ABB brought CleanTechnica to Switzerland to show off a wide array of the products and services ABB offers, as the base from which to cast a vision for the future through the eyes of ABB. We sat down with CEO Dr. Ulrich Speisshofer over lunch at the conclusion of the tour to get his top-level perspective on where ABB is looking to play in the volatile, uncertain world of electrical infrastructure just as the global grid seeks to evolve in the face of climate change and an ever-increasing influx of intermittent renewable power generation.
Throughout our discussion, Dr. Speisshofer weaved in the ABB vision for the future — opportunities it has grown from in the past, where it is operating from positions of strength today, and what he sees as growth opportunities for the future. As we talked, it became clear that ABB is well positioned both from an organizational design and product lineup perspective for the transition to intermittent renewables-based generation, global grid interconnectivity, and the electrification of transportation — all fields that it has been playing in for many years now — to not only survive in the new global grid, but to dominate.
“We need to stop being afraid and we need to start making proactive decisions.”
Dr. Spiesshofer is a bold leader who is not shy about his role as the head of a global corporate powerhouse with deep roots in innovation and infrastructure technology, and he has bold plans for ABB. Under his leadership, ABB is looking to connect renewable resources not just within a country, but as a globally connected grid that is coming to reality today as ABB technologies enable wind power from the North Sea to be stored in Norway in the form of pumped hydro.
What’s impressive about his style of leadership is that Dr. Spiesshofer isn’t working all hours of the day and night to keep the ABB machine on track, but rather, is very intentional about prioritizing downtime. While many CEOs across the US are up at arms about the latest craze in Silicon Valley where CEOs and startup execs see long working hours as rights of passage, at ABB, Dr. Spiesshofer takes a completely different approach:
“You must have a disciplined, balanced life…. It’s very important when you have a job like mine. You owe your team to be relaxed. You owe your team to be fit. The worst thing you could do is to be a CEO that is rushed and worn out.” –– ABB CEO Dr. Ulrich Spiesshofer
Upon taking up the role of CEO in September 2013, he transformed the company from a products- and manufacturing-driven company to an agile company focused on innovation and technology as the engines for growth. To accomplish this, he has led the charge to push much of its manufacturing to external suppliers, resulting in a largely white-collar workforce comprising 100,000 of its 135,000 global employees.
“We have shifted from a manual world to a world driven by electricity. We have shifted from stable fossil fuels to world powered by renewables.” — ABB CEO Dr. Ulrich Spiesshofer
The Clean Future
Dr. Spiesshofer isn’t just talking about the future — he’s living it. He drives a BMW i3 and clearly has his finger on the pulse of where the electrification of personal transportation is headed, even sharing his own driving efficiency (18.2kWh/100km for the curious) and how it was so much cheaper than driving a petrol-powered vehicle (aka an ICE car).
We talked about how the new BMW i3 will have the same cost but double the battery capacity and range and how it was exactly these types of technological breakthroughs that are being realized in new products TODAY — happening across the electrified landscape — that represent so much opportunity for ABB to lead.
“We need to ride the S-curve of the market, we need to ride with our technology.” — ABB CEO Dr. Ulrich Spiesshofer
The Clean Grid
As renewables are intermittent, more electrical infrastructure is required to bring them online. Think about a 200 MW solar installation. At peak, it has the potential to produce 200 MW of power, but when the sun goes down, the output is zero. The system will need 200 MW worth of infrastructure but won’t ever see 100% utilization of that infrastructure in any given day because of the nature of solar.
While this is challenging for grid operators, for ABB, it’s 100% opportunity, as ABB produces the equipment to connect energy-generating units to the grid. Net: more renewables result in more sales of electrical infrastructure equipment, which can only be good for ABB.
The addition of renewables doesn’t just “work,” but rather, the variability of the power output must be managed very rigorously or it will result in outages. Supplying stable baseload power is the core product for grid operators, and ABB is looking to the future with its “next level strategy” that aims to ensure ABB has a holistic plan for managing and succeeding through the shift towards renewable-powered electricity generation.
ABB provides much of the critical infrastructure required to integrate grid-scale storage, while at the same time adding more regional connectivity that allows grid operators to tap into renewable resources in other areas of the globe — after all, “the sun is always shining somewhere in the world,” and the same applies to wind, geothermal, tidal, and many other renewables.
Building up from this foundation, Dr. Spiesshofer has reshaped ABB over the last few years into a lean, mean innovation machine … okay, it is actually very nice, but you get the point. A heavy bias towards innovation and technology has shifted ABB’s workforce towards white collar workers with 100,000 white collar workers supported by a core of 35,000 blue collar workers.
Shifting non-essential manufacturing workload to suppliers has allowed ABB to focus more on developing technologies and integrating innovations into products while at the same time being more agile. The new and improved agile ABB is able to respond faster to changes in the market such as the spawning of new business opportunities — in electric vehicle DC fast charging and data center power management, for example.
A large white-collar workplace has its challenges, however, and has rapidly made conventional manufacturing-focused productivity efforts such as Six Sigma and Lean Manufacturing less relevant to unlocking the productivity potential of the ABB workforce. Instead, ABB has launched its own “White Collar Productivity” initiative which seeks to apply the very same Lean Manufacturing and Six Sigma principles to white-collar work in an effort to unlock an estimated $1 billion CHF of white-collar productivity.
“We have changed our value chain from a very deeply integrated value chain to a much lighter value chain. It allows me to run my company with a lower fixed cost and be more agile because I can flex my volume to my customers in a more agile way.” — ABB CEO Dr. Ulrich Spiesshofer
Staying close to its profit centers, ABB has grounded its leadership and financial strategies in its customers. Keeping a finger on the pulse of customers around the world has allowed ABB to stay in touch with not only customers and their industries but also with regional trends around the globe.
This bottom-up network of sensing with customers and regions culminates in the ABB central treasury approach. This team is the single point of contact for cash management at ABB and singlehandedly manages the allocation of cash across global markets and currencies for the entire company. Managing the company’s cash centrally provides another key input to the ABB sensing machine as country and regional currencies fluctuate in reaction to market trends.
We toured the data center of ABB customer Green.ch, where the ABB team shared that data centers specifically were not something that ABB was prepared for. Talking about this with Dr. Spiesshofer, he reiterated the sentiment that “you cannot be first in everything” — and that’s okay.
ABB is playing in the industries of so many of the key pieces of the electrical infrastructure puzzle and continues to innovate, which positions it well to not only lead in some areas of the markets it plays in, but also to respond quickly when market changes are detected, as was the case with data centers.
“You need to have a good radar in place that gives you early warning signals.” — ABB CEO Dr. Ulrich Spiesshofer
Tying back to the customer sensing network that ABB has diligently assembled, the company is firmly rooted in the belief that being prepared for change both on the technology side and the customer side is the key to success moving forward.
“Stay close to your customers in difficult political climates.” –– ABB CEO Dr. Ulrich Spiesshofer
ABB believes that being in a place to hear the early warning signs coming from customers around the world — and taking action in response to them — have enabled the company to minimize risk and react more quickly to emerging trends.
On top of this global sensing network, ABB is very intentional about communicating changes on three levels:
- To employees — Communicating internally early and often ensures your team stays with you. A unified team that is working off of the same page of music is an effective team, and ABB puts its team first when it comes to communication.
- To customers — Keeping key customers close and treating them as partners reinforces the feedback loop to and from customers and is foundational to lasting relationships. Being transparent with customers builds trust and reinforces the trust that customers put in ABB products when they invest in critical infrastructure underpinned by ABB technologies.
- To shareholders — Clear communication to shareholders and to the public is critical to maintaining a healthy public image and a positive reputation. ABB was built on the shoulders of infrastructure-grade equipment that requires people to trust that the equipment will work without fail for many years — even decades — and reinforcing that trust with transparent, timely communication is critical.
The Long Game
Looking beyond the challenges of the next 5 years, Dr. Spiesshofer shared a company-wide focus on cutting inventory to free up company cash. As a technology company, inventory carries more risk, as the longer a product sits in inventory, the less valuable it is. Who wants to buy a 3-year-old computer? The same applies for many of ABB’s tech-heavy products.
From the multi-day tour of ABB’s products in action and the capstone discussion with its CEO, I’m excited to see what ABB brings the world of cleantech in the next few years. It is delivering amazing, industry-leading products — such as the Smart Sensor and the Azipod — that continue to move the collective world of electrified products forward, and it appears positioned well to continue doing so long into the future.
Disclaimer: ABB brought CleanTechnica to Switzerland for a tour of the work its doing around the country and to see some of its products in action. We were not required to write on any specific topics or articles coming out of the tour. I’m not an ABB shareholder — though, after my tour, I’m considering changing that. Having said that, do not interpret the above as financial advice, but rather, seek advice from a financial professional. 🙂
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