The Lilljeqvist Formula: A Victorian recipe for modern entrepreneurship

With the fashion for Neo-Victorianism showing no signs of abating (Sweeney Todd, Sherlock Holmes, steampunk), it’s interesting to consider what today’s entrepreneurs might learn from our 19th-century forebears.

The story of the Swedish entrepreneur Rudolf Lilljeqvist reads like a case study for anyone looking to found a transformational business today. It features clear personal ambition, determination in the face of initial failure, adaptability, openness to new ideas, the development of products that meet previously unmet needs, opportunistic investment, the use of cutting-edge scientific thinking, realistic costing, the financial backing of a visionary investor, persistence in overcoming teething troubles, the creation of a high-quality product, diversification, and long-term commitment.

We reproduce the story as told in the company history of AkzoNobel, Tomorrow’s Answers Today.

Eka – or Elektrokemiska Aktiebolaget, to give the company its original name – was the brainchild of the civil engineer Rudolf Lilljeqvist. Having worked abroad as a bridge constructor in London and Paris, Lilljeqvist returned to his native Sweden in his 40s with the aim of setting up a profitable company which would afford him an independent position in life.

It may seem strange to reflect that a pioneering company in electrochemistry should have been created by a civil engineer, but Rudolf Lilljeqvist was a visionary.

A century before the successful completion of the Channel Tunnel linking England and France, he proposed building an “underwater bridge” between Sweden and Denmark at a cost of SEK 12 million. The idea was turned down; Lilljeqvist simply reacted by redirecting his attention to a different entrepreneurial field, that of electrochemistry.

From experimentation to venture capital
At the end of the 19th century, Sweden was importing large quantities of chloride of lime, which was used for bleaching and disinfection. Lilljeqvist decided to manufacture the product in Sweden. He acquired an option on the purchase of a waterfall at Bengstforsen, in the west of Sweden, to generate hydro-power for a chlor-alkali plant, and – in collaboration with G.E. Cassell, an assistant lecturer in Electrochemistry at Stockholm University – embarked on a series of experiments into the production of chloride of lime. Cassell issued a certificate to the effect that the experiments, conducted in a Stockholm basement, had been satisfactory – and Lilljeqvist went off in search of the SEK 300,000 that he calculated was necessary to set up an electrochemical company.

Lilljeqvist was advised to contact the entrepreneurial inventor-industrialist Alfred Nobel for funding. Nobel was greatly impressed by his new acquaintance (whom he was later to nominate as co-executor of his will) and provided SEK 100,000 for the venture, on the proviso that the remainder be found elsewhere. The money was duly raised and on August 9, 1895, the Articles of Association for Elektrokemiska Aktiebolaget were approved by the Swedish government.

Teething troubles
Enlisting the British engineer William Glover to provide chemical engineering expertise, Lilljeqvist set up a factory with 24 electrolysis vessels – which promptly exploded on being commissioned. “In an inexplicable and so far unfathomed way,” wrote the Board of Directors in their annual report for 1897, “ignition took place of the mixture of chlorine gas and hydrogen gas which existed in the cells and the pipes, with the result that the lids covering the anode chambers as well as live metal hoops and straps were more or less destroyed. This damage is not, however, of any major importance. On the other hand, all the glazed clay pipes, which form the outer supply mains to the chlorine chambers, were shattered.” Undeterred, Lilljeqvist pressed on.

Despite many teething troubles, the company was by 1899 able to produce 150 tons of lye and 110 tons of chloride of lime.

The products attracted positive attention in view of their unusually high levels of purity.

Dividends were first paid to shareholders in 1902. The company branched out into the production of potassium hydroxide and caustic soda (1905) and soft soap (1910) – although the latter product undercut the soap manufacturers who were Elektrokemiska Aktiebolaget’s customers, forcing the company to abandon production.

Relocation to Bohus
Because of the high freight and reloading costs at the company’s Bengtsfors plant, operations were relocated in 1924 – under the same name, Elektrokemiska Aktiebolaget – to a new site in Bohus, 17 km north of Gothenburg, which Eka took over from the recently bankrupt Kvävebolaget. Despite the new plant, however, profits remained slim, and Eka still had a long way to go before it generated significant stable returns. Dividend payments were suspended during this phase of consolidation, recommencing only in 1934. (Rudolf Lilljeqvist, however, did spend his latter years in retirement abroad, thus achieving his original aim of an independent existence. Tragically, he disappeared during a visit to the power station at Bengtsfors in 1930. It was assumed he had fallen and drowned when making observations along the rapidly flowing stream.)

Eka’s expanded its product range during the 1930s to include hydrogen peroxide (1935), liquid chlorine (1936), sodium perborate (1936), metasilicate (1937) and carbon disulphide (1939). Following World War II – when large quantities of chloride of lime were produced as an emergency measure for decontaminating mustard gas in the event of a state of war – a new hydrogen peroxide plant was built (in 1948), a new ammonia plant (in 1956) and a new headquarters (in 1960).

 

From Eka to AkzoNobel
Eka Chemicals was acquired by Nobel Industries in 1986, which was in turn acquired by Akzo in 1994, becoming the Pulp & Paper Chemicals business unit of the new company AkzoNobel. AkzoNobel continues to have a strong presence in the pulp industry as the leading global supplier of chemicals and customized solutions for bleaching pulp, marketed under the Eka brand.

This account is an excerpt from Tomorrow’s Answers Today: The history of AkzoNobel since 1646 ed. Jonathan Steffen (AkzoNobel, Amsterdam, 2008). To download the PDF of the complete book, please visit: https://www.akzonobel.com/system/images/AkzoNobel_Historybook_LoRes_tcm9-8568.pdf

 

If you enjoyed this article, you might also like A Better Turn of Phrase.

 

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