Honeywell has $25.6B revenue in 2004, with growth of about 10% and net income decline by about 3% compared with 2003. Market-cap is currently $32B, with a price-earnings ratio of about 26.
Honeywell merged with Allied-Signal in 1999 and shortly after the combination was almost sold to General Electric, with Jack Welch of GE postponing his retirement to close the deal. But it was scuttled, ostensibly by the European Trade Commission over anti-trust issues in the avionics business.
After the GE merger failed, Allied boss Larry Bossidy (already in semi-retirement) took back the CEO reins from Michael Bonsignore who, some think, didn't quite get control over the seemingly drifting corporation. Allied people were quickly brought in to take back control and Larry Bossidy hired David Cote, the hard-nosed TRW CEO, to put Honeywell back on track.
The "old" Honeywell had developed over the past century as a respectable, though plodding, Minneapolis-based company,
with 3 main businesses - Aerospace (the largest segment), Home & Building products (best known for the round-wall thermostats) and Industrial Controls (TDC 2000 "distributed controls").
Before and during the GE fiasco, Siemens (the German giant) was reportedly fishing to buy the Industrial division
(now called Process Solutions) which GE was ready to divest (since their primary interest was Avionics). But that sale never took place and the possibility has
receded. The division is now a strong part of Automation and Control Solutions (ACS), the old Honeywell "red" (total $7.5B of which $1.8B is Process
The NEW Honeywell Culture
So how is Honeywell doing? How has the corporate culture fared under the new CEO? David Cote has clearly turned the
company around; in the 3 years since his arrival, the analysts consensus is a strong forward-looking outlook. Interesting point: the ratio between GE and
Honeywell stock since the possible merger 4 years ago has remained relatively the same, and has even increased slightly in Honeywell's favor, indicating a
favorable performance comparison.
Getting 114,000+ employees moving in the same direction, adopting the same values and behaviors and working like one
cohesive team takes time and leadership. Building a new, fresh culture in a broad mix of corporate divisions takes drive and coordination, mixing in the
cultural aspects that are unique to each business and driving new attitudes into every aspect of the total business. Dave Cote and his team have spent a lot of
time and energy cultivating key initiatives throughout the entire corporation, and have remained laser-focused on them.
This "Honeywell Culture" review comes primarily from Jack Bolick and Roger Fradin, with some involvement from David
Cote at the top. Together they are creating a unique customer-centric culture developed from Allied Signal, with Honeywell's best traits, and a splash of GE.
Allied Signal brought financial and process disciplines, and strategic planning. Honeywell brought an innovative, engineering culture that thrives on customer
results. During its exploratory involvement, the GE influence brought organizational strength and Six Sigma commitment. Honeywell is now reemerging
with its own special identity and culture.
The new Honeywell is focused on 5 key initiatives: Growth, Productivity, Cash, People and the "Enablers". There are 3
enablers: Six Sigma, Lean Manufacturing and Digital Works (corporate-wide digital initiatives to increase productivity and information flow).
The growth initiative has 4 pillars:
- Each individual must do a superb job every day, focusing on Customers to provide quality, delivery, value and
- Building a superior sales and marketing organization.
- Expanding globally.
- Creating a set of robust, funded technology roadmaps for new products and services.
Honeywell encourages its employees to focus on a set of 12 behaviors, part of the corporate-wide culture, helping
people to grow personally and professionally.
- Growth & Customer Focus
- Leadership Impact
- Getting Results
- Making People Better
- Championing Change & Six Sigma
- Fostering Teamwork & Diversity
- Global Mindset
- Intelligent Risk Taking
- Effective Communication
- Integrative Thinking
- Technical or Functional Excellence
Here is the focus of the NEW Honeywell
Honeywell's people are its greatest assets. They recognize themselves as a global team of individuals, proud to be associated with Honeywell's heritage
as an automation pioneer, with a common commitment to uphold that tradition. They take great pride in working among the best in the business, learning from
each other, and delivering as a team.
- Integrity: When challenged with tough business decisions, Honeywell does not tolerate anything but the highest levels of integrity, for themselves and for all those
- Customer-centric management: A lean, results-oriented culture that puts customers first. Managers are expected to spend at least 50%
of their time with customers, or customer-facing employees.
- Global Operations: Honeywell people are all part of a global company that operates in 90 countries, respecting diversity, but sharing common values and
- Metrics & Vision: Honeywell (each Division) has a set of metrics by which business performance is measured. This becomes part of the incentive plan,
which ties back to the vision of the business. These metrics and vision are on display at all Honeywell locations throughout the world, reminding every
employee that they are all headed towards a common goal.
- Quality Policy: Right the first time, every time - in all aspects of the business. Tools like Six Sigma help achieve that goal.
Our own interest is in "industrial automation", which for Honeywell centers around Process Solutions. After a
succession of relatively ineffective Division Presidents (since the well-respected Ed Hurd departed almost a decade ago), Jack Bolick is now
responsible for this Division. The other industrial segments report separately to Roger Fradin, as parts of ACS.
Roger Fradin insists that putting customers at the center of day-to-day discussions is a top priority of his.
Honeywell has been around for 120 years and you don't survive for that length of time unless you put significant value around your customer relationships. Roger
believes that customer responsiveness, cutting-edge technology, plus outstanding sales & marketing will drive growth for ACS. He is confident in business
prospects and has no doubt that the customer-centric culture will drive results.
Jack Bolick joined Honeywell about 8 years ago; he was at Johnson Matthey Electronics when it was acquired by Allied
Signal. He's just the kind of leader that makes things happen and gets results. He believes that his people should be able to count on him and his leadership
team to state clearly what they want to do, and then do what they say. His results: When he took on the Process Solutions assignment, revenue was $1.65B;
at the end of 2004 it's an $1.8B business, with 16% orders growth. Revenue grew 8% in 2004, and is expected to be $2.3B by 2008.
Within Jack Bolick's Process Systems Division, there are 5 initiatives to support growth:
- Taking care of the installed base.
- Expanding within key regions.
- Expanding within key vertical
- Enabling knowledge transfer through
- Expanding services through domain
Jack Bolick feels he has much to crow about being an executive of the new Honeywell and running the Process Solutions
business. He insists that Honeywell has fully rebounded from the recent past,and is now regaining customer and industry confidence and earning its rightful
place as a leader in the process automation industry.
Jack Bolick and I have developed a friendship through this exchange and, at 49, I would not be surprised to see him
shoot to the top of Honeywell, or any other company he chooses, within the next decade.
My own sense is that a new and focused Honeywell has emerged from the turbulence of a few years ago. The company now
shares common corporate vision, goals, ethics and initiatives. But each business also has some distinct cultural differences. Even within ACS there is a distinct
cultural difference between various Honeywell divisions such as Process Solutions and say Sensing & Control (the old Micro Switch), or the Security
businesses within ACS. This probably reflects the differences in the businesses, customers and markets served plus the legacy/history of the individual business
Long-term Honeywellers who have worked in various Honeywell divisions feel that Honeywell had retained many of its
strengths - specifically the unswerving demand for integrity and attention to customers. And the new Honeywell does indeed have a refreshing, more open
culture, with a lot more results orientation and recognition for those who get results.
It seems that 120 years of history allows for a few bumps and bruises along the way. But it's clear that the new
Honeywell has healed, and the company now has the strength and determination to move forward, and to maintain and even expand its industry leadership.