Hugo Scott-Gall: I’m delighted to welcome Daniel Ljunggren, President and CEO of MilDef. Daniel has been instrumental in taking MilDef from a small, unlisted technology company to a publicly-traded, leading defense technology company with a growing European footprint, with a Master’s in Business Administration and a career as an authorized public accountant. Daniel joined MilDef in 2011 as CFO. In 2020, he became the executive vice president. In ’23, he became president and CEO. Daniel, welcome to the show.
Daniel Ljunggren: Thanks very much, Hugo. It’s really nice to be here and meet all of you, and thank you for inviting me.
Hugo Scott-Gall: Is this really your podcast debut?
Daniel Ljunggren: It’s my first international one. I’ve done a couple in Sweden, but the first international one, so that’s great.
Hugo Scott-Gall: Well, they always say, “You’ve never really done a podcast till you’ve done an international one.” So, you don’t look in any way nervous—and nor should you be. So, let’s just set this up. Let’s do a little bit about MilDef. Could you talk to me a little bit about in the whole sort of defense landscape, what makes you different? Where do you sit in that landscape?
Daniel Ljunggren: MilDef is a provider of tactical IT. So, we are the ones that are providing and offering the IT backbone to the defense forces, so to say. It could be digitalization of a vehicle or other different platforms or other IT tactical solutions. So, we are a part of digitalization of the defense forces, so that that’s our core business, and that is what we have done for more than 25 years. So, it’s mainly the hardware.
But we also have software and services in our portfolio. So, that is our contribution to the defense keeping peace forces, that we are giving them the edge by adding that digitalization part of it. So, it’s about communication and position and sensor systems and all of those kind of things that give you some kind of advantage on the field.
Hugo Scott-Gall: I think they’re called rugged PCs, right? Why are they rugged?
Daniel Ljunggren: It’s around the rugged business, let’s say, and the rugged is about they normally are out in field. And, out in field, you can’t use your commercial IT equipment because that would be broken quite quickly. So, you need something that is really harsh and that is down for this harsh environment. And that is what we are providing.
Hugo Scott-Gall: So, you said not just hardware. More and more, it’s software around the hardware. Has that required you to evolve your skillset as a company? You used to make pretty good hard stuff. Now, it’s actually as much about the software. It’s about integration. How do you innovate? How do you get the right skills to do that?
Daniel Ljunggren: Exactly. MilDef does something else today that it wasn’t just a couple of years ago. By acquisitions, we have added software and services. So, the offering is expanding, and that is also forcing MilDef to be in the front when it comes to innovation all the time. So, it’s about having the right people and the right mindset and then making sure that—also, we’re listening very carefully to the customer, what they need, so we don’t do innovation that is going in the other direction. It’s very important for us that we are doing things closely with the customer and the end customer, so we are on top of what they really need in the end.
Hugo Scott-Gall: I think I saw on your advisory board, you’ve got a few retired three and four-star generals. Are they valuable for experience, for network, or they valuable for product insights?
Daniel Ljunggren: Mostly for the network. They have been an important door opener on some markets. So, that is how we have been able to use that advisory board.
Hugo Scott-Gall: And, when it comes to competition, what are you really competing on? Is it capability? Is it relationship? Is it ongoing relationship? If you think about the moats around your business, is it you just have better products, or is it actually services as well around it?
Daniel Ljunggren: I think the big portion of this threshold in this market that we are operating in is that this is a trust business. We are delivering a product that hasn’t failed on the field for more than 25 years, so we are really field-proven and a trustful supplier in today’s industry. And I think that has been very important to remember as well. We have spent the last 25 years as a company developing and delivering products within this area. So, we have gained a lot of knowledge around what works and doesn’t work in this industry and in our tactical IT niche. And I think that is our big advantage, that we have a high competence of knowledge around how we can put this product on the field and they will not fail.
Hugo Scott-Gall: Okay. Let’s go bigger picture because, right now, European defense is bigger picture.
The world arguably has changed, and maybe the world over the last 40 years has changed. And, obviously, it’s a combination of a hot war in Ukraine. It’s a combination of perhaps the security blanket, security protection provided by the U.S. to parts of the rest of the world, including Europe, is maybe being withdrawn. I paint today a radically different picture of the world today versus 10 years ago. My overall statements, do you agree with them? Am I understating, overstating?
Daniel Ljunggren: Yes. To be clear, you’re absolutely right. It is a new world. And I think, for the defense industry, and especially in Europe, it’s a total new landscape. The demand has never been this high. This is a ramp-up that no one that operates now or works in the professional life have seen this before. So, this is something totally new for the defense industry in Europe. And Europe has said that there will be a quick defense ramp-up. So, it’s absolutely something new at least.
And I think that we hear on the news and from the political side that there is a lot of money that will be spent into the defense industry. So, what I hear when I listen to other CEOs at the European defense companies, is that we are a little bit unsecure of how fast this would go. But no one has been in this environment before, so this is something new for us. And I think we need to be humble about that and also be very on our toes, so to say, what will be the next step here.
Hugo Scott-Gall: If you subscribe to the view that you get peace through strength, it’s not easy, but you can measure military capability of different countries. So, there must be—and I think this is being already outlined by European governments—a kind of minimal level of military capability through strength to bring peace, that actually Europe’s right now, it’s military capability, whether that is material, whether that is naval power, whatever it is, however you measure it is not where it needs to be to deal with a more potential expansionist or certainly more aggressive Russia in a more complex world.
Have you thought about it? And I’m not going ask you to express it as a percent or anything like that, but to be strong to feel sure that actually that strength acts as a deterrent, how far away from that are we, never mind what’s possible, never mind what politicians are prepared to write checks for. But are we talking orders of magnitude of spending to get up to a capability that acts as a strong deterrent?
Daniel Ljunggren: I think, first of all, we are coming from a scenario where Europe has underinvested in defense for more than 30-40 years, maybe. And this is something that is not a quick build-up. This will take some time to build up the capabilities again. And, unfortunately, as I said, underinvested for over 40 years, something like that. And it feels like this insurance, so to say, it needs to come in place again. We need to build a strong defense again. We need to create peace through strength. So, exactly how it will play out, but it’s a real wake-up call for Europe.
So, that is something that is really shaking the defense industry in Europe now, and that all of us are looking for how we can increase our capabilities, how we can increase volumes, delivering more, finding the right resources, etc. We’re already up and running at full speed, and I think that this is just probably the beginning of the beginning. This is a ramp-up that will take 5,10, maybe 20 years before we are done with this defense ramp-up in Europe.
Hugo Scott-Gall: And that creates a challenge for you as a CEO, how to grow fast enough to meet demand, what’s too fast growth, what risks may be to stabilizing the company. Every company wants to grow, but there are constraints and limits certainly in the short term. How do you think about that?
Daniel Ljunggren: That is one of my biggest concerns, actually. There is a growing pain for the company and how we can tackle that as a company, as a management group. For example, where can we find resources, how can we be able to continue to operate with a culture within the company that we’ll like? How can we have people on board that we enjoy being on board in MilDef, etc.?
So, there is a lot of—tons of different challenges when it comes to addressing this quick ramp-up. But so far, MilDef has been able to find the right resources. We have taken steps all the time, and I think we are ready to do more than we are doing today. So, we are in front of taking a little bit of a risk as well when it comes to being a little bit faster ramping up the capabilities than what volumes are coming in. So, I think we are in a quite good position. But as I said, I think, yes, we are in the beginning of the beginning. And this will strengthen the organization even more and challenge the organization even more because there will be a lot of growing pain five years out in time.
Hugo Scott-Gall: How much is it physical constraints versus—so physical capital constraints, access to key ingredients, resources versus human capital restraint? Any industry that really expands very fast, expands supply very fast, creates shortages.
Is this going to lead to—I was going to say a war for talent, probably the wrong words, but is this going lead to a hotly contested market for top talent?
Daniel Ljunggren: I think we need to find different ways to operate. I think we need to be able to rethink how we do things, and maybe not just adding on more things that we have done before. I think we need to learn in the defense industry in Europe to cooperate even more together and see how we can find strengths to be able to deliver even more. But of course, there will be maybe a lack of talent in the industry.
On the positive side, I will say that people are now seeking work—to work in the defense industry because the last 20 years maybe, people were mostly looking away from the defense industry because the money had gone out of the door. But now, when the money’s back on the table and the innovation is back on the table, there’s also a lot of people who want to join the defense industry. So, then you’re nearing something like that, or we are seeing that it’s—they’re coming back again to the defense industry.
They are seeing if they can make a significant difference in this one and also, that they can—where the defense industry can be on top of the innovation part, and maybe that was lost 20-30 years ago. But people are seeing that, now, the defense industry, with all the money flooding into the system, could be a really interesting employer.
Hugo Scott-Gall: And that’s the historic path. When you invest heavily in military defense capabilities, this intersection of military, industrial, technology, usually, there are creative sparks that lead to innovations, adaptations that have spillover effects into the economy. The most famous example, obviously, is out of DARPA, you get the internet. But for Europe, which has been in a malaise, secular stagnation plus at least one—well, two financial crises quite close together. Do you feel this is really your kind of broader view? This could well be quite stimulative to the European economy for some time.
Daniel Ljunggren: I think so. I think there will be a lot of ripple effects in the economy as well. This will not have just only an impact in defense industry. It will impact the sub-supplier, so the defense industry, and the whole ecosystem around the defense industry. So, hopefully, this will be some—a boost that Europe really needs when it comes to getting the growth back again in total, in general terms, I would say.
Hugo Scott-Gall: How freaked out—that’s a technical term—do you feel European governments are by the idea of the U.S. no longer being as reliable as it was and the idea that there’s a kill switch in equipment that’s bought or systems that are bought from the U.S. that makes European governments incrementally wary and more adverse to buying U.S., therefore favoring local? Have you seen that already?
Daniel Ljunggren: We have seen it, and we have seen the directives they are giving as well, that they need to strengthen the European supply chains as well when it comes to defense industry. So, they have really taken some initiative towards that, how they can strengthen the European defense industry and not buy so much from the U.S., buy less from the U.S. and more from Europe.
So, I think they have realized now that Europe needs to be standing on their own legs when it comes to the security part. So, my point of view is that they’re really taking this serious when it comes to, “Will the U.S. really back up Europe? Will the U.S. have their leading part in NATO, or will they step down from that, etc.?” So, I think they really woke up and realized that we need to strengthen the European defense together, and that is what we’re seeing here and now. And they have taken a couple of actions towards that already.
Hugo Scott-Gall: So, as you put all this together, this really is a multi-decade change for you in terms of demand, in terms of customer base, for Europe. And most CEOs have to think big picture and have to think longer term, but you really do.
Daniel Ljunggren: We need to do. I think we’re forced to do that. We need to invest here and now for the long-term game, and MilDef is a player that really wants to be here in the long term as well. We have operators, I said, already almost 30 years in this business.
We have full focus now on really being a relevant player, being a helpful player when it comes to this European defense ramp-up. So, that is what we’re really acting for and planning for and talking all day long about, how we could be a 10-, 20-year relevant player in this defense ramp-up. So, we are trying to turn every stone we can and see what we can find and then how we can increase our capabilities.
Hugo Scott-Gall: Someone was interested in asking about culture. Now, there are all sorts of different definitions not commonly agreed upon around culture, how to measure it, what is it, what’s a good culture. I think it’s easy to identify a bad culture, but success breeds success. So, I imagine if you could take a barometer and measure a culture in that sort of company, what’s happened even just this year must have everyone’s morale up. It must really help, too. I imagine your culture suddenly feels better because your growth prognosis is pretty good. Is that how you see it, or how do you think about culture?
Daniel Ljunggren: I think, even if I said the big challenge is the growing pain, we also see, of course, that there are a lot of people in the organization who really feel motivated about being an important puzzle piece into the European defense ramp-up. So, that is really important for all of our almost 500 employees as well as going to work every day and really feeling motivated that they are playing an important role in giving the best equipment to our defense keeping forces here in Europe. So, I think that is a good way to put it, that the motivation for the people has really gone up. They feel that they are in the place where they can make a difference. So, I think that is an important component as well, to remember that people are not just into this as an ordinary work. They are also into this to really help create the peace again in Europe.
Hugo Scott-Gall: So, I want to ask you just some questions about you as a CEO because I always find this very interesting how—and the first question I’m going to ask you is: how do you make decisions? Are you a think about it, go for a long walk, by the end of the walk you’re going to make a decision? Are you back of your mind you’re turning it over a period of weeks? Do you have two or three people—obviously, you don’t need to name them—who you always bounce ideas off? Are you a talker? Are you a thinker? Are you a ponderer? Are you gut feel decisive?
Daniel Ljunggren: That’s a really good question. I think mostly I’m a talker. I like to brainstorm with other people, well-trusted people —close to me in the organization, for example, where we together can come up with some kind of solution that we think would work. And, from that, we can execute. In the bigger picture, of course, I take—it’s not just data-driven decision as possible, but sometimes you need to take from the gut feeling as well. But if you can support that with the data you have, at least you have something to build it up with. But as I said, mainly a talker, and I like to brainstorm with some people that I know are very wise and can give me some good advice and a good angle of different things. But of course, taking a lonely walk sometimes is also maybe a good answer to how you can get to the right answers.
Hugo Scott-Gall: Decide, move on, or are you an active reviewer post-mortem, and kind of how do you deal with, “I got that one wrong.”?
Daniel Ljunggren: Decide, move on is probably my style. I like to take a decision and a quite quick decision, and then we can take a new decision based if we didn’t take the right decision from the beginning. But not taking any decision at all, I think, is the worst part of it. You need to take a decision, move on, and then you need to be prepared to take a new decision if it turns out that the first decision was not really the best one. So, that’s probably my view of it.
Hugo Scott-Gall: Do you wake up in the middle of the night, or do you sleep well every night?
Daniel Ljunggren: I sleep pretty good, actually. Thank you. Most of the nights I sleep really, really good, actually. But of course, from time to time, there are some issues or problems or challenges that you face as a CEO that can keep you, not awake at night, maybe, but you can spend most of your time waking to think about.
So, that’s a task that the CEO needs to take on, and what’s in the road. I normally say to my colleagues that, “Bring me the bad news because that is something that I need to deal with, and the good news normally takes care of itself.”
Hugo Scott-Gall: If you compared yourself today to, say—I don’t know—15 years ago, what are you like at assessing people, whether it’s through interview or people that report to you, your insights into where people need to improve, what they do well, and your overall assessment of them? Are you getting better at it, and have you changed your process? Because assessing human capital, in every business we will do it. I don’t think you’re ever really particularly trained for it, and it’s a skill, but it’s a learned skill, I think.
Daniel Ljunggren: I agree totally with that. Mainly, I will try to figure out what kind of person I’m leading and what kind of people that we’re talking to and see how can we address that in the best way. I don’t think that you can use the same leadership style all the time.
You need to adapt to different situations, different people, so you need to adapt your different leadership style, etc., trying to find the best way how you can motivate people and how you get them to feel that they really want to be a part of this and do the best they can. So, I’m trying to figure out what kind of message I will send depending on what kind of situation do we have here, and what set of people are the ones who will receive the message. I also think adding on that, looking back from 10 years now, I’m training at least to be giving a straightforward and honest feedback, quite quickly.
And I think that is important as well for the colleagues around me to understand that I’m trying to work on that—I think, having constructive feedback is very important.
Hugo Scott-Gall: What do you think are all the best incentives for people to do their best work? Is it position in the hierarchy? Is it financial compensation? Is it acknowledgement, praise of good work? Jensen Huang at Nvidia, if someone has a great idea, he gives them a cash bonus almost on the spot.
I mean, that’s one extreme, one way of doing it. And, for lots of companies, that wouldn’t work. I’m interested in just your observations from being a leader for quite some time of what really actually consistently works with people to get them to do their best work.
Daniel Ljunggren: I have noticed here in my years as a leader, of course, that people are different. People have different motivation factors. Of course, some are driven by money, and some are driven by something else. But I think, in general terms, I think that the money is quite short-term motivated. You need to find something that is more for the long-term motivation. And what that can be could be different for different people, but I think you need to look beyond, yes, the short-term cash incentive things. You need to find a different way, why people really want to just put in all the hours that they are doing to create something good together. There needs to be something else than making money in the end.
Hugo Scott-Gall: And what’s the thing you’ve found hardest in your time as a CEO?
Daniel Ljunggren: The hardest time?
Hugo Scott-Gall: The hardest time, the hardest thing, the thing that’s caused you the most stress or doubt.
Daniel Ljunggren: That’s a really good question. It depends on different things and different situations, I would say, but of course, every time you have something—a negative message to the staff and the people that have been working around you or people in the organization that have been with the company for a long time and you have some kind of negative message to deliver. Of course, that is always hard when it comes down to people and making people disappointed or sad because they believed in something else, but you need to take another decision. And that is probably the hardest way to—when you have that kind of thing, but I think it’s also important that you can give those messages in a humble and honest and straightforward way, so you don’t try to make it sound better than it is.
Hugo Scott-Gall: Okay. One final question. Big picture, the future war. And I think if you asked—I don’t know—people 10 years ago, “What would the future of war look like,” they say, “It’s going to be robots. It’s going to be this.”
But in Ukraine, in some ways, it still looks like, say, the Second World War or even the First World War. But I’m interested in your view on the role of drones, robots. How high-tech is it? Do you think it’s going to be, or actually it’s still about volume of humans and things like bullets and guns and tanks?
Daniel Ljunggren: That’s a good question. I don’t think we never can come away from some of the things like, yeah, and bullets and tanks, but of course, there will be a development. I think there will be a development much more around unmanned things like drones. It could be other things as well, unmanned vehicles and things like that. I think we will have a high degree—a high push for digitalization of the individual soldier. There’s something in this niche going on that is called this mounted soldier concept that they’re really trying to make digitalization of each individual soldier.
Today, maybe that is more on the platforms, like a vehicle or something like that. But I think we will see a high demand for digitalization of all the areas within warfare. We have the AI, for example. We don’t really know how that will play out in the end and what kind of effects that will create on how you’re making war. But I think there will be a quite big change, but I also think that MilDef as a company, when it comes to, there will always be a high need of data power on the war field. So, I think that we are in the good sweet spot when it comes to increased defense spending, but also what they should spend their money on. There is more and more digitalization and data power out in the field.
Hugo Scott-Gall: Great. Daniel, thank you very much for coming on the show. I feel delighted that I was able to host you on your international podcast debut. But more importantly, thanks for sharing so much about how you think and operate as a CEO, but also talking about the very strong change and robust demand outlook that the European defense industry has.
So, thank you very much.
Daniel Ljunggren: Sure. Thank you very much for having me.
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