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This ABB's Relays Business: Building and Managing a Global Matrix case study discusses the development of the relay business of ABB at the same time highlighting the advantages, effectiveness, and the challenges faced in a matrix organization.
Christopher A. Bartlett
Harvard Business Review (394016-PDF-ENG)
July 12, 1993
Case questions answered:
- What is it about ABB's global matrix that allows it to succeed when so many others (Corning, Citibank, Westinghouse) have failed?
- As Don Jans, at your next steering committee meeting with Baker and Gundemark, how are you going to deal with the Comsys issue that has been giving you so much concern?
- What is Jans's role in ABB? How does this differ from his role running the same business in Westinghouse?
- How did Lindahl and Gundemark add value to this front-line driven entrepreneurship? What were their roles in this organization?
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Case answers for ABB's Relays Business: Building and Managing a Global Matrix
Executive Summary – ABB’s Relays Business: Building and Managing a Global Matrix
This ABB’s Relays Business: Building and Managing a Global Matrix case study discusses the development of the relay business of ABB at the same time highlighting the advantages, effectiveness, and the challenges faced in a matrix organization.
This case also highlights the changes in the ABB organization that was brought about by the vision of Barnevik that was focused on streamlining the company’s operations with the current market trend of globalizing while at the same time maintaining a strong national presence.
This case study also discusses the relationship between strategy and its implementation that is essential in an organization. It is essential in organizations like this, which is trying to create a leadership position in the global market.
We have also identified that factors like effective communication, efficient flow of information, and delegation of decision making to middle-level managers enabled ABB to successfully implement a matrix structure.
The Chairmen of the two companies, Asea and Brown Boveri, are in talks for the merger of their two companies because of the current scene in the market. Two significant trends have shown up in the present scenario. The new demand in the power industry can be met only by the companies operating on a global scale. Because of the firm government control on power companies, orders will continue to go to the companies with a strong national presence.
To face this situation, Percy Barnevik, the CEO of Asea, who was also asked to lead the operations at ABB, formulated a strategic vision that would guide the new company is operating at both national and global levels.
After the formation of ABB, the top management decided a matrix structure for the new organization to create a balance between the global business of the company built on 60 Business areas (BAs) and the 1300 local companies which made ABB’s national presence. Barnevik’s management model focused on twin principles of decentralization of responsibility and individual accountability.
To ensure national focus and implement decentralization, the 1300 local companies were given the control of the company’s key resources, and to maintain individual accountability. A new system ABACUS, was developed, which aimed at creating transparency within the organization. In the new system, the managers were expected to act quickly and provide quick results rather than waiting for a perfect solution.
The key purpose of this report is to identify the factors which led to the matrix structure is a success for ABB while most of the other firms which had tried implementing it suffered failure. Also, we aim to find out the underlying challenges which most of the frontline managers were facing. Finally, it is the objective of this report to understand how, despite it all, the company was making a profit.
Initially, ABB’s top management had a challenge of merging both Asea and Brown Boveri. The management is challenged on how to have a strategic vision for the company and to create a matrix organization built on approximately 60 global business areas. It is also the management’s concern on how to create a management team, assigning the responsibilities to the managers, standardizing the principles and practices of the organization across the companies acquired by ABB. This is a problem since…
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