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

ABB was formed on January 5, 1988, as a result of the merger between Sweden-based engineering group, Asea AB, and Switzerland-based Brown Boveri Limited. Both the companies had a history of around 100 years and were major competitors in the electrical equipment market in Europe. Barnevik took over as the CEO of ABB, headquartered at Zurich (Switzerland).

Given the massive size of ABB's operations, the challenge for Barnevik was to create a structural framework into which its worldwide activities could be integrated. Barnevik intended ABB to be "global and local, big and small, radically decentralized but with central control."⁶ In an attempt to achieve this objective, he created a matrix structure.

The primary task of the Group Executive Management (GEM) was to devise global strategies and periodically review the performance of ABB's eight business segments spread over 28 business regions. The members belonged to different nationalities and met once every three weeks to discuss business developments. A few members of the GEM were assisted by the corporate staff in certain specified fields, which included audit, corporate control, corporate development, corporate finance, information, insurance and risk management, investor relations, legal affairs, management resources, marketing, public finance, purchasing and export control, real estate, corporate research, taxes and customs and technology.