In memory of founder Gustaf Douglas

“As a founder, principal owner, member and chairman of the board (1994-2012), he has shown great dedication and devotion, and has always been actively engaged in the Group’s development and success.”

We published an interview with Gustaf Douglas about ASSA ABLOY in the book ”The history of ASSA ABLOY,” which came out in conjunction with the Group's 20th anniversary in 2014. We’d now like to share it again it here as a tribute to Gustaf Douglas. 

In memoriam: Gustaf Douglas

“Security is an eternal human need and a good industry to be involved in”

During your 50 years as a businessman and industrialist, you have owned a large number of companies in various configurations of investment companies. Two, Securitas and ASSA ABLOY, have developed into global market leaders in security. What made you invest in ASSA ABLOY?

In the 1980s, I struggled for several years to get out of a deep crisis related to my business ownership. I learned many lessons that made me think about corporate risk situations, especially from a long-term market and technology perspective. As a hardened, if not to say, scarred business owner, I came to prefer simple, transparent and slightly boring industries. Security was one such industry. In the late 1980s, this industry was overshadowed by the IT boom. When I first became interested in ASSA its mission was to manufacture locks. I’m no expert in theory or analysis, but one thing I learned at Harvard was to think carefully about the question that Theodor Levitt asked: “What’s your business?” For me, the mission became in all simplicity: security – security for people and their property – in other words, caring for value. It is difficult to reach any conclusion other than that such needs will grow, at least in line with population growth and material prosperity.

By your own admission you are a Count and a “rather superficial” investor. But doesn´t what you say show a lot of horse sense?

Call it whatever you like, but it’s about perpetual and concrete needs. People should be able to go to work with peace of mind, secure in the knowledge that their homes and their valuables are under lock and key. The objective is for goods and the right people to be able to enter homes and the places where people work and shop. Security is an eternal human need and a good industry to be involved in. Also, it gave me a sense of security that this industry largely serves enterprise customers. That provides some protection from volatile consumer trends and serves as the basis for rational purchasing behavior, which facilitates long-term control of expansion.

Another security factor for ASSA ABLOY is stable demand. Around 30 percent of sales each year go to the aftermarket; the installed base of locks and doors has an extremely long service life, perhaps even up to 30–40 years. This is now changing in pace with the accelerating technological developments that we are spearheading. Regarding my superficial nature, it has some advantages. You don’t isolate yourself in a rat hole, but keep all the rat holes under some degree of scrutiny at the same time.

ASSA ABLOY has become the world’s largest supplier of locks, doors, and access control. From an ownership perspective – what were the milestones along the way?

Following the initial establishment phase, in broad strokes, the next step was to buy a platform strong enough for international expansion. We began with consolidation of the Nordic market and were able to quickly move forward with acquisitions in Europe and the US that in short order made us the largest in the world. Carl-Henric Svanberg was the perfect leader for this stage and made a great effort to lay the foundation for long-term value creation.

The second phase was to create production and organizational synergies in this international group of “lock barons,” as we used to say in jest. We had a country-based organization where the country managers enjoy substantial delegated autonomy. This was initiated by Bo Dankis and became Johan Molin’s first major achievement. He restructured, rationalized, and streamlined the organization, administration, and production to provide the Group with major synergies in its global operations. The third phase has begun and is Johan’s brainchild: to dramatically increase investment in R & D, innovation, and development so that we can take the lead in generating demand with an ever-increasing range of new products and solutions.

It sounds like a master plan right from the start. Is that the case, or are you wiser now with the benefit of hindsight?

It’s like this: As principal owners, we would never have dreamed that in 20 years ASSA ABLOY would become the largest company in its industry, larger than the number 2, 3, 4 and 5 companies combined. That was never our goal. I mean that you shouldn’t keep your eye on the mountain top all the time when you have a long hike ahead. You have to watch the trail so you don’t trip. Just like Johan Molin emphasizes in his operational work, we drove developments based on processes and activities, rather than on lofty goals, when we built up the Group.

The obvious course was to become the best supplier for customers and thereby the market-leading supplier. The way the market looked, and still essentially looks today, thanks to a large base of installed products and solutions, is the presence of just one or a few players that make it difficult to break into the market through exports. Consequently, the natural path for expansion is through acquisitions. And we have been very good at making acquisitions.

Why?

Carl-Henric Svanberg and those of us on the Board were very quickly able to analyze how the lock industry worked with loads of family-owned companies, often quite inefficient in their protection of oligopoly or monopoly positions in local and regional markets, where they lived the good life with sluggish product development and reliable sales to large bases of installed locks. Carl-Henric was incredibly talented at being first in line, arranging deals and generating enthusiasm among sellers to become a part of the ASSA ABLOY family.

Coming from Sweden may also have been an advantage. We have an open, attentive, and inclusive corporate culture, with simple and understandable governance and little bureaucracy. Our pay was usually relatively generous and we allowed those who wanted to share profits to continue as shareholders.

ASSA ABLOY has a unique position among Swedish companies, thanks to its fantastic value growth in such a short time. How would you describe the ASSA ABLOY magic?

There are three things that made and make ASSA ABLOY a success: the people, the people, and the people. There is a culture of talent within the company at all levels that propagates itself over time. Culture is built both from above and from individual employees in organizations. Channeling and developing the culture have been and are vital for ASSA ABLOY’s long-term success. Johan Molin immediately took charge of continued culture-building by setting requirements and strongly emphasizing personal responsibility and an increased focus on employee development. Next after people, I must underscore strategies that have always been very strong at ASSA ABLOY, yet flexible enough to adapt to changes in the environment. Then perhaps execution – implementation – of the strategies that have enabled our amazingly rapid growth with increased profitability and strong financial stability. All of this is highly uncommon, or yes, indeed magical, for an owner.

You have been principal owner for 20 years. Has ASSA ABLOY’s huge appreciation of value ever made you think about selling along the way?

During my years in business, I have made   many and not always such wise business deals. But selling a company has never given me any great satisfaction. In many of those cases, it has been a measure to rescue, invest in something else, or because I’ve realized that I don’t understand it. My driving force has always been the stimulating and exciting work of growing companies. You can’t do this just by having a calculator in your hand. Your emotions must be engaged, or you can’t take a long-term approach.

Long-term thinking is the belief that what you are doing can lead to something better, sometimes requiring faith beyond all reason, which I have painfully experienced on several occasions. But as principal owner, you must have such faith, built on an emotion that may resemble love. That’s how I feel about ASSA ABLOY and a few other companies, and I watch how my family has now taken over after me and succeeded in progressing even further.