Reorganizing ABB - From Matrix to Consumer - Centric Organization Structure (A)

The matrix structure was devised by Barnevik so as to develop global strategies for ABB by taking into account the local conditions in the countries in which the company had its operations. The reasoning behind creating a decentralized structure was to drive ABB closer to its customers and expedite the decision-making process.

The dual reporting system ensured that both geographical interests as well as product-specific interests were taken care of. Further, it also ensured that there was proper information flow within the organization. Regional managers as well as business area managers could track the operations of individual companies.

By creating a matrix organizational structure and establishing global and regional management, ABB reaped many benefits. The operations of frontline operating companies were integrated with ABB's worldwide operations through the matrix. As a result, these companies got an international identity, and their exports increased. The companies got access to the worldwide distribution network of ABB, through the matrix structure. For example, ABB Stromberg (Stromberg before restructuring), a Finland-based company, which manufactured electric drives, transformers, circuit breakers, generators, transformers, etc. was not financially performing well, despite its wide range of products, as all its products were not of international quality standards.