Percy Barnevik Passes The Baton
Jetting around the globe assembling and fine-tuning a vast business empire, Percy Barnevik has long seemed like "a human perpetual motion machine," as one observer put it. But even the chief of Zurich-based giant ABB Asea Brown Boveri Ltd. seems to have his limits. On Oct. 10, the 55-year-old Barnevik said he would step down after eight years as president and CEO, turning over the reins to longtime sidekick Goran Lindahl. Barnevik will remain as nonexecutive chairman of the maker of power and other heavy equipment. "All the big acquisitions, the 70-to-80 hour weeks, have been a tremendous strain," Barnevik says.
The new candidate is no clone of the boss. Barnevik, an economist by training, was brought in from the outside to revamp Sweden's Asea in 1980. Lindahl, 51, is an electrical engineer who started out at Asea, which Barnevik merged with the Swiss Brown Boveri to create ABB in 1988. Lindahl probably knows the ins-and-outs of the business better than Barnevik, but he faces a big challenge. He needs to push ABB faster into emerging markets and cut back the company's dependence on slower-growing European and U.S. businesses.
Lindahl has a good track record. He has been on ABB's seven-member executive committee since 1988, has traveled widely overseas, and has pumped up earnings in the $9 billion power transmission and distribution business from $28 million in 1988 to $675 million in 1995. A good listener and strong backer of research and development, he lacks Barnevik's outsize personality and cult following among management mavens. This may please some in the Swedish and European business Establishments, who have found Barnevik's flamboyance and outspokenness grating. Both executives are Swedish.
Outsiders may be forgiven for thinking that ABB under Barnevik has been a one-man band. But Lindahl says the executive committee operates in a collegial fashion, so he has long helped shape the company. "I see no reason to change strategy just because we are changing the CEO," he says.
Lindahl says his approach will be to "adapt" to slow growth in the industrialized nations by specializing in refurbishing existing facilities. Nearly all new investment in capacity will go to the emerging markets. Years of drastic restructuring under Barnevik are paying off in steady growth. Operating earnings for the first six months of 1996 increased 4%, to $1.4 billion, over the same period in 1995 on revenues of $16 billion. Despite ABB's emerging-markets push, almost 60% of business is in Europe, causing growth to drag.
Any doubts about Lindahl center on whether he can penetrate emerging-markets as effectively as Barnevik. Lindahl answers that he has plenty of experience pounding the pavement in such markets, leading ABB's push into Asia from 1988-93. Since then he has been responsible for the Middle East and North Africa.
EASING OFF. Barnevik is willing to step aside because he thinks ABB is stable enough to weather his exit. Indeed, the stock hardly moved after the announcement. "For a moment, I was afraid that it would go up," Barnevik joked.
In Barnevik's view, much of the transformation he envisioned at ABB has been achieved. European operations have been rationalized. ABB has established a major presence in North America, and the drive into Asia, the former Soviet bloc, and other emerging markets is under way. He says that Lindahl's role will be to maintain the pace: "If you want to keep momentum and continuity, it is best to get an internal candidate."
What will Barnevik do next? Ruling out seeking another CEO slot, he says he will be a "discussion partner and coach" for senior management. His easing off at ABB may let him play an even bigger role in the Swedish and European business and political worlds. He chairs a group advising European Union President Jacques Santer on competitiveness and also holds the chairmanships of steelmaker Sandvik and construction giant Skanska as well as that of ABB. Will he shake up the still-stodgy world of Swedish enterprise? Europe is watching.