A relentless focus on accountability and continuous improvement transformed Valmet from an underdog into an industry leader in a decade. Pasi Laine tells Jean-François Manzoni how it was done....
When Finnish industrial machinery company Metso split into two in 2013, Pasi Laine knew he was inheriting the tougher challenge. Valmet – spun off as a standalone company specializing in pulp, paper, and energy machinery – was widely seen as operating in a declining industry. Analysts and media speculated that bankruptcy could be on the horizon.
“All the news around us was negative,” recalls Laine, an engineer by training and a 25-year veteran of the company at the time. Yet rather than seeing the de-merger as a setback, he embraced it as an opportunity to prove the skeptics wrong.
The separation from Metso, a mining and construction equipment manufacturer, forced Valmet to sharpen its strategic focus. Without the safety net of a stronger-performing unit, its success depended entirely on its performance. This newfound independence brought clarity, says Laine, fostering a deep sense of ownership and accountability – both for business results and for strengthening customer relationships within a leaner, more agile structure.
“Sometimes I say my easiest management job was the de-merger,” he jokes, describing it as a shot of momentum to rebuild the company from the ground up.
He also streamlined operations, reducing headcount from 12,500 to 10,000 within two years – nearly half the workforce in Finland’s paper industry at the time.
Valmet traces its roots back to the early days of Finland’s industrialization in the 18th century, specifically to a shipyard that later became part of the state-owned metalworks Valtion Metallitehtaat – eventually shortened to Valmet. In the 1950s, the company shifted its focus to industrial machinery, particularly for the forestry sector, a cornerstone of the Finnish economy.
By 2013, however, the business was struggling. Overcapacity in China, a shift toward smaller machine sizes, and declining paper demand led to underperformance and a shrinking profit margin. Customers were frustrated by poor coordination between business units, while internally, many doubted whether service revenues could grow organically or if technology alone could be profitable.
To address these challenges, Laine restructured Valmet into a matrix organization comprising three business lines – Pulp & Energy, Paper, and Services – and five regional areas. In 2015, the company added a fourth business line, Automation, which it acquired from Metso. Each region was tasked with ensuring unified and efficient customer service across all business lines, while also ensuring active representation of the regions within the company’s management team.
He also streamlined operations, reducing headcount from 12,500 to 10,000 within two years – nearly half the workforce in Finland’s paper industry at the time.
“Laine fostered a customer-first mindset across the organization, ensuring every decision aligned with delivering greater value and service.”
Another early move following the split was distilling Valmet’s mission, vision, and strategy into a one-page document that would serve as a compass for its decade-long transformation.
Dubbed Valmet’s Way Forward, the mission focused on converting renewable resources to sustainable results. The strategy featured four “must-win” areas: customer excellence, technological leadership, operational efficiency, and team performance. The vision was clear and ambitious: to become a global champion in customer service.
“We wanted everyone to feel part of the story,” Laine explains. “We aimed to create a culture where employees came to work thinking about how they could improve their tasks, even just a little, every day.”
The transformation delivered impressive results. Over a decade of steady order growth, Valmet’s profit surged from around €50m at the time of the de-merger to over €600m by the end of 2024, while its profit margin improved from 2% to nearly 12% – along with an accompanying surge in the company’s share price. Today, it employs 19,000 people in 40 countries.
So, what did Valmet get right? Laine believes it comes down to several important decisions.
The first was deciding to stick with and reposition the name Valmet rather than rebranding under a new identity. “That was a more important decision than I would ever have thought,” he says. “So many of the customers knew the Valmet name and had high respect for it. Many older investors knew the company and, of course, over half our employees had been working at Valmet and were proud ex-Valmeteers.”
The second was to prioritize stability within the management team to ensure accountability. “When I appointed my team, I told them: ‘You will stay in your positions for five years – if you perform.’” Constant leadership changes erode responsibility, Laine believes. “Without stability, there’s no accountability.”
Another key enabler was introducing granular financial oversight. This allowed Valmet to drive continuous improvement and renewal, as precise financial tracking made it easier to identify areas for enhancement. Lastly, he fostered a customer-first mindset across the organization, ensuring every decision aligned with delivering greater value and service.
Even when Valmet was struggling financially, Laine remained committed to learning and development.
From an early age, Laine was ambitious, setting his sights on becoming a CEO while still in high school. As a young man, he often took the opposing view, eager to prove himself. Over time, he learned the value of listening. “I’ve come to understand that the end result of a discussion matters more than my role in it,” he says. “When you’re young, you want to prove yourself. And when you’re older, you learn that if the discussion is going in the correct direction, let it go, and if it isn’t, ask good questions to change its course.”
He credits this shift to trusted colleagues who offered constructive feedback. As Laine advanced in his career, he recognized the importance of developing talent, challenging his management team to improve each year through training and stretch assignments. “The message for everybody was: you have to develop your team all the time. You cannot be happy with the current situation. At the end of the year, you must have a stronger team.”
Even when Valmet was struggling financially, Laine remained committed to learning and development. “If we asked something from the team, like becoming better project managers, we had to develop the tools, but we also give them training and connect that with our actual must-win objectives.”
Leading a company through transformation for a decade required discipline.
In 2024, after 34 years at Valmet – 18 in top management and 10 as President and CEO – Laine stepped down, eager for a new challenge while still full of energy and passion. Today, he chairs the board of Konecranes and Ilmarinen, Finland’s largest private pension company, and serves on the board of Neste, a global leader in sustainable aviation fuel and renewable diesel.
Leading a company through transformation for a decade required discipline. During his tenure, Laine set clear boundaries, taking weekends off and holding just one management team meeting on a Saturday evening. He took up CrossFit to manage stress, finding that lifting weights lightened his mental load.
“The positive thing is that you can’t think about work. For any CEO or leader under pressure, it’s especially important to have a hobby that forces you to put work out of your mind. When you focus on outperforming the younger folks exercising next to you, you forget the pressure from your job – and that helps you to keep going.”
Watch the full CEO Dialogue to learn more from Pasi Laine on how he instilled strategic and organizational clarity in the organization, leading to strong focus and accountability, the role digitalization played in the transformation, and how Valmet’s early focus on sustainability turned into a business opportunity.
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