ABB Corporate Culture - Winners shaped by history

Formed by the 1988 merger between Asea of Sweden and Brown Boveri of Switzerland, ABB was fueled by a series of bold acquisitions in the 1990's. The company won several business honors - "Corporation of the Year" (R&D Magazine, 1993), and one of the "Most Admired Companies in the World" (Fortune Magazine, 1998). By the turn of the century, revenues exceeded $35 billion, employment topped 200,000 and share prices were rising steadily.

Then came a series of "hard knocks" that took ABB to the brink of failure. In mid-2002 the company reported a huge quarterly loss and market-cap plummeted by 25% overnight. Faced with mounting debt, an overly complex organization, and potentially debilitating asbestos claims (from acquired subsidiary Combustion Engineering), the ABB board took quick, decisive action. Chairman Juergen Dormann assumed the role of CEO in Sept. 2002 and launched a multi-year program to "right size" and re-focus.

Within a month, ABB streamlined its structure to 2 core divisions - Power Technologies, and Automation Technologies. The group executive committee was pruned to just 5 people, and within 18 months most of the non-core businesses were divested. Good teamwork and hundreds of locally-driven initiatives removed $900 million in annual costs. Today, even the troubling asbestos issue is headed toward resolution. The story is chronicled on the JimPinto.com website: "The ABB Blahs".

Within 2 years, ABB has succeeded in reversing most of its problems. The two core divisions have posted 10 straight quarters of top-line and earnings growth and the group reported Q1 2005 net income of nearly $200M. Debt and operating ratios have returned to respectable levels, and once-skeptical market analysts are positive. ABB shares have grown six-fold from their lows in late 2002.

Today, ABB is a $20B company (versus $35B in the late 90's); employment has halved to about 100,000, and the core divisions are even considering acquisitions again to complement their portfolio. Juergen Dormann handed the CEO reins to Fred Kindle at the beginning of 2005. The strong senior management team includes Dinesh Paliwal (Automation Technologies) and Peter Smits (Power Technologies).

Dinesh Paliwal, a 20-year ABB veteran is a member of the ABB corporate executive committee. He heads the global Automation Technologies business and also group operations in North America, his dual role.

While still generating growth in Asia and Eastern Europe, ABB has strengthened its North American focus. Automation orders in this region are now growing in the double-digits. Some industry observers suggest that European companies can't make money in North America, but Dinesh Paliwal is defying that myth.

ABB's roots in North America come from many acquired companies including industry leaders such as AccuRay, Bailey, Fischer & Porter, and Taylor. Though these names are no longer used, ABB has strengthened its marketing focus on "heritage brands" and pledges lifecycle support through strong services offerings. Globally, automation services are showing double-digit growth, accounting for almost 25% of revenues today.

Two years ago ABB automation activities spanned 3 corporate divisions and 11 global business areas. Now just one division and 3 business-area managers direct the full portfolio of Automation Products, Process Automation, and Manufacturing Automation. Automation Technologies is now ABB's largest business, with 50,000 employees, about $11B in revenues for 2004 and an installed base of some $100B worldwide, including about $20B in process automation systems.

Internally, ABB stresses 4 key "levers" to drive automation business strategy:

Operational Excellence
With some 140 manufacturing, software and applications centers worldwide, the ABB automation team is constantly tweaking logistics, design and marketing processes. This includes combining locations, and moving some manufacturing operations to fast-growing emerging markets. Some of the most profitable units blend global sourcing with core operations.

Core Competencies
Learning from past failures, ABB no longer aspires to be all things to all customers. The battle for pure market share is less important now than focus on proven competencies. Application centers-of-excellence have been consolidated to key locations. Some 60% of automation revenues now come through qualified partners such as Systems Integrators, Distributors and OEMs.

Strategic Marketing
ABB trumpets its comeback story by aggressively showcasing its wins. Brand advertising has been stepped up in media such as Business Week, Fortune, and Harvard Business Review, plus key cable news channels and major airports worldwide. Expenditures for conventional trade shows have been scaled back in favor of captive events such as the "ABB Automation World" Conference in April 2005, when more than 1200 customers and the press converged in Houston for 3 days of technical sessions, exhibits and relationship building.

People Power
ABB executives and managers praise employees who persevered when times were tough. There are reward, recognition and development programs at every level - Dinesh Paliwal has personally nominated dozens of fellow professionals. There are incentive bonuses for most managers, which include a linkage to timely completion of employee performance appraisals.

There's an old saying, "When the going gets tough, the tough get going." The ABB culture of diversity, perseverance and teamwork is achieving one of the automation industry's most dramatic turnarounds.

This ABB Culture Review was summarized for JimPinto.com eNews. You may wish to read the more detailed article - web link below.

Google satellite maps

Hey, have you experienced new "Google Maps"? Simply type an address in the Google search bar and you'll link to Google maps: street maps with easy zooms. But, much more unusual - click the "Satellite" link at the top-right corner and you'll see a satellite photo of that address. Google now has this capability through its acquisition of Keyhole.com. You can zoom in to view streets and buildings; or zoom out to see towns, cities, states, or the entire US. Try it - you'll be amazed!

Check out satellite photos of your home, local shopping malls, the Golden Gate bridge, the Washington monument. Type in "1600 Pennsylvania Ave, Washington, DC" and you'll see a satellite photo of the Whitehouse. Move around and view the Capitol building, the Pentagon. These satellite photos are there for anyone to view. Clearly there are worries about the use of this by terrorists. But, it's just another way of showing a map.

In Dec. 2004 Google announced ambitious plans to expand its "Google Print" service by converting the full text of millions of library books into searchable Web pages. Major libraries have already signed up as partners, including Oxford, Harvard, Stanford, and University of Michigan and the New York Public Library. More are sure to follow. This will likely be remembered as the time in history when knowledge finally became truly ubiquitous and freely available.

Google & Wal-Mart - Yin & Yang

Wal-Mart is the opposite - the world's largest company, sales ($285B) - but the $10B profit is low-margin retail. Wal-Mart has the world's largest work force (1.5 million) generating $190,000 per employee. Cash flow and profits per Wal-Mart worker are only $16,000 and $6,700 respectively - about 3% of Google's numbers.

Google and Wal-Mart are huge successes in very different ways. But the yin and yang have this in common:

• Each company has a simple mission. Wal-Mart's is "always low prices." Google's is "to organize the world's information and make it universally accessible and useful." Both companies know who they are.
• Both companies have their brand and mission statements aligned. There's no confusion about what they do.
• Both companies are technology leaders. Wal-Mart is the world's preeminent tech company. It pioneered the use of bar-code scanners, slick supply chains, inventory management tweaked to local purchasing preferences, and now it's pushing into RFID chips. Google, meanwhile, continues to attract the best tech brains in the world.
• Both companies exploit the cheap revolution. Google's search engine runs on 100,000 cheap servers and free Linux software. Wal-Mart searches the planet for low-cost production. It buys 10% of the goods China exports to the US.

China to top U.S. broadband subscribers

Over the past few years, the US broadband market has been plagued with regulatory issues that have stifled the growth of high-speed Internet-access technologies. Largely because of this, America is falling behind in the percentage of its Internet households that have broadband connections.

If international competitiveness is measured by the number of broadband subscribers, then the US is on the verge of losing its leadership - China is rapidly overtaking. By the end of 2005, China will have 34 million subscribers, compared to 39 million in the US. By the end of 2007, China is expected to have 57 million broadband users, compared to 54 million in the US. And the lead is expected to widen.

Emails & Multi-tasking hurt IQ more than drugs

The mental impact of trying to balance a steady inflow of messages with normal work is serious. The study found that for people who tried to juggle messages with regular work, their Intelligence Quotient was reduced by 10 points. This is the equivalent of missing a whole night's sleep, and more than double the 4-point drop after smoking marijuana. And, speaking of drugs, email is addictive too.

Today, 60% check their electronic messages when they're not working, or are on vacation. 50% respond to an email within an hour. 20% will interrupt a business or social meeting to respond to messages.

Interestingly, 90% think that people who answer messages during face-to-face meetings are rude. But 30% think that it is not only acceptable, but a sign of diligence and efficiency.

This is a very real and widespread problem. If left unchecked, this obsession with email and electronic messaging damages performance by reducing mental sharpness. For more productivity, companies should be encouraging more balanced work habits.

These days, technology is being inordinately applied to work at the cost of good social behavior and leisure. It's hard to stop. Competition on a global level is fierce. Job performance and the company's bottom line depend on more people doing more, better, cheaper, faster.

Most of us now seem to be working faster and longer, filling limited leisure time with busy activities. There's an increasing sense of time poverty. Our new technological leash forces us to be on call all the time, constantly subject to interruptions and sudden demands. We are compromising our health, marriages, parenthood, community life and social activities.

It takes discipline and resolve to switch off your cell phone and leave your laptop at home. Try it, you'll like it.

eFeedback

"You hit the nail on the head regarding multitasking. It seems that if you can't multitask 15 things your boss thinks you're not a very capable employee. My saying is "I'd rather do three things well instead of ten things poorly".

"Unfortunately, at work we are spread so thin no task gets the time it deserves and the total project elapsed time is way longer than it should be. A more serial, versus parallel, approach is required but is not likely to happen anytime soon. At work, I've tried to propose a 6 month productivity test of serial vs. parallel but basically no one took me seriously."

"Your article on computer/technology disposal was a perfect example of 'The Law of Unintended Consequences'. A real eye opener for me (as you know, I'm one of those "send it South" people). Your DFE (Design for the environment) and EPR (Extended producer responsibility) suggestions strike a cord; but they won't do anything for the current and legacy crop of eTech.

"Considering the uproar about using Yucca Mountain for nuclear waste (I was in Las Vegas recently for a trade show and it was top of the fold-news), maybe it should start out as an eDump?"

"With all the fury about outsourcing, does anyone realize that outsourcing is not new in this country? It has been going on for decades and was actually encouraged by most states.

"The boom in growth in the Atlanta, RTP and Charlotte NC areas was at the expense of Boston and other parts of New England. How many people lost their jobs in New England from this back in the 70's and 80's? Factories are built in the middle of nowhere for a several reasons - one is cheap labor, or what is now called Outsourcing.

"We used to outsource to remote parts of our country - now we outsource to remote countries. No difference in concept - just crossing new borders."