The machine manager warns against complacency – “I try to create a healthy sense of uncertainty”

Philippe Delorme looks at the sea glistening in the sun from the 16th floor of Kone’s headquarters. “I haven’t had enough time to sail,” he says.

The largest of the boats of the elevator company’s new CEO is the 10.8-meter Jpk-branded racing yacht called Racing Bee II.

The smaller boat is a foiling, i.e. rising on an airfoil, a Waszp-jo, which can fly over the sea at a speed of almost 40 kilometers per hour. It is sailed with a helmet on, because flying into the sea at high speed would otherwise be dangerous.

The same vertigo can be seen in the manner and speed with which Delorme has set out to drive change in Kone. He started work in January and soon he informed the rest of the management that the new strategy must be ready in September.

“It raised a few doubts, because the organization was used to a longer preparation time.”

Now the strategy is ready and the message is clear: Something must be found to replace China.

Kone has been doing hugely profitable business in China’s elevator market for the past 15 years with its state-of-the-art skyscraper elevators.

The company operates almost all over the world, but China accounted for about a quarter of the turnover last year as well.

When such a market collapses, it is not easy to admit the facts. The bubble in the construction industry pumped up with loose financing started deflating already four years ago.

At the end of the last decade, 800,000 new elevators were built in China per year, now less than 500,000. It is still the world’s largest elevator market, but not as big as it used to be.

The biggest problem for the machine is that due to the shrinking of the market, the price paid for elevators has dropped drastically.

“The Chinese market is in a considerable decline. Profitability in China used to be above the company’s average level, now it is below,” says Delorme.

So something new had to be invented and quickly.

New According to Delorme, the strategy means investing in elevator renovations even more than now.

They are already generating more sales than new elevators. Their share of the total turnover is already briskly more than half and the growth is clearly faster than in new sales.

According to Delorme, the biggest opportunities in China are also in maintenance and modernization of existing elevators. The elevators of many skyscrapers are approaching the age of renovation.

“There are more buildings over 200 meters high in Shenzhen alone than in the whole of Europe.”

Also in the market for new elevators, Delorme is pushing the company’s line. The machine is at its strongest in high-tech elevator systems tuned with the latest automation and flow control systems. They are no longer sold in the old fashion.

“In the most advanced elevators, Kone has a considerable technical lead over its competitors and they are undoubtedly still important. We now have to pay more attention also to ordinary elevators and their price,” says Delorme.

A basic elevator sold in ordinary apartment buildings is not as profitable in the sales phase. However, it feeds the maintenance business.

”

“I try to create a healthy sense of uncertainty in the crowd.”

Delorme speaks surprisingly directly. The speech is not covered with French-style polite garnishes, but the English sentences are precise and analytical.

Delorme, who grew up in Lyon and was educated at top universities in Paris, has spent almost his entire working career in Asia and the United States at the French electrical and automation company Schneider Electric.

He is therefore used to tuning his communication to the requirements of different cultures.

He spent 11 years in Hong Kong, so he knows the Chinese market inside out. Most recently, Delorme headed Schneider’s European operations. That’s when the Nordic countries and the local style became familiar.

Now Delorme wants to get his message across in Finnish style: the situation requires precision.

”When you look at what Kone was 30–40 years ago, the company’s success story has been incredible and still is. The machine has a lot of potential. But the last four years have been more difficult,” states Delorme.

Kone is one of Finland’s largest companies in terms of turnover. However, the company’s turnover has stagnated and profitability has weakened. History teaches that companies can lose their position quickly.

“I try to create a healthy feeling of uncertainty in the crowd. So that we are not complacent at all, but we carefully look at all competitors who are doing interesting things in the market”, says Delorme.

Global the elevator industry is the playing field of the big three. The US company Otis is the largest with a turnover 15–20 percent higher than Kone. The Swiss Schindler comes in third.

According to Delorme, other than the biggest competitors should also be followed. There are many interesting small companies and startups in the field of technology and maintenance as well.

Of course, Kone can buy them as part of its own supply. Otherwise, according to Delorme, the possibilities of business acquisitions are explored with an open mind.

In terms of operations in Finland, the new strategy raises questions. Of the company’s approximately 60,000 employees, only approximately 2,700 are in Finland. The small share is explained by the fact that two-thirds of the total number of employees are maintenance personnel, who of course work where the elevators are.

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Speed ​​must be put before perfection.

By machine there is a lot of elevator product development in Finland. What is its role after the reform?

According to Delorme, the new lines do not mean a decrease in the importance of product development. Development work is needed just as much for new lifts as for the modernization of old ones.

Among other things, Kone is developing an artificial intelligence assistant to make the work of elevator attendants more efficient. In order to minimize the use of energy, intelligent systems are also being developed that recover the energy generated during the elevator’s movements.

Delorme assures that the role of product development in Finland remains strong. The company cooperates closely with Aalto University in matters such as artificial intelligence.

And the product development of new elevators is not about to stop either. Now, for example, saving space, i.e. smaller and lighter elevators, is a trump card. In this field as well, Kone is ahead of its competitors in development.

The background of many development projects is the effort to reduce both products and emissions during their use. The fight against climate change is also high on Kone, which owns more than 60 percent Antti Herlinin on the family agenda.

“Competitors are closing in on us in this field as well.”

Still Delorme hopes that the entire organization will travel more and meet people face-to-face, also internationally.

“During the corona epidemic, we perhaps lost a little energy, tenacity, which applies to all other companies as well. People didn’t meet each other.”

In addition, the collapse of the Chinese market also coincided with the same years.

According to Delorme’s observation, the courage that was at the core of Kone’s culture has faded a little in the face of difficulties.

“Now it just needs to be revived. Courage, speed, simplicity, that’s the essence of strategy. In practice, it means, for example, that the teams have to make choices, which is not easy. You have to put speed before perfection.”

The investment company of the family of Kone’s main owner Antti Herlin is the second largest owner of Sanoma, which publishes Helsingin Sanom.