To be honest, the achievements of organisations are often down to quite basic stuff: a good idea, hard work and a lot of luck. We may suggest analytical tools all we want but often the list of factors explaining real empirical success will include rather basic stuff. It is therefore we get so delighted whenever a successful organisation (App- le, Ikea, the usual suspects) or a successful person (Steve Jobs, Ingvar Kamprad, again, the usual suspects) actually does have certain features that resemble the ones we think about as generally relevant. But this doesn’t happen often.
However, one such person just left us: Jan Wallander passed away in September at the age of 96. For the modern Swedish world of industry and commerce, including researchers like yours truly, his legacy and status is unique. Because his achievements were remarkable in the mundane, perhaps, world of administration and decision-making. Things you study and my colleagues and I try to teach. Wallander actually used scientifically grounded ideas about structure, decentralisation and, particularly, the art of incentivising, to transform the Svenska Handelsbanken – arguably the most successful bank in the Swedish system over the last four decades – for which he served as CEO and later chairman in the 1970s and 80s.
He decentralised the structure and increased the number of branches, in order to get closer to customers, even if it wasn’t the bank for everyone. Decisions were taken locally. They had nice margins on their products and services, and unlike the others, Handelsbanken made few risky bets abroad. Wallander also gave up budgeting, which gave him quite a reputation. “Giving up budgeting – in a bank?” It worked out just fine, as suggested by research. There are other means to control organisational behaviour. One of his main immediate decisions was to create Oktagonen – a profit-sharing trust controlled by the employees of the bank. Every year the bank outperforms the industry average, the annual meeting yields a certain amount to the trust, which primarily has invested in the bank itself (Oktagonen is one of the larger owners), apart from adding to the pension as staff retire. If you’ve worked long enough, you get more than 10 MSEK upon retirement.
”Wallander also gave up budgeting, which gave him quite a reputation.”
Wallander did other things as well to transform the bank, but these initiatives on their own, and, more so, in orchestration, created an institutional platform for the bank to continue to outperform the others and reach above-normal returns year in year out. It is testament not only to brilliant leadership but also to the suggestion that every now and then, a sensible and clever implementation of management ideas can actually result in fantastic things.
There are many other things to be said about Jan Wallander: generous (the research foundation that bears his and Tom Hedelius’s names funds basically the entire postdoc research community in the economics and administration fields in Sweden), highly intelligent, sociable, and, at its very core, a decision-maker with a rare quality of judgment. LUSEM awarded Wallander an honorary doctorate in 2006. I’m very proud of this.
P.S. Re my last column: I bang my liberal head against the wall, and plead incompetence. I’m out of sync with certain parts of this world. D.S.