ABB – ASEA Brown Boveri

Swiss Technology Company

January 2020: ABB is since 1988 the merged company of the former Swedish ASEA and the Swiss BBC. It was a company with a wide range of production sites and customers in countries all over the world. The first CEO was Percy Barnevik (1987 – 1996). To guarantee optimal decisions regarding production and customer usefulness Barnevik introduced the matrix organization.

All issues regarding customers were treated jointly by the production branch and the regional sales department. These decision processes deemed to be optimal. That was however only one side. The other side was a tedious and long lasting decision process.

One of Barnevik’s successors, Jürgen Dormann (2002 – 2004), saw especially the disadvantages of the matrix organization and tried to abandon it – as the medias reported. Obviously however that wasn’t fully achieved. With Ulrich Spiesshofer, CEO from 2013 to 2019, the matrix organization was still in operation. It was dismissed finally by P. R. Voser, CEO as of 04/2019. The matrix organization had just been a symptom of organizational problems of the company, the amount of different products had become too large for rational, efficient management. So in regard to its competitors ABB lagged behind, a reorganization was initiated. As result finally in April 2019 management decided to change the company structure profoundly. At first the fifth branch Power Grids was sold and in the first half of 2020 it will become part of Hitachi.

Thus just four branches remained:

  • Electrification
  • Industrial Automation
  • Motion
  • Robotnics & Discrete Automation

At the same time the branches were upgraded and received a mandate for more autonomous decisions. They were promoted to divisions and are mandated with much more functions including R & D and sales (regions/customers). The central sales departments Europe and Asia, Near East, Africa obviously were dissolved.

Comment: These are reasonable steps in a sensible direction. Not clear is so far however which functions are still wielded centrally. Even the more autonomous branches will not each run independent sales offices in all of the more than 100 countries. What will be done by the new divisions what still will be done by the central unit? For a success of the new ABB organization these problems will be crucial.

P.S.: These considerations are based on public information in the media. They are to illustrate theoretical findings. If the applied assumptions prove to be different, different conclusions might be logical.