An ancient industry's modern problems

As I wrote in my last post, I didn’t make a great impression on my first day at the Stockholm School of Economics. And in the following weeks at SSE, I didn’t make a whole lot of friends either.

Then one day, our professor announced that we would be choosing partners for a yearlong project.

A core value of SSE is that you don’t just learn theory—you partner with a Swedish business to put your studies into practice. It was one of the things that had drawn me to the curriculum in the first place. I’d initially hoped to get involved with Spotify, Skype, or one of the other hip startups coming out of Sweden at the time. But now that it was time to choose partners, it occurred to me that it would be hard to land a gig when none of my classmates wanted to talk to me.

I was relieved when the man sitting in front of me turned around and said: “Hello, my name Hans.”

Hans was in his early 40s, blonde, blue-eyed, and tall. Like all Swedes I had met, he was immaculately dressed, wearing a houndstooth jacket and sharp leather shoes. (I really needed to buy some new clothes.)

Hans had lived in Canada, so he spoke even better English than most Swedes. He told me that he was from Norrbotten, the northernmost part of Sweden, bordering Lapland to the west and the Arctic Circle to the north.

I told him that I was from California, and explained a little bit about my background in supply chain management and the commodity business.

“You know, that sounds like just the kind of thing we’re looking for,” Hans said.

I lit up. Who was this “we”? Spotify? Skype?

“SCA Forest Products,” Hans said. “We cut timber and make paper products.”

My stomach dropped. I had just left California to get out of selling produce and nuts. There was no way I was going to go back into the commodity business.

***

As it turned out, those Spotify jobs were a bit more difficult to find than I’d hoped. Stockholm is one of the startup capitals of the world, but much of Sweden’s GDP still comes from older industries. Many of my classmates, like Hans, were “high potential” employees from these institutional companies, sent by their employers to get their MBAs.

One of the classmates that I talked with was working with the government of a small municipality south of Stockholm. Another was employed by a company that made paper sacks.

After each conversation, Hans’ SCA was looking better and better.

At break, I snuck out to do a little googling, and found that SCA was the largest private landowner in Sweden. They had mills and plots of forest all over the north. Hans was a friendly guy who spoke great English and for some reason seemed to want me to come work with him. I needed to get over myself.

I found Hans at the end of class and asked: “Did you choose a partner yet?”

“I’m still talking with—”

“Do you want to work together?” I blurted out.

He smiled. “I’ll have you up to Lule? and you can meet everyone.”

***

A few weeks later, I found myself on a 13-hour night train from Stockholm to Lule?, the biggest city in northern Sweden (population: 75,000). Over 80% of Sweden’s population live in the southern third of the country, so once you get north of Stockholm, there’s a stretch roughly the length of California inhabited by 1.5 million people and a lot of trees.

I didn’t sleep much that night, staring out the window of the sleeper car at the midnight sun shining over the vastness of the Swedish north. It’s some of the only unspoiled wilderness in Western Europe, and I was enchanted by its majesty.

In the morning, the attendant came by with my breakfast, which was less majestic:

· An individual packet of Kalles, a popular spreadable fish roe paste (don’t get me started)

· A thin Swedish bread (“tunnbr?d”), spread with butter, topped with moose, and wrapped up like a burrito

· A cup of black coffee prepared in “northern style,” which is kind of like tractor fuel

By the time I arrived in Lule? I was groggy, hungry, and very caffeinated.

***

Hans met me at the station and drove me through Lule?, an idyllic waterfront city with a small-town feel.

On the car ride to his house, he described the problem we’d be working with.

Harvesting costs of timber in Sweden had been going up every year for the last two decades. At the same time, the world market costs had stayed flat.

“If we keep going like this,” Hans said, “we’ll reach the point where we can buy wood on the open market for less than we’ll be able harvest it with our own equipment.”

Given the amount of forest land SCA owned, this would not be a positive development.

But as chief forester, Hans saw it as a potentially solvable problem.

In the old days, Sweden’s plentitude of rivers provided a competitive advantage, since newly-cut wood could easily be floated down from the interior of the country to mills and ports on the Baltic Sea. Paper mills had always been built at the mouths of rivers, but this now proved inconvenient since the wood was transported by trucks. However, mills cost around $1 billion to build, so those weren’t going to move any time soon.

The solvable problem, in Hans’ estimation, was that harvesting and transportation were still operating in a pre-modern model, cutting trees wherever was convenient for harvesting, regardless of whether it made logistic sense. Trucks were driving 300 miles in each direction to bring wood to mills that were forest-adjacent, simply because 300 miles away was where the wood was being cut that day.

From a theoretical perspective, it was a classic problem: a company has had success doing something one way for generations, but their operating model is no longer efficient. How do you change the operating model without upsetting the company culture?

As we pulled up to Hans’ house, I realized that this would be similar to my work in the Marines in some ways, but also different, since I wasn’t a member of the organization. I would be consulting and supporting change management externally, through a theoretical background from business school.

***

I gleaned three important learnings from my project with Hans that I still use to this day:

1. Learn by doing. In my undergrad years, I loved business, but I didn’t love business school. I hated doing math for the sake of math. I struggled to get motivated for management theory that we never put into practice—or theory we spent nine weeks learning and one week implementing in a “case study.”

But when you give me the opportunity to learn theory and immediately put it into practice? I’m 100% on board. Literally. Put me on board a train to anywhere—even the Arctic Circle.

The best things about SSE was that practical application of theory came first (not last), and you were forced to engage in real-world work with your classmates. Anyone can read MBA books or speed through online courses, but the value in business school is in working with people who challenge you. And when those people have a diversity of background, experience, and approach, the possibilities are endless. 

2. Learn by listening. By nature, I’m someone who likes to start problem solving immediately—sometimes before I even have all the relevant information. The SCA project was uniquely suited to teach me how to sit down, shut up, and listen.

Many of the guys at SCA were from isolated parts of Sweden and didn’t feel comfortable speaking English with an American. (Even though I would later learn that once they got a few drinks in them, their English was flawless. But that’s a story for next month…)

Because of the language barrier, I was reliant on Hans to translate our interviews with SCA employees. Once he translated for me, I had to ask questions to make sure that I understood what Hans meant, understood what the man he was translating for meant, and understood the difference between the two.

The language barrier forced me to ask good questions to make sure I really understood what was being communicated. Often when we’re in comfortable settings, we “listen” without really listening, assuming we can fill in the blanks or simply waiting for our turn to speak. That wasn’t an option at SCA, and the experience was great practice for my future career.

3. Make the theory fit the people—not the other way around. As Hans made clear early on, my idea of just telling SCA employees what to do wasn’t going to work.

First off, ordering someone to “do this” isn’t the Swedish way (and trying to impose a foreign culture’s values because you think they’re better is a surefire way to fail). Secondly, I couldn’t tell anyone what to do because I had no power. I was an outsider and a grad student at that, and I had to learn how to influence without authority.

This is one of the reasons that “learn by doing” is so important. At SSE, we learned useful strategies and frameworks, like Kotter’s 8 Steps of Change, PEST analysis, STAR format, and Balanced Scorecard. It would have been very easy to use these theoretical frameworks on a SCA case study. But the key to implementing change is managing people. Applying theoretical frameworks to company politics, bureaucracies, traditions, and, most of all, real people with real feelings, is not as easy as in a case study, and SSE gave me the opportunity to use theory to manage actual people.

***

There’s an adage about the difference between a consultant and a business coach: A consultant will look at the box and tell you how to fix it. A business coach will look at the person looking at the box, and help that person fix the box.

SCA gave me the opportunity to both look at the box (SCA) and at the person looking at the box (Hans). It was in my role as both consultant and business coach that I started learning the tools I needed to manage large-scale change, which I could sense that I had been lacking when I was at Diamond.

It was the first time I’d gotten to be an outside consultant or a business coach, and I liked it. I liked it so much that I decided to dedicate my career to it.