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Competitiveness
Lean and clean are perfect partners, says CEO of engineering giant
Morten Wierod, President and CEO of ABB tells Jean-François Manzoni how a leaner-and-cleaner mission, decentralized discipline, and a culture of speed are driving its transformation for the road ahead....
In our CEO Dialogue series, Morten Wierod, President and CEO of ABB, explains to Jean-François Manzoni how his company is on a mission to help industries become more efficient, productive, and sustainable.
Few companies have been as central to the infrastructure of daily life as ABB. For more than 140 years, the Swedish-Swiss group has driven industrial transformation, from the earliest electrification projects to automation and AI. With 110,000 employees, more than 170 factories, and annual revenues of about $33bn, it remains one of Europe’s great technology heavyweights.
Yet for Morten Wierod, appointed President and CEO just over a year ago, the challenge is not only to manage scale. A lifelong “ABB-er”, Wierod joined the company straight from university and rose through the ranks to lead its two largest business areas. He is tasked with steering the $100 billion engineering icon into its next chapter: a journey shaped by ABB’s belief that sustainability and competitiveness can reinforce one another.
We have a decentralized business model, but it doesn’t mean anarchy. You need core processes that everybody follows – performance management, people and culture, brand, and governance. That’s the glue that holds us together.
Leaner, cleaner, and more competitive
ABB sums it up in two words: leaner and cleaner. Wierod uses the phrase frequently, describing ABB’s role as helping industries “outrun”, becoming faster, more productive, and more sustainable.
“We are really looking at how we can make the world more efficient and more productive, and also to decarbonize industries,” he explains. “Helping industries to become more efficient – that’s leaner – but also to help them reduce their carbon emissions, which is the cleaner part of it. Most of the time these two things go together. It’s not one or the other, it’s an ‘and’ equation.”
That mission runs through ABB’s four business areas. Electrification – representing about half the company – encompasses everything from utilities to building systems to transportation. Motion supplies the motors and drives that power ships, trains, and factories. Process Automation delivers control systems for complex plants, and Robotics & Discrete Automation equip manufacturers with robots and machine solutions.
The competition is intense. Siemens and Schneider Electric are frequent rivals in electrification and automation. Rockwell and Emerson are strong in automation. In robotics, Japanese giants FANUC and Yaskawa dominate, with Chinese competitors gaining ground.
“Customers don’t buy hardware or software; they buy solutions that help them become leaner and cleaner.”
Where hardware meets software, and AI
Long known as an engineering powerhouse, ABB is now also a digital one. Around half of orders are enhanced by digital and AI, and more than 50% of ABB’s research and development engineers are software specialists.
“It’s the combination of really good hardware and really good embedded software that creates the magic at the customer site,” Wierod says. “But customers don’t buy hardware or software; they buy solutions that help them become leaner and cleaner.”
Decentralized, disciplined, and fast
The transformation has also been organizational. Under Wierod and his predecessor Björn Rosengren, ABB has codified its management philosophy into what it calls the “ABB Way”. At its core is decentralization. Considerable decision-making authority rests with 18 division presidents, each with full responsibility for their strategy, profit and loss, and overall performance.
“We have a decentralized business model, but it doesn’t mean anarchy,” Wierod stresses. “You need core processes that everybody follows – performance management, people and culture, brand, and governance. That’s the glue that holds us together.”
Culture is central. ABB articulates its values as the “four Cs”: care, courage, curiosity, and collaboration. “If you travel the world of ABB, most people could easily tell you what the four Cs stand for,” he says.
For Wierod, clarity and speed matter more than often-elusive support functions, economies of scale, and synergies that led to complex matrix organizations. “It is often said that culture eats strategy for breakfast,” he notes. “At ABB, we also believe that speed eats synergy for lunch.”
Collaboration through connection
While decentralization brings agility, it also risks fragmentation. ABB addresses this through communities of practice – cross-company groups where knowledge is shared and duplication is avoided.
“We have more than 50 communities,” Wierod explains. “For example, our AI community has 6,000 members and a repository of over 400 ongoing projects. What I want to avoid is the ‘Oops, if I only knew’ reaction. Communities make sure people know what’s happening, and can join and piggyback on projects.”
To keep these groups vibrant, ABB organizes technology forums, recognizes achievements, and ensures senior sponsorship. The goal is to preserve accountability while fostering collaboration where it matters most.
You’re not allowed to grow before you have got your house in order. Badly run businesses can never grow themselves out of the problem.
Performance before growth
ABB also brings unusual clarity to performance expectations. Each division is assigned one of three strategic mandates: stability, profit improvement, or profitable growth. The mandate depends on a division’s profitability as well as the market environment and the maturity level of the business. Targets and incentives are aligned accordingly. “You’re not allowed to grow before you have got your house in order. Badly run businesses can never grow themselves out of the problem.”
The same discipline applies to the portfolio. Each year, ABB reviews its businesses against three criteria: fit with the company’s purpose, attractiveness of the market profit pool, and synergies with ABB’s capabilities. These criteria guide both acquisitions and divestments.
Speaking of portfolio management, ABB plans to spin off its robotics division as a separate listed company. Wierod acknowledges that the move may appear surprising, in light of predictions that the industrial robotics market is projected to reach $45bn by 2030, with China already accounting for half of new installations.
“We are convinced that robotics has a very bright future,” says Wierod. “But we also believe that rather than keeping it within ABB and it representing a small percentage of our activities, listing it separately will give investors interested in robotics a more direct way to invest in this industry.”
Resilience through local-for-local
Rising protectionism and geopolitical fragmentation have made global supply chains less reliable. ABB’s answer is its longstanding local-for-local strategy – producing close to customers in each region.
“I spent four years in China nearly 20 years ago as part of this strategy,” Wierod recalls. “Today, about 85% of what we sell in China is produced in China. In the US, it’s 75-80% – higher if you count the United States-Mexico-Canada Agreement. This helped us during the COVID-19 pandemic, during the semiconductor crisis, and it helps with tariffs and currencies.”
The strategy sacrifices some economies of scale but pays dividends in resilience. “We should never be single-sourced, and that comes with a cost, but it’s worth it,” adds Wierod.
Sustainability that pays for itself
ABB has set ambitious green targets, validated by the Science Based Targets Initiative – an 80% reduction in Scope 1 and 2 emissions by 2030. The company has already achieved 78% against its 2019 baseline.
“We are not a large emitter ourselves, but we show it’s possible in our own sites, what we call Mission to Zero,” says Wierod. “Energy efficiency has a good business case. Wasting energy doesn’t make sense in any geography.”
For example, “Indian steel producers switched from coal to electricity to compete with Chinese imports,” Wierod notes. “They saved carbon emissions, but the main driver was cost. That’s why I say leaner and cleaner usually go together.”
Transparency and accountability
For Wierod, ABB’s transformation is also about leadership. His approach is very clear. “I give openness and trust, and I expect transparency and ownership in return.”
He considers impatience a virtue. “Most leaders say impatience is their weakness. I think impatience drives performance – impatience for results now and improvement now. It’s the hunger to do more that drives innovation.” At the same time, he is “impatient with actions, more patient with results”, recognizing that some initiatives take time to bear fruit.
Candor is equally important. “Be polite, but not too polite. Feedback must be honest and direct, but always with good intentions.”
He also encourages what he calls level-up thinking. “I want people to put themselves one level above and ask themselves how they would analyze the situation from that point of view. ‘If you were me, would you go for this proposal? If not, why are you proposing it?’ That mindset creates better decisions and makes it easier to get a ‘yes’ when you ask for resources.”
Reflecting on his first year at the helm of ABB, Wierod explains that he made a conscious effort to invest time and energy in creating a strong executive committee. “We are a team of individuals,” he says, “but we have to work closely together and feel that we have each other’s backs. For me, that has really helped. They always say that it’s lonely at the top, but I haven’t really felt that during this first year. It’s really been a team effort.”
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