20 years ago, 4C Strategies’ founder Andreas Hedskog saw a gap in the market for a training and evaluation software tool while serving in the Swedish Armed Forces. Today, the company has multiple offices in Europe and the US, and a global customer base within the private and public sectors as well as the military. With the company celebrating its 20-year anniversary, we talk to Andreas, now Executive Chairman and Head of Products, about the past, present and future of 4C Strategies.
The beginnings of Exonaut
Exonaut, our core software, was conceptualised in the military. After preparing two weeks of training and exercises for the Swedish military, I realised that there were no formal processes or supporting tools for documenting results or reusing the exercises. At the time, evaluations were done in Excel files and with a pen and paper. I wanted to change that, to make training more effective and reusable for other units and the next generation of soldiers.
In the spring of 2000 I put forward the idea of developing a software tool for training management to the second in command in the Swedish Air Force, BG Owe Wagermark. Thankfully, he gave me the go ahead to develop a proof of concept tool and the necessary scenario to support a Swedish Airforce exercise in the autumn of 2000.
So, I asked some of my close friends – Fredrik Mårtensson, Klas Lindström (Deputy CEO 4C Group) and Mikael Edqvist (VP 4C North America) – as well as some of the conscripts that had been under my command, to join me during the summer break from University. We began work on developing the embryo to Exonaut – at that time called Alfons. Albeit with several fascinating hiccups, that serve as good start-up stories these days, the exercise was a success!
4C Strategies is born
After the exercise, I managed to persuade Fredrik Mårtensson to quit his secure daytime job and spend 12 months – with the occasional support of Johan Hägre, (Software Architect 4C Strategies) – developing the first release of the software whilst I continued my studies at University. In parallel, I started 4C Strategies together with another friend, Andreas Line, to support companies with business intelligence services. Not long after, I decided to merge Exonaut into 4C and invited some of the people that took part in developing the proof-of-concept tool to join the company.
In the autumn of 2001, we were close to having launch-ready software. However, it became clear that selling a military training software through the right procurement channels was not going to be as easy as signing the initial proof of concept contract with the Swedish Airforce. It was my last year at Cambridge. I was about to graduate in the summer of 2002 and was worried that the start-up was not going to have enough capital for me to move back to Sweden and work full time on growing the business, so I was contemplating taking up an offer to do a PhD at Cambridge and MIT.
Later in the year, 9/11 happened and security levels were raised as the war on terrorism was about to begin. I was invited to take part in a couple of studies on how to use portfolio risk management and scenario planning to mitigate the risk of interruptions to critical infrastructure, such as utilities, transportation and food – a new door was opening for me.
New offerings bring improved sustainability
The critical infrastructure landscape had completely changed over the past two decades due to privatisation of many state-run entities. Governments had a limited toolbox to manage the risks facing some core functions of society. It made complete sense to bring some of these risk management methodologies into the 4C offering. In Exonaut, we had the ideal software for training governments and private industries in how to best manage various interruption scenarios. This would provide us with a complementary service portfolio and generate sufficient capital to sustain the business as we developed and sold our software through the right channels!
After a couple of months of market research and meetings with several Swedish Government agencies we signed our first small research project with the newly formed Crisis Management Agency (KBM), today the Swedish Civil Contingencies Agency (MSB).
Growing the market
Slowly but steadily we signed new contracts and were able to add more people to the 4C team. We could clearly see that there was a gap between the public and private sectors. We worked hard to change this based on our experience from using international best practices. This eventually led to the creation of bodies such as FSPOS, the Swedish financial sector’s public-private partnership, among others.
Moreover, back then, there were not many international standards for some of the services we were providing, such as risk management, business continuity management and incident and crisis management. So, we worked with standardisation bodies, including ISO and SIS, to change this. A couple of years down the road we began to see the results, with publications of international standards in all of these areas. It was also around this time that we started working with the EU and ENISA (The European Union Agency for Cybersecurity) to help improve cyber security awareness and IT continuity on a national and international level.
We knew that, within the training domain, our software would be beneficial to other nations’ armed forces. We had to approach them, while expanding the Exonaut software to support our consultants and customers with their risk, business continuity and incident-/crisis management needs. This required substantial R&D investment. Therefore, between 2005 and 2010 we concentrated our resources on the areas where we could get the fastest ROI, while delivering the best services to clients. In the military training domain we decided to target a nation with a bigger army, a bigger budget, and a clear need for Exonaut, the British Army. In 2009, thanks in large part to the hard work of Mikael Edqvist, we won their business, and have been expanding our support to the British Army ever since.
A new CEO and a new international presence
By 2010/2011 we were turning over roughly 60 million Swedish krona (around 6 million Euros) and approaching a staff of 50 employees. All passive owners of the company had been bought out over the years to ensure we had full control of our future. We were opening an international office in the UK to establish a second home market for our services and to support the British Army’s use of Exonaut. However, it was becoming apparent that we were not focusing enough on the software side of the business as, for instance, our service offering was taking up much of my time.
Several large listed international companies had put in bids to acquire 4C, but we turned them down as we knew we could do much more on our own. When developing our 3rd five-year strategy, I realised something had to be done to support further international and domestic growth on the software side while supporting expansion of our services business.
So, after 10 years as the CEO of 4C Strategies I decided we needed to find someone else with relevant experience from larger operations in both software and services to help us take the next step on the 4C journey. This would enable me to take up the role of Executive Chairman – managing our strategic and financial concerns – and, on an operational level, take charge of our software in a concerted effort to grow that side of the company. Magnus Bergqvist joined us as an external CEO with a wealth of experience from SAP and also the drive, commitment and personal skills necessary to be able to both report to me as Executive Chairman and direct me as Head of Product.
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The next big step
In 2015, 4C was a well-established company, working with global organisations in the private and public sectors and a number of allied military customers including NATO itself. But there was one major market we hadn’t targeted yet. For Exonaut to become the de facto standard in military training and exercise management software, it had to be used by the US armed forces. Entering the US market would take large-scale investment. I knew this was a risk, but the risk of not doing this could prove to be even greater down the road as new competitors would emerge. After all, we were not the only ones who wanted this market position, but we were the best placed to take it. We secured financing from our bank for 12 months of US entry activities, and in late 2015 we took the decision to enter the US market.
Right from our spring launch event at the Swedish Embassy in Washington through to a large Army Exhibition Event in the autumn, the response and interest from senior US Army stakeholders was exceptional. Moreover, the British Army’s training collaboration with its US counterparts gave us the opportunity to demonstrate the value readily available to the US Army through a “battle proven” technology. However, going from interest to contract in the desired 12 months’ period proved very difficult.
Moving beyond organic
Until that point, the company had grown organically, but for a sustainable and ambitious entry to the US market we needed more capital than our bank was willing to lend us. During a thorough review of the alternative routes to financing, I found Priveq, a Private Equity company based in Stockholm, to be the best match for our journey ahead. In December 2016 they injected a substantial amount of capital into 4C and became a minority owner in the company; now we had the funds to carry out our US strategy and continue to grow our business in the Nordics, UK and internationally.
In hindsight, taking the risk to enter the US market was definitely the right decision. We have won three major contracts with the US Army – beating the goliaths of the industry – and are currently working with the US Marines. Furthermore, to support our efforts locally, we opened a second US office in Orlando in 2019.
Three words that capture the past 20 years and will serve well for success moving forward:
- Passionate – dedicated to making people/organisations/ society safer and more secure.
- Innovation – constantly looking to improve ourselves, our products and services.
- Impact – always make a difference for our customers and society as a whole.
Andreas Hedskog, Executive Chairman and Head of Product, 4C Strategies
We’ve come a long way from those early days of developing code in my parent’s attic room. Today, we have agile teams working in parallel at our offices in Europe and the US. Release 19 of Exonaut is available as a SaaS and on-premise solution. It’s a fully modular service, comes with native iOS and Android apps as standard, and is highly secure, being both NATO Unclassified and NATO Secret accredited. We have a great team of developers and designers who’ve made this possible. But we still have big plans for Exonaut moving forward.
As a company, we are in a very good position; we have great people, great products and a great roadmap for expansion. But like all organisations, COVID-19 has impacted our results and delayed some of our plans – even though we have grown in 2020, employing more than 30 people so far this year and moving to larger premises in Malmö, London and Orlando. Throughout the year we have also played an important role in supporting organisations around the globe, including the Swedish government, with a coordinated COVID-19 response. Not surprisingly, the pandemic has shone a light on the importance of building organisational resilience, by having integrated risk, incident, cyber and business continuity capabilities in place. When we come out of the pandemic there will be a lot of questions asked and a lot of lessons to be learned. This should have a big impact on the need for our products and services moving forward.
One of our key strengths throughout the years has been hiring and retaining skilled, ambitious and passionate people. And this will not change. Our people are the key to a successful expansion and our ability to deliver on our mission of building a safer society through the combination of industry expertise and digital innovation. It is our people that make the company a better place to work and ensure we deliver great results for customers – which is why we continue to get repeat and referral business.
On the product side, we are building the next generation of Exonaut; going from a product suite to a platform, which will use data more effectively through AI and allow for substantial customisation and integration with other systems. Working with data can be a challenge when you have customers from highly regulated industries and the military – but we will get there. We are also working on improving the user experience so that our customers continue to get the most out of our system, as we extend the feature set. With risk and operational resilience high up on many leaders’ agendas now, there is a great opportunity for growth through Exonaut.
On the services side, we will cement our position as market leaders in our home markets through a combined offering of subject matter expertise and pre-packaged services for training and skills development. With the uncertainties currently being faced in so many areas, governments and businesses will be forced to invest heavily in security in the years to come, and we will be there to support them and society as a whole.
As a company, we will continue to grow. Over the years we have followed a pattern when expanding into international markets. Start with a relationship with the military through Exonaut, then open an office and expand the business to include the public and private sectors. This strategy has served us well so far and will continue to do so as we expand into new markets throughout the world. It’s exciting times ahead at 4C!
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