Published 12. Oct. 2016
Agile Co-Creation Boosts Rapid Innovations
by Sini Vikkula
Arto Kuusinen comes to meet us with a broad smile. Kuusinen’s appointment as Symbio’s new CEO in Finland has just been announced and the phones have started ringing. The question on many people’s lips is “why Symbio?” Kuusinen offers us coffee and begins his story.
Outside the windows is a view of the tower of the Central Railway Station, with passengers flowing in and out through the doors at its foot. A good vantage point and constant motion have been the defining factors of Kuusinen’s twenty-year career. As a consultant and business executive in the ICT industry, he has had a front row view of the crucial transformations in Finnish, Nordic and global business. Right now, he says, we are moving into a new era: a new kind of model of strategic partnership that will open doors for agile and innovative operators like Symbio.
Let’s get back to Kuusinen and how he ended up here. His interest in international business was sparked during his student days in the 1980’s. After studying international business, Kuusinen graduated as a BBA in the middle of the worst depression in 1992, and wisely decided to continue his MBA studies in Heidelberg.
The ABC of Consulting
The first career turning point was a job at a small Finnish consulting firm, where Kuusinen took his first steps as a consultant.
“Working at a fledgling consulting business was a good school for a fresh graduate. I learned three things during that time: the first is entrepreneurship. When nothing is ready and you have to do everything from the cakes served at meetings yourself, it helps you understand the basics of business. If you don’t get a job, you won’t get paid.”
“The second thing is vision. In business management consulting, you need to be half a step ahead of the clients and the market. If you’re not, the additional value you bring is questionable.”
“The third is a humble attitude. Expertise must be proven every day. Arrogance is not a characteristic of a good consultant. You can be a smart-aleck only twice: the first time and the last time.”
The Beginning of an International Career
As an ambitious person, Kuusinen soon began to yearn for bigger circles, and in 1999, joined Andersen Consulting (currently Accenture), for whom he worked for more than ten years.
“The contrast at the beginning was unbelievable. I came from a company where we did everything ourselves, and suddenly we had pre-installed laptops, luncheon vouchers, a coffee machine, a new office building, a Friday pub night and extravagant training at our own campus in St. Charles near Chicago. I was amazed that people were still complaining about small things. It was evident that if you’ve never tried things yourself, you can’t appreciate what you get.”
Around that time, there were about 50,000 people working for the group; today, Accenture employs almost 400,000 people. Kuusinen saw the great growth and transformation in IT consulting from up close.
“At first, there were about a couple of hundred of us in Finland. The growth figures were impressive, but the structure of the business was warped, with most of the business coming from Nokia. There was arrogance in the air, particularly towards the more traditional industrial operators. The years that came changed both the attitude and the business.”
Large System Projects and Investments
Another turning point in Kuusinen’s career has to do with the major industrial investment projects of the beginning of the millennium. An ultra-modern office in Ruoholahti turned into the bleak scenery of the Tornio steel mill, where he spent the next three years. Doubling Outokumpu’s stainless steel production capacity and the optimization and design of the supply chain were among the largest industrial investments in Finnish history – as well as an educational experience in management of change and process management.
“Those years were marked by a steep learning curve. I learned the meaning of true business change. One has to prioritize what is important and meaningful. Things go wrong when you try to be 100% perfect. Usually 80% is enough. The last part is the most labor-intensive and most expensive and doesn’t bring corresponding additional value.”
Adopting new operating practices and methods is an art form, especially in an environment where things have been done the same way for a long time.
“In the project we led, a new operating practice was adopted just before the summer vacations. People wondered about it, but in fact, the summer workers were quicker to learn the new practice than old employees were. The young ones were already doing things the new way when the old fogeys were still trying to come up with ways of fooling the new system, so that they could keep doing things the same as before.”
At the beginning of the millennium, Accenture’s clientele quickly broadened to cover the largest operators in the banking and finance sector, commerce and the manufacturing industry. Kuusinen specialized in the manufacturing industry and worked with the most important Finnish industrial companies, such as Kemira, Rautaruukki, Outokumpu and UPM. In the early 2000’s, he managed the entire metal industry business in the Nordic countries.
“The vision was to triple the company’s revenue. When there is a will to grow, much can be done. Around that time, Outokumpu sold the stainless steel business, giving birth to Avesta Polarit. We were chosen as partners for the integration project. The growth was phenomenal; our team of a few dozen people quickly grew into a unit of 200 persons.”
Success bred success and clients were soon knocking at the door. Besides the metal industry, Kuusinen also worked with projects in the chemical and forest industries, of which one of the most memorable was the OneKem project initiated by Lasse Kurkilahti, whose goal was to integrate and develop Kemira’s business as a whole.
In retrospect, those years were marked by a strong belief in development and investment. The demand for stainless steel grew, and production was lagging behind. Development focused mainly on increasing the growth and improving the efficiency of production and distribution. The future seemed bright, even though dark clouds were already gathering in the skies of Western industry. Around that time, China started massive multi-billion investments in the steel industry. As a result, the global market was in upheaval in a few years’ time. The entrance of the Chinese into the Western markets changed the balance of supply and demand. Suddenly, there was no more demand for the steel produced.
“The whole business logic had been built around the idea that factories operate at maximum utilization rates; at lower rates, they were making losses. This led to pressure to close down production plants. The situation is extremely difficult, if the costs of production and logistics exceed the market price.”
Kuusinen has seen the huge transformation in Finnish and Scandinavian industry from up close. He still wants to avoid easy conclusions. The challenges are too complex to be solved through simple solutions.
“There is much talk in the Nordic countries about the costs of labor, but in reality, on the level of automation that things like steel and paper mills are running, it makes little difference whether they are located in countries with cheap or high costs of labor. Of much greater importance are macroeconomic questions and the order and delivery chain in a broader sense – from raw materials to the customer market. One has to find a new competitive edge and reconsider the logic of profit. The freshness of technology and level of automation are also important.”
Recently, the field of Finnish industry has been announcing more and more bad news, but there have been opposite signals as well. Kuusinen is optimistic about the future and believes in the ability of companies to re-invent themselves. In the forest industry in particular, things have been rethought and the will to invest is on the rise as well. The most important recent news is Metsä Group’s new bio-product factory in Äänekoski, which is an even bigger investment than Outokumpu’s once was.
Globalization and Offshore
The third turning point in Kuusinen’s career has to do with globalization and a change in Accenture’s business model. Up until then, the consulting business had been based on major system integrations. Projects eventually come to an end, however, so Accenture sought to systematically develop business that would produce constant revenue. They found a new focus area in outsourcing services, the demand for which was rising rapidly. In practice, this meant strong growth in India, where skilled labor was available at reasonable cost.
“The development was fast. At the beginning of the millennium, Accenture had about 150 employees in India, but by 2007, it had grown into the largest country for the company with 35,000 employees. In practice, offshore in India became a new way for our clients to save costs and improve the efficiency of processes. Many significant industrial companies took advantage of the opportunity and began to move their functions there.”
Kuusinen himself advanced to the position of an Executive Partner and took on even more global tasks in the Foundation Offering unit led by Colin Fulton, which focused on Plant and Automation Solutions for industrial environments.
“Colin asked me to join a global management group and take responsibility for Big Deals. Today, major industrial investments take place mostly in the southern hemisphere. The largest regions of growth at the time were South America, South Africa, the Arabian Peninsula – particularly the United Arab Emirates and Abu Dhabi – Australia and South Korea. For instance, I participated in a huge 228-billion Euro investment project by the Brazilian national oil company Petrobras, which included 60 oil rigs, super tankers and refineries, among other things.”
The years abroad were so hectic and involved so much travel that Kuusinen and his family considered moving abroad. During a company reorganization, the Foundation Offering unit was decentralized, however, and Kuusinen returned to Finland to take a breath.
The Rise of the Indian IT Giants
The fourth turning point in Kuusinen’s career was the rise of the Indian ICT giants in Europe. The arrival of the Indians in the Western markets dates back all the way to the 1970’s, when IBM decided to leave the Indian market. Many of today’s global Indian giants were created to fill that gap and to serve the domestic market. At the turn of the millennium, cost pressure increased in the West, and companies turned their eyes to new, developing markets. In this game, India had a few aces up its sleeve: the English language shared by all educated Indians, the highly economic service price and a sufficient number of trained professionals.
In the early 2000’s, Indian ICT companies weren’t yet terribly interested in European markets and focused on the largest companies mainly in the US and the UK. In ten years, the situation changed, and in recent years, we have seen a real rush of Indian companies to the European market. Kuusinen was interested in the trend and took on the position of Wipro’s country manager in Finland after the expiration of the Accenture non-compete term in 2013. Wipro offers information technology, consulting and outsourcing services, is one of the largest and best-known brands in the industry and employs over 170,000 people in 175 cities all over the world.
“One must always be one step ahead. The change was really quick; after a couple of years, the question was not whether we should be doing offshore, but how and how much of it we should be doing.”
Not everything can be moved to India, however. One must know the rules of the local market and business, legislation and culture to be able to succeed.
“Trust can’t be outsourced. Taking care of a customer relationship locally is the core around which a partnership is built. Indian operators have a very good attitude in that regard. When they enter a new market, they have plenty of humility and agility. The will, the hunger for new business, is palpable.”
The Indian business environment made an impression on Kuusinen with its dynamics. If something needed to be done, it was done. The company management had a genuine personal interest in clients, and top management was ready to travel to client meetings personally. They never said there wasn’t enough time to do something. Their operating practices, however, were a bit hard to swallow for someone used to the punctual Western culture.
“It was a balancing act on the border between activity and chaos. Really big organizations are more challenging internally than externally. Areas of expertise have been split into small bits, and making holistic offers is like a jigsaw puzzle. A part of Indian culture is that everything happens at last minute, while the Finnish mentality is about reaching one intermediate target at a time. We always managed to put together an offer in the end, however, and during those years I learned that it is also possible to do things that way.”
Although services by default are very well packaged and described, Indian companies are skilled at customizing their service concepts in a customer-oriented way. The current operating practices and methodologies allow us to see for what purpose the systems were originally created and identify critical parts and interfaces, even if documentation doesn’t exist or is incomplete. At the Tornio factories, for example, the updated system was adopted within a year from Wipro signing an agreement with Outokumpu – despite the fact that factory systems at the foundry and hot rolling mill were originally fully customized and domestically implemented.
“I would argue that the main reason for the success of Indian companies lies in expertise resources. The Indian academic world produces annually people with academic degrees several times more than the UK. The availability and scalability of expertise is almost limitless. Those who have made it through the system and graduated with top grades are exceptional individuals. Talking to these top professionals makes you feel like a rather simple guy.”
True Innovations and Artificial Intelligence Accelerate the Future
The amazing growth has slowed down over the past years. The Western markets are saturated, and achieving growth in new regions is significantly more challenging. However, according to Kuusinen, this is a symptom of a bigger change as clients are seeking new growth, instead of or in addition to cost savings. With this realization, the career of Kuusinen moved to a new stage. In August, he started as the CEO of Symbio in Finland. Symbio is specialized in making precisely targeted innovations related to software design and product development, and projects that can be implemented quickly in collaboration with clients.
It has been said that five years’ work at a single company is equivalent to one year’s work at a consulting company. At best, as a consultant, you may be able to participate in multiple projects of the scope that people working in a single company meet rarely, if ever, during their career. In the turmoil of global economic turbulence and developing technologies, Kuusinen’s priorities have remained clear.
“I see the management of customer relationships as a crucial thing. At its core is trust. You can’t make an omelet without breaking eggs and there are troubles in every relationship. It is a mistake to think that everything is always going to go smoothly; it won’t. The question is how will challenges be fixed and with what kind of attitude. Successes will be celebrated and losses mourned together, as one team and as an integrated part of the client’s operation.”
With this attitude, one can also succeed in a rapidly changing, heavily networked operating environment. The key drive for change comes from digitalization, an umbrella that covers many directions of development. In Kuusinen’s opinion, the most interesting themes are related to true innovations as well as artificial intelligence and robotics. By true innovations, he means inventions, operating practices or technologies that produce new growth.
“There are two lines leading to company top management. In the long line, people tell stories of cost savings, of how operations will be made more efficient and reduced. In the other, much shorter line, are the guys who tell what new technologies enable and how they can be used to create new business. The latter line is the one you should try to get in.”
Sharing economy is an example of how to rethink things; today, the world’s largest hotel operator doesn’t own a single hotel and the largest taxi company doesn’t own a single cab. Even more traditional industries like retail have changed radically. For example, the world’s largest online store doesn’t have a single warehouse.
Development seems obvious, even inevitable, when it has been applied in practice. It is much more difficult to foresee which innovations will create new business. According to Kuusinen, the two worlds – new thinking and traditional business with its revenue generation model – will live side by side for a long time. They should feed each other, not compete with each other. Kuusinen is fascinated by the development of artificial intelligence and robotics, especially bots.
“When systems become self-learning, they will change basic support services entirely. The ones who come through the transformation as winners are the ones who build a service team out of their own core group, a broader partner ecosystem and a combination of humans and bots.”
Kuusinen puts down his coffee cup and ponders for a moment. Recently, the father of five has been wondering particularly about what the future will look like and what it will mean to individuals. The oldest children are already being trained for working life, while the youngest is still in diapers. The only thing that is certain is that traditional, linear careers will no longer exist in the future.
“For the individual, development with a fast cycle is a challenge. You shouldn’t worry about how the world will change tomorrow, but about how it will change the day after. For today’s youth, the world will look quite different in middle age from the way we experience it now. In the future, there will be more need for hybrid expertise, the ability to broadly combine various areas of expertise. The skill race will get even tougher with more educated people pouring in from developing countries. In the future, basic skills won’t be enough.”
Agile Co-Creation Boosts Rapid Innovations
Basic skills are no longer enough for companies, either. Big consulting firms who rode on the wave of the efficiency boom are also trying to come up with new kinds of service models. The need for improving efficiency is not going away, but it will be accompanied by development bursts with short cycles.
“In the future, we will be facing a major transformation. The big operators in the ICT industry are used to making up the rules and choosing their clients. At worst, they have arrogantly dictated the terms of partnership and hoarded the IPR’s. Co-Creation, where new operating models are created together, is the way things will be done in the future. It opens new doors for operators that can be small and agile.”
Agility and speed are currently being sought in many different ways. According to Kuusinen, the demand for doing things in this manner is palpable. Large companies are looking for small, agile companies as partners; hackathons and startup hubs have come to stay. Kuusinen wonders aloud how the public sector with its rigid procurement mechanisms can keep up with the speed of development. At the very least, it should be able to collaborate with the private sector in new, innovative ways. A good example of this is the city of Gothenburg, which has started a pilot project for self-driving cars in collaboration with Volvo. If the public sector opened itself to this type of operation, it would enable many new services and speed up development.
“It’s hard to ask for a tender offer for new innovations. Instead, you need to create ecosystems and platforms that draw innovative players. There will be a gap in the market for new players. Although Symbio is a small player on the global scale, we have strong expertise and proof of prior experience, a good international presence, a strong foothold in the North American market and a good delivery arm in China.”
What Symbio’s diverse and multi-disciplinary projects have in common is the utilization of new kind of technology. At one extreme end is the Adidas interactive shop window and 24/7 online store, created together with the advertising agency TBWA, which won the most prestigious advertising award in the industry, the Golden Lion in Cannes. At the other client end, one can find Sandvik, which produces machinery and equipment for mining and construction companies. Robots can be sent into a mine immediately after a detonation. Without the need for lengthy withdrawal periods, work can be resumed immediately, which significantly improves efficiency. One of Symbio’s strong, internationally recognized fields of expertise is innovation in autonomous cars and ships. The company’s reference can also be seen in the Volvo CarPlay integration of the newest Volvo XC 90 SUV.
When talking about projects in progress, the otherwise open and talkative Kuusinen chooses his words carefully. Unfinished client projects are top secret, and often don’t become public even upon completion. Often Symbio’s role is to act as a grey eminence that realizes the client’s dreams, but is invisible on the outside. In the future, this too may change.
“A new way of doing things requires an even better ability to create and maintain functional, network-like ecosystems. Customer-orientation and creating client value requires the ability to orchestrate open and diverse networks. A controlling attitude are beginning to crumble. Companies don’t even need to pretend to be doing everything themselves, but build the kind of ecosystem where everybody pulls together in the name of the client’s best interests.”
Symbio will be attending the following events as a solution provider:
Internet of Things, Finland, 02.11.2016
IndustryForum Machinery, Finland, 24. 01. 17
600Minutes Innovation and Product Development, Finland, 04. 04. 17
IndustryForum Retail and FMCG, Finland, 16. 05. 17
IndustryForum Banking and Insurance, Finland, 31. 05. 17
IndustryForum Automotive, Germany, 22. Nov. 16
IndustryForum Automotive, Germany, 21. 11. 17
For more on our upcoming events, visit the Event Calendar »