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Nordic CIO Interview: Teemu Salmi, Stora Enso
Working with startup communities helps to drive digital transformation at one of the world’s largest forest industry companies, Stora Enso
In 2017, Teemu Salmi had just returned to Stockholm, Sweden, from the Middle East. After heading IT and cloud services for Ericsson in the Middle East and East Africa, he was looking for a change. The chance for this arose from an unexpected direction – Finnish forest industry giant Stora Enso.
“I was approached by Karl-Henrik Sundström [former Stora Enso CEO] who asked if I’d like to join the company as CIO and head its digital transformation, which was just starting,” Salmi tells Computer Weekly. “I thought it sounded like a good plan, I accepted, and the rest is history.”
Stepping into a company that produces wood and biomass-based products was a major shift for Salmi after 17 years in the telecoms industry, but he was ready to shake things up. In the last four years, he has moved Stora Enso’s IT into a process-led organisation and introduced new ways to innovate, both within the company and in collaboration with startup communities.
Salmi’s first step was to ensure Stora Enso had the right leaders to drive its digital ambitions. He wanted to bring in senior staff from outside the company who were both technical and business-oriented.
“We opened up all management positions in IT and digitisation in 2017 and recruited 60 leaders who run the [IT] organisation today,” says Salmi.
Stora Enso has a total workforce of 25,000 globally. Its IT and digitisation section accounts for about 500 of these and it relies on a mix of in-house and outsourced delivery models. A significant change for the IT organisation has been to move into a process-led approach. Its IT is inherently process-driven – repetitive things done each day to ensure service quality – and Salmi wanted to introduce a better structure for it.
“There had been several attempts to become process-led before I joined, but it never took off,” he says. “Then we chose a framework called Business Technology Standard as a framework for our process deployment. We started that journey at the end of 2017.”
The introduction of the framework resulted in improved efficiency. At the same time, Salmi has increased transparency in Stora Enso’s service delivery section, putting in place a service portfolio that details each service, what the service actually costs and what is the service-level agreement.
Think big by thinking small
In addition to a focus on processes, Salmi sees investment in digital innovation as a fundamental change for Stora Enso. In the past four years, the company has earmarked more than €10m annually for digital innovation in an initiative called Digifund. It has also created a small digital unit of 20 people to work as part of its IT organisation. But instead of leading Stora Enso’s digital efforts, the team has a more supportive role.
“We need to help the business to employ and grow its digital savviness, so we can be a centre of excellence, helping the organisation to scale up and drive the transformation of digital knowledge and competence in the business lines,” he says. “That is where you need people, not in a huge central organisation on its own.”
Consequently, Salmi does not see innovation just as an IT or digital activity. It needs to connect with the company’s business strategy and the challenges it faces in achieving that strategy. For Stora Enso, one answer has been to open up these challenges to outside partners.
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But while many organisations like to talk about collaboration with startups, Stora Enso has turned it into tangible solutions for its business needs. One example is Portuguese machine learning startup Overstory, which combines satellite data and artificial intelligence-powered algorithms to help Stora Enso understand, for example, how many cubic metres of wood there are in a specific forest area, how healthy the trees are, and their growth rate.
This is one of many partnerships that have stemmed from Stora Enso’s work with the Nordic startup accelerator Combient Foundry, of which Stora Enso is the founding partner. Salmi believes cooperating with an accelerator that has access to an extensive network of startups is the right way to go for any large company.
“The second thing is to be very specific in what you are looking for,” he says. “One problem for many companies is that you go too broad and ask the startup community for help, but don’t get the answers you were expecting. We have learnt that the more specific you can be in describing a challenge, the better answer you’ll get from the startup community.”
Preparing for an automated future
But Stora Enso’s innovation efforts are not limited to outside partners. The company’s Digifund includes money for open innovation. Anyone in the company can apply for this funding, and the most promising ideas are selected twice a year.
But not all ideas succeed. Initially, Stora Enso faced a problem with closing down initiatives that their owners wanted to keep pursuing. To tackle this, it created clear criteria and a five-stage process to determine whether or not an innovation activity should continue.
“Let’s face it, if 10% of your initiatives go through, that is a success,” says Salmi. “You have to be able to discontinue 90% of what you do, and you need to have a transparent process in place for that, so the people starting the innovation process know what to expect.”
Now Stora Enso is moving from innovation to scale-up phase. It has allocated funding to build on the innovation portfolio it has created since 2017, and scale them to products that benefit the business.
Notable areas Salmi wants to explore further are automation and efficient asset utilisation. Here he draws on his experience in the telecoms industry. Telecom networks are typically operated from a central place globally and field maintenance is deployed only when there are maintenance needs or in response to problems. Salmi believes the same should happen in the forestry industry.
“It has taken 100 years to get to the automation level we are at today, but the pace of the digital development is now so fast that what happened in 100 years now takes 10 years,” he says. “If you grasp the opportunity to learn and understand how technology can help, then you can jump on a train that goes faster and faster. We are trying to do that.”
