ABB Way: Our operating model

BUSINESS MODEL
ABB’s business model shapes how we operate in a decentralized structure, drive best-in-class performance, allocate capital, and manage our portfolio. Accountability, transparency, and speed in decision-making and execution are enabled by this model, which is built on the principle that operating decisions are best made within the divisions and close to customers. Establishing select common processes and a strong performance management system enable alignment with the Group’s strategic priorities, as well as financial and sustainability targets, while also enabling collaboration across divisions to better serve our customers. For more on how our decentralized model creates stakeholder value, see the Value Creation chapter. 


PEOPLE AND CULTURE
We aim to attract and retain the best people, while cultivating a “high performance – high integrity” culture. Through our values of Courage, Care, Curiosity, and Collaboration, we aim to create a safe, fair, and inclusive working environment in which our people can succeed and develop, while always ensuring compliance with safety standards, internal controls and our Code of Conduct. As we push the boundaries of technology and deliver on our purpose, we also create opportunities for our people to focus on their own development, integrating learning into their work and fulfilling their career potential at ABB.


GOVERNANCE
ABB’s robust governance framework fosters accountability, transparency, speed in execution, and responsible risk management. Our framework protects our license to operate through comprehensive internal controls and our Code of Conduct. This framework also supports the responsible adoption of technological advancements, such as artificial intelligence (AI), and helps us integrate integrity throughout our value chain.

BRAND 

The ABB brand is an expression of our company’s purpose, our values, and long history of innovation. Today, the iconic red ABB logo has become a sign of trust, quality, and premium value. We foster our reputation as a reliable business partner, technology leader, and preferred choice for our stakeholders.

How industries run is critical. From energy, power, and mining to building, transport, manufacturing, and more – businesses need to operate at high performance, while becoming more productive, efficient, and sustainable to outperform. Or as we say at ABB, they need to “outrun”, leaner and cleaner.

Decentralized setup

We operate in a decentralized setup where our divisions represent the highest operational level, empowered with full ownership and accountability for their strategies, performance, and resources. This fosters greater speed and accountability, driving improved operational performance.

Our divisions are organized into business areas that govern and set strategic mandates. These mandates guide operating decisions, prioritizing stability and profitability before growth. Meanwhile, our corporate functions are designed to be lean and effective, providing essential frameworks for the business model, performance, portfolio management, and capital allocation. This decentralized model allows us to combine the speed and agility of a small company with the brand strength, capital resources, and global reach of a large business.

ABB’s decentralized business model

• Reached full implementation of ABB Way performance accountability and strategic mandate for business lines after summer 2025
• ~70 business lines
• Majority of divisions have a mix of business line mandates; majority in growth, some in profitability
• Business line performance management owned by business areas and divisions

PERFORMANCE MANAGEMENT

At ABB, we strive for continuous improvement, building on a systematic and transparent performance management framework. The increased accountability and speed of our decentralized setup is balanced by the transparency of our robust performance management system.

We translate our financial and sustainability priorities into ambitious targets. ABB’s financial and sustainability targets are developed bottom up and are underpinned by detailed plans from each division, ensuring they are realistic, accountable, and aligned with our strategic priorities. Furthermore, our remuneration system encourages the mantra of “smart leaders collaborate”, as our leaders are expected to generate synergies where it makes sense for the business.

Strategic mandates

DRIVING OPERATIONAL PERFORMANCE WITH STRATEGIC MANDATES


Each division operates under a clear strategic mandate that shapes its decision making. These mandates prioritize stability first, then profitability, and only then growth; they are directly tied to variable remuneration KPIs. While mandates are reviewed regularly, they are held for a minimum of one year to ensure strategic consistency. This clear and disciplined approach has enabled a successful shift; today, approximately 70 percent of revenues are under a growth mandate.

We continue to implement a strict focus on delivery by strategic mandate, which will support growth and continued profitability improvements. As divisions transition through ABB’s strategic mandates, we emphasize that growth and profitability are equally important but, based on a division’s mandate, different rates of improvement are expected. Divisions with best-in-class profitability are incentivized to grow faster while stronger profitability improvement is expected from divisions with a profitability mandate.

We are enhancing accountability even further by empowering business line leaders with strategic mandates and corresponding incentives to improve operational performance. This approach will further improve accountability, transparency, and speed in the organization.

Capital allocation

ABB’s capital allocation principles are determined by the corporate finance function and have enabled us to maintain a strong investment grade rating with a focus on profitable growth. We focus on funding organic growth through R&D and production capacity, followed by paying a rising and sustainable dividend per share over time. Beyond that, we seek value-creating acquisitions to complement or expand our offering in high growth segments, fill technology gaps, gain access to new geographies, and boost economies of scale. Our ambition is to deliver an average of 1–2 percent annual growth through M&A. Lastly, our capital allocation priorities also state that we distribute any excess cash to our shareholders via share buybacks.