For years, Volvo was a brand stuck between a rock and a hard place. Its cars didn’t match up well with those of top luxury brands like Mercedes-Benz, BMW and Audi, yet the company lacked the capacity to compete with mass-market leaders like Toyota and General Motors. Under new ownership, the Swedish automaker decided to transform its product line by becoming a premium player. CEO Stefan Jacoby and Björn Sällström, the company’s chief human resources officer, rigorously examined Volvo’s existing workforce. The result was clear: Volvo needed new people with different skills.
Volvo took three critical steps to ensure that its outside-in transformation would work. The first was to put Sällström at the heart of the initiative. The CHRO needs to be at the center of any acquisition of talent from the outside. While Volvo didn’t acquire companies as it went looking for outside talent, Jacoby, and his successor Håkan Samuelsson, counted on Sällström to figure out what the company needed in places it had never explored before.
That brings us to the second step: expanding the company’s peripheral vision. To get the skills and change agents it needed, Volvo looked outside the automotive industry. Between 2011 and 2015, the company added 3,000 new people in engineering and development.
Third, the company developed a strong system for integrating that new talent. Communication was vital: Jacoby first described the strategy shift to Volvo’s key 300 employees, while Samuelsson, following his predecessor’s lead, holds regular live chats with employees. Training was also essential: Jacoby and Sällström implemented a range of initiatives designed to shift Volvo’s staff into a more entrepreneurial mindset, and each of the 300 key leaders was given a personal coach.
It’s too early to say whether Volvo has definitely turned itself around. Says Sällström: “Even with all this outside DNA, it’s a long journey to change the mindset of an organization. It’s still a work in progress.” Financial signs are certainly pointing in the right direction. Net revenue hit an all-time high in 2017, and profits rose for the third consecutive year. The company sold 571,000 cars last year, up from 373,000 in 2010.
Reaching outside to transform your company is sometimes necessary, but it’s always complicated. Volvo offers a road map for how to pull it off.
