30 NOVEMBER, 2017 ABB and SynerLeap - an innovation accelerator. Helena Malmqvist, Head of External Research Collaborations, ABB Sweden

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1 30 NOVEMBER, 2017 ABB and SynerLeap - an innovation accelerator Helena Malmqvist, Head of External Research Collaborations, ABB Sweden

2 ABB: the pioneering technology leader What (Offering) For whom (Customers) Power and Automation Products 58% Systems 24% Services & software 18% Utilities Industry Transport & Infrastructure ~35% of revenue ~40% of revenue ~25% of revenue Where (Geographies) Globally Asia, Middle East, Africa 38% Americas 29% Europe 33% ~$35 bn revenue ~100 countries ~132,000 employees

3 Technology innovations and value to our customers Breakthrough innovations by ABB s R&D Leadership built on consistent R&D investments More than $1.5 billion invested annually in R&D 8,700 scientists and engineers Collaboration with 100+ universities

4 Corporate Research Fueling tomorrow s innovations ABB Corporate Research Key figures 700+ highly qualified scientists and engineers Västerås In 7 corporate research centers around the world In 8 global research areas aligned to ABB s core technologies Raleigh Kraków Ladenburg Dättwil Bangalore Beijing / Shanghai December 6, 2017 Slide 4

5 Megatrends: are changing the world around us Electrification Digitalization Greater use of electricity Renewables at all levels Storage at all levels Micro and mega grids AC and DC grids New business models IoTSP/I4.0/IIoT Cyber security Artificial Intelligence Global standards Data centers Everything connected Demographic shift Resources Population growth Urbanization/mega-cities Population aging Access to workforce New services Rise of individual Electrification Pollution Urban farming Access to water Energy density Transport Access to energy resources

6 Technologies have developed continuously But not at the breadth and speed we see today Renewables Storage Materials Manufacturing Communication Sensing Computing & security Analytics Virtual Reality, Blockchain. December 6, 2017 Slide 6

7 ABB R&D ecosystem Traditional innovation pipeline From idea to market release: ~ 5 years Academia ABB Corporate research ABB BU & Division R&D Markets, investors, competitors Legal, political, social environment Strategy Product management Supply Chain Management Marketing & Sales Balance between long term and short term R&D: ~90% effort in the divisions and ~10% effort in CR R&D Internal ABB partners External partners & environment

8 R&D ecosystem Innovation together with our partners for our customers From idea to market release: < 2 years Information systems Academia Corporate Research Start-ups ABB Technology Ventures Industry partners & selected customers BU & Division R&D Markets, investors, competitors Legal, political, social environment Strategy Digital ABB Product management Supply chain management Marketing & sales R&D interacts with much richer and agile ecosystem R&D Internal ABB partners External partners & environment

9 SynerLeap Powered by ABB A Growth Hub for fast growing small and medium sized enterprises aiming for rapid expansion on a global market Located in the heart of the Swedish ABB R&D center in Västerås with unique infrastructure and expertise within industrial automation, robotics and energy 85 working places or about 25 companies

10 Collaboration is key Partners Companies Small and medium sized enterprises with fast growing potential within automation, robotics, energy and industrial digitalization some customers already in place willingness to collaborate within the ecosystem clear business strategy and solid IP no competition within the ecosystem Slide 10

11 Expected values for ABB.. for SynerLeap Companies Shorten innovation cycle Enable growth Decrease time-to-market Strengthen competitiveness interaction with ABB s experts and scientists access to ABB world class laboratories collaboration with partners and other SynerLeap companies events and workshops arranged by SynerLeap, ABB and partners increase visibility and network modern collaborative working space meet ABB s customers together with ABB Slide 11

12 Core technology areas Cross-divisional R&D competence areas: basic building blocks for ABB s offering Connectivity Software Systems and control Sensing Mechanics Power conversion Materials and manufacturing Electromagnetics Current interruption December 6, 2017 Slide 12

13 ABB Corporate Research Sweden Laboratory resources Mechanics laboratory Computational mechanics Chemistry laboratory Materials laboratory High voltage testing laboratory High power testing laboratory Power electronics testing laboratory Asimov laboratory Mechatropolis laboratory Collaborative robot laboratory UXI laboratory Communication Laboratory Acoustics laboratory Flow laboratory Electromagnetic laboratory Dielectric response laboratory PEA laboratory High frequency laboratory Battery laboratory Motor and drives systems laboratory Small high voltage laboratory Cable laboratory Proximity to real-time simulator laboratory

14 New innovative business require different mindset SynerLeap companies ABB Revenue Product Innovation Business Development Small Scale High Uncertainty Develop Customers Capture Market Growth Building the Organization Cost Product Management Process optimization Large Scale Low Uncertainty Serve the Customers Managing the Market Share Rightsizing..

15 Obstacles to be overcome ABB perspective Cultural Structural Business Inside the box thinking Level of entrepreneurship Limited risk taking Internal politics Profitability through cost cutting vs. long-term growth New ideas threatens existing business Fear of loosing the best people Loss of focus on core business Incentive/remuneration systems The funding scheme The decision making process The different business models between mature and new business Lack of cross functional/ organizational teamwork Product life cycle management killing the winners R is turning into D search for incremental innovations Shareholders investment horizon New business models emerge

16 R&D ecosystem Innovation together creates win win From idea to market release: < 2 years Information systems Academia Corporate Research Start-ups ABB Technology Ventures Industry partners & selected customers BU & Division R&D Markets, investors, competitors Legal, political, social environment Strategy Digital ABB Product management Supply chain management Marketing & sales R&D interacts with much richer and agile ecosystem R&D Internal ABB partners External partners & environment

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