ENSTO TODAY 1/2016 17 When it comes to execution we should look at our struc-ture, overheads, and capacity utilization. I recently visited our units in France and found opportunities to better act as one unified company. et Does growth for Ensto mean tough choices about the product portfolio? You should never divide your products between category A and category B. Be proud of every product because they all have a role to play. Just because a product does not have potential for global leadership does not mean that it lacks value. Prod-ucts may generate valuable cash flow, or they may be part of a farm of potential future successes. I don’t believe there is such a thing as “profitable shrinking.” Profitable growth is the name of the business. Do not misun-derstand: I am not saying that we should accept underper-forming products – that is a separate issue. You’ve remarked before that Ensto products should be number one or two in their respective categories. Products need to be positioned, and this means two things. First, that you are hopefully a “leading product.” Second, it means that you are in the largest market. It doesn’t help if we are number one in Finland but number 11 in Germany and France. What’s your position when you first define your market? You have to be as global as your main competition. But keep in mind that “global” may not be the right word here. It’s better to say that business is constantly becoming “less local,” and recognize that there are places in between local and global. For each product we have to understand the relevant market. It will never be only domestic, but that doesn’t mean it will be the whole world, either. What’s the relevant market for our products? Look where our strongest competitors are operating. That is our market. If our definition of our playground is not as wide as the strongest competitors, there is always the risk that a more global com-petitor, without any pain at all, can use his cumulative cash flow and take away our market. Our product lines must be as global as their strongest competitors. We must raise our ambition for these products; we must ana-lyze their competitive advantages and positions. et What are Ensto’s competitive advan-tages at the group level? If you visit South Korea you’ll find that companies there have the goal to be number one in the world. In the US, if your company reaches 10 mil-lion in sales, you don’t sell it if you see it could make 100 million after five years. Finnish companies gen-erally lack this ambition and remain very small. In this sense, Ensto is not a typ-ical Finnish company. In business-to- business worldwide there are 3,000 in leading companies, and half of these are German. They are often middle-sized companies, leaders in small niches, which have been family-owned for generations. Ensto is similar to these in the respect that it is a family-owned company with the crit-ical mass to become a global or regional leader. But also we do not have the resources to be leaders in too many businesses. This strength of Ensto means continuity, which is extremely important for product development. How can you develop something really new if you stay as CEO only three years and maximize profit every quarter like is common in listed com-panies? In a family company you can stay and fight for some-thing that brings results after five or fifteen years. et Buying companies is the fast track to growth, but you have cautioned against too much acquisition. Ensto’s growth should be, roughly speaking, half organic and half acquisitions. Offhand I cannot assign numbers, but my sense is that Ensto has been growing more by acquisitions in recent years. We’ve had Enervent and Alppilux in Finland. We’ve grown in France by acquisition. It is easy for me to name these transac-tions, but it’s more difficult for me to name how we’ve grown organically through product development. So organic growth is an area for focus. Changes the Board Changes in Ensto’s Board of Directors have recently been announced. Current Chairman Risto Anttonen will step down in February, remaining as a Board Member and assuming the role of Deputy Chairman. Marjo Miettinen will take the role of Chairman. Current Board Members Esa Saarinen and Martti Mäntylä (both academics) will also step aside. Ensto wishes to thank these gentlemen, espe-cially Esa Saarinen for his over 25 years of service to the board and his invaluable con-tributions to the development of Ensto. The cooperation with both former board members will continue at practical levels outside the board. Replacing Professors Saarinen and Mäntylä will be two men with strong business and manage-ment backgrounds; Kari Kasanen, a manage-ment consultant and former owner of Talent Vectia and a partner of Boardman (the leading network developing active ownership and board work competences in Finland) and Jukka Ruusunen, CEO of Fingrid, the electricity transmission company. continued
EnstoToday 2016 No1 / ENG
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