Spiesshofer Draws on Student Career Studies for ABB Job
ABB Ltd. (ABBN)’s designated Chief Executive Officer Ulrich Spiesshofer has been preparing for the job since his student days. His 1991 dissertation examined how engineers can reach top management roles at industry companies.
Last week, the research of the 49-year-old German paid off when he was named as chief of Zurich-based ABB, the world’s largest supplier of power grids and worth 45 billion francs ($48 billion). He takes the helm on Sept. 15, only eight years after joining ABB and following 14 years as a consultant with A.T. Kearney and Roland Berger advising automotive, oil, gas, consumer, telecommunications and utility companies.
Spiesshofer’s first challenge as ABB CEO will be to integrate the purchases of his predecessor Joe Hogan, who added motors and low-voltage products in a $10-billion global acquisition spree before announcing his surprise resignation last month. Spiesshofer’s experience in a wide range of industries may help him to market those new offerings through ABB’s operations with 145,000 employees.
In times of challenging transformations, companies tend to turn to more “consultant and brainy types,” said Didier Cossin, a professor at Lausanne-based business school IMD.
Similar consultant-to-CEO examples include Lou Gerstner and Peter Wuffli, who worked at McKinsey & Co. before becoming CEOs of International Business Machines Corp. (IBM) and UBS AG (UBSN) respectively.
“Ulrich was a very, very smart guy and he got things done,” said Professor Peter Horvath, Spiesshofer’s university supervisor and founder of Horvath & Partners, a management consulting firm in Stuttgart.
Spiesshofer is stepping up after just three years overseeing ABB’s discrete automation and motion division. In that time, he oversaw the integration of Baldor Electric Co., which at $4.1 billion is ABB’s largest acquisition. Spiesshofer also handled the $1-billion deal to buy California-based Power-One Inc., Hogan’s most recent purchase, which is predicted by ABB to close in the second half of this year.
Chief Financial Officer Eric Elzvik, who was finance chief of the discrete automation and motion division when Spiesshofer was heading the unit and then got promoted in February, said the new CEO’s global experience will help.
‘Careers of Engineers’
Spiesshofer is a “true global manager” and a “fast thinker with a sharp strategic mind,” Elzvik said in an e-mailed response to questions, adding that he worked hand-in-hand with him on the acquisition of Baldor Electric. The new CEO, who is a “great skier and likes the outdoors,” has “the right social skills” to blend different cultures into Switzerland’s biggest engineering company, he said.
Spiesshofer declined via a spokesman to be interviewed about his plans and strategy.
In his 186-page dissertation, titled “Careers of engineers in the top management of European industrial companies,” Spiesshofer analyzed the factors that helped engineers to progress in their careers, such as language skills, international experience, a second university degree in business administration and exposure to different industries.
Spiesshofer’s career path shows he has followed through with his own analysis. He gained a PhD in economics and a Master degree in Business Administration and Engineering from the University of Stuttgart. He spent several years in Australia, Asia and Switzerland as a member of A.T. Kearney’s local leadership team before joining Roland Berger.
Spiesshofer “completed his doctorate studies very fast in two and a half years, whereas others need three of four years,” said Horvath. “He already knew then that he didn’t want to become a professor, he wanted to become a manager.”
As ABB’s head of corporate development from 2005 to 2009, Spiesshofer already built up the mergers team to prepare for bigger deals and laid the base for ABB’s strategy, Elzvik said. That position will also have exposed Spiesshofer to lots of different parts of the business, Cossin said.
Spiesshofer is taking over at a company that has been outperforming rivals. ABB shares have gained 7.7 percent this year while Germany’s Siemens AG (SIE), a competitor in factory robots and automation, declined 6.3 percent in the same period. ABB’s earnings before interest, taxes, depreciation and amortization may rise 18 percent this year, according to the average of 31 analysts estimates compiled by Bloomberg.
Apart from integrating Hogan’s acquisitions, ABB’s new CEO needs to revamp the power-systems unit, said Canaccord analyst James Stettler. The company faces lower orders from China State Grid Corp., its largest customer, as local rivals make technological advances and make inroads into its market share, he said.
“What’s interesting is that they didn’t go outside as ABB picked an outsider so many times before. It looks as if there was good preparation there internally,” Cossin said.
Hogan was the first American to lead ABB and joined the Swiss company in 2008 from rival General Electric Co. (GE) where he had been the CEO of the healthcare division. Hogan replaced Fred Kindle, who had joined ABB from Swiss pump maker Sulzer AG. (SUN)
Spiesshofer, who also lectured in business management at Stuttgart University, has risen unusually rapidly to the top of ABB’s eleven-member executive committee, yet it’s an ascension that shouldn’t alarm investors, said analysts including Zuercher Kantonalbank’s Richard Frei and Bank Vontobel’s Panagiotis Spiliopoulos.
While “such quick moves on the corporate ladder are not seen every day,” Spiesshofer’s performance at discrete automation, the acquisition of Baldor and the spearheading of the Power One Inc. (PWER) purchase may have helped, Frei said.
ABB’s new CEO increased operating profit at the discrete automation division by 14 percent to $1.47 billion last year, or about a third of the group total.
“Ulrich has done a great job in every respect, speaks German, ran the largest automation division and the most profitable one,” said Spiliopoulos. “He is well respected with analysts.”
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