ABB-The Dancing Giant: Creating the Globally Connected Corporation

Rating:
Summary: Lessons from ABB's experience and Percy Barnevik.
Review: "Is ABB a model for other organizations?...Indeed, Percy Barnevik does have particular views on this question. In an interview in India, he said: 'More and more companies will see the need to develop this multidomestic combination for global coordination. The big American companies used to have a domestic and an international division. You cannot have an international division. In my company, the word does not exist because if you are foreign, you are foreign everywhere. The whole meaning of being domestic or foreign has lost its meaning. When I am sitting here in India, I am not an Indian citizen, but I represent an Indian company just like I represent a Spanish company when I am in Spain'...Is ABB a model for nations?...Warren Bennis says: 'The ability to align, create, and empower will characterize successful leaders well into tht twenty-first century. But there is another theme that surfaces provocatively in some of the interviews..., most notably in the remarks of Percy Barnevik of ABB. That is the emergence of federation as the structure uniquely suited to balancing the seemingly incompatible drives toward global cooperation and the putting down of deep local roots. This paradox is evident in world politics, where intense ethnic and national identities coexist with the widespread recognition that new economic and political alliances must be forged outside one's borders'...So, what are the lessons that other organizations and managers facing the challenges of globalization can learn from ABB's experience so far? We think that there are many lessons that are both explicit and implicit throughout this book. However, we asked Percy Barnevik for his views. He says: 'I do not believe that you can mechanically copy what another company has done. ABB itself has several variations on its organization and management depending on products and customers...However, there are some general principles to learn from and adapt to your own business: the need to be global-local, big-small, and decentralized-central control' "(from the Introduction).

In this context, Kevin Barham and Claudia Heimer summarize their objectives in writing this book: document the story of the merger, ABB's growth and global expansion; catch more than a glimpse of the real story behind the company's ongoing success; raise some key questions for the future of ABB; highlight some lessons from ABB's experience for managers in other organizations facing international and global challenges. And thus they organize their book into three main parts:

I. The Birth of A Modern Giant - In this part, by telling the story of the two main partners-ASEA of Sweden and BBC of Switzerland, and by outlining Percy Barnevik's concepts regarding the strategy, structure, control mechanisms and people development of the newly merged/emerged company, they describe early days of ABB.

II. Giant Steps to the Globally Connected Corporation - In this part, by defining ABB as a 'globally connected corporation' (global and local, big and small, and radically decentralized with central reporting and control), they show the stages of global expansion.

III. Reaping the Harvest - In this part, they look at the organization a decade after the merger to find out how the masterplan has worked out to date and at how ABB has started to reap the harvest resulting from all the hard work it has put into building its structure and implementing its strategy. And they also focus on CEO Goran Lindahl and his priorities for ABB in the future-innovation in human resources and information technology.

Finally, end of this invaluable study, they list 15 giant steps to a global organization. I briefly summarize these steps as follows:

1. You don't need to have all the answers when trying to achieve change on such grand scale as the ABB merger.

2. Decentralization to profit centres around the world is the key to creating an entrepreneurial mindset.

3. Stay close to customers around the world during a merger to reassure them and not lose market share.

4. Don't delude yourself that you can forecast the future-you can only see breaks in trend lines, and you won't always see those.

5. Understand which parts of the business are more global and which are more local and act accordingly.

6. Multiculturalism is not an ethical issue, it is a practical business need.

7. Set challenging targets, but don't keep changing the formal organization.

8. Communicate, communicate, communicate to 'fire people up'-even at the risk of competitors listening.

9. Globalization requires transparency and connectivity accross time zones and geography.

10. Every manager, including the CEO, should aim to have two to three succession candidates ready at all times.

11. You don't necessarily need lots of global managers-not everybody has to be global-but you do require a pool of cross-culturaly capable people from which you can draw your global managers.

12. Results-oriented learning on the job gives management development credibility and makes line management take responsibility for developing people.

13. Don't assume that all your organizational values are fully applicable across the world.

14. Keep it practical. Concepts are only 5 per cent of the building of a global organization. Execution and the ability to engage people around the world are 95 per cent.

15. Long-term shareholder value is the ultimate measurement of performance in a global company.

Highly recommended.

Rating:
Summary: Lessons from ABB's experience and Percy Barnevik.
Review: "Is ABB a model for other organizations?...Indeed, Percy Barnevik does have particular views on this question. In an interview in India, he said: 'More and more companies will see the need to develop this multidomestic combination for global coordination. The big American companies used to have a domestic and an international division. You cannot have an international division. In my company, the word does not exist because if you are foreign, you are foreign everywhere. The whole meaning of being domestic or foreign has lost its meaning. When I am sitting here in India, I am not an Indian citizen, but I represent an Indian company just like I represent a Spanish company when I am in Spain'...Is ABB a model for nations?...Warren Bennis says: 'The ability to align, create, and empower will characterize successful leaders well into tht twenty-first century. But there is another theme that surfaces provocatively in some of the interviews..., most notably in the remarks of Percy Barnevik of ABB. That is the emergence of federation as the structure uniquely suited to balancing the seemingly incompatible drives toward global cooperation and the putting down of deep local roots. This paradox is evident in world politics, where intense ethnic and national identities coexist with the widespread recognition that new economic and political alliances must be forged outside one's borders'...So, what are the lessons that other organizations and managers facing the challenges of globalization can learn from ABB's experience so far? We think that there are many lessons that are both explicit and implicit throughout this book. However, we asked Percy Barnevik for his views. He says: 'I do not believe that you can mechanically copy what another company has done. ABB itself has several variations on its organization and management depending on products and customers...However, there are some general principles to learn from and adapt to your own business: the need to be global-local, big-small, and decentralized-central control' "(from the Introduction).

In this context, Kevin Barham and Claudia Heimer summarize their objectives in writing this book: document the story of the merger, ABB's growth and global expansion; catch more than a glimpse of the real story behind the company's ongoing success; raise some key questions for the future of ABB; highlight some lessons from ABB's experience for managers in other organizations facing international and global challenges. And thus they organize their book into three main parts:

I. The Birth of A Modern Giant - In this part, by telling the story of the two main partners-ASEA of Sweden and BBC of Switzerland, and by outlining Percy Barnevik's concepts regarding the strategy, structure, control mechanisms and people development of the newly merged/emerged company, they describe early days of ABB.

II. Giant Steps to the Globally Connected Corporation - In this part, by defining ABB as a 'globally connected corporation' (global and local, big and small, and radically decentralized with central reporting and control), they show the stages of global expansion.

III. Reaping the Harvest - In this part, they look at the organization a decade after the merger to find out how the masterplan has worked out to date and at how ABB has started to reap the harvest resulting from all the hard work it has put into building its structure and implementing its strategy. And they also focus on CEO Goran Lindahl and his priorities for ABB in the future-innovation in human resources and information technology.

Finally, end of this invaluable study, they list 15 giant steps to a global organization. I briefly summarize these steps as follows:

1. You don't need to have all the answers when trying to achieve change on such grand scale as the ABB merger.

2. Decentralization to profit centres around the world is the key to creating an entrepreneurial mindset.

3. Stay close to customers around the world during a merger to reassure them and not lose market share.

4. Don't delude yourself that you can forecast the future-you can only see breaks in trend lines, and you won't always see those.

5. Understand which parts of the business are more global and which are more local and act accordingly.

6. Multiculturalism is not an ethical issue, it is a practical business need.

7. Set challenging targets, but don't keep changing the formal organization.

8. Communicate, communicate, communicate to 'fire people up'-even at the risk of competitors listening.

9. Globalization requires transparency and connectivity accross time zones and geography.

10. Every manager, including the CEO, should aim to have two to three succession candidates ready at all times.

11. You don't necessarily need lots of global managers-not everybody has to be global-but you do require a pool of cross-culturaly capable people from which you can draw your global managers.

12. Results-oriented learning on the job gives management development credibility and makes line management take responsibility for developing people.

13. Don't assume that all your organizational values are fully applicable across the world.

14. Keep it practical. Concepts are only 5 per cent of the building of a global organization. Execution and the ability to engage people around the world are 95 per cent.

15. Long-term shareholder value is the ultimate measurement of performance in a global company.

Highly recommended.