Claim to the Title

In the late eighties, global economies were bracing for one more (of the now all too familiar) crisis. The economies of most western countries were overheating (high inflation) and interest rates were on their way up. The market was up to its ears in debt (thanks to Reganomics leaving the American economy 1 trillion in the hole by the end of the 80s) and was also in the midst of another speculative fever.

 

In the late 80s, legendary CEO Lars Ramqvist  decided to take a risk (a  calculated risk, not a speculative risk) and focus his company (while spinning off unwanted none core units) into cellular telephony. Ramqvist had been president of the mobile division for a number of years, and knew the market, the technology and his company’s ability well. While other companies were trimming their investments and workforce,  Ramqvist started investing in R+D  and took all the required steps (as per his strategic plan and gap analysis) to prepare Ericsson for its claim to the title of mobile telecommunications world leader. One of the results of the investment in R+D was the creation of radio TDMA which allowed cellular systems to expand into a digital modulation scheme, without affecting the existing cell plan (ie. the radio network did not have to be redesigned). For this, Ramqvist and Ericsson were awarded the IEEE technology award of the year as well as a good portion of the digital mobile market (which included both TDMA and GSM markets). Ramqvist was also eventually made a fellow of the Royal Swedish Academy of Sciences.

 

But Ramqvists’ success was not the resultant technology, but his strategy. His strategy transformed Ericsson into a global telecommunications player, a company that enjoyed continuous growth for more than 10 years with adequate return to its shareholders, and a shooting star in the telecom world.

His strategy consisted of focusing on a market (mobile telecom), taking a calculated risk (he knew the business and the required inputs and the expected outputs due to his past tenures) including the necessary investments, and leadership (convincing his management team and the company to go for it!).