Entrepreneurial operator and investor Magnus Sandberg serves as Shoplogix and Group CEO of the Smart Manufacturing Software portfolio of companies under Constellation Software, Canada’s leading diversified software company.
In an interview with The Vertical Software Podcast, Magnus shines light on his journey through navigating the manufacturing world, his vision for the Smart Manufacturing portfolio, and his future aspirations for Industry 4.0 technologies.
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A native of Sweden, Magnus has ventured out across the globe; he has worked and lived in countries spanning parts of Europe, North America, and Australia. His professional background includes working with Autoliv, a Fortune 500 multinational market leader in automotive safety and Accenture, a global technology, business, and management consulting company. He also acts as a committee advisor for MaRS, one of Canada’s best-known innovation and investment hubs.
Magnus fosters strong leadership practices at Constellation. He brings his wealth of knowledge and experience to the forefront of M&A operations and has helped Constellation achieve honourable accolades such as a rank in Canada’s 50 Best-Managed Companies.
Interviewer: Tell us about your story; how did you get into the world of Smart Manufacturing software?
Magnus Sandberg: I grew up in Sweden and started my career in management consulting. I worked for Autoliv, which was one of the most prominent companies in Sweden at the time and still is. I worked for the head office, essentially travelled the world with them, and that experience is serving me very well now in the role that I’m in. After Autoliv, I started working with Constellation at a very early stage to what has become a huge Canadian success story. I left for a few years to run an impact, investment and innovation firm and came back to Constellation in 2017 to build and run what we call “the Smart Manufacturing portfolio of companies.” Shoplogix is one company in the portfolio which I’m currently the CEO of, as well. Throughout my career, I’ve lived and worked in about five countries around the world and if I were to step back and see what shaped me the most for who I am today, it’s that experience of living in five different countries, for sure.
Interviewer: What was it like to transition from a manufacturing company like Autoliv to, at the time, a very young, burgeoning, and growing company called Constellation Software?
Magnus Sandberg: It’s interesting in many ways. Autoliv had a very similar business model to Constellation. Autoliv was very decentralized where each plant was a business within a business and they had grown [through] acquisitions; Constellation is the same in many ways. We’ve grown through acquisitions, we keep the acquired companies autonomous and we own them for life. Similarly, both companies had a big focus on best practice sharing. In the case of Autoliv, we were in the process of transitioning to Lean Manufacturing and starting our Operational Excellence journey. We had help from one of our key customers at the time, Toyota, who is the pioneer in the field of Lean Manufacturing, so that was a great experience to be part of. Continuous Improvement is a core to Lean Manufacturing and Constellation is all about testing things, measuring the impact, and growing from it. So the transition was pretty smooth, despite the fact that the companies are in two very different industries.
Interviewer: What makes you excited about Shoplogix? There’s a lot of noise around AI, Machine Learning, and IIoT (Internet of Things). Tell us more about how Shoplogix goes across all these areas?
Magnus Sandberg: It’s a great company with a very strong team and product. We’ve been able to grow [Shoplogix] quite significantly since the acquisition and we now have team members in 12 countries and customers in 34 countries, so we sell many products and services into all those “buzzwords” that you just mentioned that would help with manufacturers to get into the age of digitization, IoT, and Industry 4.0. We call what we are selling a Smart Factory software platform and we primarily sell into industries like packaging, consumer packaged goods, food and beverage, and automotive. The time is now for manufacturing to be transformed or even disrupted. I love being a part of that market, where that change is happening. It’s always fascinating to be part of it.
Interviewer: What did you learn during your first stint at Constellation Software from an M&A perspective?
Magnus Sandberg: I learned both M&A and operations when I started with Constellation. I learned a tremendous amount and grew a lot as well. At the time, we bought and managed about 25 businesses and today we’re close to 600. [During the earlier days] I remember Mark Leonard, our founder and CEO, coming out to each business on a quarterly basis, and what really left an impression on me was how he coached the businesses. It was really a suggestive approach, as opposed to a directive approach. It’s all about learning and having people take ownership, and you don’t achieve that by telling people what to do. I would try to incorporate that in how I work with the companies under my umbrella.
Interviewer: In your words, why do owners want to work with Constellation Software? What makes it unique versus other exit options in the market?
Magnus Sandberg: I think the reason we’ve been able to buy 600 companies to date is that we fall somewhere in between a private equity owner and a strategic owner. We own for life, which is very liberating as a management team because you can plan and make decisions with a strategic mindset and long-term perspective. The same goes for people, we try to grow people over a long period of time. As a comparison, private equity firms, on average, own their businesses for maybe 45 years, which is a tight timeline to generate targeted returns. Buy-and-sell cycles can be very destructive to businesses and customers. Because of the tight timelines for private equity, they tend to dictate way more with a [high turnover]. [At Constellation] we keep businesses as autonomous business units with their own brands and keep the bands when we buy the companies, etc. If you compare that with a strategic buyer, they usually functionally integrate the business in their corporation. Often that kills the entrepreneurial spirit and focus of the companies that they buy. To me, Constellation really does a great job in combining the best parts of private equity and strategic ownership; it’s the best of both worlds. In addition to that, as I previously mentioned, Constellation is a company that fosters a sense of continuous learning and growth. At the end of the day, Constellation is a family of related business to business (B2B) software companies learning under the same umbrella. Learning from each other is highly encouraged and key. We have [about] 600 companies now under Constellation, each company will try different things, each management team will try different things, some things work, some things don’t work and I think we’ve created a very open book culture within Constellation where we share everything between the operations. With 600 companies, I would say we’re experts in B2B software companies.
Interviewer: As someone who came in to take over a company, tell me more about what that process was like. How did you work with the day-shift management teams and customers to ensure a smooth transition?
Magnus Sandberg: One of the first things that I typically do is to get feedback from all employees as to the challenges and opportunities that they see. We do our due diligence and we try to quantify the opportunities and the risks that we see. It’s interesting to talk to every employee and get their feedback, ideally in person. I typically have four questions that I ask each of them; 1) What does a company do really well today? 2) What are some things that the company or the department that the person is working in do better? 3) Thinking big, what is needed for the company to get to the next level? 4) What is needed for you to do your best work? Another area that I tried to focus on from day one is to make sure that there is a high level of transparency. Typically, employees are not aware of the financials of a business and the bigger picture and, to me, that is key to get to the next level of engagement and focus from the team. As for customers, they almost always see us as a great owner for the business once they understand that 1) We own for life, there will be no more destructive buy-and-sell cycles and 2) We are Canada’s largest software company, which brings stability and we give the software company resources to grow with the customers over time, which is something they really appreciate.
Interviewer: [Regarding leadership] What skills or mindset do you find the most difficult to transfer, even within the most talented members of your team?
Magnus Sandberg: What drives me is to always identify what I can do better. Whether that is improving the business or myself. That’s really important to me and I really value the combination of humility and a strong drive, alw
ays trying to push the envelope, and that is hard to transfer. I’m a big fan of the book Good to Great by Jim Collins; I think the principles are really strong and that has significantly shaped my thinking in the area of leadership.
Shoplogix is re-defining the manufacturing industry by making the Smart Factory platform the cornerstone of digital production performance transformation. By empowering manufacturers to visualize, integrate, and act on production performance in real-time, Shoplogix helps to uncover hidden shop floor potential and drive rapid time to value. Contact us to learn how a connected smart factory platform can transform the way you see, analyze and interpret real-time data in your manufacturing operations.