Ericsson Chairman steps aside as company ‘enters a new phase’

Chairman of the Ericsson Board of Directors Leif Johansson has announced that he will not make himself available for re-election at the 2018 Annual General Meeting.

The move itself has come after several months of pressure from investors, including Cevian Capital, which has been particularly vocal in light of poor performance in recent years. Johansson has not explicitly fingered investor pressure as the reason for this departure, but the wording of the below statement leaves sufficient wiggle room for interpretation.

“I have had the privilege to serve as Chairman of the Board since 2011,” said Johansson. “It has been an exciting but also challenging time. Börje Ekholm assumed the position as CEO in the beginning of the year and during the first quarter the company presented a new, more focused, business strategy.

“This strategy, which is supported by the Board and the major owners, creates a solid foundation for realizing Ericsson’s full potential. The company now enters a new phase, with focus on execution, and we also have a new ownership constellation. It is natural to let the owners jointly propose a chairman and well ahead of this I want to announce that I will not be available for a next term.”

For the most part, it should come as little surprise. CEO Ekholm has been promising a restructure since his appointment, and this might just be another step towards the new and glowing Ericsson.

And when you look at the current management team, there is evidence this restructure might not just be a soundbite to ease the concerns of investors:

• President and CEO – Börje Ekholm – appointed January 2017
• EVP and Advisor to the CEO – Jan Frykhammar – appointed January 2017
• Advisor to the CEO – Magnus Mandersson – appointed July 2016
• Chief Human Resources Officer – MajBritt Arfert – appointed April 2017
• Head of Market Area Europe & Latin America – Arun Bansal – April 2017
• Head of Business Area Digital Services – Ulf Ewaldsson – appointed April 2017
• Chief Strategy Officer, Head of Technology & Emerging Business and Acting Head of Market Area North America – Niklas Heuveldop – appointed May 2017
• Head of Market Area North East Asia – Chris Houghton – appointed April 2017
• Head of Market Area Middle East & Africa – Rafiah Ibrahim – appointed April 2017
• Head of Business Area Networks – Fredrik Jejdling – appointed April 2017
• Head of Business Area Managed Services – Peter Laurin – appointed April 2017
• Chief Legal Officer and Secretary to the Board of Directors – Nina Macpherson – appointed 2011
• Chief Financial Officer and Head of Finance and Common Functions – Carl Mellander – appointed April 2017
• Head of Market Area South East Asia, Oceania & India – Nunzio Mirtillo – appointed April 2017
• Chief Marketing and Communications Officer – Helena Norrman – appointed 2014
• Chief Sustainability Officer – Elaine Weidman-Grunewald – June 2017

The guys in charge of the turning the Ericsson supertanker are pretty much all brand new to the Executive Management team. Perhaps Johansson is the final legacy cog in the machine to be removed, allowing the former market leader to walk the path to redemption. The signs are certainly positive, but we are still a little sceptical…

Yes, there is a fresh team in place perhaps signalling the restructure was more than a PR soundbite, and yes, there are rumours the team might be ditching the underperforming business units, but there is still a substantial legacy business weighing down the giant. The company has a lot of innovative products and plenty of smart people, but continued reliance on old-fashioned tech is still proving to be an issue.

While it is never nice to say that someone essentially resigning is a good thing, Johansson leaving the bridge might be a good thing for the Ericsson supertanker. Johansson has been in this position since 2011, an appointment which took place when Ericsson was performing adequately. Fortunes have changed but the approach hasn’t.  Einstein said the definition of insanity is doing something over and over again and expecting a different result; if this is to be taken as a rule, it was just time for Johansson to move on.

It’s been turning on a very slow arc in recent months, but a fresh perspective and alternative leadership might just have the effect which the Swedes need.