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    The investor who believes in giving back to his homeland

    3 January 2023 in CEO Dialogue Series • Podcast availablePodcast available

    The Wallenberg sphere operates in about 180 countries and its holdings generate a total of $160bn of annual revenue. But Marcus Wallenberg, chairman of the family holding company, explains to Jean-François Manzoni...

    The Wallenberg sphere operates in about 180 countries and its holdings generate a total of $160bn of annual revenue. But Marcus Wallenberg, chairman of the family holding company, explains to Jean-François Manzoni why working for the benefit of his native Sweden is so important. The Swedes even have a word for it: landsgagneliga.

    As companies grapple with some of the biggest upheavals since the industrial revolution, today’s business owners face multiple challenges, from how to transition seamlessly towards sustainability to ensuring that their companies harness the full potential of digitization.  

    But they also have to satisfy an increasingly complex tapestry of stakeholders while ensuring that their governance structures remain transparent and agile enough to respond to a backdrop of growing economic and geopolitical uncertainty. 

    As chair of Wallenberg Investments AB and FAM AB, Marcus Wallenberg sits on the front lines of these critical issues. The two entities are pillars of his Swedish family’s business empire that stretches across everything from pharmaceuticals to banking and industry.  

    Together with other fifth-generation family members and cousins, Jacob and Peter, the Wallenberg sphere, as the collection of family holdings is known, reads like a corporate Hall of Fame. Through its publicly listed industrial holding company, Investor AB, it has large interests in ABB, AstraZeneca, Ericsson, Electrolux, Saab and Husqvarna. All told, the sphere generates about $160bn in annual revenue and employs 600,000 people across about 180 countries.  

    But the Wallenberg family is more than business holdings. It operates a unique ecosystem of which Investor, through a number of Wallenberg Foundations, is one part. The purpose of these foundations is the betterment of Sweden through the funding of top-class education and basic research projects at the country’s universities. That makes the Wallenbergs custodians, as well as owners, highlighting a strong sense of purpose.  

    The older generation always said that just because your name is Wallenberg, you shouldn’t believe that you have a place because you really have to perform and you have to work
    - Marcus Wallenberg

    Indeed, the Wallenberg’s strong sense of purpose is grounded in social responsibility that is captured in the Swedish word landsgagneliga, which translates loosely as “for the benefit of the country”.  

    “It’s a way to give back, to really have the possibility to support Swedish society,” Wallenberg said. “The family has been very focused on working for Sweden and with Sweden over the years, so it suits our way – and the way we think about ourselves.”  

    “Our way” revolves around a personal sense of duty but also deep commitment. “When the three of us grew up, the older generation always said that just because your name is Wallenberg, you shouldn’t believe that you have a place because you really have to perform and you have to work,” he said.  

    The combination of hard work and social responsibility has produced more than a dozen foundations over the years that today funnel more than $200m a year into a variety of research projects and research organizations involved in science and education – all with a clear objective to help the development and competitiveness of Sweden. 

    Twenty years ago, for example, Wallenberg foundations backed research into genomics, then and now one of the critical areas at the frontiers of scientific investigation. Two themes that the foundations have focused on and that have the potential to revolutionize the course of human development are artificial intelligence and autonomous systems, including self-driving vehicles, smart transportation systems, and cloud infrastructure.  

    Prioritizing digitization and sustainability  

    Identifying such areas of focus requires long-term vision. But how does that approach translate to the world of business?  

    Wallenberg says taking the long view is important because it facilitates innovation, which he considers central to succeeding in two areas that he believes will help determine societal and corporate success in the coming years – digitization and sustainability.   

    On the first, he says that the rapid uptake of digitization during the lockdowns due to COVID-19 is just scratching the surface. “There are so many more things that we could do to improve our offering and to make our operations more efficient,” he said. “And that, in turn, demands that companies change their business model to operate in a different way vis-à-vis customers and suppliers.”  

    It’s important to acknowledge that being a CEO is quite a lonely job, and they need some sort of communication to feel that they are on the move
    - Marcus Wallenberg

     

    When it comes to sustainability, he argues that adopting the right policies and practices now will pay dividends down the road. “It’s part of building for that future even though I understand that it involves making investments that will be costly,” he said. “I still think for the long term, and since we have a long-term focus, that it will benefit companies and their customers, and give very good returns in the future.” 

    Balancing influence and interference  

    The stable of Wallenberg-owned companies has delivered extraordinary results for shareholders over the past 20 years or so, with returns averaging about 15% a year – roughly double that of Warren Buffett’s Berkshire Hathaway. So, to what does Wallenberg attribute much of that success? 

    “It is a continuous development of the relationships with these companies, trying to stay close without interfering in operations, but still having an active dialogue with these companies,” he said. “We’ve been trying to find this balance between ownership, very engaged ownership, where we make sure that the right board, primarily the chairman and CEO, is in place.”  

    With the rise in importance of environmental, social and governance (ESG) factors, investors have placed increased scrutiny on the way business owners administer their companies, and the Wallenberg sphere is no exception. While many of its companies are ultimately controlled by the family, such companies also have many other investors – and some of the family’s holding companies are publicly listed.  

    Against that backdrop, Wallenberg says that the family tries to tread a delicate line between influence and interference. “You could say that you should not meddle in the operations of a company, and this is a very important point because you have to let the CEO do his or her work in a way that they can develop the company according to the strategy that you have set out,” he explained. “But I also think it’s important to acknowledge that being a CEO is quite a lonely job, and they need some sort of communication to feel that they are on the move.”  

    Sweden
    The combination of hard work and social responsibility has produced more than a dozen foundations over the years that today funnel more than $200m a year into a variety of research projects and research organizations involved in science and education – all with a clear objective to help the development and competitiveness of Sweden

    Wallenberg also says that appointing CEOs, as well as sometimes having to dismiss them, is an essential part of a board’s responsibility – and that making the right choice depends on having an objective understanding of where a company is in terms of corporate health and development.  

    “We have to realize that if you appoint a CEO to a company which is in trouble for one reason or another, it’s probably a different skill set than when you are trying to find somebody to help expand an already successful company,” he said. “It’s really trying to find the right person for the right company, and at the right time … besides the normal qualities of a leader, which are very important, I think the choice also has to be tailor-made for the specific situation.” 

    Lessons for the next generation 

    With the sixth generation of Wallenbergs growing up and taking an active interest in the business, what does he hope they will learn from previous generations as well as his own?  

    One is to maintain the long view. “Where are you trying to aim? What are you trying to achieve long term? Because it’s easy to get into a situation, when things are more challenging, where you deviate from the long-term goal.”  

    Another is to balance that long-term view with an acute focus on the present. “My ancestors always made sure to look and see what was coming – and how to make adjustments,” Wallenberg said. “That is something that my cousins and I carry with us and feel is very important because otherwise it’s difficult to be relevant as an owner.”  

    Expert

    Marcus Wallenberg

    Marcus Wallenberg

    Chair of Wallenberg Investments AB and FAM AB

    Marcus Wallenberg is a banker and industrialist. He served as the President and CEO of Investor from 1999 to 2005. He served as the Chairman of the International Chamber of Commerce from 2006 to 2008. Wallenberg is the Vice Chairman of the Institute of International Finance. 

    Expert

    Jean-François Manzoni

    Jean-François Manzoni

    IMD President

    Jean-François Manzoni is the President of IMD, where he also serves as the Nestlé Professor. His research, teaching, and consulting activities are focused on leadership, the development of high-performance organizations and corporate governance.

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