“Innovation is not optional. It is how Volvo Group remains competitive”
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CEC European Managers working group “Innovation for a More Competitive EU” is conducting a series of interviews with top European managers. The goal is to understand their approach to innovation and determine how Europe can better support them. By analysing what is working and what is not, the initiative maintains a constructive approach to strengthening the EU’s competitive edge.
We interviewed
Emma Mattsson (Linkedin profile [+])
Volvo Trucks Technology & Industrial Division
Head of Strategy & Governance Office
YOUR COMPANY: BUSINESS MODEL AND CHALLENGES
The automotive industry is undergoing major changes: transitioning from traditional combustion engines to biogas, hydrogen-powered, and electric alternatives, autonomous driving trucks. How central is innovation to your company’s strategy?
Innovation is absolutely fundamental to Volvo Group’s future.
This period is unprecedented, hitting us with not one transformation, but several at once.
We are moving toward electrification and alternative fuels, exploring autonomous solutions, becoming increasingly software-defined, and adapting to entirely new customer expectations around productivity, sustainability, and services.
Innovation is not optional. It is how Volvo Group remains competitive, captures future growth opportunities, and leads the transformation of sustainable transport and infrastructure solutions.
Can you share an example of a successful technological innovation? What was the key element that drove its success?
One example is the rapid development and commercialization of battery-electric trucks.
What fascinates me is that many people view this as a vehicle innovation, while in reality it represents the transformation of an entire industry.
On the technology side, success depends on advances in battery chemistry, power electronics, software, connectivity, lightweight materials, and manufacturing capabilities. But technology alone is not enough.
The real challenge is creating a viable ecosystem around the vehicle. This means developing charging infrastructure, digital services, new maintenance concepts, and business models that make the transition economically attractive for customers.
Equally important are supportive policies, incentives, and risk-sharing mechanisms that reduced adoption barriers during the early stages of the transition.
Close collaboration between vehicle manufacturers, energy providers, customers, infrastructure partners, and policymakers helped create the confidence needed to invest and scale.
The key success factor, then, was not a single technological breakthrough. It was the ability to combine technological innovation, business model innovation, and ecosystem collaboration into a solution that worked in practice and created value for everyone involved.
Innovation isn’t just about technology; it’s also about evolving processes and business models. Can you share an example of a successful process innovation? What was the key factor behind its success?
One example is how Volvo Group has developed a structured approach to open innovation through CampX and our broader innovation ecosystem.
Historically, large industrial companies often relied primarily on internal development. Today, the pace of change is simply too fast.
Through CampX, Volvo Group works with startups and scaleups to rapidly test new technologies and business ideas. What I find particularly powerful is that the model is not innovation theatre.
It is designed to identify real business challenges, connect them with external innovators, validate solutions quickly and create pathways into Volvo’s business operations. CampX has become a strategic tool for accelerating both technology and business innovation through partnerships.
The key success factor is having a structured process that combines entrepreneurial speed with industrial discipline.
HOW YOU MANAGE INNOVATION
Who drives innovation within your company?
The easy answer is everyone.
The more honest answer is that innovation happens when curious individuals meet a culture that allows them to challenge existing assumptions.
Engineers, researchers, product teams, business leaders, customers, startups, academics, and suppliers all contribute. Some of the strongest ideas come from teams working close to customers, operations and products. Leadership’s role is to create the environment where innovation can happen: setting direction, allocating resources, encouraging experimentation and acceptance of thought through risk-taking and building partnerships.
How do you execute innovation? Do you rely just on internal R&D, or also to open innovation, M&A, or startup acquisitions?
We combine deep internal engineering expertise with extensive external collaboration.
No company, regardless of size, can keep up with all technological developments alone.
We therefore invest heavily in our own R&D while simultaneously building strong partnerships with startups, universities, suppliers, our customers and other industrial players.
The future belongs to organisations that learn quickly and well, not just invent.
How do you involve your suppliers and partners in the innovation efforts?
Innovation increasingly happens across value chains.
We therefore work closely with suppliers, startups, universities, our customers and industrial partners throughout the innovation journey and as previously mentioned, the CampX framework is there to bridge the interfaces between our large company structure with external ones.
Strong ecosystem collaboration has become a competitive advantage in itself.
What approaches have worked best, and which haven’t?
Three things consistently work:
- Starting from a real customer problem.
- Working in cross-functional teams.
- Building partnerships early.
What typically does not work is treating innovation as an isolated activity.
Innovation needs clear ownership, executive support, and a credible path toward implementation. A great idea without a route to scale rarely creates business value.
How do you finance innovation? Do you participate in EU research and funding programs (e.g., Horizon Europe)?
We invest through our technology and business portfolios, but we also actively participate in collaborative research and innovation programmes.
European and national programmes are especially important when developing technologies with longer time horizons or higher risk profiles. Public funding becomes most valuable when it accelerates collaboration and helps industry move from research to deployment.
What barriers do you face (e.g., regulatory hurdles, talent shortages, funding gaps, cross-border collaboration challenges)?
The biggest challenge today is rarely invention or shortage of great ideas. It is scaling.
Europe is good at research and generating ideas. We are less successful at turning those ideas into globally competitive solutions with market success and companies/industries.
Uncertainty itself has also become a challenge. Companies need to make large investments while the geopolitical, technological, and regulatory landscape keeps shifting.
What key skills and competencies do your managers need to foster innovation and steer the business through these disruptive times?
Today’s leaders must be comfortable leading through uncertainty.
They need strategic thinking, technological understanding, ecosystem leadership, change management, and the ability to balance short-term business priorities with long-term exploration.
Most importantly, they must connect innovation to real customer value.
Are your managers equipped with these skills? How do you train and develop them?
We are continuously developing these skills,.
The pace of change means leadership development can no longer be viewed as something that happens every few years. It needs to be continuous.
Personally, I believe exposure is one of the most powerful development tools: exposure to customers, startups, research environments, and perspectives that challenge our existing assumptions.
Sweden has a strong culture of consensus, yet innovation inherently disrupts people’s roles and jobs. How do you ensure a fair and smooth transition for your workforce?
Technology transitions are ultimately people transitions. Historically, big technological leaps have created anxiety because jobs changed. The same is true today.
As leaders, our responsibility is to be transparent about where the industry is heading, invest in reskilling and upskilling, and create opportunities for employees to grow into future roles.
I don’t believe technology eliminates the need for people. But it certainly changes the skills we need. That is why we are building a culture and mindset of lifelong learning into our structures to support our company’s greatest asset – our people.
EUROPEAN POLICIES ON INNOVATION
European regulations strongly impact your technological pillars. To what extent have these regulations acted as a catalyst for innovation versus an obstacle for your business?
Both! Clear regulations have accelerated innovation in areas such as safety, emissions reduction and sustainability. At the same time, regulation can become an obstacle when it becomes overly detailed or technology-specific.
The most effective regulations create direction without prescribing exactly how industry should solve the challenge. Industry benefits most from clear long-term direction combined with technology neutrality.
With the EU Commission prioritizing competitiveness and innovation, what is your stance on recent regulations and directives?
I appreciate the ambition.
Europe has taken a leadership role in sustainability and industrial transformation, which is something to be proud of. The question going forward is how we maintain that ambition while also strengthening competitiveness. Those two goals should not be seen as opposites.
What is currently missing in Europe to truly foster innovation? How could the EU better support our industries? more funds, less regulations, tech neutrality, …?
If I look across industry, academia, and startups, I don’t think Europe lacks ideas. I think Europe struggles more with scaling.
We are often very good at creating knowledge and prototypes but less effective at turning them into globally competitive businesses and industrial capabilities.
Therefore, a balance between academic basic research, applied research, needs-driven research, and innovation is needed, and we believe more focus is needed on industry-driven initiatives that can also be close to the market.
Research that can be translated into products and services must be stimulated, Large-scale demonstrations including technology, policy, infrastructure and business models and behavioural perspectives, will be important instruments going forward.
Speed and timing are of essence and the process from call to projects to results must be further enhanced and focused on facilitating implementation. The processes for prioritization must be faster and simpler.
If you could request one specific initiative, program, or piece of legislation from the EU to accelerate innovation, what would it be?
As synergies are increasingly required between different areas, the same applies to new policy development.
Better understanding of how different policy instruments affect the green and digital transition is key, and policy and regulatory development therefore needs to be included across the entire R&D value chain, from basic research to implementation.
Non-harmonized pan-European standards and regulations are today an obstacle for global companies.
One initiative suggested by the European Commission that we support -connected to our automotive sector – is the setting up of an Automotive Joint Undertaking – a partnership where we see large potential to accelerate innovation from research to scale-up and facilitate large-scale innovation initiatives with substantial industrial participation and leadership.
Today there is relatively strong support for research and early-stage innovation.
The biggest gap is often between successful pilot projects and full-scale industrial deployment. Helping European companies bridge that gap would significantly strengthen competitiveness.
Overall, do you believe the EU needs to take a stronger or a less prominent role in guiding industrial policy and innovation?
A stronger role in enabling innovation and a lighter role in prescribing outcomes.
The EU should help create the conditions for success through infrastructure, funding, industrial collaboration and predictable long-term policies.
Innovation itself should remain driven by industry and customer needs, entrepreneurship and competition.
Thank you for your time.
