Abb’S Relays Business: Building And Managing A Global Matrix

When the two giant power equipment companies Asea and Brown Boveri were merged to become Asea Brown Boveri (ABB), Percy Barnevik, the CEO of Asea, was asked to lead the combined operations and implement strategic plans. He “formed a 10 person management work group” and handpicked 300 key managers to form the manager team. He argued that ABB need to manage three contradictions-to be global and local, big and small, radically decentralized with central control. Although his broad vision seemed to be very attractive to any business organization, it is actually much easier to make such statement than to implement it (if the goal is actually achievable). I believe there are number of organizational problems within the company. If ABB wanted to continue to succeed in the market, several adjustments are necessary.

1)

First, Percy tried to put in place a very complicated matrix organizational structure to manage the company. Managers on the front lines were expected to act roughly and quickly than carefully and slowly. However, huge amount of expectation to front lines managers is being demanded and seems that limited rewards are only given to the manager with outstanding result. Although it seems okay to make mistakes and under perform in some periods, however if I were a front lines manager, I would try my best not to over perform. Otherwise, I might find myself in a difficult situation next year. People tend to focus more on the negative than the positive achievements. If I under performed and was unable to meet company targets, it is always true that I will have a hard time to explain and find forgiveness from upper management.

(Competition can only be stretch to certain extend. If over stretch, it will produce negative result. For example, in page 11,Joe Baker is unwilling to support Don as his regional transmission performance started slipping behind budget and getting pressure from upper management, Lindahl and Schulmeyer)

2)

“After announcing its formation in 1990, Gundemark challenged the relays R&D council to develop a common platform for future product development across units.” (page 10) Surely, Don Jans is not too happy and has concerns about this major BA development project known as the common systems (or Comsys) project. Clearly, Gundemark does not give full support to Jans, as Jans is always having difficulties to implementing the new Comsys program, and focus on results. However, my second argument ends here with a question, “Whose