# Swedish lessons
*What any business can learn from a line of Swedish industrial groups*
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Sweden has produced a particular kind of company. It buys small industrial businesses, usually leaders in narrow and unglamorous niches, keeps them, and runs them from a very small head office. Several of these groups trace back to Bergman & Beving, a technical trading company founded in 1906. Since 2001 that one company has become six listed ones, among them Addtech and Lagercrantz, and most still run the same way. Lifco and Indutrade arrived at much the same model independently. You can see a resemblance in some better-known serial acquirers too.
The model grew up in diversified industrials, and some of it only makes sense there. But its parts fit together for reasons you can state, and I think there are lessons in it for any business, as long as they're learnt rather than copied.
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In the spring of 1981 Bergman & Beving's finance director, Anders Börjesson, and his colleague Torsten Fardell set one number for every part of the business: profit divided by the working capital it took to earn it, with a target of at least 45%. For a trading business, working capital is mostly stock on the shelves and money owed by customers, less what it owes its own suppliers. The ratio is profit as a share of sales, multiplied by how many times a year the stock and customer debts turn back into cash, so a manager can move every part of it. They can raise the margin, collect from customers faster, or hold less stock.
A metric is an attention tool. It points people at whatever matters to the person who set it. Setting a good metric is setting a strategy. A metric only works if the people being measured can understand it and influence it. Give a manager a number they can't follow, or one built from things they don't control, and someone else has to interpret it for them. That is one way a group ends up needing large central teams to analyse and explain each business's results.
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The same number tells each business what kind of job it has, and whether it may buy other businesses. This is how Bergman & Beving sets it out today:
| Profit over working capital | The job | Buying other businesses |
|---|---|---|
| Below 25% | Margin and working capital, usually stock, even at the cost of some sales | Off the table |
| 25% to 45% | Mainly profitability, with only selective growth | Sometimes |
| Above 45% | Grow, by selling more and by buying | Expected |
The 45% is said to come from a simple split: a third of profit to tax, a third to dividends and a third reinvested. Reinvest a third of a 45% return and working capital can grow about 15% a year without new money. If the return holds at 45%, profit grows 15% a year too, which is Bergman & Beving's target for earnings growth.
The bands answer a question most boards argue about every year, which is whether to spend effort improving the business or expanding it. The two aren't equally valuable. [[Facing into M&A|Growth can be worth far more than a cost saving]] when the business earns well above what its investors require, and destroys value when the business earns less than that. The bands make a rough version of that call in advance, so each manager can see which side of the line they're on without waiting for a board paper.
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All of this runs from very small head offices. Lifco ran 275 companies at the end of 2025 from a head office of sixteen people. Bergman & Beving's head office is about ten people. These groups still shape their companies, the people who run them and how they work. They do it differently from a large corporation.
A large corporation mostly passes on [[Human bottlenecks|know-what]], the things that can be written down: policies, playbooks, shared systems and group-wide processes. It takes a large head office to write them and enforce them. The Swedish groups mostly pass on knowhow, the practical sense of how to run a business, which travels through people. Lifco's subsidiaries are chaired by group managers who used to run subsidiaries successfully themselves, and part of their job is to bring each company into the group, its culture included. Around 500 people a year, from managing directors to sales staff, go through Addtech's academy. In 2000 Bergman & Beving gave every employee a book about its "idea and soul", and two decades later people at Addtech still had it.
Little of this is written down as policy, and it changes as the people change. Because each company's number needs no interpreting, the head office has time for this work.
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Bergman & Beving split off Addtech and Lagercrantz in 2001, when it had about two hundred companies. Since then, the companies that split off have split again.
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<text x="256" y="33.5" font-size="9.5" fill="currentColor" opacity="0.85">Lagercrantz</text>
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<text x="165.5" y="70" font-size="8" fill="currentColor" opacity="0.6">2016</text>
<text x="256" y="77.5" font-size="9.5" fill="currentColor" opacity="0.85">AddLife</text>
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<text x="256" y="99.5" font-size="9.5" fill="currentColor" opacity="0.85">Bergman & Beving</text>
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<text x="174.4" y="114" font-size="8" fill="currentColor" opacity="0.6">2017</text>
<text x="256" y="121.5" font-size="9.5" fill="currentColor" opacity="0.85">Alligo</text>
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<text x="218.6" y="140" font-size="8" fill="currentColor" opacity="0.6">2022</text>
<text x="256" y="147.5" font-size="9.5" fill="currentColor" opacity="0.85">Momentum Group</text>
<text x="256" y="131" font-size="7.5" fill="currentColor" opacity="0.6">was Momentum Group</text>
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The only reason given for the 2001 split was focus. But the pattern runs against the idea of getting as big as possible. Each new company started with the number, the small centre and the habits, at a size where they still work. The result is several mid-sized companies instead of one giant, each still close enough to its businesses to run them this way.
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None of this should be copied wholesale. The model grew up in businesses that had little to share: separate niches, different customers, different products. Where your businesses serve the same customers, [[Building density|combining them]] can be worth more than leaving them alone. In software, a shared development centre can hire people no single small business could attract, and buy cloud hosting and AI computing at a better price. And profit over working capital means little in a subscription software business, where customers pay in advance and working capital is often negative. Whatever number you choose there, build it the way Börjesson and Fardell built theirs, from parts each manager can see and move.
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