Steering success: Stefan Müller-Arends

Stefan Müller-Arends, Muehlhan CEO, talks to The CEO Magazineabout the often-rocky road to success as he steers an international operation back on track.

The CEO Magazine: What was it that first attracted you to take on the role as CEO of Muehlhan?

Stefan: There were two main things: the international footprint as well as the possibility to extend my scope of experience from an industrial manufacturing background to a service business.

What opportunities did you identify for growth and improvement when you were appointed CEO in 2011?

I very quickly spotted 4 key areas for improvement. The first was risk management — the risks in a project-based business are huge and they weren’t being managed properly. The second area was  leadership. Independent management is common in international project businesses, and this can correlate with the level of discipline. It means continuously walking a fine line; I need independently acting managers, and cannot keep the leash too short but, at the same time, managers have to realise that they are not free electrons in their own orbit.

The third area centred on the attitude of tolerance regarding project losses. They were totally cool and relaxed when a project started to burn hundreds of thousands of Euros, and this is not acceptable. Last was to look at improving the project controlling tools and replacing an inadequate reporting system.

Regarding growth, I actually had to shrink the business before I could start to grow it. We divested €20 million of negative businesses and still grew Muehlhan from €165 million to €255 million last year. That is growth of more than 50%.

The third area centred on the attitude of tolerance regarding project losses. They were totally cool and relaxed when a project started to burn hundreds of thousands of Euros.

What have been some key milestones or highlights for you and the business since then?

There have been a whole lot of simple little things — both operational and strategic — rather than anything spectacular: things like having the boldness to close loss-making operations everywhere, and seeing that decision help turn the company around, as well as the many little operational improvements that helped make Muehlhan more professional. Most importantly, but only seen by the staff and me, was the change in the attitude of the management team: risk awareness, better understanding of the implications of their actions, and a better team spirit.

Could you explain about changing the risk profile into a more risk-averse approach?

The culture in Muehlhan is positive and optimistic, and this attitude is also applied to the way projects are approached. This can be dangerous because the scope and the potential amplitude of risks are much higher in project management than in an industrial manufacturing process. Projects happen at the location of your customer and not at your own premises, which means that you have to deal with a much bigger number of variables that you can’t control.

That said, it is beneficial to expect that things will deviate from your plan — which they do anyhow — and to apply a more risk-averse or risk-aware approach.

How have the industries or segments you work in evolved over the years, and how has Muehlhan worked to keep pace with new changes and challenges that arise?

Most of our markets have undergone a radical change. The shipbuilding industry, as well as most of the repair businesses, have left Europe and migrated to Asia. This market was traditionally the backbone for Muehlhan and counted for almost the entirety of the company.

The wind-energy market has been in constant evolution since it emerged. As with all new markets, this comes with the rise and fall of the players, and Muehlhan has suffered losses over the years due to bankruptcies and not getting paid. The oil and gas market
stands for a good quarter of our turnover, and since 2013 this market has seen significant turmoil, which means another strain for us.

How do you foster positive working dynamics with suppliers and partners to create success for all stakeholders?

A trustful and close relationship is paramount for mutual success. Because of this, our operational managers maintain contact at an operational level, we invest in our own R&D activities, and often cooperate with our suppliers in those activities. And we maintain a regular dialogue on top-management level.