In 1988, ABB was formed by a merger of two electrical engineering giants, ASEA of Sweden and Brown Boveri of Switzerland. Other companies were subsequently acquired, including Westinghouse's payer transmission group and Combustion Engineering in the United States. In 1989, I began to work with Goran Lindahl, executive vice president and head of the Power transmission and Distribution segment, on what Lindahl calls "human engineering." From this ongoing collaboration, we have developed some operating principles for the management of a complex global company (doing business in 128 countries).
By "human engineering," we do not mean treating people like machines to be programmed and controlled. To the contrary, we have tried to take soft concepts such as values, style and culture, and create useful language, measurements and shared understanding about the logics that determine human behavior. The purpose is to improve communication and teamwork.
Lindahl recognized from the start that an extremely complex global company could not be managed mechanistically. Top management, led by Percy Barnevik, had pared away the bureaucracy to a minimum. They had designed a matrix of business areas coordinated in the segments (including Power Generation, Industrial and Building Systems and Transportation) and companies incorporated in countries and coordinated by regional management--Europe, the Americas, and Asia-Pacific (see "Managing Multidomestic R&D at ABB," RTMI Jan-Feb. 1995, pp. 30-33).
The ABB strategy has been to make use of a global engineering and production capability combined with insider presence in the different countries. The slogan "think global, act local" means that local companies should respond creatively to the local business environment in collaboration with the business areas that are responsible for product and process development and production strategy.
Independent and Interdependent The success of this strategy depends not only on defining roles and responsibilities and measuring the right things. It also requires people who are both independent and interdependent, who accept responsibility to act and at the same time communicate openly and honestly with one another. ABB's "Mission, Values, and Policies" booklet states:
Every ABB manager must be a driving force for change and development. Taking action and doing the right thing is obviously best. Taking action, doing the wrong thing, and quickly correcting it is second best. Creating delays or losing opportunities is the worst course of action.
Willingness to act requires freedom from fear of being punished. Cooperation among strong, autonomous people requires a high degree of commitment to the company strategy, combined with mutual understanding and trust. Given the different nationalities involved, mutual understanding depends on shared concepts and meanings. Although English is the corporate language at ABB, it is a second or third language for most managers. Because the chances of misunderstanding are so high, Lindahl discourses writing memos when there are dis-eements and encourages his managers to pick up the phone and talk through a problem. However, he encourages them to communicate the achievements of others in writing with copies to several people. By affirm the success of this cooperation and practicing recognition, ABB is building a motivating corporate culture.
To construct a common business logic or framework for dialogue, ABB managers have to balance industrial and political logic. Industrial logic dictates where and how products can best be manufactured. Business area managers take the lead with this logic. Political logic modifies this according to demands made by large customers such as utilities for local content in production and developing countries for opportunities to strengthen their technical skills.
In making decisions, managers sometimes must struggle against human nature, or psychology. …