockey stick growth spurt”, serial entrepreneur Wili Miettinen says. ”The majority of games aren’t original ideas, they’re variations of existing games. That’s why timing is more important than almost anything else”, Miettinen explains. What he means is that Hay Day and Clash of Clans are great games, but they’re both ”just” much better versions of existing concepts.

That’s the norm in the gaming industry – companies try to remake existing games by improving some of the features or adding new ones. But every once in a while someone creates a new and improved gaming experience at exactly the right moment. ”For example, if Angry Birds had hit the market a year later, I’m not sure the games would have

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even made the top 100 list. But they launched right when touchscreens were becoming hugely popular and people were looking for things to do on them”, Wili Miettinen says. ”And then Supercell’s games came along and combined touch control, nice graphics and catchy music.”

No one has a crystal ball, Miettinen says. But you know you’ve really succeeded when you’re playing in the big league and you get the timing just right. ”Timing is a combination of people’s taste, technological development and whatever else happens to be on the market... Usually there are one or two hit games that make a killing by launching right on the crest of a big wave of change.”

Even Petri Järvilehto, the founder of the gaming company Seriously and former Executive Vice President at Rovio, which is home to the Angry Birds, smiles when talking about Supercell’s decision to start making tablet games. ”Holy shit, what timing!”

He also puts part of their success down to pure probability: ”If you look at the guys at Supercell, it’s the key players from Digital Chocolate. By the time they started Supercell they’d been making games for 10 years. If you do anything long enough you’ll eventually get the timing right.”

Lesson 5: F i g u r e o u t w h at c u s to m e r s wa n t to pay f o r They got off to a rough start, but now Paananen and Supercell hold all the keys to success.

They’ve got talented teams with unlimited freedom.

Their focus is now firmly on tablet games.

And the company’s coolheaded CEO has the trust of both investors and the board – just as long as the next games make money, too.

Which brings us to the big question: In theory we know how free-to-play games

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” b i g h e a rt, s t rong o p i n i ons ” Other CEOs on Ilkka Paananen ”If I think back to all the tech CEOs I’ve met all over the world, Ilkka Paananen is in the top 3. He’s one of the toughest and smartest people I’ve met.

He’s also one of the most talented and experienced guys in the industry, and a good person. He has a big heart, which has a lot to do with why Supercell’s culture exists. He has some pretty strong opinions about leadership, which he’s talked a lot about in articles and at trade fairs. He means everything he says. He’s a person who really cares about the ecosystem and he does a lot to help the startup scene around him.”

— Wili Miettinen, CEO, Microtask ”Ilkka deserves a hell of a lot of respect. He was on Remedy’s board for around 18 months, so I spent more time talking to him during that period.

Ilkka has definitely strengthened my belief in the importance of corporate culture.

I think it’s the single biggest factor. Ilkka also handles communications really well.

It’s rare to see someone speak publicly as perfectly and consistently as he does. He always seems to say the right things in the right way.

I had just left Remedy when Ilkka, Mikko Kodisoja and the rest of the guys were starting Supercell, and they asked me to consult. Now I could definitely ask them to consult.”

— Petri Järvilehto, CEO, Seriously

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make money – by giving the player the chance to pay to play more.

But anyone can give players the chance to pay to advance more quickly.The question is: How do you make a free-to-play game that makes millions of dollars a year? ”I can explain gaming company logic to you”, says a man sitting at a table in a Helsinki restaurant.

The man is a twentysomething analyst who used to work in the gaming industry. He’s agreed to explain how it all works. He doesn’t want to talk to us as a representative of the company he works for now, so our teacher will remain anonymous.

The man takes out a piece of paper and starts writing down words. ”There are three metrics that all companies track. The first is ARPU, average revenue per user.”

The second is called the retention rate, which measures what percentage of players return to a game after one day, 10 days or 30 days. ”The retention rate has a 40–20–10 rule. It means that you’re doing ok if 40 out of 100 players playing today come back tomorrow, 20 after a week and 10 after a month.”

The last one is the viral factor, or the K-factor. ”It’s hard to measure. It shows how fast a game is spreading around the world. The viral factor K tells us the average number of new users that each player brings to a game. If K is more than one, the game is growing because each player is bringing new players to the game.”

He explains that in the world of mobile games, organic growth means that games spread via word of mouth. It gets good reviews and makes it to the top download lists or spreads from one friend to another, and so on.

Non-organic growth, on the other hand, is when users are bought, for example by luring new players in with paid advertisements on other games or apps.

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And this brings us to the heart of the matter.The average amount of money put into the game by each individual player has to be greater than the average cost of ”buying” one player with paid ads.

If you can achieve that, you’ve literally got a money-making machine on your hands.

Here’s an example: Your game is so good that each player brings in an average of $1.00. At the same time, you can pay $500,000 for an ad campaign that you can be pretty sure will bring in around one million new users.

In this scenario you’ll double the money you invested in your money-making machine. Because it’s more than likely that the $500,000 you invest in marketing will bring in a million new players, you’ll get a return of $1.00 on every $.0.50 you put in.

This is why metrics are so important. If the average revenue per unit is high, if players keep coming back to the game, and if, on average, each player brings new players to the game, then one player’s lifetime value quickly surpasses the cost of attracting that player.

Our analyst takes Boom Beach as an example.

It’s the new game Supercell launched this spring.

As this issue of Aalto Leaders’ Insight went to press it was too early to predict the game’s success, but the beta version alone went straight to the top ten lists in Canada and Australia. ”You can test out the game in Canada and buy 10,000 test players in that market. Then you just track the metrics,” he explains.

Canada is a good test market because we know from experience that success there is an excellent indication of how the game will do globally.

Once the data starts rolling in, the company continues developing and tweaking the game until they get the metrics right. For example, if a new player doesn’t play the tutorial in the beginning of the game all the way through to the end, the team goes back and makes it clearer and more engaging.

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If, on the other hand, the ARPU is too low or the game’s ”monetization is too low”, as the analyst says, there isn’t enough incentive for players to pay to advance more quickly. The problem can easily be remedied by tweaking the in-game charges. For example, you can lower the price of the diamonds used to make your chickens lay eggs faster.

Retention, on the other hand, indicates whether a game is addictive enough to keep players playing. For example Clash of Clans play can be boosted with on-screen push messages reminding the player that his or her “clan needs a leader”.

And the K-factor can be improved by doing things like giving players the diamonds they need to advance faster when they like the game on Facebook. That ”like” shows up in the player’s friend’s newsfeed, which then leads at least some of them to the game.

Supercell hasn’t released its numbers, but based on the company’s turnover and profit margin, it’s clear they have a well-oiled money-making machine on their hands. ”If they have a few hundred million, they only have to put a few million of that back into the organisation,” our analyst says. ”The rest is spent on user acquisition.”

They put 50 cents in and take a dollar out. ”Supercell’s ethos is to make good games that people want to pay for. These games have a soul.

They’re made well and a lot of thought went into them. But very few games or products are suc­ cessful just because they go viral. The majority of successful games become popular by buying players.”

Lesson 6: C o n v i n c e i n v e s to r s w i th yo u r t e a m , n ot yo u r pro d u c t Like any aspiring growth company, Supercell needed investors at the beginning.

One of the biggest challenges in wooing inves-

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tors is that the gaming industry is massively hitdriven.

When a company like Google develops its products it essentially gets better at what it does every day. It gains better insight into its business and customers, which to investors looks like they’ve built value.

Investors love stuff like that.

And what investors don’t love is when a company has a hit product that’s making them money today, but that no one will remember tomorrow.

Especially if there’s no new hit on the horizon.

A company like that isn’t a reliable or a sustainable investment.

Of course Supercell is a gaming company.Yet it still managed to raise $15 million in seed capital between 2010–2011 (including from Petteri Koponen’s Finnish Lifeline Ventures and London Venture Partners) and to sell 16.7 per cent of its stock in 2013 to investors for €100 million (buyers included Geneva-based Index Ventures and London-based Atomico).

When you read what Supercell investors have to say in interviews and blog posts, one thing keeps coming up: Supercell – and most importantly Ilkka Paananen – managed to convince investors that the company had an exceptionally clear vision and a talented team to turn that vision into reality.

The team also plays a big part because approaching investors with plans to make massive amounts of money isn’t always a good idea. Or, as Will Cardwell, senior advisor at Aalto University Executive Education says: ”When you apply for funding from venture capital companies like Accel, Atomico et cetera...

If you walk in and announce that you plan to make €700 million within the first two or three years, they’re going to think you’re either insane or totally unrealistic. The only way to get people to invest in your company is by showing them you have a team that’s going to be able to handle anything the future might throw at you.”

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In other words, you have to reach a point where single hits and misses aren’t everything because you’ve got a company that is ready and able succeed in the long term.

Aalto Leaders’ Insight talked about this with David Gardner, the founder of London Venture Partners and one of Supercell’s first investors.

What he had to say sheds a lot of light on what teams can do to impress potential investors: ”We met with the Supercell team twice. We have a set of criteria that has to be met before we’ll invest in a company. First, we look at the team’s integrity. Are they telling us the truth? If they don’t know the answer to something, they have to be honest about it.

Are there lots of unknowns when it comes to the industry and potential customers? Is the team good at learning new things? I really believe that company culture plays a huge role in creating the best end products and long-term development.

Is working together going to be fun and productive? Is the team prepared to listen to our advice?

We’re looking to invest in companies made up of people who want to build a company – not just a product or a game. Do they have a comprehensive vision in mind or just an idea for a product?

So what was it about Supercell that convinced us they met all of our criteria? First of all, they were down to earth. They were humble yet outgoing. They were polite.

They were working hard to develop their tools and their whole production environment. They already had Gunshine, but they were focused on building up their company and portfolio.

That showed us that they wanted to be more than a one-hit wonder. They wanted to build a company and a team. They were interested in what we said. And they were generally attentive.

We met with Ilkka Paananen and Mikko Kodisoja in London first, then we met 8–10 other people in Helsinki. That gave us a good feel for the team.

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W hat a r e t h e n e x t b e s t b e t s i n gam i ng ? ”There are four big transitions going on right now, and they’re all happening at the same time”, says Petri Järvilehto.

Järvilehto is one of the biggest Finnish names in gaming. He has had a hand in creating Remedy Entertainment’s hit games, Max Payne and Alan Wake.

While he was at Rovio, downloads of Angry Birds shot from 100 million to an astounding 2 billion. ”First of all”, Järvilehto begins, ”the business models are changing. The entire gaming industry is shifting from premium to free.”

What he means is that these days ”no one” is interested in making games that cost one or two euros to download but that don’t have built-in revenue models.

The entire industry’s focus is on free-to-play games, which is an area dominated by Supercell and a handful of competitors, including Sweden’s King, which is behind the massively successful Candy Crush Saga. ”Secondly, the platforms are changing. Mobile has exploded onto the scene”, Järvilehto says.

Järvilehto’s claims are supported by statistics: According to AppAnnie’s annual report, while the total amount of money spent on digital games went unchanged from 2012 to 2013, the amount spent on mobile games at the App Store and Google Play grew by an astounding 190 per cent. ”Thirdly, digital distribution is changing almost everything. Anyone can publish an app and own the entire value chain”, Järvilehto says. ”It used to be that the publisher was the person or company that the game’s developer went to, hat in hand, asking for €20 million. Now, developers can publish their own games and call their own shots.”

It’s this change that has allowed Supercell to build a company culture around small, totally independent teams.

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And what about the fourth change? ”It started at the beginning of the 2000s. For the first time you could tell your friends at the bar that you like to play NHL 2001 without being stigmatised for it.”

What Järvilehto means is that nowadays games are for everyone. ”Old people play and young people play. Mobile has had a huge effect on gaming. Think about the fact that PlayStation 2 is the best-selling game console of all time and 155 million of them were sold. Today, Rovio has 250 million players a month on Angry Birds alone.

And Supercell has 29 million active daily players.”

Järvilehto now runs his own company, Seriously, and he is incredibly inspired by his colleagues at Supercell.

So what does he plan to focus on next? ”Around 200,000 games were published on iOS alone last year”, Järvilehto says. And there are 170 gaming companies in Finland alone, 120 of which were created in the past two years. ”The market is saturated. There are more choices than ever. That’s when the brand really becomes important. Soda shelves are full of sugared water, but it’s the Coke brand that stands out.”

Järvilehto says he’s seen two types of success stories. On the one hand there’s Angry Birds, which is a good game that stands out mainly because of the brand behind it. There are Angry Birds on bread packages and they have their own theme parks.

And then there are huge money-makers like Supercell’s games, which are branded more for the gaming world than the real world. ”At Seriously, we want to do both”, Järvilehto says. ”If we can do that we’ll be able to do something really cool.”

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We had a lot of experience in the gaming industry and we’d seen first hand how massive teams wasted millions.

Today, you have to have different ways of looking at risk: let a project fail and learn from it. Supercell was prepared to do just that. If something isn’t working they acknowledge that failure and move on.What we saw in Supercell was an organised team of professional businesspeople, not a group of people who were just looking to try something new. And that’s surprisingly rare in the gaming industry.

We also had faith in their ability to make great

games.They had tried mobile and Facebook.This wasn’t their first show.

We knew that making great games eventually leads to making big money.”

And that’s exactly what happened. First through user-generated revenue and eventually through an amazing partial exit. Instead of listing the company publicly, Supercell sold half of the company to a Japanese mega-company looking to enter the Western market. The price tag was $1.5 billion.

And this brings us to one of the most important parts of Supercell’s story. It has to do with the

Is t hat what r e a l ly ha p p e n e d, I l k k a Paanan e n ?

S

upercell’s CEO Ilkka Paananen read Aalto Leaders’ Insight’s analysis of the company’s success. Here’s what he had to say: ”It’s always interesting to see how outsiders see our success. For us it all comes down to one very simple idea, which was presented on the first slide in both of our first two pitches: The best people make the best games.

We wanted to build a new kind of company with talent and people at the core.That’s much more important than financial goals, or anything else for that matter. We use a professional sports team model. No one knows better what a great game is than the people who actually make them. They don’t need anyone telling them what to do.”

That said, the Supercell story definitely hasn’t been all sunshine from day one.The first 18 months were tough.We had a lot of money invested in the company and everyone was wondering why because at that point we still had nothing to show for it.

One lesson that wasn’t included in the piece

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Ilkka Paananen

is that our focus isn’t on what we’re doing, it’s on what we’re not doing. That’s something we’ve always been pretty good at, and we get better at it every day.

We’ve also had to make other difficult deci-

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foundation upon which the company was built once the money started coming in.

Lesson 7: Sh a r e yo u r s u c c e s s In an article published in Pandodaily, a web magazine that focuses on the tech sector and startups, investor Kevin Comolli said that Supercell is Accel Partners’ fastest growing company in terms of turnover and profit.

Keep in mind that Accel has been around for 33 years and has invested in companies like Facebook, Groupon, Spotify and Rovio.

sions than the one to kill Gunshine. We’ve killed lots of products. And if a member of one of our teams isn’t working, he or she isn’t going to be on that team for very long. We’ve had a surprisingly high employee turnover.

The trial period is really a trial period, and we’ve had to make some really hard decisions because we’re so paranoid about keeping our teams and culture strong.

We’re also still a really small company compared to our main competitors. Sweden’s King has a little under a thousand employees. Rovio has over 800 employees. One of our main goals has been to keep the company as small as possible.

Actually, our tablet-first strategy was the result of a trip a bunch of us took to London to meet with investors and the Facebook team there. After that trip it was clear to all of us that we had to make a big adjustment.

We got all the game teams together when we got back to Finland and we had a really honest talk about it.We all agreed that we had to make some big changes.We didn’t just have to kill Gunshine, we also had a great betaready Facebook game that we had to kill, too.

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That’s a pretty good indicator of just how extraordinary Supercell’s success has been.

So what have they done with all that money?

Clearly sharing Supercell’s success with the entire company is something that has been important to the founding partners.

When part of the company was sold in 2013 during the second investment round, the management decided to allow both investors and employees to sell off an equal percentage of stock.

“I don’t know of another case like this. Usually it’s only the founding partners who sell their stock”, Petteri Koponen, angel investor and chair-

The most unbelievable part is that it was the team that had created that game that eventually made Clash of Clans.

This article talks about timing, and it’s true that it’s incredibly important. No one has a crystal ball, so timing really mostly comes down to luck.

Most business leaders don’t want to admit that, but it’s true. We were unbelievably lucky when it comes to timing.

We don’t make games like the gaming industry analyst you interviewed described.

Good games aren’t made with metrics, they’re made with intuition. Making games is an art, not a science. Metrics do show you how well a game has done, but you can’t make good games based on data.

We had almost no metrics when we launched the Clash of Clans beta in Canada because they weren’t really ready to use back then.

And the 40–20–10-model no longer really applies either. One of our biggest dreams is to make games that people play for years – not for weeks or months. If only 10 percent of players return to the game after a month, we’re not living that dream.”

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“Everyone literally got to cash in on the company’s success.

That made them even stronger as a team.” man of Supercell’s board, has said in an interview with Helsingin Sanomat.

“Everyone literally got to cash in on the company’s success. That made them even stronger as a team and increased their ability to take risks.”

This move, made before the Japan deal was done, helped stave off any potential internal issues that might have threatened the company culture.

And of course it was also intended to reward the people whose hard work contributed to the company’s success.

And if all this wasn’t enough, the folks at Supercell have also done an amazing job of quelling the Finnish national tendency toward envy.

Founding partners Ilkka Paananen and Mikko Kodisoja have said they’re thinking about setting up a foundation. And Paananen has said the company gladly paid around €260 million in corporate and income taxes in 2013 alone. And what’s more, Paananen has said he plans to use some of the €160 million he made in the deal to invest in startups. Last December Supercell employees do-

nated €3.4 million to the building fund for Helsinki’s new children’s hospital.

It’s hard to say how much the company’s gooddoing has impacted its amazing results, but it has definitely had an effect on how the company is seen by most Finns.You’d be hard-pressed to find anyone with anything bad to say about Supercell.

And besides, Supercell works harder than most to recruit the best people out there.

When the best young game developers in the business set out to find their dream job, one company will stand out as a generous employer that gives every member of every team the freedom to pursue his or her own creative vision.

Let’s do a little thought experiment.

You and a few friends get together to set up a company.

Where do you start? ◆ Read this interview in Finnish online: www.aaltoee.fi/ blog

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B oo k 3 [ b u s i n e ss cas e ]

ro l l i n ’ with t h e dan e s In a city of million bicycles, the bike culture has the potential to be big business.

Annukka Oksanen talks to Kenneth Bødiker and Christian Linde about how they jumped in with both wheels. Photographer Jussi Puikkonen rode the streets of Copenhagen with his camera.

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he light turns green at the Queen Louise Bridge. The column of bikes surges forward. A woman in high heels is riding her bike while talking on the phone. A businessman has placed rubber bands around his pants legs to keep them from getting stuck in the spokes. A kindergarden teacher is pushing four of her little students to the park in a trailer attached to the front of her bike. A dog peeks out from another three-wheeled cart. And of course the mail is delivered by bike.

After all, this is Copenhagen.

Around 52 per cent of Copenhagen residents ride their bikes to work or school every day, and many of them cross the Queen Louise Bridge, which connects Nørrebro and Copenhagen’s other heavily populated northwestern neighbourhoods to the city centre. Over 40,000 riders cross the bridge every day. During rush-hours, it’s such an impressive sight that tourists gather to watch the mad rush.

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In many countries traffic is eased by synchronising traffic lights into waves of green lights. In Copenhagen, bike riders going 20 kph can ride green waves in special express bike lanes that run through the city.

You might catch a Danish government minister riding his or her bike to an audience with Queen Margrethe. MPs ride bikes. Business leaders choose bikes over taxis, which are usually slower. Crown Princess Mary bikes to a trendy Copenhagen restaurant to meet a friend. Crown Prince Frederik takes his kids to nursery school in a cargo bike.

And why wouldn’t the heir to the Danish throne hop on his bike whenever possible? His grandfather did back in the 1930s, when he’d ride from the Amalienborg Castle to his job at the Royal Danish Navy.

People in Denmark would think it was very strange if the prime minister didn’t ride a bike.

Biking is mentioned in the government programme, so of course Prime Minister Helle

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Christian Linde (left) and Kenneth Bødiker.

In Copenhagen, bike riders going 20 kph can ride green waves in special express bike lanes that run through the city.

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“If you can make bikes that are good enough for the Danes, you’re going to be able to sell them anywhere in the world.”

Thorning-Scmidt rides a bike. Her bike is bright red, the colour of her party, the Social Democrats.

The name of her Velorbis bicycle is Dannebrog.

The Danes refer to their red and white flag as ”Dannebrog”. Velorbis, on the other hand, is a new-generation design company that makes things like leather bags in addition to its iconic bikes.

Velorbis’s strategy is based on one very simple insight: a bicyle is an accessory, not a piece of sporting equipment or means of transportation. That’s why you’ll find Velorbis at fashion fairs. And it’s also why Velorbis bikes are designed and styled right down to the tiniest details.

Today’s bike companies have to be able to read both the silent signals coming from their own community and the newest global trends. They have to be able to analyse the risks and make sure there’s money coming in. And they have to hold their own when dealing with global suppliers. At least if their sights are set on world domination, they do.Velorbis’s founders, Kenneth Bødiker and Christian Linde, know how to do it all.They built Velorbis up from nothing, but before everything really started, a bomb went off in London.

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here are so many bikes at Denmark’s biggest and busiest railway station, Nørreport, that they have to be parked at two-tier bike racks. Follow the sea of bikes down Frederiksborggade two blocks to the west and you’ll see the orange Velorbis bike stand and sign.

Founded in 2006, the nameVelorbis comes from the words velo and orbis. Velo means bicycle in many European languages and orbis is Latin for circle.

It’s no coincidence that Velorbis is located on Nørre Farimagsgade with its wide bike lane separated by a small divider – common practice in Copenhagen. Even the garbage cans are placed diago-

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nally so that it’s easier for riders to throw trash away as they ride.The people who ride past the Velorbis store might well just be the most demanding and style-conscious bike riders in the world – in other words average Copenhagen residents. In this city, the streets are literally full of product developers.

Velorbis is owned by a Dane, Kenneth Bødiker, and a Swede, Christian Linde.These stylish fourtysomething Scandinavian guys say they’re glad that their customers hold Velorbis to such high standards.

“We started in Denmark, where people ride their bikes in all kinds of weather. If you can make bikes that are good enough for the Danes, you’re going to be able to sell them anywhere in the world”, Bødiker says.

Velorbis’s attempt at world domination is already underway, albeit slowly.Today, the company has 72 dealers and Velorbis bikes are sold in 16 countries.

But their main focus is still on their home markets of Denmark, Norway and Sweden.

Bødiker and Linden’s Velorbis bikes are the perfect mix of quality, nostalgia and classic design.The handlebars curve beautifully and the mudguard is leather. And the back of your bike is the perfect place to carry your briefcase, which is also from the Velorbis collection, of course.

The saddles are made by the iconic British Brooks company, and the gears come from the British company Sturmey Archer or Japan’s Shimano Nexus. Because the frames of Velorbis bikes are made with Chromol steel, which is lighter than regular steel, they weigh less than 20 kilogrammes.

The bikes are assembled at a small family-owned company is Bremen, close to the German border.

The sleeve joint that joins the frame to the front of the bike is another mark of quality. Most bike makers weld their bikes together because it’s cheaper.

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Around 52 per cent of Copen­ hagen residents ride their bikes to work or school every day.

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The average price for a Velorbis bike is around a thousand euros.

While Velorbis is surrounded by product developers – or Copenhagen’s bike riders – it’s also surrounded by competitors. There’s a bike shop, rental shop or repair shop on almost every Copenhagen corner, sometimes even two.The majority of bike shops sell Batavus bikes from Holland, Raleigh bikes from Britain, Swedish Monarch bikes and Danish Kildemoes bikes. Hardly any of them are made in Europe these days.

There are also an increasing number of bike boutiques competing with Velorbis for the same style-conscious customers. Customers for whom a bike is a continuation of who they are.They want a bike that makes a statement and they’re prepared to pay more for it than most. Shopping for aVelorbis bike is also an experience, as the shops are nothing like regular bike shops. The postindustrial red brick walls and classic Danish Artichoke lamps designed by Poul Henningsen set Velorbis shops apart from most sporting good stores. Here in bike-crazy, style-conscious Copenhagen, it’s only natural that you can do your bike shopping by candlelight, for example at the Cykelmageren bike shop on Store Kongensgade.

The popularity of bicycles has gotten a boost from a number of big trends, including environmental awareness, the rise of individualism, healthy living, saving money, and mindfulness, which focuses on awareness, enlightenment and being present in the moment. There are few products on the market that are associated with as many positive qualities as bicycles.

All this makes Velorbis’s Christian Linde very happy.

“Competition is a good thing. There’s always someone trying to sneak up behind us. And that definitely keeps us on our toes.”

And with business backgrounds like Linde’s and Bødiker’s, these two have what it takes to handle both speed and the competition. They honed the skills they would need to become bike salesmen

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in London City. The Swedish Linde and Danish Bødiker met over ten years ago in London, where they were both working at the accounting and consulting company, Deloitte.

After studying IT and finance at the University of Lund, Linde ended up in London almost by accident through his job at the accounting and consulting firm Arthur Andersen. City of London was booming at the beginning of the 2000s. Linde remembers how much fun he had helping to open the search engine AltaVista’s London office.There were lots of long days, but also lots of parties and travelling.

Arthur Andersen filed for bankruptcy and then fell along with Enron as part of one of the first major corporate scandals of the 2000s. Linde moved to Deloitte. That’s when he met Bødiker, an Arthur Andersen veteran and fellow Scandinavian transplant in London. Bødiker, who studied accounting and business management at the Copenhagen Business School, and Linde starting having lunch together. They became fast friends, although they spoke English for the first year because the Swedish Linde couldn’t understand Bødiker’s Danish.

A

t 8.50 in the morning on the 7th of July, 2005 a bomb ripped through an Underground train near the Liverpool Street station.

Seven people were killed. Fifty seconds later another bomb exploded on an Underground near Edgware Station. Six people died. Fifty seconds after that, another bomb went off, this time on an Underground train travelling from King’s Cross to Russell Square. Twenty six people lost their lives.

The morning rush hour turned into pure chaos.

Less than an hour later a bomb went off on a double-decker bus at Tavistock Place. Thirteen people died.

Kenneth Bødiker was on his way to work. He was sitting on a city bus heading to central London and Deloitte. Oblivious to what was going on, he wondered why the bus was so full and there were

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“The morning rush hour turned into a pure chaos.

The terrorist attacts claimed 52 lives and wounded over 700.” so many people on the street.

When he got to his office, Bødiker heard about what had happened. He called the Danish Deloitte office to tell them he was alive. Not everyone was as lucky.The terrorist attacks claimed 52 lives and wounded over 700.

Bødiker’s Swedish colleague Christian Linde was in Copenhagen on business. He watched the news about how the Underground exploded on his route to work. ”I’m never setting foot on that train again”, Linde thought. He called Bødiker and said: ”We’re going to start selling bicycles.” They had spent many lunch hours talking about how amazing it would be to own their own business.

Two weeks later panic struck London yet again.

Bombs were found on three Underground trains and one bus, but thankfully they hadn’t gone off.

Bødiker, Linde and many other London residents started avoiding buses and Undergrounds. London bike shops sold all their stock. Bødiker made a very Danish and very aesthetically-driven observation: ”Businessmen in pinstripe suits are riding around on racing bikes. It looked really stupid.”

Bødiker and Linde had what can only be described as an “aha moment”. They decided they would sell stylish, quality bikes that are nice to ride.

Linde says that at first, his family thought he was crazy, but that didn’t deter him at all. Many people think that leaving a job that pays well is a huge risk. Bødiker thought differently. ”I know I can always go back to consulting. No one can take away what’s inside my head.You can lose a business, but then you just have to try again.” ”Denmark is a wealthy country with a high standard of living. So what’s the cost of failing here? It’s very small, especially since I have an advanced degree. The risks are much higher in the

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United States. But here, failure isn’t a major catastrophe”, says this son of the welfare state.

When they gave their notice at Deloitte, Linde and Bødiker had a business idea and years of experience in turning business ideas into business strategies. Analysing risks and combing through companies’ books had taught them to understand and analyse business strategies from every angle. ”We thought it would be fun to test out those skills on our own business”, Bødiker says.

In addition to their experience as business analysts, the pair had a rare and valuable brand of intellectual capital: before the London terror attacks, they hadn’t given much thought to their upbringing in bike-crazy Scandinavia.When they did, it became the foundation for their brand. ”You don’t realise you’ve lived in a biking culture until you leave”, Bødiker laughs. He says in Britain teaching adults how to ride a bike has evolved into a whole business branch. ”Can you imagine?!”

B

ødiker and Linde started studying bikes and the bike models on the market while they were still in London, but they knew from the beginning that their new business would be based in Copenhagen, the Mecca of biking. They knew how they wanted their bikes to look. They sketched them on paper. But who would actually make them? They had no intention of becoming factory owners. They would have to find a factory, a subcontractor.

Around 130 million bicycles are made each year.

A little under 100 million of them are made in Chinese factories. Linde picked up the phone and called China. He’d heard about a company that could make the bikes at a great price.

The deal fell through because the factory want-

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Around 130 mil­ lion bicycles are made each year.

A little under 100 million of them are made in Chinese factories.

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ed to make 10,000 bikes, but Linde and Bødiker only wanted to order 400.They did some research and found a company in India. But they were sceptical after their first encounter. The factory had a little stand at the Eurobike Show in Germany, where the head engineer was fast asleep. But Bødiker and Linde liked the Indian bikes. The design was right, but the dimensions were too small for European riders.

Bødiker, Linde and a bike mechanic from London flew to India for a long weekend and the deal was done. The mechanic was there to make sure they didn’t get cheated. It was obvious that the pair had found an opening in the market because Velorbis sold all 400 bikes to customers who had pre-ordered them on their website. And they got paid in advance, too. That was all the marketing they needed.

It wasn’t long beforeVelorbis’s owners were calling to apologise to everyone who had ordered one of their bikes.The bikes were supposed to be ready in a month, but it actually took nine, because the cost-conscious workers at the Indian factory found it difficult to comprehend that it’s better to use higher quality and higher priced materials than to skimp on style.

Bødiker and Linde took out a loan to start the company. They also maxed out their credit cards and raised another 14,000 euros by hocking Bødiker’s Mercedes. Both of them lost sleep. Everything had to be paid for in advance and they had no bridge funding. ”It was a little uncomfortable having to call customers for the third time to tell them their bike still wasn’t ready.” Bødiker had nightmares of Velorbis being featured on a Danish TV show investigating financial crimes and fraud.

The bikes finally arrived from India. But that wasn’t the end of Velorbis’s problems. The phone started ringing. On the other end were customers complaining about problems with the bikes; the pedals and seats were breaking. Velorbis bought new parts to replace the broken ones and offered

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to buy back the bikes to anyone who wanted to return one.

But no one wanted to.They liked the bikes.And that encouraged Bødiker and Linde to go on.

Now, eight years after the episode in India, Bødiker says they hadn’t thoroughly analysed their concept.

“We spent the first three or four years playing and searching. We started in 2006, but we really took off in 2010.We paid our dues. Understanding design wasn’t enough, we should have learned much more about the industrial manufacturing process. We had no idea. We’re not engineers, so the variations in the degree of rusting of different metals came as a huge surprise to us. We had a business plan, we had the design and distribution channels, but we had no overall understanding of our product. We learned through practice.”

In the beginning, Velorbis bicycles were made of crude steel that rusts easily. Brand conscious owners used to browse the bicycle stands in Copenhagen in search of rusty Velorbis bikes. If they found a rusty bicycle, they would leave their business card on it and offer repair services. Nowadays, the steel used in the bicycles resists the damp, northern weather.

“We learned a great deal about the dialogue needed for successful subcontracting and about the industry in general during our time in India.”

In the end, Bødiker and Linde found a bicycle manufacturer in Germany, in a country that epitomises the industrial traditions of the old continent. Being European is a huge asset in the bike business.

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s is the case with all businesses, Velorbis has had to identify its strength and core business focus.Was it mass sales, new innovation, luxury or something else?

There are plenty of engineers out there who can come up with a genius product without giving much thought to the market. It’s technical expertise that makes them successful. Many tech-

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“The bikes finally arrived from India. But that wasn’t the end of Velorbis’s problems.The pedals and seats were breaking.” nical innovations, for example programming languages, belong to this category. And our everyday life depends on them.

There are companies that have mastered the production process and manage to manufacture their products for less and get them to the market faster than their competitors. A classic example of this is the Finnish mobile phone company Nokia, which had an astonishing distribution network back in its glory days.

Then there are companies who strive for exclusiveness in the quality or availability of their products. Sometimes it takes more than money to get your hands on the products like these, for example luxury brands that people queue up for months to buy.

Velorbis’s strength lies in its thorough analysis of the product, its story and the market. In other words, the entire world.

What makes Velorbis stand out among other bicycle manufacturers is the fact that Velorbis bicycles are seen as accessories or fashion statements.

They’re not just a means of transportation or a piece of sporting equipment.They are part of your wardrobe.

This novel approach enables a range of design, conceptual and marketing opportunities. When a bicycle is seen a fashion item that’s part of a person’s wardrobe as opposed to a piece of sports equipment or a vehicle, it’s easier to build a product family around it.

“Our slogan is Ride in Style. Our bikes are designed for fashion-conscious people who want to look good when they ride”, Bødiker explains.

Because Velorbis bikes are fashion products, the company also exhibits at fashion fairs. Thanks to their visibility at fashion fairs,Velorbis has appeared, for example, in a set of Louis Vuitton advertise-

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ments filmed in Denmark.Velorbis bikes can also be seen in ads for a whole slew of international Danish brands. For example, the shoe brand Ecco and the originally Danish clock and watch manufacturer Skagen have both used Velorbis bikes in their campaigns.

“We like to use piggyback marketing with other Danish companies. Being Danish is part of our brand, and cooperation with other Danish companies strengthens our brand image.”

Simply put, piggyback marketing means marketing cooperation. Denmark and the Danes know the tricks of the trade. The furniture industry and architecture made Danish design a well-known and highly-respected concept in the 20th century.

And Danish companies have masterfully used this reputation to their advantage for decades. Recent examples include the boom of Danish clothing brands and TV series in the 2000s. Copenhagen has created such a strong brand around its restaurants and Nordic kitchen that many people travel to Copenhagen just to eat. This is remarkable considering how poor Copenhagen’s culinary reputation was in the 1990s.

The public sector also actively participates in branding the country. It skillfully markets Denmark as an easygoing, chic, ecological and modern country. Danish design fits the framework of modern paradise perfectly. ”Denmark” sells like a dream.

Eco-friendliness is important for Denmark, but it’s also used for business promotion. For example, Copenhagen markets itself as a bicycle city and has set up a separate “embassy” for the representatives of other countries who want to learn more about bikes.

Linde, who comes from Sweden, has been blown away by the Danish cooperative spirit and by how

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2.

3.

1.

4.

5.

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In Copenhagen, 28 per cent of all families with two children have a cargo bike. Of all house­ holds with a cargo bike, 17 per cent have one in place of a car.

7.

6.

8.

1. Elis Herkehavn 2. Io SarroeBrinkloev 3. Gino Brekker 4. Liselotte Schöbel 5. Jens Refsgaard 6. Tim Gade 7. Jesper Tœnnes 8. Sœren Glad 9. Stine Danielsen 10. Kasper Dohlmann

9.

10.

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easy it is to launch projects with Danish companies.

He says the Swedes are far less eager to cooperate with each other.

Velorbis is also happy to give piggyback rides to other Danish companies. The company launched its line of children’s bicycles and bags during a fashion fair in winter 2014. Velorbis’s stand also featured the Series 7 chairs by Arne Jacobsen and the classic Superellipse table by Piet Hein, which literally helped bring home the message of Danish design. The arrangement helped Velorbis label its products as Danish and gained visibility for the design furniture manufacturer Fritz Hansen. It was a win-win deal.

Understanding the concept of piggyback marketing has been central to Velorbis’ story and corporate DNA. “We’re a young company, but we stand on the shoulders of a long tradition.”

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he owners of Velorbis dream of some day turning the company into an international franchising chain. And these shops will sell much more than just bikes. After careful consideration, bags were added to the Velorbis product range.

Bags are relatively small investment, so people tend to buy them more often than bicycles. The company has also launched a line of other accessories, such as sunglasses and belts.

Velorbis paid its dues with the big business, too.

This time, however, the situation was reversed. At first, the bags were made in Italy. However, the zippers on the Italian bags broke too easily. Today, the bags are made in India at a lower cost and higher quality. And at 300 euros a piece, the briefcase-like work or school bags have to be high quality.

“Being made in Italy doesn’t guarantee anything.

After all, they sell the products with their artisan tradition, just like we sell our bicycles with tradition.” The leather for the bags comes from India.

Velorbis emphasises the Danish design of the bags in its marketing.

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Velorbis is not only bikes. They also sell bags, purses and brief­ case-like school bags. The owners dream of turning the company into a international franchising chain.

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A bicycle isn’t just a bicycle. It’s also a fashion item.

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“Biking is not considered cool in developing economies where only poor, foreign workers use them.This trend can change.”

“Nowadays, no one expects the product to be made in Denmark if the design is Danish,” Bødiker says.

Striving to become the market leader pays off, because it yields profits. Bødiker uses the concept of fashion tax, which is the extra consumers are willing to pay if they like a brand.

The Indian factory Velorbis uses has an ISO SA8000 certificate, which means it’s committed to ensuring good working conditions. Leather products sold in the US, Canadian and German markets are manufactured at the same factory. For example, the well-known US fashion brand Kenneth Cole uses the same factory. Bødiker says they wouldn’t have selected the factory if they were its first Western client.

“The factory is committed to adhering to European standards of working conditions and not using child labour.”

It’s important to Velorbis that they’re able to ensure the appropriate production conditions.

More and more importance is placed on the sustainability of imported goods, and any problems in the production chain could threaten Velorbis’s reputation as an honest and eco-friendly Scandinavian brand. In the top-luxury end, Velorbis is also working on manufacturing bags in Sweden, made of Swedish leather.

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elorbis’s turnover is in the low end measured in millions of euros. The company’s first financial statement will be published for 2014, but Bødiker says the company will already turn a profit this year. The company is growing fast, tens of per cents year on year. As usual for companies in this phase,Velorbis’s sales profits have been invested back in the company.

Until now,Velorbis has been able to finance its

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expansion from organic growth. This means the company has not been able to expand its operations quickly and simultaneously into many new markets. Next up are the British and German markets.

In Britain, for example, Velorbis bicycles were sold in the early stages of the business at the Harrod’s and Selfridge’s department stores in London.

But finding the right partnership has been difficult, and now Velorbis is planning to open its own store in London in the near future instead.

Linde and Bødiker are well-aware that financing is scant, which has forced them to carefully consider their investments and strategies.They’ve also had to carefully consider their markets. Italy, for example, has a thriving bike culture, but the popularity of racing and sports bikes makes it very different from Denmark’s culture of everyday bike riding. And this means that breaking into the Italian market would be difficult.

It might well take 5 to 10 years for Velorbis to break into some markets. Biking isn’t considered cool in developing economies, where the rich might see it as embarrassing. The bicycle is not a status symbol in a country where only poor, foreign workers use them. And the same applies to countries that are becoming wealthier, where success is measured by fancy cars and flashy jewellery.

“Here in Scandinavia, on the other hand, having the time to take it slow and bike to work is considered a sign of good living. The soft values are appreciated more and more. The situation is different in China.The Chinese are getting rich and looking to live their dreams. We’ll have the product when they’re ready for it,” Bødiker says.

On the other hand, Scandinavian design is a strong asset in Asia. So you will see the occasional Velorbis bike hanging on the wall of a rich

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c yc l i ng t r i v i a l i t i e s The city of Copenhagen regularly conducts and publishes a report called “The Bicycle Account”. The total number of kilometerts cycled in Copenhagen has increased by 36 per cent since 1996. Here are some facts from the 2012 report.

SOCIO-ECONOMICS

eur 0.16

Gain to society per extra km traveled by bicycle in Copenhagen

eur 0.15

2.05

23 %

13%

32%

%

90,000 T CO2 per year saved by cycling in Copenhagen at present rate

12%

20%

%

33

0.91

Revenue by mode of transport

32

549,000 T CO2 per year emitted by transport in Copenhagen

35% Revenue in shops and supermarkets by mode of transport (EUR billion per year)

Bicycle

Car

Walking

Shopping trips by mode of transport

Public transport

C yc l i ng c u s tom e r s a r e c e n t r a l fo r r e v e n u e Looking at shops and supermarkets (but not malls) in Copenhagen, cycling customers spend less than customers in cars. However, cycling customers shop more often and therefore spend more in total than motorists. In sum, customers on bicycle and on foot account for half of the total revenue and two-thirds of all shopping trips in Copenhagen.

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H E A LT H B E N E F IT S O F C YC LI N G

30%

Reduction of mortality for adults who cycle to and from work every day

228 million Value of the annual health benefits from cycling in Copenhagen (EUR)

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Source: City of Copenhagen / Technical and Environmental Administration / Traffic Department

c l i mat e i m pac t of c yc l i ng

1.47

2.06

Cost to society per extra km traveled by car in Copenhagen

l t

x

o

o

o

b

W H AT D I D W E LE A R N ?

Velorbis is a textbook example of how one small company can reach almost every corner of the globe. What have Velorbis’s owners, Denmark’s Kenneth Bødiker and Sweden’s Christian Linde, learned from the bicycle business?

Lesson 1: Sales come first.

“Your first priority should always be sales. If you can’t sell the product, you have no business,” Linde says.

Coming up with ideas is fun, but selling them is more important. So it’s important to use resources and to consider how the products and product characteristics fit into the Velorbis story.

Lesson 2: Come up with the right price structure.

It takes a great deal of skill to price a product so that it’s not too expensive for retail while still making a profit the seller, distributor, agent and Velorbis.

Chinese home, but more as a design item. This makes Linde very proud. Today, the only Velorbis concept store in Asia is located in Bangkok. It ‘s run by a Thai steel group.

The US isn’t ready for Velorbis yet, either. The high quality Velorbis bikes are too expensive for the US market, because most Americans don’t ride bikes every day. That said, Bødiker believes the bicyle culture is about to nudge forward in the United States.

“There needs to be an infrastructure, i.e. bicycle lanes, and a critical mass. When there are enough cyclists, the culture will begin to change. I wish

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Lesson 3: Accept the realities of being an entrepreneur.

Entrepreneurship isn’t for everyone. When money was tight, Bødiker had to live at his summer cottage, and the two men occasionally work around the clock.

It suits them well. “I respect people who choose differently than we have,” Linde says. Linde and Bødiker have never regretted leaving Deloitte.

Linde reminds us that their work involves meeting new people and immersing themselves in new cultures, which they both enjoy.

Lesson 4: Take risks.

Taking risks is vital for a new business. You have to be able to live with the uncertainty involved in developing something new. “Otherwise there is no business”, Bødiker smiles.

every American city was like Portland.”The hipster city of Portland, Oregon, is one of the few bikefriendly cities in the United States.

B

ødiker and Linde have both made a living assessing risks. It’s taught them the importance of setting up several complementary sources of income.

In addition to its own bags, Velorbis manufactures private label bags at the Indian factory.They noticed that many clothing companies want to sell bags but aren’t interested in controlling the production process, with its factory audits and qual-

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ity assurance systems. Ensuring acceptable production conditions is hard work, which makes the certificate Velorbis holds a big asset.

Velorbis designs bags for other companies. The process could be called the outsourcing of outsourcing: a brand outsources its bag production to Velorbis, who in turn subcontracts the manufacturing.

Velorbis also sells its bikes to companies and for sponsoring. For example, the champagne producer Deutz has a Velorbis bike, and the City of Copenhagen recently bought severalVelorbis bicycles to transport lawnmowers.The appeal of the bicycle as a brand advertisement and image-booster is based not only on the high quality Velorbis design, but also on the positive image of the bicycle.

Children’s bikes are the latest addition to the brand’s range. The company continues to analyse and further develop the market.The Velorbis bikes that are sold in Europe are manufactured in Europe, but in the US, for instance,Velorbis could sell more affordable bicycles that are manufactured closer to the US market.

Balancing between agents and retailers can be

A number of investors have already contacted Velorbis. Bødiker and Linde are not sure if the the skillfully constructed brand is ready to receive a sudden surge of money.

“What if we had a hundred million Danish krone (14 million euros)? What would we do with it? We could visit every fair there is and set up marketing campaigns, but the growth could also be too rapid. Our factory and organisation has to be able to keep up.”

The idea is not to include investors, at least not yet. However, investors might be welcome soon, becauseVelorbis’s skillfully-crafted story and products have convinced those selling the Scandinavian dream. The Copenhagen airport has invited Velorbis to open a pop-up store for four months in the summer of 2014. The famous Danish interior design company Illums Bolighus will soon start selling Velorbis bicycles in its shops in Stockholm and Oslo, in addition to the Copenhagen shop. Illums Bolighus is a legend in the international design world, and its four-storey shop in the centre of Copenhagen is like the Holy Land for

“What if we had a hundred million Danish krone?

What would we do with it?” difficult. Agents and their cultural expertise are often needed in new markets.The agent gets a cut of the price, of course, which leads to the next decision: Is it better to raise prices or reduce production costs? It’s not easy to cut production costs without moving production outside of Europe.

“It might make sense to manufacture closer to the markets, like we do in Europe for the European markets”, Bødiker says.

On the other hand, keeping production in Europe is so rare thatVelorbis proudly prints the German origin of its bicycles in its brochures. Being Danish is an asset, but a German family business that specialises in bicycle manufacturing makes the brand’s aura even more positive.

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the world’s design enthusiasts.The NK department store in Stockholm has also confirmed that it will soon start selling Velorbis.

This means Velorbis will also have to develop its other products. Few people buy a bicycle at an airport, but travellers are likely to buy smaller items.

Linde is the IT-guy and Bødiker is responsible for the company’s finances. They both design the Velorbis products. Diversity is a good thing, because the two men share the same business vision.

“Bicycles open the doors for us, and everything else comes after,” Linde says. ◆ Read this article in Finnish online: www.aaltoee.fi/blog

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B oo k 4 [ self-development ]

M R . S I M PLE Executive Coach Ben Nothnagel is Mr. Simple of leadership and self-development. He possesses a simple solution for your complicated problems: ”You have to get your thinking back.”

Interview by Reetta Räty, photos by Touko Hujanen.

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he crazy lawyer from South Africa.”

Ben Nothnagel’s trainees and course participants recognize this as the slogan that Nothnagel uses to describe himself. And why shouldn’t he? He is a lawyer from South Africa, and yes, he may be slightly mad compared to many of his colleagues.

Yet there are other ways to describe him, too.

Ben Nothnagel (born in 1961) lives in Finland.

He does not work as a lawyer but teaches selfdevelopment for executives at Aalto EE and countless companies. And the mad part? It is undeniably strange to move to a small, Nordic country and come up with a profession that aims to reduce the stress of executives. But once you listen to Ben, it also becomes evident that he tries to beat sense into those working like maniacs.

Ben himself is not guilty of that anymore. At the time of the interview he is in Málaga, Spain, having a relaxing time and reading. ”Trying to find new insights”, he describes the ”beach break” on terraces, far away from lecture halls. We settled a Skype date, and a happy face appeared on the screen at the agreed time.

The speakers convey the sound of chatter from the bar in addition to Ben’s voice. ”They have these nice little tapas things here, absolutely lovely”, Nothnagel says and his smile fills up the screen. We both move towards the screen in order to hear each other through the Spaniards’ loud words. The Skype connection remains intact. It appears as if we are sitting at the corner table of a vibrant bar.

Ben Nothnagel heads a self-development process for Aalto Executive MBA program, and teaches how to manage stress and the feelings of being too busy. In his teachings he may safely presume that almost every listener experiences stress and hurry. When Nothnagel conducted a survey targeted at executive-level participants, 60 per cent reported “chronic stress”. We have come to an important point of phrasing in Nothnagel’s

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world: there is a difference between feeling stressed or busy and actually being really stressed and too busy.

Nothnagel’s teachings could be summarized in two sentences: One cannot always change the circumstances in which work is done and decisions are made. But behavioural patterns in a stressful and pressurizing environment are something that can be influenced.

And observe, dear audience, this tapas-eating Sir on Skype is not a consultant on positivity. He does not point to the sun behind the clouds and say that there is no stress.

“I am not into the happiness business, no. And I do not try to manipulate your thinking, no!”

The goal is much more business-like: ”I want you to act clever.”

N

othnagel believes that stress is often more a feeling of stress than actual stress, much as being in a hurry.

His goal is to have people – a leader or expert – to tell the difference between these two.

“In our self-development process we focus on giving participants the insight and tools to identify chronic stress in themselves and others and to break their habit of being stressed.”

The coach has a seemingly simplistic approach to controlling the feeling of stress. It goes as follows: You feel yourself being surrounded by a stressful situation. Before you allow the stress to flow over you, ask yourself: Should I be stressed? The answer could only be yes or no. And look, after taking a moment in most situations your answer is: No, I should not be stressed.You should be anything but stressed! You should act smart, clearly, wisely.

Nothnagel believes that if you recognize a stressful situation coming on, it is possible to affect your own behaviour. It becomes premeditated and deliberate.

“Your mother told you to count to ten. It’s the same thing, basically.”

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Ben Nothnagel is not a consultant on positive thinking.

“Although I think happiness is an undervalued competence.”

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This sounds a little too simplistic. But let the mad lawyer proceed. He is, in fact, sane and has seen his method work in practice.

‘T

he core of self-development program is simply to limit unthinking behavior and to promote thinking behaviour in important moments of our lives.”

Nothnagel recites the core of his teachings like homework memorized off by heart.

Nothnagel has heard all the possible explanations that executives or those working in expert positions provide for being busy or stressed. Many probably think: Oh if you only knew my work! It cannot be changed by a minor mind game.

But it can. At least it can be attempted.

The self-development process begins from the notion that we can develop as decision-makers or leaders. Perhaps even as humans.

As Nothnagel is originally a lawyer, he is used to testifying. “I have to prove everything”, he says.

So let him work as a defender of sorts for a mo-

that we repeat in our lives”, he says. These habits and reactions are “unthinking” by definition. We repeat them when we are forced to make difficult decisions in a competitive environment or on a tight schedule. We also go on autopilot when we encounter so-called difficult people.

The habits are not easy to recognize, as we consider them natural. But we should.

“It is widely accepted that unthinking behaviour or habit limits our ability to reach our potential, create solutions to solve complex challenges, and perform effectively over longer periods.”

When Nothnagel carried out preliminary resarch to survey stress on a group of 100 busy people, around 70 per cent answered “no, not really” after applying the “should I be stressed” question for three weeks in their lives.

The most essential factor in terms of business is this: when people are not chronically stressed, they make wiser decisions and do better at business.

Quite convincing, the prosecutor in Helsinki nods, but is still slightly doubtful. Personal experi-

When a person is not chronically stressed they make wise and better decisions, and perform business operations better. ment. On the prosecutor’s side, i.e. in this Helsinki office someone through Skype is claiming that stress is stress, and nothing else.

Evidence: The to-do list is endless, emails overflow, your superior insists on a better result with less personnel, acute crises take up all of your time, weekends must be put aside for work, days at the office simply constitute out fires, the competitor’s development process is advancing seamlessly…

All this is familiar to Nothnagel, from his own life as well.Yet as a defender he has a question: Do you want to develop as a human and as a leader? Or should we focus on simply being terribly stressed?

Nothnagel recounts his teachings from the tapas bar.“All of us have habits or patterns of behaviour

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ences in executive tasks prove that at least occasionally stress is real. What if you answer the “should I” question with a yes? Yes, I am damn stressed, no matter which way I look at it.

“Stress can be real, of course”, says Ben. The point is that if you have to fight for your perspective or accomplish tough goals, it would be wonderful to have a clear mind. I.e. brain functions should operate as well as possible.

“That joy to be able to be as smart as you can brings a lot of happiness. That reduces stress. You can become a better lover, leader, friend.”

The defence in the tapas bar explains our behaviour through neuroscience. A long-term state of stress leads to a person being “habitually stressed”. This affects the brain.

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Nothnagel first travelled to Finland in 1993, and now considers Helsinki as his hometown.

Details from his home on Eerikinkatu.

“Working too much is not good for you. It is dangerous. It is as bad as smoking”, says Ben Nothnagel.

“Chronic stress increases the activation of adrenal hormones such as Cortisol in the brain and body.”

Cortisol is real poison. Nothnagel presents a long list of its terrible outcomes: Slows down thinking; damages cells in the Hippocampus, resulting in impaired learning; lowers the immune system’s inflammatory response; increases stomach fat; disturbs sleeping patterns.

The list goes on, but the last point mentioned

by Nothnagel is perhaps the most surprising one: It lowers libido.

L

et us presume that Nothnagel is right. Being stressed differs from feeling stressed. Let’s presume that we can get rid of stress through the right mindset. Let us believe neuroscience and hope that we will obtain more information on

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how our brains operate in different social situations. Let us also allow a small miracle:Why do we downright boast ourselves with our hectic and stressful lives, if it is really so unhealthy, and even bad for business? How is it possible that executives go around telling people how busy they are while revealing that their thinking is mediocre at best?

Not to mention their sexual desires.

“I know”, Nothnagel laughs on the screen.

He believes that the situation will change within a few years.The results of brain studies increasingly yield more information.

“We have not gotten the message yet. Working too much is not good for you. It is dangerous. It is as bad as smoking.”

Nothnagel says that habitual or chronic stress is particularly harmful for those who suffer from it the most, i.e. executives and managers.

“It triggers a vicious cycle of unthinking behaviour that limits their performance and is triggered under performance.”

The executives’ stress levels also count, as these people have power over other people.

Occasionally Ben Nothnagel has to justify using these so-called soft issues, such as self-development in the context of economics or leadership course. This is when he pulls out another card: if we want to improve business, we have to improve leadership.

“Leaders affect other people.”

Bad leadership affects the entire organization.

“It makes the organisation slow down and lose money.”

This is surely as ”hard” as economics classes should get.

I dare suspect that some of the people who have met Nothnagel have doubts about self-development. I mean, it sounds rather hip.

“Well, yes, people have prejudices against the terms of self-development, mindfulness and personal change”, he says.

In his gracious and humane style he considers this entirely understandable. He works a great deal

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l o t

x

o

o

C

razy!

Again. This is the first thought to pop up when listening to Nothnagel’s story on how he ended up in Finland. No, it is not the most ordinary of stories.

In 1993, Nothnagel arrived in Finland on a ship from Stockholm. He had come up with the idea that Finland could be the place where he wants to spend his sabbatical year from working as a lawyer.

Apartheid had ended in his native South Africa and the air seemed free to breathe.To some extent Ben’s infatuation with Finland was influenced by Nokia. Perhaps Finland would be refreshingly different, as it was the home of Nokia, he reasoned, even though he had never been to the country.

Originally Nothnagel decided to have a sabbatical, as many of his colleagues in South Africa did the same.

So he took the opportunity presented to him.

Life unveiled itself as it often does, when given the chance. Nothnagel met interesting people in Finland and decided to stay.

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b

with engineers, businessmen, lawyers and doctors.

Self-development is not – yet – a subject taught at high schools or universities. Its terms and rules are still strange, which is why they may be shunned.

“Many of the roots of self-development and mindfulness lie in religion, meditation, yoga, psychology or self help, and people may be suspicious of it or not comfortable with it.”

Some are irritated by Nothnagel because the change he promotes is not at all simple.To change yourself and your behaviour! It would be easiest to think that this is the kind of leader I am and that’s that…

“Some people think they have nothing to improve”, Nothnagel says.

If this is the case, a small, minor thing can be picked as the object of improvement.Yet everyone has to do something in the EMBA program. Also self-development is graded.

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3 p r ac t i ca l conc e p t s of t h e s e l f - d e v e lo p m e n t p roc e ss 1.

Firstly to identify a habit that limits performance or no longer contributes to the leader / person you want to be.

2.

Secondly to recognize the social or mental cues that trigger habits or unthinking behaviour.

3.

Thirdly to suspend unthinking behaviour in important moments of your life and to replace it with thinking behaviour.

B e n N ot hnag e l on t h e s e l f - d e v e lo p m e n t p roc e ss : “The initial results from my research show that these steps are fairly easy to implement, as the main aim is simply to trigger thinking or responses in important moments in our lives, leading to situational smartness and surprisingly ‘default self- development’ for the vast majority of our participants. By ‘default’ I mean that, because our behaviour changes from unthinking reactions to thinking responses, we often are ‘as smart as we can be’ in important moments of our lives and the benefits and results are very visible to ourselves and those around us.”

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Or rather, he ended up staying.

“Staying on in Finland was not my plan, Finland just grew on me. I felt very comfortable in Finland, lots of people gave me opportunities, it was easy to do business and I returned often until I finally decided to make it a permanent base around 2002.”

“I consider Helsinki my home.”

At Aalto EE, Nothnagel originally coached employees who wished to learn how to face people from different cultures. He became a stress doctor as a result of his own experiences. Once business in Finland was going smoothly Nothnagel observed what so many others had: he was a busy, stressed out person who spent his time on planes and in hotel rooms.

He had previously been interested in neuroscience and understood what happens in the brain as a result of stress. Nothnagel caught himself.

Now he consciously tries to cut back on his workload. It is not easy.

“I am terrible at time management! Terrible!”

Because Nothnagel is not limited to one profession or job description, he is often asked to join different kinds of projects. And he gets excited, far too often. But he has an easy method for safeguarding himself.

If someone calls about a new, exciting work opportunity, Nothnagel says: Sounds interesting, I will get back to you tomorrow. This way he gives himself time to work out whether he really has time for it. And is it really as interesting a job as it initially appeared to be?

“I am triggered by excitement. I ask myself a simple question: Should I be excited? I then ask the caller: Can I get back to you tomorrow?”

“This is simple but it saves me. I am not chronically stressed anymore.”

Nothnagel’s own self-development process has now reached a point of working three days a week face-to-face with the people he coaches. At other times he reads, meets interesting people and seeks new perspectives and thoughts.

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“And I joined in a tennis club. I enjoy hanging out at a tennis court, and a little GT after that!”

W

e are finishing up our Skype call. The sounds of the tapas bar are still pleasantly observable in Helsinki. Nothnagel plans on remaining in Málaga for a few days. After a brief visit to Helsinki, he will travel to Shanghai to teach.

Nothnagel’s self-development process is an important part of the Aalto EMBA. It involves oneon-one discussions with each student in addition to lectures. Ben is available to meet his students on a regular basis for the duration of the two-year EMBA program.

Nothnagel has a particular impact on his students. “Oh Ben, I know him!” is a regular comment from people he has taught. They feel like they know Ben. One claims to have incorporated his teachings to his leadership practices only after a couple of days. Another says she even got gym instructions from Ben. A third, busy and gaunt businessman received the nickname Mr. Mindfulness after Nothnagel’s self-development process.

His life changed.

One could presume that Ben Nothnagel himself is Mr. Simple.

His students are people with complicated issues.

“Most of my work is done with leaders in companies that do business internationally or with individuals identified to have high potential by their organizations.”

So he teaches them simple truths.

“In short I tell people: You have to get your thinking back. You go back to work. You always have problems. You feel too stressed. Your ability to think is reduced.You are situationally less smart.

Your performance slips. It can become a vicious circle.You are the last one to notice it. Do something!”

Let us try!

The Skype connection shuts down, the sounds from the bar disappear.

Goodbye, and thank you, Spain. ◆

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B oo k 5 [ l e ad e r sh i p ]

IT TA KE S T H REE TO TA N G O What is the best way to build a good rapport between owners, the board of directors and the managing director?

Journalists Annukka Oksanen and Ville Bl책field met up with corporate governance experts in Finland and Denmark.

Illustration by Pietari Posti.

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‘A

t that point, I had to carefully consider whether I could continue.”

Tom von Weymarn reflects on the year 2006, when the board of directors of an international telecommunications group was in the middle of heated discussions. As chairman of the board at the time, von Weymarn was the one leading the debate.

In addition to being a professional board member, he now works as a consultant and coach in the field of corporate governance.

“Then, I was handed over a dissident board from the onset”, von Weymarn recollects.

Ideally a board as well as it’s chairman should have enjoyed amicable, confidential relations with the company’s Chief Executive Officer. This, however, was not the case.

“We had reached a point where trust in the CEO was beginning to run out. Some had a particularly critical attitude, while others were prepared to show support primarily for power reasons”, explains von Weymarn.

The board was dissatisfied with the company’s results. The president was also under scrutiny for doubtful judgement on a number of issues as well as limited processes related to many emerging markets. The disparity culminated in a harsh exchange of words between some members of the board and the CEO. “After several rounds of discussions and faced with a big enough issue representing very doubtful judgement by the CEO, I finally announced that if the board could not agree on the dismissal of the CEO even under these circumstances, I together with a couple of additional board members would resign.”

This sort of an approach is not an everyday occurrence, as lack of confidence usually results in the resignation of the CEO rather than the chairman and board members.

The board appoints and dismisses

the CEO, not the other way round.

The exception to the rule resulted in an equally exceptional response: the owners stepped in.

“The company’s main owners were not particularly happy with the way things were turning out”, states von Weymarn.

They decided to hold an extraordinary general meeting where approximately 50 per cent of the board members were changed. The extraordinary general meeting also decided to ask von Weymarn to continue as chairman of the board, as proposed by the nomination committee.

Shortly after the next annual general meeting the CEO was dismissed by the new board in order to “improve the atmosphere”, as stated in the company’s press release.

T

his episode illustrates how difficult managing a company can get, when the three top layers are out of sync. In principle, a clear hierarchy prevails among owners, the board of directors and the managing director, whereby the board exercises the power of the owners and monitors operational management. Reality is of course a great deal more complicated than a simple organisation chart.

Established on legislation and corporate governance, the rules of the game are only the starting point. What happens on the playing field depends on the players – the chairman of the board and managing director in particular.

To up the challenge, seamless teamwork between these players is key to a company’s success.

But how to create a functional relationship between a company’s board and operational management?

And how does a board of directors that is up with the times and understands its own role actually function?

What should be expected of a managing director appointed and trusted by the board? This article examines

The board appoints and dismisses the managing director, not the other way round.

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corporate governance and its underlying rules through the eyes of four experts in the field.

Tom von Weymarn speaks from experience. With a background in corporate governance, he has also served as the CEO for a number of different companies. In addition von Weymarn has been a member of the board in up to 30 different companies, usually as the chairman of the board.

“Exercising power is embedded in strong individual human behaviour”, says Tom von Weymarn. “It all depends on the individual and personal characteristics. An intention to use power is ingrained in the role of a managing director. Without this characteristic, a managing director fails. A managing director needs to be as strong-willed as possible, but balanced by an equally strong-willed board.”

Board professional Marina Vahtola currently holds the position of Executive in Residence at Aalto University School of Business, and is a board member in several companies, as well as a senior adviser for international chains based in Sweden and Germany. Before her current role, Vahtola worked for over a decade as CEO of a number of different companies.

“Trust is the key word”, states Vahtola.

“In addition to competence and experience, trust is a vital factor in successful business. True appreciation and trust enable building growth and reacting to changes surrounding business. If trust is missing, we often talk about chemistry between people. As is the case in one’s personal life, in the end trust can crumble simply due to emotional reasons. After all, we are all human.”

Jesper Lau Hansen, Professor of Company Law and Financial Market Law at the University of

Copenhagen, has particularly examined the Nordic corporate governance model. He is more than familiar with the type of drama in the boardroom described by von Weymarn and Vahtola.

“Nordic corporate governance is extremely honest, marked by a culture of discourse and informality.

Addressing in first person and heated debates may even come as a culture shock to others”, says Hansen.“In the Nordic countries, board work is a rather strange mix of fierce disputes and consensus. Those unwilling to seek unanimity are shown the door.”

Our fourth interviewee is Professor of International Economics and Management Steen Thomsen, who is the executive director and founder of the Center of Corporate Governance at the Copenhagen Business School.

“The relationship between a company’s board and managing director is a rather unknown entity. It is a challenging field of study, as the subject matter is so intricate – a bit like examining particles”, says Thomsen.

“But team leadership can be explored in general. Hardworking leaders who motivate their team members usually reap results. It probably comes as no surprise that an enthusiastic coach – or chairman of the board in this case – ends up succeeding.”

“ Nordic corporate governance is extremely honest.”

— Jesper Lau Hansen

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A

ccording to Jesper Lau Hansen, the Nordic corporate governance model is based on the Danish Public Companies Act of 1930.

According to the Act, large enterprises must have someone in charge of day-to-day management in addition to a board of directors.Thus, the Act refers to a managing director and defines two layers; the board of directors and managing director.This model continues to be the foundation for

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corporate law also in the other Nordic countries.

The picture becomes a bit more blurred when examining who actually occupy these layers.

Firstly, the managing director may have a dual role: in Sweden, 40 per cent of managing directors are also members of the board of the company they run. This is a common occurrence also in Finland despite a somewhat lower percentage.

Secondly, an owner may be both a board member and involved in operational management.

“The same person filling several different seats is common especially in the case of family businesses”, mentions Tom von Weymarn.“This easily leads to situations of jealousy and owners tugging in different directions.”

Listed companies usually operate according to a clear-cut hierarchical model, with owners, the board of directors and management placed on top of each other.

Often roles and power relations overlap a great deal in smaller risk investment companies. Regardless of what the organisation chart may state, a similar, so-called integrated model is prevalent also in larger companies in the Nordic countries especially in practical operations.

Owners

Board CEO

CEO

Hierarchical model

Board

Owners

Overlapping model

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A managing director influences the board’s decision-making, while the board has an impact on operational decisions - all usually in good spirits. Striving for consensus is another typical feature of Nordic corporate culture, the decisionmaking process culminating in unanimity.

“In Germany it is stated separately that board members, i.e. ‘advisers’, may not be part of the company’s executive management. This is explained by the fact that boards in Germany can include as many as 15 members”, Hansen states.

In situations where owners have differing views concerning the company’s revenue requirements or strategy, the board of directors may be in a serious state of internal conflict. In many cases coowning siblings fall out with each other, or a state owner has a very different concept of running a company compared to a private owner. While owners and their representatives on the board are busy arguing, managing directors may end up with more power than intended.

Yet legislation makes it seem clear that the owners and the board that represents the owners dictate what goes on in a company. In principle, the board decides on a long-term strategy and ensures that it is implemented by the managing director in day-to-day operations. But yet again what really happens is another story; the managing director usually exercises a great deal more power than is formally prescribed.

The interviewed corporate governance experts emphasize the role of the managing director. A company’s strategy is not wisdom that trickles down from the board to the CEO – quite the contrary. Grasping the strategy is teamwork that involves the board requesting the managing director on a continuous basis to update the company’s future plan.

The managing director processes the strategy with his or her subordinates, i.e. the management team, before presenting strategic options as well as the recommended approach to the board of directors.

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coaching the managing director is a key task of the board”, Jesper Lau Hansen explains.

Marina Vahtola accentuates this further.

“The board needs to make demands on the managing director. This doesn’t necessarily mean being demanding in a negative sense”, she says.

“There must be respect towards each other’s expertise, but also a trust that management knows what it’s doing. To a degree, one must give space, but naturally the board also has responsibilities and its members are responsible for their decisions. The board needs to demand any relevant information from the managing director.”

Vahtola notes that the main focus of the board should always be on the long-term strategy and future of the company.

“Successful business demands continuous development. Composing the company’s strategy together with the management team and overseeing the development process are the board’s key responsibilities.”

“The strategic process is owned by operational management and usually requires in-depth discussions by the management team”, says Tom von Weymarn. This is quite natural, as involvement in daily operations gives the managing director a clearer understanding of the ins and outs of the company compared to the more distant board.

In today’s chaotic business environment any company must have both a learning operational top team as well as a fast-learning board of directors. The pre-requisite for such dynamics is a genuine and transparent dialogue involving top management and board – and pretty much on a continuous basis.

“If decisions of the board are repeatedly in conflict with the managing director’s proposals, the situation begins to get under the managing director’s skin. The managing director becomes careful and unwilling to take risks.”

Managing directors must not be crushed, but they do need challenging.

“In the Nordic countries, challenging and

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W

hile boards have become more professional, pressures on the managing director have also increased. Managing directors have increasingly shorter terms of office; according to an estimate, on average managing directors now hold the same position for only four years. In the aftermath of the financial crisis, a managing director is in for a particularly shaky ride.

“Managing directors need to realize that the risk of getting fired has increased”, says Steen Thomsen, Executive Director of the Center of Corporate Governance at Copenhagen Business School.

“Today, CEOs work harder and are under more stress than before. It is likely that their creativity and out-of-the-box thinking are in danger of receiving a hit at the same time.”

When talking about confidence in managing directors,Thomsen mentions sympathy.The board needs to be able imagine itself in the managing director’s heavy boots.

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“Building trust is closely linked to familiarity and transparency. The chairman of the board and the managing director need to have a rapport and some degree of sympathy. Even if it is missing on the outset, sympathy can be built over the course of time”, says Thomsen.

“Without sympathy everything is harder.”

How close can the chairman of the board and the managing director actually be?

“Like mentor and mentee?” poses Thomsen.

“Perhaps a little more distant, as we’re talking about a coach, who can change the team around.”

Trust and sympathy do require a degree of closeness. Marina Vahtola reminisces on what it was like to be a managing director without a close rapport with the board: “The support of the board is vital for the managing director. I was the CEO for an international company for a long time with a very distant board. I came to see that the further away the board seemed, the harder communication became. Often numerical meters amplify in international companies – only because of the geographical distances. There’s less communication and more pressure to meet numerical goals.”

The equation is near impossible: a managing director wishes for support, coaching and close communication, while also needing space, trust and a certain amount of independence.

A board wants the managing director to provide vision and implement the board’s decisions.

“Being close buddies with the chairman of the board isn’t enough”, reminds von Weymarn. “The managing director needs to be trusted by the entire board.”

B

ut what happens when the confidential relationship between the board and managing director

takes a blow at times?

The board needs a plan B. Even if teamwork is smooth, owners and the board need to be ready for the possibility of a new captain in charge. The board selecting the managing director and the managing director appointing other managers used to be enough. Now the board needs to also be acquainted with the company’s management team that comes under the managing director.

The board needs to know who will be managing the company in the event the managing director leaves or is dismissed. On the other hand, it is fairly common for the chairman of the board to step in as interim managing director in situations of crisis.

“In the end, the board doesn’t have that many roles. The main tasks are to appoint and oversee the managing director – dismissal is a great deal harder”, says von Weymarn.

As a golden rule, the first year is usually when the managing director is frowned upon in the event of problems. Issues are discussed during the second year. If problems persist during the third year, the managing director is asked to leave.

The situation appears rather merciless from the managing director’s perspective. The managing director may have been hired for a crisis company, where steering the strategy and processes require tough decisions, years of hard work and perhaps persistence with many years of bad results.

“Problems can be lived with also during the third year, if the company isn’t in a worse state than its competitors or if a sacrifice has been made that won’t reap rewards until later on”, estimates Thomsen.

Sometimes there is a dip even during better times. Not all investments have immediate returns.

“There may be challenges, when a

“ Without sympathy everything is harder.”

— Steen Thomsen

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managing director wants to develop something new or suggests embarking into new markets.

These are the moments where trust is measured”, describes Marina Vahtola.

“It often takes some time before new ventures take off or things are settled on a new market.

Without trust, proposing these types of issues to the board can be risky.The board should have sufficient understanding and competence to take in the proposals of the managing director. If this is not the case, the CEO can hardly get the support needed. Sufficient competence in the board secures the development of the company.This is why the composition of the board should also be reviewed regularly.”

Verbalising reasons for trust and its loss can be difficult, as it is a question of emotions. Once again, everything boils down to two elements: the chairman of the board and the managing director.

“Their relationship is crucial”, says Vahtola, who has experience from both roles.

“The relationship needs to be confidential, smooth and demonstrate mutual respect.”

A rift between the chairman of the board and managing director can jeopardize the position of the other board members. Owners are rarely interested in or able to address internal power struggles. The situation described by von Weymarn at the beginning of this article of a chairman being ready to step aside in a situation of conflict is by far the more unusual turn of events.

“These days it is common for a managing director to transfer to another role merely for reasons of personal chemistry, when a relationship doesn’t work”, says Vahtola.

Reasons vary, both in the public statements and behind the closed doors. Let’s look at some examples.

Antti Pankakoski, managing director of Finnish state-owned manufacturer of alcoholic beverages Altia, was dismissed in December 2013. Also his predecessor Leena Saarinen was forced to step down. Reasons can be manifold, but the phenom-

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enon does illustrate the dilemma of state ownership: profits need to be made, while Finns should be drinking less.

Timo Kohtamäki, ex-CEO of Finnish construction company Lemminkäinen, was dismissed in April 2014. According to Berndt Brunow, Chairman of the Board of Directors at Lemminkäinen, the dismissal is explained by dwindling profit performance, yet it roused suspicion in the industry.

“There’s no other reason. Of course speculation arises when a good person has to leave”, explained Brunow in Finnish newspaper Helsingin Sanomat. “The board of directors decided on his dismissal. Naturally, weak profit performance played a part. The board is of the opinion that the company’s agility needs to be accelerated.”

The chairman of the board became the interim CEO of the company owned by the Pentti family. Kohtamäki headed the company for approximately five years. He was hired to renew and improve the company’s profit performance.

As demoralizing, vague and emotional as it can get, a managing director’s faltering position is justified.The main job of the board of directors is to protect the owners’ interests, and at best a demanding, strict board can spread an atmosphere of fairness further afield.

Allowed too much freedom, managing directors have created a great deal of trouble.

“The entire financial crisis is a result of this”, says von Weymarn.

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t is indeed a valid argument that one reason for the global crisis boils down to irresponsible and greedy managing directors in the financial industry with oil in the wheels but left too much to their own devices.

“Overseeing the managing director is the issue at hand”, von Weymarn says. “I’d couple this with keeping the managing director’s ego in check.

Self-esteem is an important element, as a company’s success is so closely tied with the ability of

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photo riitta supperi

the managing director and his or her team to make it rain.”

“It is the board’s task to support, but also to make sure the ego doesn’t grow out of proportion.

An over-sized ego creates the worst damage. The risks get to high.”

In the peak years before the financial crisis, a large proportion of international financial giants became slack with financial analysis. With money pouring in, managing directors and boards were too caught up in the flow to pause and analyse the situation. Managing directors who begin to think that rules no longer apply to them is another telltale sign of an overgrown ego. It is all very human, but a dangerous scenario for companies.The phenomenon is usually coupled with a so-called moral hazard resulting from managing directors exclusively operating with external funds.

Of course managing directors are not solely to blame for overstepping the mark, as often also owners and the board of directors have lost their grip. After all, how else could operational management be free to play as they wish.

The way managing directors are compensated for their work and rewarded for exceptional performance provides an efficient supervision tool, keeping their egos under reign at the same time. Hansen and Thomsen agree that strict restrictions must apply to rewarding practices.

A popular method for engaging a CEO in a company is through ownership. However, ownership should be earned by managing directors rather than something that falls straight into their arms.

“This is a problematic area. Compensation and engagement methods vary. A bill was drafted in Denmark in 1940 that would have made it compulsory for managing directors to

own part of the company. The draft bill was sidelined, as World War II began”, Hansen explains.

According to Hansen, a director’s salary should constitute the main income paid by the company, while incentives should be made available only if the company does better than its rivals.

“Usually the grounds for incentives are to loose; they are paid for doing as well as other companies in the field”, Hansen criticizes. In Hansen’s view, incentives should be low compared to the main salary.

“Those who do their job well don’t get fired.

It’s important to send out a message that we’re already paying you for doing your job well. This should be the basic assumption”, notes Hansen.

Thomsen agrees.

“I’m all for expanding ownership to include the managing director and other executives. However, ownership needs to be earned rather than given away. Managing directors should have to spend enough of their own net income to acquire ownership, so that it actually matters to them. This is a good test of how much a managing director actually believes in the company – a classic way for an agent to reveal his genuine view on a client”, explains Thomsen.

Some companies are quite happy to publicise the managing director’s salary, while others refrain.

According to Hansen, publicity is a double-edged sword. On the one hand, a company may receive positive publicity for paying out generous compensations and attracting the best talent. On the other hand, this can set off a wage spiral that backfires on the company itself.

“Shareholder power is the best wage control, as remuneration comes straight out of the shareholders’ pockets”, Hansen says.This is the reason why companies with a single or

“An oversized ego creates the worst damage.”

— Tom von Weymarn

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investors. The code encourages large-scale investors to engage in increasingly active ownership, transparency and collaboration with other owners.

The Stewardship Code states: ”For investors, stewardship is more than just voting. Activities may include monitoring and engaging with companies on matters such as strategy, performance, risk, capital structure, and corporate governance, including culture and remuneration. Engagement is purposeful dialogue with companies on these matters as well as on issues that are the immediate subject of votes at general meetings.”

As engaged ownership of this type comes with a price tag, institutions have begun to employ proxy agents.This doesn’t remove the problem but in essence externalises shareholder responsibility.

The new British code seems to resemble Nordic corporate governance, does it not?

“It is an attempt to turn institutional investors into responsible owners. In my view it doesn’t work”, announces Hansen. According to Hansen, the problem is that an institutional investor may own a slice of a company, yet from the perspective of the institution – be it a pension fund, insurance company or an investment fund – the ownership still constitutes a small investment.

The Government Pension Fund of Norway, coined by the public as “the oil fund”, is a good example. The fund has indicated that it would be implementing an increasingly proactive ownership policy in companies of which it has a share of over 5 per cent. As a result, a representative of the fund is now a member of the board of directors of Swedish truck company Volvo. However, a 5 per cent ownership of Volvo is like a needle in the haystack for the Norwegian pension fund, which owns ap-

“ Board members should have in-depth knowledge.”

— Marina Vahtola

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a handful of owners rarely pay out huge salaries: for a large owner, salaries constitute a concrete investment rather than a rushed decision by the AGM. “Managing directors that are so-called fat cats with extremely high salaries are more common in companies with decentralized ownership”, says Hansen.

Remuneration paid to managing directors always gets out of hand during an economic upturn.

“The financial crisis demonstrated that several banks had generous incentives in place also low down in the organization. Stricter practices now apply to so-called high-net-worth individuals. For instance, some banks require the board to sign each agreement”, explains Thomsen.

Yes, the financial crisis.

Recovery efforts have had an impact on corporate governance throughout the industrial world.

Corporate governance rules have become stricter in Britain by increasingly holding company management – i.e. boards of directors – to account. Large-scale institutional investors have been persuaded to take on increasingly responsible and proactive roles.The underlying idea is for larger owners to have more of a say in companies than so far.

“In Britain, corporate scandals have mainly focused on companies with decentralized ownership. Without a single major owner, no-one is interested in thoroughly supervising the managing director and company operations”, says Jesper Lau Hansen.

“Directors should not be independent in relation to owners, but accountable.”

In 2010 – a couple of years into the credit crunch – the British Financial Reporting Council published its Stewardship Code for institutional

proximately one per cent of all of the world’s shares.

Studies also show that large institutional investors have not succeeded particularly well in their investor engagement, whereas hedge funds have managed to influence companies and reap major rewards.

With its headquarters in London, global security services company G4S Secure Solutions made a bid to acquire major Danish cleaning company ISS.The merge would have resulted in the world’s biggest company offering security and cleaning services. However, directors at G4S failed to convince owners, with especially certain activist funds campaigning against the deal. The share price of G4S fell amid suspicions over the merge, and hedge funds managed to sweep up a sufficient amount of the cheaper shares to prevent the deal.

Finally, G4S was forced to cancel its offer in late 2011, the share price rose and the hedge funds made a huge profit.

During a new, more open but equally volatile era, boards may be facing tougher times. They need to be able to justify their decisions to shareholders. Otherwise the outcome may be revolt, as illustrated by the story of G4S.

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o how can a company be protected from conflict?

Despite good intentions, active ownership does not always work. Operational management that is too free and strong may head down a risky road.

On the other hand, a board that breathes down the managing director’s neck is not optimal either.

“Things run smoothly and best results are reaped with expertise and competence sitting at the same table”, states Marina Vahtola.

The idea may sound simple, but comes as something of a relief among all the differences of opinion and power struggles. Companies have the potential to succeed provided that each position is filled with the right skillset, and subsequently all of the elements respect each other’s expertise.

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If approaching corporate governance from a conventional point of view, this may seem like a challenge; boardrooms are no longer filled by who you know, but require the right expertise and experience.

“Board members can be required to have indepth knowledge. Boardrooms need individuals with their own areas of specialisation coupled with an ability to see the big picture. They need to have a thorough understanding of the decisions they are making”, says Vahtola.

“An inadequate board doesn’t understand the point. It doesn’t recognize what is vital and urgent”, describes Tom von Weymarn.

“On the other hand, if a board has a great deal of sector-specific expertise, a board member may end up being a real pain in the neck to the managing director. Someone might start challenging the managing director over something pointless.

It all ends up in a struggle over who wins.”

Boards of directors increasingly work in committees, members forming sub-divisions to pre-

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pare decisions and focus on particular areas. Any developments that make corporate governance more professional are welcome. Yet care must to be taken that the board does not step on the toes of operational management.

“The place of a board of directors is not on the shop floor”,Vahtola points out.

The number of board professionals has risen in recent years, and the circles are no longer so small.

According to a study conducted last year by a Danish headhunter company, the average age of board members had decreased considerably. New talent and an increasing number of women have entered the boardroom.

A case in point is the way headhunters have replaced nomination committees in seeking new board members.

Although the final decision of a board’s composition lies with the biggest owners, competition is so fierce that they need assistance in finding the best resources. According to Jesper Lau Hansen, a typical board these days has just 3-5 members, meaning there is no room for choosing the wrong candidate.

In the Nordic countries, women still rarely occupy board seats of listed companies.

Hansen points out that one should not stare at the figure of women making up half of the population when considering their low representation in company boards. “A typical board member is an executive of some other company. More women will join the ranks, as more women become CEOs, CFOs etc. Now women have reached a level just below the managing director. If there’s a glass roof somewhere, that’s where it’s at.”

“Boards have clearly become more committed and professional over the last decade”, clarifies Steen Thomsen.

This has partly been spurred by the financial crisis. “The competence of board members has been emphasized

a great deal during the crisis – before, independence was the buzzword”, Thomsen compares.

Regulators emphasize the importance of expertise and competence especially in financial companies.This has resulted in an increasing share of boards being made up of both sector-specific and financial experts.

The board of directors of Denmark’s biggest company Mærsk, known for its container shipping services, is a prime example of this phenomenon. Mærsk typifies Nordic companies in the way it has a single strong owner – the Mærsk family – that controls the company through foundations.

Five of the 12-member board can be described to be top financial experts. Ane Mærsk-McKinney serves as vice-chairman of the Mærsk Group’s board of directors. Her son Robert Mærsk Uggla, who is in his thirties and has a degree in economics, was appointed as a member of the board in April 2014. Chairman of the board Michael Pram Rasmussen is also an adviser for the International Council of investment bank JPMorgan Chase; member of the board Sir John Bond is the former chairman of HSBC, one of the world’s largest banks; Arne Karlsson is the former president of Swedish Ratos private equity conglomerate; and Dorothee Blessing is the former co-head of German investment bank Goldman Sachs.

“Boards are keen to find members who master accounting and finance”, summarizes Thomsen.

The members and tasks of boards have become more professional. According to Steen Thomsen, the same applies to their remuneration.

“Board members used to always be paid an even, moderate fee. These days they still receive a basic fee, but are also expected to acquire shares in the company. In my opinion, board members should invest their remuneration in the company’s shares and

Board members would have to prove they believe in the company by becoming shareholders.

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n other words, let’s pick the best experts on the market in order to provide owners with the best possible agents for overseeing their assets. We need to make sure that in addition to their own area of specialisation, experts have the ability to see the bigger picture.

Teams should be chaired by individuals with emotional intelligence, who understand their responsibility as the managing director’s counterpart and coach – even listener.

In appointing a managing director, we need to look for someone who is honest, has the right amount of hunger and makes things happen. A “rainmaker”, as experts often say.

A strategy should be drawn up jointly based on the managing director’s sector-specific competence, but understood and shared by the members of the board. Everyone should commit to the joint plan. “The more views differ, the more time, energy and cigarettes are wasted on meaningless arguments”, Tom von Weymarn sums up.

In the end, the rules of the game are simple.

“Sandpit psychology”, says von Weymarn.

“That’s what it’s mainly about. Power is always in the hands of the one with the strongest, most personified strategic intent.” ◆

Tom von Weymarn explains: a s u cc e sf u l B oa r d - manag e m e n t t e am has : A shared agenda.

Shared ambitions.

Genuine, open and honest dialogue.

Im p l e m e n t i ng chos e n s t r at e g i e s r e q u i r e s : Management with the right expertise and competence.

Agility in surprising situations.

Perseverance amid continuous changes.

The board needs to understand the needs of management.

Management sould be characterized by healthy self-esteem.

The board and management need a dose of modesty rather than arrogance.

from AALto EE: The Board of Directors program The Board of Directors Program is a top-level director and executive program with a truly global and strategic perspective. The program aims to develop the expertise of board members in assessing the company’s strategy in a constantly changing business environment, with a focus on strengthening the competence of a board in steering the company.

The program is ideal for board members in public and private companies, and executives preparing for board membership or working closely with a board of directors. The program has been designed in cooperation with Board Professionals Finland and a distinguished steering group consisting of qualified directors. The next program begins in spring 2015.

For more info visit www.aaltoee.com

Read this article in Finnish online: www.aaltoee.fi/blog

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retain the shares until some time after they’ve left”, says Thomsen.

Board members would have to prove they believe in the company by becoming shareholders.

The same should be the case for the managing director.

It is interesting that although the boards of Nordic companies are becoming increasingly international, studies have shown that multicultural boards are not necessarily reflected in improved results. As a point of comparison, companies in the US with boards comprising solely US-citizens are more successful on the market than equivalent companies with international boards of directors.

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sha r i ng e x p e r i e nc e s Pa rt i c i pan t s , fac u lt y & aa lto EE a l u mn i

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“ I SEE MANY PEOPLE sticking to THEIR OLD ROUTINES – I PREFER TO QUESTION THo se routine s ” Aalto EE alumnus,Tamro’s Managing Director Kai Kaasalainen recounts the highlights of his career.

What part has the idea of lifelong learning played through the years?

1981

photo touko hujanen

“After finishing comprehensive school, I was attracted to both tech­nology and economics. I had improved my grades for my diploma after the teacher’s annoying claim that boys cannot succeed at school because they do not study or concentrate.

I applied and got accepted to high school, but decided to drop out and enter a business school instead: I wanted to find a ‘real job’ as soon as possible. I graduated from marketing at Hyvinkää Business School.”

1984–87 “The introduction of PCs sparked my enthusiasm for computers, and I taught myself how to program.

I applied for the Finnish Institute for Information Technology, which was the only instance that provided vocational qualification in Business Information Technology. After en extensive testing procedures, 60 out of 2,300 applicants were chosen. I studied in Pasila for three years.”

kai kaasalainen Managing Director at Tamro, Finland’s leading distributor of pharma­ ceuticals. Since the mid 1980’s, Kaasalainen has worked in sales and executive positions at several companies in the IT business as well as pharmaceutical and health care sectors. Aalto EMBA 2009-2010. Wife and 3 children. Hobbies: scuba diving, underwater photography, and organizational activities.

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1987–95 “I worked for Aldata. The rapid evolution of IT required continuous selflearning. I would carry the latest IT guides, books and magazines home with me, and every now and then I would attend Linturi’s classes. Note: there was no internet!”

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1995–99

2000

“I had moved to Fujitsu to work as a sales director. The information technology was evolving at a rapid pace. These were insane times in terms of studying, as acquired information became outdated extremely quickly, and new technologies were introduced annually. Companies offered some courses but I have always placed value on personal responsibility over self development. Pouring information on someone is not teaching.

I studied on my own.”

“As a member of the executive committee, I got first-hand experience on what it would be like to manage a company.

In addition, I took part in Fujitsu’s international training. We tried to learn how to operate within different cultures. At that point, businesses were becoming more international.”

“Wincor Nixdorf, where I worked as Managing Director, was German-owned. Our returns were record-breaking. We had to learn how to work with matrix management, which meant two superiors: one Finn and one German. For the first time in my life, I was faced with practical cultural differences. Work taught me about the formality of the German culture, and of the importance of open conversation between a managing director and the board.”

1. Year 1997. Kaasalainen re­ 1 ceived a prize in the Gold Excellence Awards of ICL in Venice.

4. Kaasalainen travelled to 4 New York with his EMBA course. They visited NY Stock Exchange NYSE.

2. Kai Kaasalainen and his 2 wife Sirpa aboard the Ori­ ent Express train in 1997.

5. Year 2010. EMBA gradua­ 5 tion

3 3. Year 2002. Kaasalainen worked for Wincor Nix­ dorf. Finnish business daily Kauppalahti wrote an arti­ cle on their innovations.

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“I had moved on to become the sales manager of a consulting company called Capgemini. During my work period, a rather peculiar incident took place: we were about to begin our summer vacation, and I was on my way to have the lawnmower repaired with my daughter.

As I drove the car, I said: ‘You know, Nelli, your father could have a job that is rather different from the current one.’ Perhaps two minutes later, a headhunter called.

‘Kai, have you ever thought about doing something else in life?’”

“Tamro was seeking a sales and marketing executive. I figured it was time to leave the IT business.

I believe it is healthy to make at least two significant changes in one’s working life: I had worked with IT projects, after which I did executive sales tasks. Now, I was leaving the IT for business sales and executive tasks.”

p h o t o s k a i k aa s a l a i n e n ’ s a l b u m

2006

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2013 “I started working as Managing Director at Tamro Oyj late last year. Tamro operates on the health and welfare industry. 56 per cent of Finland’s pharmaceuticals pass through Tamro, and our annual sales stand at approximately 1.1 billion euros.”

“I have witnessed very different kinds of management and leadership styles and skills. I myself invest in skillful people. Enthusiasm as well as trust in what we do bring the best results. I couldn’t adjust to work that consist of simply running existing operations.”

portant role for me.”

“I am very pleased with my choice. Right from the start, Aalto EMBA turned out to be a wellmanaged program, with lecturers of a high caliber.”

“What I recall most distinctly, was discovering the necessary tools for systematically managing a business. I see many experienced people who stick to their old routines. I prefer to question those routines and find new tools and modes of working.”

“Another significant factor was the project included in EMBA. Our group did a project on Tamro: How to adapt to the clients’ needs and manage a client portfolio? We came across new thoughts in the

group, and developed them further in Tamro. It was wonderful to mull over the different aspects of our field with experts from various fields. Our team included a financial director, investment banker, director of development, director within the real estate business…”

“It has truly been rewarding to boldly switch working places and industries. Aalto EE also provided teachings that move past business areas. Thus ,I dare to encourage everyone: Be bold and change tasks and, at times, the entire industry!

Completely! Having the courage to embrace a completely different environment and introducing new perspectives may support the construction of your personal career.”

2009–2010 “After becoming Deputy Managing Director for Tamro, I suggested to my superior that I would like to acquire new perspectives and fresh tools for leadership. I had learned about Aalto EMBA and I was intrigued by how the program could simultaneously support the company, and my personal development.”

“After comparing the available education, Aalto EMBA program was the obvious choice for me.

Many instances offered education that emphasized working online, which did not appeal to me. I knew I wanted a program that involves face-to-face discussions and listening to different kinds of perspectives. Being present played an im-

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“ I STILL hAVE QUITE A BIT OF WORK TO DO as a leade r ”

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suppose I had grown accustomed to perceiving training days nearly as a day off. Well, I am no longer under such an illusion. The hard work that EMBA entails has been truly exciting. I am participating in a program tailored for the top management of the City of Helsinki. The city seeks to improve its leadership. A tight budget management calls for skillful leadership.

I spend every other Saturday with EMBA tasks: The program comprises of 17 modules.There is a preliminary assignment before every module, and an assignment afterwards. Advance reading and an essay are often required, too.

For me the part on economics was the most challenging. We have shared some of the agony amongst classmates: is this really insanely difficult, or am I simply this dumb?

I require my employees to continuously learn new things. The program has reminded how difficult it is to begin from scratch. At times I have thought that I am not able to do this, but see: here I am! It is not impossible at all.

The most interesting module so far involved reflection on one’s executive skills. Midway through the second day of the module I was completely worn out. A manager easily ends up in a situation where they only receive compliments.

This module shows that there is still quite a bit of work to do. It does not provide teachings on how to be a good executive, but rather it instructs on

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how to apply your individual characteristics on management.

I run the city’s Youth Department, and we are in the middle of a strategic rethinking excersice.

The program has provided many concrete tools for me to use in my work. For example, during the self-leadership module I realized something about the way I communicate. I sometimes relate matters so quickly that others are not able to keep up. It is important to learn to communicate calmly. The most recent course was also very useful.

Now, I really understand the meaning of Euribor.

Economics equals trust systems equals social science!

What is most significant and inspiring about the program is that the management of the City of Helsinki is changing: we are learning to work together.

I have enjoyd the discussion with my classmates.

During one module, our discussion focused on the importance of fairness as a value for the City of Helsinki. During the discussion, we realized that we were addressing different issues. My perspective on fairness starts from the weakest ones and from inequality. For others, it meant that citizens of the municipality should know, what they are entitled to. It was truly an eye-opener: I realized that by listening to each other we come to see why someone may perceive things as they do; they may not even be talking about the same thing as I am.” ◆

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tommi laitio Director of Youth Affairs for the City of Helsinki.

Master of Social Sciences.

The Youth Department employs 400 people and has an annual budget of 30 million euros.

In the past, Laitio has worked at think tank Demos Helsinki, headed a video festival in Amsterdam, and worked as a reporter. Laitio is participating in the Aalto University Executive Education’s EMBA program tailored for the City of Helsinki.

photos tommi laitio’s album

Laitio shares his learnings and experiences on the program regularly in social media.

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“ Input for real life e ntre pre neur ship, that is what I bring to class ”

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odern entrepreneurship is about discovering and developing customers. This process applied to both large companies and even the public sector, as well as startup companies.

In Finland, the leading companies tend to be business-to-business. However, they have to understand the end consumers of their products and services as well as the business buyers. My classes focus on this process. We seek to find innovative ways to learn more about customers and uncover new revenue streams. In particular, I really love to get startups and big companies in the same room and have them learn from each other, learn to speak the same language.

In Finland, entrepreneurship has undergone major changes over the past fifteen years. There is a chance now to enable entrepreneurial mindset not only for startups, but also as a way of accelerating the renewal of larger corporates and public sector organizations. In my opinion, the most interesting and high potential activity at the moment is to bring together big companies, startups and the public sector. In other words, building entrepreneurial skills across diverse organizations. In our Aalto Part-Time MBA New Venture Formation course, we invite together the MBA students and the Aalto-based startups, and have them work together both during and outside of class.

I think this is a way to overcome misunderstandings the different type of companies may have about each other. Big companies often think: this is a small company so I will squeeze the price to

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the absolute minimum since they need us – and, also, because it is risky for us to buy from them.

Nokia was one of the worst offenders, but there were many others. Today, the approach should be more like co-creation. Value is created and destroyed so quickly, and the formula is so complex, it takes an ecosystem to survive and thrive.

I hope that at the end of my courses, the students look at how to create and maintain a business model in a brand new way. It is much less about fancy spreadsheets, and much more about bouncing ideas and concepts with customers and partners and searching for win-wins. I think that this is particularly crucial to business developers at large companies – they need to realize that startups can come from nowhere – like, for example,WhatsApp or Supercell – and be worth billions in few years, and totally turn an industry upside down. No company can afford to ignore this trend.

While teaching, I believe in bridging the young people with the executives, and also enabling cultural diversity and multidisciplinarity. I enjoy finding new ways to get teams to learn from each other, and I’d like to get as far away from traditional lecturing mode as possible.

I love leading class, and enjoy co-teaching with colleagues who have different experiences than me. I prefer facilitating knowledge and sharing experiences over the traditional methods. I am particularly excited about our new Lean LaunchPad entrepreneurship teaching approach, based on approaches from Silicon Valley and other hubs of innovation.” ◆

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will c ardwell

photo touko hujanen

Senior Advisor and Visiting Professor, Entrepreneurship & Venturing, at the Aalto University Executive Education.

Cardwell has spent 15 years in the Finnish high-tech environment, as a CEO of a startup, venture capitalist, the CEO of Technopolis Ventures, investment banker, researcher and lecturer. He has been on the board of 15 Finnish companies. At the Aalto Part-Time MBA he teaches courses like Venture Capital, and New Venture Formation.

Will Cardwell at the Aalto University Executive Education Headquarters in Töölö, Helsinki.

On his left: Entry 2 (2008, wood) by Veikko Hirvimäki.

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“ We use d exec utive e ducation to support doctor recruitme nt ”

The Future Leader Initiative was developed in collaboration between Terveystalo and Aalto EE. Aim of the program is to educate healthcare industry leaders, Jaana Junell from Terveystalo says.

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entered the healthcare industry from the telecommunications field. Right away I noticed that doctors were accustomed to having a doctor as their superior. It is, of course, our wish at Terveystalo to see leaders emerge from the healthcare industry, but this requires the necessary leadership skills to be provided. One needs to understand and acknowledge that being a manager is a very important role. In my opinion, one should really want to be a superior and develop the necessary skills. I hope that doctors understand that in the future their superiors will not be exclusively doctors.

We turned to Aalto EE for expertice in creating customer-orientation and change management, particularly from the perspective of managers in the healthcare sector.

We had peer discussions and tailored the program with Aalto EE until we found the right balance of strategic level and workshops with a focus on individual development as a leader and sharing of experiences with colleagues.

We did the pilot internally to see how it would go. We had a huge number of applicants! It was wonderful to witness such enthusiasm for managerial work within the healthcare industry, even though the field largely dominated by expertise has not placed too much value on the work of managers. As part of the next phase, we have just started a program for finding external applicants

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for our managerial positions.We used the program to support recruitment.

The number of motivated applicants and the completion of our own program for doctors made me proud.

The program addresses the transition from expert to leader, and helps people understand what this truly means. Our own excellent executives give speeches in class and convey their experiences.

Internalizing and managing customer-oriented approach, and thoroughly understanding the service experience from a customer’s perspective are also highlighted during the program.

The program is a significant investment for the employer. Our strategic goal is to make Terveys­talo the best possible place for skilled workers. This takes dedication towards future experts and expertise, which also involves managerial work and leadership. Superior managerial work supports the entire group of healthcare professionals and improves well-being at work.

The Future Leader initiative has supported us in recruitment and personnel commitment: in Terveystalo you can also be a part of a top leadership program.”◆

Read more about the Future Leader Initiative: www. aaltoee.fi/terveystalo (in Finnish).

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jaana junell HRD Director at Terveystalo, the largest healthcare service company in Finland.

Th e f u t u r e l e ad e r i n i t i at i v e : T e rv e y s ta lo and A a lto EE

Responsible for human resource development, leadership development, work welfare, recruitment, career, competence and talent development. Previously worked at Nokia and Nokia Siemens Networks. Two children, aged 6 and 13.

Loves science fiction and history.

The bold aim of the Future Leader initiative is to find and develop the next generation of healthcare industry leaders from within Terveystalo.

The four main themes of the program are: 1. Strategy and transformation in healthcare 2. Leadership and management 3. Customer orientation in healthcare 4. Growing as a leader The feedback we got from the participants was an excellent 9.6 (on a scale of 4–10). Key performance indicators were also agreed for each participant with their supervisors, and these, too, are being tracked over time.

photo touko hujanen

While the results from these efforts will maily become visible during the next few years, some participants have already seen considerable changes in their managerial roles within the company.

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Björn Heselius from HBL and Aalto EE alumnus Mary Gestrin from Yle.

Mary Gestrin, Aalto EE alumnus and Head of Internet Media at Yleisradio, has mentored Björn Heselius, Hufvudstadsbladet’s Head of Visual Department, for a year.

How did you find each other?

BJÖRN: “In 2011 I got the opportunity to work as co-head of the design department at Hufvudstadsbladet, and two years later I was asked to take over the department on my own. By then, I had a reasonably good idea of what I was supposed to do, but I had no experience on managing a staff or setting new goals and strategies for the department. While studying, I became familiar a alto leade r s’ i n si g h t

with mentoring as a way of boosting personal growth within a professional role. So when I found myself in the situation where I needed to find my voice and confidence as a leader, Jens Berg, my editor-in-chief, and I started discussing mentorship as a possible way to go. Only a few days after our initial meeting, he had paired me with Mary.”

MARY:“I had previously worked with Jens Berg.

Apparently, Jens remembered from our years of working together that my leadership skills included something that could be of use to Björn. He also knew that I enjoy mentorship and coaching, both of which I have been doing for a long time.”

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“ IT ’ S LIKE HAVING A MIRROR THAT DOESN’ T SHOW YOU EXACTLY THE WAY YOU ARE ”

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How was your first meeting?

MARY: “We met at a café in Helsinki, and straight away we decided to have the first conversation without a set agenda, and only then decide if we wish to meet again. The first conversation lasted for hours, so we decided to continue our meetings.”

BJÖRN: “It was a test run. Our relationship needs to be effortless and trusting.”

MARY:“It is important to me to keep highlighting that mentorship is not a teacher-student relationship. It is a dialogue between two people, where the other person simply has slightly more working experience than the other. I feel that instead of giving advice or answering questions it is my job to help Björn notice that he, in fact, knows well how to manage things.”

all the components for a non-involved person to understand. “ How has Mary helped Björn?

BJÖRN: “I have a checklist of things Mary has brought to my attention: How do I communicate the same thing to different audiences? Never let another person feel anbushed or stupid. Set ground rules. Reward and expect individual responsibility. And finally, I always ask myself: WWMD, What Would Mary Do?” And what has Mary learnt from Björn?

MARY: “Often when describing some experience, I have tried to figure out how I managed it, what was hard, surprising, or great about it. The discussions with Björn open my eyes to new ideas, new ways to think or act.”

What are your meetings like?

BJÖRN: “We meet for a few hours in different cafés in Helsinki. Meeting in different cafes every time instead of the office keeps us from becoming too comfortable or lazy. New surroundings keep the mind active.”

Are there things you do not discuss?

BJÖRN: “We do not mention names. Especially in a professional field like ours, where most people have some kind of relationship with each other, it is not kosher to pinpoint colleagues.”

Who decides the agenda?

MARY: “Björn decides. We discuss all matters relating to work and leadership. The fact that we work in the same field makes things easier. However, knowledge of the field is not necessary in mentorship. It soon becomes evident that challenges of leadership, durability and organization of work are very similar in all fields.”

BJÖRN: “Focus is mainly on the areas I have pin-pointed at an early stage in my role as a leader: leading my staff in a sustainable way and finding confidence in my role as the person that presents the goals and the means to reach them.“ “We also discuss current matters, if there are situations or dilemmas that I’m dealing with at that very moment. It is surprising how problems can untangle on their own when you just lay out

In what kind of situation would you recommend mentoring?

MARY: “From the mentors perspective: to want to share experiences, thoughts and time with a stranger, one has to be open and genuinely interested in other people.”

BJÖRN: “I believe that everyone could learn a lot about themselves by having a mentor. It’s like having a mirror that doesn’t show you exactly the way you are, but instead asks you to describe your features and reflects them.”

“Our relationship has helped me locate my strengths and made me aware of the areas I need to put more energy into. The mentorship changes focus over time - today we hardly ever discuss the matters that were regular topics for our meetings last year.” ◆

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aa lto l e ad e r s ’ i ns i gh t Editor in Chief Pekka Mattila

Editors Reetta Räty Ville Blåfield Columnists Riitta Kosonen Mikko Laukkanen

Producer Anu Sirkiä

Contributors Touko Hujanen Juhani Mykkänen Annukka Oksanen Pietari Posti Jussi Puikkonen

Creative Director Jarkko Hyppönen Translations Rebecca Watson Lissu Moulton Annika Rautakoura Emilia Norlamo

Concept Räty-Salovaara-Blåfield Ateljee Hyppönen Online Producer Suvi Lindén Publisher Aalto University Executive Education Ltd Mechelininkatu 3 C, 00100 Helsinki, Finland tel. +358 10 837 3700, www.aaltoee.com Aalto University Executive Education Pte Ltd Singapore 25 North Bridge Road, EFG Bank Building, Unit 08–03 179104 Singapore, Singapore tel. +65 6339 7338, www.aaltoee.sg Strandvägen 7A, 114 56 Stockholm, Sweden tel. +358 10 837 3700, www.aaltoee.se Printed by SP-Paino Oy, Nurmijärvi, ISSN 2342-3986 Address Register aaltoleadersinsight@aaltoee.fi

• S ha r e t h e i ns i gh t s and f i nd mo r e on l i n e

A A LTO LE A D ER S ’ I N S I G H T O N LI N E S TRE A M •

Aalto University Executive Education hosts and curates a stream of varied content online.

At www.aaltoee.com/blog you can find articles – i.e. the long form Books from this magazine, easy to forward and share digitally – videos, columns and blog posts

by Aalto EE and Aalto University faculty and alumni, as well as journalists and other guest writers invited to share their insights with the Aalto EE community.

E x a m pl e s fro m th e d i g i ta l c o n t e n t : Boosting Finnish banks to once again becoming the best.

Developing leadership in the gaming sector – video presentation of The Game Executive program How well do you know your customer?

What is customer value-based pricing?

Dr. Anil Gupta: “Does China face a bubble?”

Don’t take digitized change for granted.

Organizations should embrace entrepreneurship, says Stanford University academic.

Is your pricing strategy paying off?

C onn e c t w i t h A a lto EE i n soc i a l m e d i a : Find Aalto University Executive Education on Facebook, Twitter and LinkedIn for more content and updated Aalto EE news: www.facebook.com/aaltoee www.twitter.com/aaltoee (@aaltoee) www.linkedin.com/company/ aalto-university-executive-education

P L US T H IS MAGA Z INE You can also read Aalto Leaders’ Insight in digital format.

Find and browse the e-magazine at aaltoee.com.

Aalto Leaders’ Insight – the magazine by Aalto University Executive Education.

Library of insights: Understand India with Jhumpa Lahiri.

Learn from the success of Supercell.

Take a look at biking as business.

Get the board on board.

Learn to handle stress.