As a proud EE grad (LA Tech, class of ’87), I’ve always had an affinity for battery companies. After reading about the downfall of Northvolt, once heralded as Europe’s beacon in battery manufacturing, I was disappointed but obliged to put on my CEO hat and once again see a big miss on a critical aspect of effective leadership: the importance of identifying and addressing management issues before they spiral into crises. Obviously, visionary thinking is vital when building complicated technology, but the ability to anticipate and sidestep common pitfalls often determines a CEO's success.
Northvolt's journey began with the ambitious goal to establish itself as a leading European battery producer, securing substantial investments and partnerships with industry giants like Volkswagen and BMW. However, the company encountered significant challenges, including production inefficiencies, safety incidents, and struggles to meet customer demands. These operational failures culminated in the resignation of CEO Peter Carlsson late last month, a leadership change that underscored the severity of Northvolt’s internal issues.
As Andy Palmer, founder of consultancy Palmer Automotive, observed:
The biggest issue is that batteries are not easy to make, and Northvolt haven't satisfied the supply demands of their customers—that is a management issue.
I agree, batteries are hard to make. But talk to any startup founder, and you’ll learn making anything is hard. I think Andy’s observation points to a deeper failure: management's inability to recognize and resolve execution challenges early. Once these issues became visible to customers, the company’s reputation and financial stability were already severely compromised.
In my work with CEOs, I constantly emphasize being vigilant in monitoring the health of the organization, particularly in areas that directly impact customer satisfaction. A CEO’s job is to see problems before others do and act decisively to prevent them from growing. The only way I know how to accomplish this is a management system that highlights developing risks and empowers leaders to make swift, corrective action. In Northvolt’s case, the inability to scale battery production and meet delivery commitments was a known industry challenge. Yet, the company’s leadership failed to implement measures to address these issues before they escalated.
Here’s the deal: CEOs must develop mechanisms to spot and address management shortcomings early. Ignoring or underestimating operational issues can transform manageable challenges into existential threats.
As Shane Parrish of Farnam Street aptly noted,
It can be difficult to appreciate how much simply avoiding the standard ways of failing dramatically increases the odds of success.
As part of your CEO operating system, I would absolutely foster a culture of vigilance and proactive problem-solving, regularly reflect on questions such as:
What signs of misalignment or dysfunction exist within our current operations, and how are we addressing them?
Are there risks in our execution that could lead to customer dissatisfaction or missed expectations?
Do we have robust feedback systems in place to detect issues before they impact our strategic objectives?
Engaging with these inquiries consistently can help you build a resilient organization that navigates predictable pitfalls effectively. The downfall of Northvolt is a cautionary tale that highlights the high cost of overlooking operational challenges. Vision may set the course, but the discipline to anticipate and manage risks ensures the journey's success.