For years Volvo was a brand that lacked direction. Ford Motor Company offered Volvo Cars for sale in December 2008, after suffering losses that year and in 2010 it was sold to Zhejiang Geely Holding Group, commonly known as Geely. Later that year Stefan Jacoby, formerly chief executive of Volkswagen of America, became Volvo Car Corporation's president and chief executive. Neither premium, nor mass market, the Swedish automaker decided to transform its product line by becoming a visibly innovative premium player.
Over the last 10 years the company has implemented “an M&A strategy for talent”, mindful that it is talent that drives outsized value. In short, new skills needed to come into an industry that has undergone so much change. The Chief HR Officer (CHRO) Bjorn Sallstrom explained, “Once, you needed mechanical engineers. Today, there’s a greater need for software engineers because cars are computers more than anything else.” Secondly, he and Jacoby believed that only an infusion of fresh talent could transform Volvo’s culture into an entrepreneurial one. Financial and talent intentions were conceived and implemented in unison and while it is too early to draw conclusions on the impact of this strategy; a number of observations can be made:
- Its cars are winning rave reviews: according to Edmunds in 2016, the XC90 SUV “puts Volvo right back in the game.”
- 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
- Volvo has carved out a spot in the competition to introduce autonomous cars. In 2017, Uber announced that it planned to buy up to 24,000 Volvo cars designed to accept autonomous. This includes a plan for Uber Advanced Technologies Group to design and build the self-driving system. A bold move and unexpectedly reaction has been mixed; however the automotive press praised Volvo’s clear intention to embrace change, not fear it.
So what talent actions were taken:
- The CHRO was at the centre of the strategy and was visibly partnering with the CEO
- Volvo mapped then sought out of sector talent in places where it had never looked before: fashion houses for craftsmen, the internet giants (such as Google) for sales and marketing people, consumer orientated Nokia engineers and ensured that any managerial talent that came in had conceived and executed significant strategic shifts at bigger companies
- Volvo’s leading 300 directors and managers were briefed on the strategy shift and given personal coaches
- Jacoby’s successor, Hakan Samuelsson holds regular live chats with employees
- A 30 person “catalyst group” was set up and charged with showing others in the organisation that work could be done differently. For example, its members asked why every design change in a car required a dozen signatures and managed to cut that number in half.
Volvo’s actions offer a textbook case in how to go outside the company to retool your workforce for a transformational initiative. CEOs must have a strategy for “talent M&A”—that is, how they will aggressively target pools of external talent to keep ahead of new strategic opportunities. This means expanding their talent horizon, especially when the biggest threats and opportunities may come from out their traditional industry. And it means implementing the transition with care to avoid “organ rejection” of externally sourced talent. Reaching outside to transform your company is sometimes necessary, but it’s always complicated. Volvo offers a road map of how to pull it off.