Essay Building and Managing a Global Matrix

8112 Words May 25th, 2013 33 Pages
Harvard Business School

9-394-016
Rev. April 26, 1999

ABB’s Relays Business: Building and Managing A Global Matrix
It was a casual conversation between the chairmen of Asea and Brown Boveri in 1987 about the dismal state of the utilities equipment market that eventually led to merger talks between these two giant power equipment companies. Within weeks of the announcement in August 1987, Percy Barnevik, the CEO of Asea who was asked to lead the combined operations, had articulated a strategic vision for Asea Brown Boveri (ABB). Convinced that the decade-long decline in new power generation capacity would soon reverse itself, he believed that the new technologies and scale economies required to meet the new demand could only be
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Through continued acquisition and rejuvenated internal growth, within four years ABB grew to become a $29 billion company with over 200,000 employees worldwide—the giant of its industry, dominating previous first-tier players like Siemens, Hitachi, and General Electric (see Exhibit 3). To understand how this rapid growth and geographic expansion was managed, this case focuses on the birth and development of one of ABB’s almost 60 business areas (BAs) (Exhibit 4).

Building the Relays Organization
In August 1987, Göran Lindahl, Asea’s executive vice president responsible for power transmission, found himself on Barnevik’s 10-person top management transition team. After presenting a proposal for merging the two power transmission businesses, Lindahl was tapped to head this important segment for ABB as of January 1, 1988.

Creating the Management Team
In the relays business, as in each of the other eight BAs reporting to him, Lindahl’s first task was to identify the managers who would drive the integration and capture the synergies that were fundamental to ABB’s strategy. He described the process: For me, the key qualifications were proven performance in their business, and broad experience in more than one discipline. But, as important as their career background was their personality—their flexibility, integrity, and statesmanship. He named Anders Fraggstedt, general

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