To achieve the next level, ABB is targeting profitable growth by shifting its center of gravity – through strengthening competitiveness, driving organic growth and lowering risk – and through incremental acquisitions and partnerships.
We are further enhancing our strong competitive position by expanding our customer value proposition with new engineering and consulting services and advanced software-based services.
As a technology pioneer and leading provider of software for industrial products and processes – the majority of our offerings are software related and we employ 2,600 software developers – ABB is well positioned to make software an even more important differentiator. In embedded software such as drives, for instance, we are enhancing the intelligence of products and increasing their value to improve ease of installation and integration, and enable condition monitoring. In automation system software, we continue to expand functionality, for example, with mobile interfaces and security, while maintaining our architecture leadership. And in application software, we are helping our customers in the planning, design and in the optimization of their operations through focused expansion of value-adding applications.
Our offerings are also addressing the big shift in the electrical value chain – for instance, with more efficient, long-distance power transmission and micro-grids – and we are innovating to help our customers derive the benefits of the “internet of things, services and people” (see Big shifts in power and automation).
Driving organic growth momentum
ABB’s strong global presence means we are well positioned to access high-growth segments. Examples in the utility sector include asset upgrades and retrofits, digital substations and solar and micro-grids; in industry, growth opportunities exist, for instance, in the further development of oil and gas, mining, new robotics applications such as electronics, and food and beverage packaging. In transport and infrastructure, promising areas include data-center electrification, rail retrofits and electric-vehicle charging.
ABB’s global growth opportunities across our businesses have been identified using the “heat map” approach, which gives us visibility on our position in all key markets and segments. We have clear action plans in place to operationalize growth.
A key driver of profitable growth is our PIE concept, centered on Penetration, Innovation and Expansion, which was launched in 2014. With PIE, we are driving growth momentum by selling more of our existing offering to accessible customers (penetration), developing new offerings and value propositions with focused resource allocation (innovation), and expanding into additional, high-growth segments.
Alongside our focus on organic growth, we are taking decisive steps to reduce intrinsic business risk by identifying relevant risks and implementing targeted risk mitigation; for instance, by standardizing approaches to reduce risks in specific areas. In doing so, we will deliver lower volatility, higher predictability and higher margins.
Incremental acquisitions and partnerships
We will complement our strong focus on organic growth by targeting incremental acquisitions that contribute value in line with the new strategy. We will also explore partnerships with other leading global companies along the lines of those with the Chinese technology group BYD on energy storage and electric mobility, with Philips on building automation, and our new joint venture with Hitachi in Japan to develop the country’s high-voltage power transmission network. Going forward, these partnerships will help us enhance growth momentum.