ABB in the new millennium: New leadership, new strategy, new organization

This case takes an inside look at ABB’s unprecedented 1997-2000 transformation under Gvran Lindahl, the second CEO of this electrical engineering powerhouse, who succeeded Percy Barnevik during late 1996. After a highly successful first decade of existence under Barnevik (1988-1996), ABB found itself in the midst of a crisis by the end of 1997, after the combined effects of global deregulation, radical technological innovations and an unpredictable but sweeping financial crisis across most emerging markets. ABB’s response was to radically shift its strategic focus to favor knowledge- and service-based offerings across all of its businesses. The company’s implementation of such strategy took place in two bold steps. The first one comprised a major global restructuring of ABB, as a result of which the company divested from mature manufacturing businesses such as power generation and transportation, and became a global leader in areas such as industrial process automation and electrical distribution solutions. The second step was to transform ABB into a fast-growing high-technology company, moving from “old” to “new” economy internet-based services and solutions. The case contains two “mini-cases” in “ABB distribution solutions” and ABB’s “global information systems group”, two instances which show first-hand the pains of rapidly transforming a vast, manufacturing concern, into an internet- and solutions-based powerhouse as the new millennium unfolds. The case is supplemented by a video of Gvran Lindahl addressing “ABB’s transformation charter” in March 2000 to a group of key ABB’s global managers.