Designing for Innovation with Mikkel Lyngbo Nielsen of Ericsson

Speaker A: Foreign.

Speaker B: Welcome to the Purpose of Place podcast. I'm, um, Despina Katsikakis, your host and I'm delighted to have with me today Mikkel Nielsen, who is the chief real Estate officer at Ericsson, overseeing more than 14 million square feet of offices, industrial R and D and Data centers across 180 regions in the world. Most of the world. Welcome Michael. Very nice to have you with us today.

Speaker A: Thank you Despina, and a pleasure to be here.

Speaker B: Ericsson is an incredible company because of course Ericsson is responsible for transforming, uh, the telecommunications for businesses, governments, uh, and consumers. So it's a great perspective to have from a company like that, uh, in terms of how offices have changed and work has changed and what the purpose of PLACE is. So what are some of those changes that you've been seeing?

Speaker A: No, I think it's interesting because we are a technology company, but we're also a technology company with 150 years of history. So from the first kind of wall mounted phone to the evolution of communication and telecommunication. Right. Um, so in one way we have a rich history and a lot of legacy. And on the other hand we are also a technology company leading the future, driving the infrastructure for a lot of new innovations and so on. So somehow we need to reflect that. Also when we attract talent, for instance, uh, we are against some of the other tech companies, we need to attract top talent, software coders and so on. So it's that combination of having a very long history with a lot of legacy and at the same time also being in the forefront of creating the next generation of uh, workplaces.

Speaker B: That's very interesting. So you're saying that then the physical places you provide actually play a role in attracting and retaining your talent. And do you actively use that?

Speaker A: No, we do. We are looking for top, top talent to really, uh, work for us. Uh, we also want to retain our top talent, of course. So we do see, and I think we definitely saw with the Pandemic being kind of an accelerator for working a lot closer. Real estate, IT and hr, for instance, around how do we actually design the best employee experiences and what is the role of the office, what is the role of HR and what is the role of it? And how do we have a more holistic approach to actually designing employee experiences so that we retain and we attract and we try to take a little bit of a leap into the future. Uh, so there is this, you can say one third, we have 100,000 employees at EXN, one third. So that's roughly around 35,000 uh, R& D engineers, very, very smart people, uh, very innovative people that also put very high demands on what the future should be. So we try constantly to try to match that with our portfolio and what the workplace should be so that we not only kind of follow the trends and where we see the workplace, uh, evolving, but we also try to somehow impact and influence a little bit what the future could be.

Speaker B: You remind me that I know you've worked with your engineers often to try and track the impact that different environments make to them.

Speaker A: We work a lot with R and D, of course, uh, but they're also very curious around how they can also evolve. So it's kind of a two way street quite often. So we do a lot of experiments with them around changing a little bit how they work. Uh, but one thing we did was, uh, that we did some research among 400 R&D engineers where we actually, we mapped the entire R and D process with every single step. And then we evaluated what. What is the kind of nature of this task? What does it actually require? Is it more collaborative? Is it more kind of individual? What is it more focused? What is the nature of this task? So we mapped the entire end to end process. And then to understand in terms of the hybrid context, then we did actually run a number of experiments with rd. So we did group them up in smaller groups, and then we asked them to say, okay, you need to solve different kind of problems in groups and you need to collaborate to get it. So every single, uh, member of that group got a clue and they could only solve this or come up with the solution when they kind of, uh, put all the different clues together. So we had 100% virtual teams and we had 100% in person teams that worked from the office. And then we kind of tracked how they got around it, how fast did it take, what was the accuracy of, uh, of how they solved the problem, and so on. And one thing we could see that was that the teams working from the office was actually 25% faster than the virtual teams.

Speaker B: Very interesting.

Speaker A: In terms of accuracy, it was more or less the same. So that was interesting. Yeah, but we could also see that when we monitored the process, that the virtual teams were a lot more dependent on one person taking lead, putting together the clues and come up with a solution, more or less, where when we saw the people working in the office, it was a lot more inclusive. They collaborated, they came together. So when we kind of monitored how they got around it, it was two very different kind of processes. So we ran a Number of these experiments we also looked into individual work and then we tried to map how does it actually, how does the office support versus the home. And we could actually see that they complement each other. So that has been some of the groundwork that we have added into our, uh, updated or revised hybrid policy around being more intentional, around where do you actually perform work? Because we can obviously see that the office, if you're 25% faster, you're more inclusive, you actually come up with more innovation and more kind of collaborative, uh, approach to solving complex problems. Then of course that's what we need to design the office around. That's what we need to accommodate and that's what we need to design for. Right. On the other hand, we could actually see that more individual task and more focused task was 15% better done from home. So of course we thought, okay, when we have mapped the entire end to end process, what if we say that, okay, R and D, their ways of working in the team, how they organize, Maybe they work 80% from the office in the first three weeks of a project where they need to come together and collaborate, maybe later in the process they will work more from home. So we could actually see that how we design offices through the research and working closely with R and D, that if we manage it in the right way and if we become more intentional, we can boost productivity innovation, which is great for the company, of course, but we could also boost the engagement for our employees and that is making that kind of win, win situation.

Speaker B: I absolutely love that you talk about intentionality because, uh, uh, you and I have talked about this before. It is one of my greatest frustrations is that companies are always trying to solve the office through physical space and policies on hybrid versus, you know, home or remote without taking into account the significant impact of the work process and adapting the work process to make that alignment, that intentional alignment that you describe. So that I think is a fantastic example of how you're doing this differently. And I suppose having R and D engineers who are interested in the process is one great benefit because they're more curious than your average office, uh, worker.

Speaker A: They're both demanding, which is great because that also push us to kind of raise the bar. But it's quite interesting to see the impact if something is not working well. They're also very vocal because it actually influenced their work quite a lot. On the other hand, when you do something really, really great, it also has a very kind of positive impact on their work. So they're very kind of sensitive to the environment. Making sure that we have the right environment, that we have the right functionality of the office as well. And that makes it even more fun to actually work with.

Speaker B: Absolutely, absolutely. Wonderful, wonderful example, uh, so you talked about functionality and intentionality and you also talked about how the office is one of those enablers to attract the right talent. How much do you see your physical places, uh, embodying the brand and the values and the culture of Ericsson?

Speaker A: No, I think I mentioned around the long history of Ericsson. And we don't want it to be a museum where we showcase all the old technology that we have. So what we do is that to kind of what we're testing right now and working closely with the Brain team is that we actually try to, we have built a lot of components into iPhones for instance, and some of the first iPhones. We try to work with young artists for instance and try to actually scale up some of these small components and make out of it. And R and D engineers know what it is. I would probably not be able to tell, uh, but we somehow try to do it in a little bit of different way. When we look back and look at our history, when we look forward, our office is really the most kind of, that's the platform we use to showcase what our technology is about. So that's where we showcase use cases both around what it actually enables today, but also in the future. So we have some of these, imagine studios for instance, where we bring in prime ministers, customers and also our employees and so on to showcase what it is. So there we have self driving cars for instance. We showcase how you can make a stadium experience if you watch sports for instance, and so on. The younger generation is sitting and watching a game and that's it for 90 minutes or two hours or how long it is is not how they actually consume sports.

Speaker B: Right?

Speaker A: So we are doing some tests, for instance in ice hockey arena where we provide the connectivity and then you can have an interactive kind of experience. You can play games while you actually watch the game and you can interact in a complete different way. So we try to somehow illustrate some of these use cases because what we do is very complex. So we somehow need to use the office to showcase what our uh, technology

Speaker B: actually enable so that that whole kind of immersive, integrated experience of technology in place. And what's fascinating with that is of course everything we do in our lives now touches that integration of technology in place. So in some ways you have a bigger challenge, a uh, higher bar to meet. As an organization that is developing the Future of that experience, uh, by creating frictionless technology experiences for your employees, uh, that take them into the future.

Speaker A: Ah, we need to drink our own champagne as well. So right now we are actually, we are changing our wi fi routers and put up 5G in our offices instead, which actually reduce the cabling and a lot of the cost of fitting out an office for instance, and so on. So sometimes we also need to remember, oh, what is it? Oh, there's actually also a use case in what we do as a real estate organization.

Speaker B: Exactly. So one of the things that I often talk about is that buildings increasingly are becoming um, sort of dynamic data sets that allow you to be able to track utilization of space, carbon consumption, uh, employee connections, engagement. And I would assume that you are right at the forefront of that being able to test some of those assumptions.

Speaker A: I think that's sometimes something we forget a little bit. We are very kind of front end focused on what can it actually enabled. But if we don't solve the back end and make sure that we have the right data lake, we have the right data integration that it kind of connects and you can get correlation of data points and so on, then you turn actually data into insights and insights into actions. Otherwise we're just collecting a lot of data. Right. But it's definitely something where we see a strong need to further invest in sensors, in smart meterings, in making the buildings smarter or consumption smarter, but also engaging with our employees in a complete different way. And as a technology company, we thought that during the pandemic, okay, there must be some kind of application or prop tech where we can, where we can help our employees coming back to the office and navigate a hybrid environment. Where are my colleagues? How do I best utilize the office? We know the Monday Friday challenges. How do we make it a lot more dynamic in a way? And we did find that there was no kind of one stop shop for a solution like that. So as a technology company we decided to build our own technology. And I think we are around the third generation of the workplace app right now. We have a vision towards the sixth generation of uh, the tool and the vision there, that's not where we are today, I have to make that clear. But the vision there is that it becomes a digital twin that actually helps you. So when you come into the office that's been there, you actually get a notification. You sit in this area. This is where your team or your top collaborators and in order to kind of enable a tool like this, in order to also embed j, AI and other Technologies into a tool like that, you need the data foundation in the back end to integrate, uh, otherwise it will just be a very painful kind of uh, rule. So that kind of back end versus front end that somehow need to play together is extremely key. Right.

Speaker B: Uh, you mentioned about engaging your employees in the process. And you know, one thing that fascinates me always is that you know, Scandinavian companies are always seen to be much more innovative, uh, in terms of their workplace environments and typically have a very different culture of decision making. Tell me a bit more about that because I think it's interesting in the

Speaker A: real estate context our culture is extremely consensus driven. Right. So that means that when we uh, co create a lot, we engage a lot, uh, we invite a lot of different views. You also see uh, Scandinavian architects, uh, designing buildings in a different way, uh, very inclusive earth and so on. So it's definitely, you can say we are almost programmed to be very inclusive because it's so embedded into our culture. I think there of course also some challenges with a more kind of consensus driven approach. And you can say now we're back to the data because if you don't bring the right insights to a discussion with stakeholders, users or then you just get a lot of sentiment based input when you actually design solutions. And I always like the quote from Henry Ford, right when he designed the T model, one of the first models, uh, he said if I just ask my customers what they want, they would just have said faster horses. Uh, so it's that combination of being very consensus and get the input but also be extremely fact based so that we make sure that it's not too sentiment based.

Speaker B: Great, great point. Because being able to balance quantitative and qualitative data and using that to make more complex business cases, uh, is always such a critical part of design uh, solutions. And sadly for the most part as an industry we tend to be as you say, very sentimental based in terms of the engagement of people and very quantitative in terms of the decisions on building. So there is a disconnect now. You know, we've been working with you to almost streamline that process and it'd be great to hear a little more

Speaker A: about that post Pandemic, you can say understanding ways of working, how work actually evolve, uh, when do we need to make a change to the office, does it actually support what it needs to support and so on? We need to and I think we have a history of being more reactive. Uh, so most trigger points to changing an office layout, for instance, has been an expiry date, for instance or Contract date. And that drives a very kind of reactive kind of approach to say, oh yeah, by the way, we have a lease coming up. Let's maybe see if we should improve something. Right? And what we're trying together with you right now is to say, okay, but what if we actually add a step zero where we actually become a lot more data driven and the data again, turning data into insights and then into actions. Can it actually trigger something? If we sign a 10 year lease, for instance, maybe after three years, we actually need to evaluate if that is still fit for purpose. For instance, we can't just wait until year 10 because that's seven years of waste, more or less, right? So how can we become more proactive in our approach? By using data, by using the trigger that data can actually do.

Speaker B: As an industry, we are historically incredibly reactive as opposed to being a true partner to the business and being, being able to bring those valuable data points to help align real estate to the business and to the workforce and work process life cycle.

Speaker A: And as a technology company, in 10 years from now, Exxon will be a complete different business, complete different company. Our technology will be different, our talent will be different. Everything will be different in 10 years. So we cannot just commit and have a solution today that will also work well in 10 years or even in five years, uh, maybe. So how do we then build that flexibility into our solutions so that we can adapt and we can change? And uh, I think that's where we do see that we need to take a big step from being more reactive to a lot more proactive.

Speaker B: Sustainability is central to everything that Erickson has been doing. How does that impact your decisions on real estate? And I know some of this because we are working on some of this together, but it'd be really great to hear how you approach us.

Speaker A: No, I think this is one of the biggest challenges and opportunities that we have as an industry. Right in the coming years. And again, it needs to align with the company vision. And sustainability is embedded into our company vision. Digitization plays a huge role in actually removing carbon footprint. So it's embedded into our company. That of course also means from a real estate point of view, that we play, uh, an important role. We need to be net zero by 2030 in our own operations and real estate is roughly around 70% of that target. So of course it's about creating a complete roadmap and actually say, where are we today and where do we need to be by 2030 and what are the activities that we need to do to get there? Uh, so what we're working with you guys, uh, with right now is to say, okay, but when we do business cases and decision documents, we are very good at comparing different options against each other financially. Option A, B and C. And we can compare everything. We need to have a framework where we can also compare the carbon footprint of each option as well. So we are running a few, uh, tests with you now and some landlords where we actually have an assessment of different buildings so that it's embedded into our decision making.

Speaker B: It's more of a balanced scorecard that allows you to bring the impact of sustainability decisions alongside the impact of cost. So let's come back to metrics. Um, you talked about, uh, bringing in sustainability metrics alongside uh, cost to create a kind of more balanced scorecard. How do you measure the value of the real estate decisions you make?

Speaker A: When I joined Exxon five years back, I looked at our. Back then it was KPIs, right? And we have seven different ways of measuring cost. Cost per square meter, cost per, uh, employee, cost per whatever. And I think what was really good with the pandemic was that it actually forced us to ask why do we actually even need an office? What is the benefits? Not just the cost of the office. Like we just need it for the sake of having it. Right. But okay, why don't we just work from home 100%? So suddenly we actually needed to provide an answer to that question. So you can say the cost is just the input, but what is the output or the outcome of having an office? I think that has changed the dialogue with the business and stakeholders completely. Right. So it's a lot more outcome based. So it's about experience, it's about productivity, it's about how well does it support, uh, collaboration because we do translate collabor into future innovation, but also more classic, um, uh, metrics like utilization. It used to have, uh, the higher utilization the better. Now we have instead said how many of our buildings actually sit within the range of 60 to 80%. Because we can see from the data that that's where you have the vibrancy, that's where you have the best experience.

Speaker B: Very interesting. So of course it makes you much more focused on identifying what are the things that are worth investing in that will make the most impact to the business, to the cost, to the people's, uh, experience.

Speaker A: Yeah, you can say we want most experience for the money. Right. But it also means that we can be more focused when we have a more data driven approach. We can actually see what is it that we need to fix and we do that in real estate. But we also correlated with data from HR and it, because if we fail in real estate, HR will not succeed or it will not succeed either. Right. Uh, so it's about that kind of holistic approach to IT as one way.

Speaker B: Well, that brings me very nicely to sort of, um, my last question, which is kind of what should CEOs, CHROs, heads of real estate and technology think about when they look at the changing requirements and expectations of the next generations at work and the impact that they will have on the workplaces of the future?

Speaker A: Number one priority is to align strategies and even OKRs, right. Have shared OKRs across the different units so that we actually align on what is the ambition level, what those could actually look like, what is the investment that we. And should we invest in the real estate or the IT side for instance, and how do we can improve the experience most. Right. So that alignment on a strategic level, but also in terms of the kind of more operational, uh, okrs and have shared there, I think that's a fundamentals to succeed in anything. But I think the arena has changed completely. It's about ways of working. That's the starting point. We need to understand the ways of working. How is work actually evolving, how are, uh, the different processes and how do we then support that in the best way? But not only support it, we also need to nudge it and try to innovate it a little bit. And I think that is where the workplace can be extremely powerful when we team up and be engaged with the business. And we have seen that for the transformation projects that we have done post pandemic that we have actually in our HR survey, improved our ESAT, our employee engagement score by 7 points, uh, across in average for these sites where we have transformed seven points up. When we transform our offices, that's quite significant. Right. And I don't think AGI have any tool in their toolbox to improve the engagement by seven percentage point.

Speaker B: Uh, that's incredible.

Speaker A: It is when you really start to correlate and work together in a horizontal way rather than in your own vertical.

Speaker B: I like what you said about shared OKRs, because I think that collective accountability is the piece that's always lacking. We know that most corporations operate in silos and when we're trying to create experiences that bring together both the physical place, the digital experience and the employee expectations, you really have to create ways that you need to rely on one another.

Speaker A: Exactly. And I think we can do a lot in different programs and stuff. Like that. But when we all have it in our OKR and it's actually aligned, we also know the investment levels, we know where we actually move the needle. Um, uh, but again the data needs to somehow enable that. Okay, if I improve in real estate, you can actually see it in HR because what I do here is actually contributing to a better engagement across. So it means that we have better retention and we have better attraction or we can better attract future talent as well.

Speaker B: Uh, well that's very inspiring what you've been saying, certainly both in terms of the evolution of the digitization, the engagement of the people and the more intensive collaboration and alignment between those critical functions that deliver the outcomes. So I'm very interested to see where this goes next. Thank you so much for joining us today. Uh, it's been great having you on the show, huh?

Speaker A: And thank you. It's been great fun.