Dynamic Volvo chief has a taste for drama and controlled chaos
Los Angeles — A devotee of the favored sports of the leisured classes - sailing and tennis - Pehr Gyllenhammar once claimed never to have had a serious thought until he was 28 years old.
At 36 he became chief executive of his father-in-law's company, the Volvo Group, Sweden's largest industrial conglomerate.
Although he cut a dashing figure, many fellow businessmen still didn't take his ideas too seriously.
Nevertheless, Mr. Gyllenhammar decided early on to attack what he saw as boredom and anonymity in factory work. He built a car factory without an assembly line, rejigged the automaking technology around electronic carts, and invited factory workers to help choose the company's board of directors.
Now, after 13 years at Volvo's helm, Gyllenhammar still cuts a dashing figure in world business, and some of his once-eccentric innovations are looking like worldwide trends.
In a time when the captains of industry are mostly organization men unknown to the public, there are still industrialists who appeal to the popular imagination. Americans have Lee Iacocca; Swedes have Pehr Gyllenhammar. (That's Pare YULE-en-hommer.)
Under Gyllenhammar's command, Volvo weathered the turbulent recent years for the auto industry and has emerged more robust than ever. The company now has a broad enough industrial base, in Gyllenhammar's view, to carry it through most economic storms.
Along the way, Gyllenhammar has picked up a reputation for innovation and bold international deals.
A trim, cosmopolitan fellow with the weathered face of a yachtsman, and a baritone voice with British tones to his Swedish accent, Gyllenhammar travels with his tennis racket - not least to preside over the Volvo Masters tennis tournament each January.
In a recent conversation here, he did not hesitate to point out how Western industry, especially the auto industry, has mistreated its workers. Nor is he reticent about what Volvo is still doing wrong. But the current vogue among his fellow industrialists for aping Japanese management styles is a response he calls naive.
The redoubtable Gyllenhammar has an apparent taste for controlled chaos, drama, spontaneous action, and the other forms the dynamic element of working life takes. His company - despite its size and scope - has not become a sluggish bureaucracy, he says. Rather it has kept that climate where a good idea can get through.
As Gyllenhammar sees it, there is a tension in Volvo between two contradictory elements:
* Unswerving loyalty to basic objectives, which ensure the continuity that uphold quality.
* Constant controversy within the company. This is the unsettling force for innovation.
The tension is at the heart of Volvo's dynamism, he explains.
''Sometimes it's hard for our own people within the company to understand this,'' he adds. The faithful upholders of Volvo quality ''have to do everything today the same way they did yesterday.''
The classic case is the Kalmar plant, a factory Volvo opened in 1974 without assembly lines. Small teams of employees worked on cars that were maneuvered for them on self-propelled carriers. Heavy work was eliminated. Noise was cut to the point that workers could converse normally while they labored. The teams were flexible so workers could change tasks periodically and set their own pace.
At the time, Gyllenhammar says, his competitors viewed the Kalmar factory, with upturned noses, as an ''exotic little venture.'' Inside the company, the new plant was ''big drama.''
''It had to be rejected by all those who defend stability, including my own colleagues in top management.''
Now Kalmar is the most efficient plant, by the Swedish krona spent and by the hour worked, of any Volvo plant in any industrialized country. It is also the most adaptable to new standards and conditions.
And carmaking giants such as General Motors, Ford, Fiat, and Volkswagen have adopted the self-propelled carrier that is the basic building block of the Kalmar concept.
Gyllenhammar was greeted with the same kind of hooting - both inside and outside his company - in 1971 when, fresh to Volvo's helm, he invited factory hands to choose directors to the board. This is no longer controversial today, he adds, because it has been very successful.
This kind of tension, though, is what makes a company dynamic. Sums up Gyllenhammar: ''An organization without conflict, in my opinion, is dying.''
Perhaps the Volvo chief's most dashing deal was one that failed. In 1979, he had arranged a mammoth collaboration with neighboring Norway: Volvo got North Sea oil exploration rights and Norway got about a fifth of Volvo.
The deal would have mated Norwegian energy wealth with sophisticated Swedish technology. The Norwegian parliament voted yes; the Volvo stockholders voted no.
But one project was saved out of the aborted bargaining. Gyllenhammar calls it the ''light-components project.'' It is magnesium, lighter than aluminum, made from seawater and electricity. Volvo built a prototype car with it last year, after 31/2 years of research.
Magnesium will be ''much more important'' to Volvo than he originally thought , says Gyllenhammar.
While the outlook for Volvo is good now, the late 1970s were a treacherous time for the company. Strung out between climbing costs and competition from less developed countries, the typical forecast for the company, Gyllenhammar recounts, was that it would lose its position and ''not be a force.''
The Volvo chief, meanwhile, was thriving. ''It was very exciting, dramatic,'' he confesses.
Volvo has since expanded its interests from building cars, trucks, and marine engines into food, energy, and engineering. This broader base strengthens the company's position in cars, trucks, and engines.
Volvo's style is a source of stability, too, since the upper-middle-class families that are typical buyers are the last group to quit buying cars in market downturns.
And Gyllenhammar is not getting white knuckles over low-wage competition from Asia. The car business is too sophisticated - between distribution networks, dealing with customers before and after sales, servicing cars over the years, and defending quality - to be usurped by less developed countries.
The battle has to leave the ''primitive phase where one just cedes whole branches of industry to them by not defining what our job is.'' That job, he adds, does not consist solely of assembling quality hardware.
Competition from Japan has awakened American industrialists to the fact that the Japanese have motivated people better by giving more meaning to their work.
Imitating the Japanese won't work, Gyllenhammar says. ''I think it is an early stage of lack of maturity. . . . You have to live within your own culture.''
Western businessmen still tend to take a dismissive attitude toward programs to improve work life, he says. Businessmen here like the idea, Gyllenhammar adds , but when it comes to particulars, they balk.
''The typical response is, 'We haven't got it in our budget. We will lose so and so many minutes, which means so and so many pieces produced, and who will pay for it?' ''
''And that's the Western system: Who will pay for it?''
Polls have shown that Volvo's own workers consider themselves very loyal to the company, but that they are not sure whether the company returns their loyalty, Gyllenhammar admits.
''It reaffirms to me that people are thirsty for your attention, your care, your feedback, and if they get what they think they deserve, the potential is very great that they will perform even better.''