Jouko Karvinen

Jouko Karvinen
CEO

Stora Enso Oyj

Jouko Karvinen joined Stora Enso in 2007. Prior to that, he held senior management positions with Phillips and ABB. Today, he’s on the Board of the Finnish Forest Industries Federation and Confederation of European Paper Industries, a member of the Election Committee of the Confederation of Finnish Industries EK, a member of the Business Co-Operation Council and Co-Chairman of the Forest Industry Task Force, and a member of the Board of Nokia Corporation, SKF Group, Montes del Plata and Veracel Celulose SA.

 

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A view from the top

In this short video, Jouko Karvinen shares his view on today's key business issues: risk, volatility, innovation, talent, and growth

Quotes

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

We're in for a wakeup call in Europe. We need to figure out how to get growing again.

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

We’ve questioned a lot of the old beliefs that come with operating in a cyclical commodity industry like ours.

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

We’re deploying our assets and operations in a more flexible manner so that we can control costs not only with regard to predictable business cycles, but also to cope with unpredictable macro-economic events.

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

We’ve entered into some significant outsourcing agreements, not only with respect to administration but also mill maintenance with the aim of achieving maximum flexibility in the use of our assets at a time of great uncertainty.

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

We’re pushing hard on workforce mobility, succession planning, and – by mixing experienced people with the less experienced people – on-the-job mentoring.

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

When we think about innovation, we tend to look too much at the input – what percent of revenue do we spend on R&D – rather than the output. Meaning, what are we getting in return?

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

It isn’t about young versus old, or the developing world versus the developed world. The most critical selection criteria that we used in putting together our team of junior managers together was to maximise diversity of thought.

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

I would also say that partnering has become a lot more important for us. In the past, we thought we had to do everything ourselves. We don’t believe that anymore.

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

We intend to grow by having a presence in growing markets like China, India, and Latin America.

Jouko Karvinen

Jouko Karvinen

CEO, Stora Enso Oyj

I think in packaging, plastics are my competition. There’s a huge growth opportunity for us there. Would you rather have the food you buy come in plastic or in paper packaging? In ten years or so, there’s going to be two billion more consumers in the world eating packaged food. So, isn’t that an opportunity?

 

Read interview transcript

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What key risks may impact your business over the coming year?

I think the big question mark in the economy for many companies, including ours, is Europe. I see many politicians spending most of their time telling other countries what to do or not to do; and too little time worrying about their own economy and the future of their next generation of citizens. So that to me means that, in the short term at least, we had better be ready for pretty much anything.

How are you preparing your own business for those uncertainties?

Getting ready for something that uncertain, isn’t easy. In general terms, I think you need to maintain flexibility. And that means doing practical things like reducing your fixed costs, outsourcing processes where you can, and streamlining your supply chain. The other fundamental thing is to keep your workforce believing that whatever the next storm, we’ll be able to get through it.

How would you describe the current business climate?

We're in for a wakeup call in Europe. We need to figure out how to get growing again.

How have you and your company responded to these uncertain times?

In the five years that I have been with Stora Enso, we have gone through some pretty turbulent times. But I think we’ve now gotten the basics right. We’ve removed a lot of overhead costs, tightened up the supply chain, and so forth. Having said that, the most important thing for everyone in our company to understand is that every day is “day one”. What we did last year - or in the past five years - doesn’t matter. That, I think, is the challenge for every CEO. Sure, we’ve made tremendous progress at Stora Enso over the past five years - but the race is still on. And the only thing that counts is now. We’ve succeeded in our fight to survive. And now, we have to fight every day to win.

How has your strategy changed?

We’ve questioned a lot of the old beliefs that come with operating in a cyclical commodity industry like ours. The conventional approach is to get operations to the minimum cost level and make sure your manufacturing plants are running full. Well, given the current economic climate, that’s simply not going to happen. So instead of focussing on the lowest possible cost, we’re focussing on optimum costs that are geared toward our different capacities and different parts of our manufacturing cycle. We’re deploying our assets and operations in a more flexible manner so that we can control costs not only with regard to predictable business cycles, but also to cope with unpredictable macro-economic events. I would also say that partnering has become a lot more important for us. In the past, we thought we had to do everything ourselves. We don’t believe that anymore.

We’ve entered into some significant outsourcing agreements, not only with respect to administration but also mill maintenance with the aim of achieving maximum flexibility in the use of our assets at a time of great uncertainty. What about future growth? Well, we intend to grow by having a presence in growing markets like China, India, and Latin America.

What is your approach to getting the right talent to the right places?

We’re pushing hard on workforce mobility, succession planning, and - by mixing experienced people with the less experienced people - on-the-job mentoring.

How do you attract talent to an old-line industry like pulp and paper manufacturing?

I don’t believe that people want necessarily to work in a particular industry or for a particular company. Instead, I think people want to work in an environment where they have the opportunity to grow, where they have a chance to wake up every morning and say, “Today I’m going do something exciting”. If you can give people the feeling that they have the latitude to think independently and that their ideas will be heard, you will be able to attract the talent you need.

How does innovation play into your growth strategy?

Innovation, first of all, should not be limited to product innovation. You can also innovate new ways of serving your customers, new business models, or new supply chains. My second point is that when we think about innovation, we tend to look too much at the input - what percent of revenue do we spend on R&D - rather than the output. Meaning, what are we getting in return?

So in terms of innovation, my job is to ask what do we get out of it; and why is this going to make a difference to our customers and to consumers generally. Ours is a capital intensive industry so we really have to maintain a focus on those sorts of questions.

Could you cite an innovation introduced by Stora Enso?

Sure. We recently launched a renewable, small-carbon-footprint product known generically as microfibrillated cellulose - MFC for short. The product can be used in a variety of applications including as a lighter and stronger packaging material. On a more traditional note, we’ve proven the use and benefits of wood as a building material for multi-storey construction. And wood has significant possibilities to achieve cost savings in construction compared to traditional building materials - without restricting the freedom of design and architecture.

What is Stora Enso doing in terms of corporate responsibility?

Historically, we’ve been widely acknowledged in external benchmarking studies as a responsible enterprise. And that’s important to us. Today, we are particularly invested in Corporate Responsibility in the emerging markets because we understand that that’s where our future lies. We want to be seen in those markets as a welcomed friend - not just a company that’s bringing in technology to exploit a financial opportunity. Consequently, we work very hard with local communities in the developing world on issues like education and health care. And we’ve introduced exchange programmes between universities in the developed and developing world. So, I can stand up in Uruguay or Brazil or China and say, we’re here because we want to better your community and your society.

Do you perceive any conflict between Corporate Responsibility and the core aims of a business enterprise?

I think there’s a misconception that somehow, there’s must be a choice between the two. In our industry, at least, I think it’s quite the opposite. When we invest large amounts of our shareholders’ money into growth markets they want to be assured that we’re doing it in such a way that those investments are secure and that we’re regarded by those communities as a net benefit. As stewards of our shareholders’ investments, it’s our responsibility to let shareholders know that their money is well invested and is benefiting society, too.

How do you keep your management team inspired and motivated?

I’ve been lucky in my career in that I became a general manager at a very young age. That was a great experience - but also worrisome in some ways because it’s easy after 25 years in general management to start telling yourself, “I’ve seen everything, I know how things should be done.” And that, I think, is a big risk for any company. We recently had a group management team meeting and we went through a number of strategy issues. And after the discussion I said to my team, “We sound like a broken record”. The concern I was trying to express is that we have to avoid “group-think” and discourage the attitude of, “We know best, we’ve seen it all before”. And I concluded that what we need is somebody to challenge us and tell us, “You people don’t know what you’re talking about - the world has changed.”

So, over the next few months, we solicited applications for membership in a team of junior managers that would work with IMD -an outstanding Swiss business school -to come up with some revolutionary ideas that will help us rethink the way we do business and contribute to society. And that’s something that’s received a lot of positive feedback from people in the company.

Do you think this sort of fresh thinking from junior managers is applicable to other established companies in the developed world?

In my view, it isn’t about young versus old, or the developing world versus the developed world. The most critical selection criteria that we used in putting together our team of junior managers together was to maximise diversity of thought. So we recruited young and not-so-young managers. We recruited different nationalities. We recruited people on very different career paths.

And that’s going to be a challenge for them because there’s going to be cultural and communication obstacles to overcome. But that diversity of thought is very good medicine for any company. At every Board meeting, Board members have breakfast with some of our younger talent. I don’t attend those breakfasts because I want board members to hear straight from those young people about what’s going on - and what’s not going on - in the company. Getting that kind of real time feedback from young, talented people is not a bad idea for any company.

How do you work out what’s realistically achievable in terms of breakthroughs in your business?

Innovation in most industries is too driven by technical perspectives rather than consumer perspectives. We’re very fond of talking about all sorts of technical possibilities. But in many cases, we don’t actually understand many of the markets that we’re trying to sell into. And I happen to believe that’s where you should start. You need to bring the consumer into the equation first, before pushing out technical solutions. When I was working in the healthcare industry, we were designing new products for clinical imaging and we began that process by trying to understand the needs and benefits of those products from the patients’ perspectives. I think the same sort of consumer-centric approach is very much needed in the packaging, paper and wood products industry.