Multidivisional conglomerate
In 1975 KONE was an elevator, crane and conveyor company. The crane business carried the company through the oil crisis in 1973-74 as shipyards geared up to handle the new generation of giant tankers. The arrival of Gerhard Wendt in 1970 and his subsequent rise to general manager of the Materials Handling Engineering Group, bolstered the leadership necessary to handle the company’s growing diversity. Matti Matinpalo headed the Lift Group, and Arvo Tuononen was in charge of finance and administration.
In the 1980’s, KONE both diversified and expanded into new geographic markets. In addition to the elevator and crane businesses, there were now electronic medical technology (KONE Instrument Division), wood handling for the pulp and paper industry (KONE Wood), high-pressure hydraulic piping systems (GS-Hydro) and shipboard cargo access solutions (MacGregor-Navire) as well as a few smaller ventures. KONE also continued to own the Raahe Steel Foundry, an acquisition made in the 1950s. KONE increasingly placed service at the center of its offerings.
Such a heterogeneous and increasingly international conglomerate was hard to manage centrally. KONE’s policy was one of global support for local operational decision-making. Real-time reporting allowed controllers to keep track of what the various national companies were doing, but it was not yet possible to streamline operations in the dozens of factories and hundreds of branch operations around the world into an efficient global unit.
As Pekka Herlin and his team grew older and global commerce became faster and more complex, they had an increasingly difficult time keeping this diverse empire functioning efficiently. By the late 1980s there were signs that KONE – now one of the world’s top three companies in elevators and escalators, cranes, wood-handling systems and shipboard cargo handling systems – was beginning to lose the drive that had powered its growth and rising prosperity.