Enterprise operation and development are the micro-foundation of the national economy, and large enterprises are the cornerstone of national economic stability and the "national team" participating in international competition. Because large enterprises have relatively obvious advantages in capital, technology and scale, and have strong capabilities in industry resource integration and integrated innovation, they have a significant role in stimulating supporting industries. The competitiveness of large enterprises has thus become the representative of the country's industrial development capabilities and the "ballast" for ensuring economic stability. stone".
In the past period, many Chinese companies achieved rapid expansion by relying on demographic dividends, reform dividends and capital dividends, but neglected to pay equal attention to value creation, growth methods, and financial conditions, making "high revenue, low profit" a Chinese An important problem common to large enterprises. As industrial giants with a century-old history and a market capitalization of more than 100 billion U.S. dollars, the successful experiences and business strategies of 3M and Honeywell have far-reaching implications for global companies.
Every day, half of the world's population comes into direct or indirect contact with 3M products. Many people have been on an airplane, but they don't know that 50% of the airplane is made by Honeywell. Both companies have pushed their business diversification strategy to the extreme, providing a model for domestic companies to learn from. How to continue to expand its influence through its core technology, from a category brand to cross-category and diversification, and finally become the "chain master brand" of the industry chain, an industrial giant with a market value of 100 billion?
There are two key links in the development of an enterprise, one is strategy and the other is operation. The frequency of strategy is low, but it is the key decision-making for the survival of the enterprise; the frequency of operation is high, and it is to improve the operating efficiency of the enterprise under the condition of the strategy.
At the group strategic level, both 3M and Honeywell focus on keeping pace with the times, and constantly optimize and refresh their product lines through mergers, acquisitions, sales and other means to maintain a close match between the business structure and the needs of the times. Their business strategy emphasizes flexibility and adaptability in order to gain a foothold in the changing market environment.
At the level of business operation, both companies emphasize on continuously grasping and strengthening their core technological advantages through research and development, so as to form a continuous driving force for innovation. They know that only continuous research and development and innovation can maintain the competitiveness of products and meet the ever-changing needs of the market.
Therefore, for domestic enterprises, the experience of 3M and Honeywell provides important reference value. Enterprises need to maintain dynamics at the group strategic level, and optimize their business structure through mergers and acquisitions, sales and other means; at the business operation level, enterprises need to continue to invest in research and development, strengthen core technological advantages, and form continuous innovation momentum.
In the category brand stage, actively use unique technical advantages
3M has developed innovative products like the Post-it Note, while Honeywell has built a strong brand through its technological strengths in aviation, safety and technology. Both companies have built strong brands in their respective fields by leveraging their unique technological strengths.
The adhesive tape on which 3M made its fortune can be used to attach to American aircraft and tanks during World War II; Honeywell’s main business is aerospace instruments and equipment, and has been providing automation and control systems and services for the US Army, Navy, aerospace and civilian industries. .
In 1902, five industrialists founded a mining company in Twin Harbors, Minnesota, initially mining only ore sand and soon changing modes to manufacture sandpaper. This is how 3M started. In 1910, 3M's corporate headquarters moved to St. Paul, Minnesota, and an epic journey of industrial innovation began.
Honeywell dates back to 1885. The inventor Albert Booth founded the Booth Electronic Thermostat Company and developed the "damper damper". For many years, many of Honeywell's products were extended With such a closed-loop system design, the company's first advertising campaign was the famous thermostat. This caught the attention of Uniform Temperature Controls and led to an acquisition. In 1904, Mark Honeywell founded Honeywell Professional Heating Company, which discovered and improved some of the disadvantages of heaters on the market, which in turn expanded the water heater manufacturing business. In 1927, the merger of the two companies was announced due to a business fit to form the Minneapolis-Honeywell Regulator Company.
Their experience tells us that in the category brand stage, giving full play to their own technical advantages and combining with suitable partners is the key to success.
Cross-category stage, with super technology as the core, continuously expand product forms and application scenarios
Through its unique adhesive technology and material science technology, 3M has developed a variety of products ranging from office supplies to medical equipment. Similarly, Honeywell has also developed a variety of products and services based on its technological advantages in the fields of aviation, safety and technology.
In 1914, 3M keenly grasped the demand for mass production of military vehicles in the First World War. Its exclusive product Three-M-ite synthetic abrasive was purchased by the army in large quantities because of its superior performance in cutting metal. In 1921, Wetordry, the world's first waterproof abrasive sandpaper, was born in 3M. By wetting cutting objects with water, it avoided the spread of lead dust and perfectly solved the production safety problem of paint. This innovative waterproof sandpaper also allowed 3M to expand.
From 1922 to 1945, 3M relied entirely on adhesive tape technology to make a fortune in World War II. The production process of its milestone product, Scotch tape, is complex, forming a technical barrier. During the Great Depression, not only the American people tried their best to use Scotch tape to repair things at home, but 3M tape was even used on aircraft, ships, tanks and other weapons. During World War II, Scotch tape contributed about 50% of 3M's revenue. Not only did 3M not lay off staff like other companies, but it tripled its scale.
World War II spurred further innovations in its adhesive technology. The U.S. government cut off the commercial supply of natural rubber for war needs, forcing 3M to vigorously develop artificial rubber adhesives and speed up technological iteration. During World War II, 3M developed more than 100 kinds of adhesive products, laying a technical foundation for subsequent product innovation.
3M Company has a famous "15% rule". The company stipulates that R&D personnel can devote 15% of their working time to researching things they are interested in every week. "The era of 3M is unbelievable; "doing nothing" and "encouraging mistakes" have become 3M's cultural hallmarks. This innovation in management was directly emulated by many Internet companies later. For example, Google has upgraded the 15% rule, allowing engineers to spend 20% of their working time on their own projects.
There is also Honeywell that does not set boundaries for innovation, and its emphasis on R&D and innovation is also amazing. At Honeywell, office areas can be easily divided or integrated, R&D and design personnel across teams and types of work maintain collaboration, openly discuss issues, and conduct innovative research. Although the four business groups of Aerospace, Automation Control Systems, Transportation Systems and Special Materials under Honeywell seem to be very different, each R&D team does not directly report to the business group corresponding to the R&D direction, but directly Report to the leader of the Technology Division.
Honeywell also takes its super technology as the core to continuously expand product forms and application scenarios.
Honeywell actively conducts mergers and acquisitions and cooperation with companies related to its core technology to obtain new technologies and markets. They acquired Time-O-Stat Controller Company and Brown Instrument Company, which further enhanced their technical strength in the field of control systems and instrument measurement; they also acquired Sperry Aviation, which enhanced their technical position in the aerospace field.
Honeywell applies its technical advantages in control systems, instrument measurement, aerospace and other fields to new product development. They developed a series of fire detection and alarm products, expanding the market in the field of security equipment.
Honeywell not only applies its technology to a single field, but also tries to apply its technology to multiple fields. For example, they apply the technology of control systems to household and industrial environments, such as water heaters, thermostats, etc.; at the same time, they also apply these technologies to aerospace fields, such as the automatic driving system of aircraft.
Honeywell pays attention to technology research and development, and constantly improves its technological advantages. They invest in research and development of new technologies, new products and improvement of existing products to adapt to market changes and meet customer needs.
Through these strategies, Honeywell has successfully continued to expand product forms and application scenarios with its super technology as the core, thus achieving cross-category development.
In the stage of diversification, continue to expand the adjacent business fields of the industrial chain around super technology
3M has further expanded its business areas through its technological advantages in materials science, electronics and electrical, automotive, health care and other fields. Similarly, Honeywell has further expanded its business areas through its technological advantages in aviation, security and technology.
In the process of realizing high-end transformation and diversification of 3M and Honeywell, the kinetic energy of mergers and acquisitions is indispensable. They optimize product portfolios and improve operating margins through business restructuring, coupled with horizontal mergers and acquisitions.
For a century, 3M has been committed to expanding the limits of technology, and after the war, it transformed to diversification through listing. 3M currently sells about 55,000 products in nearly 200 countries, covering fields including materials, electrical appliances, construction, energy, medical and personal consumption.
As a basic manufacturing company, 3M's products and technologies are deeply integrated into people's lives. 50% of the world's people are directly or indirectly exposed to 3M's products every day, including its most famous masks, post-it notes, waterproof Sandpaper, masking tape, etc.
From 2001 to 2017, 3M acquired a total of 74 companies to acquire more core technologies, enhance its product line, and pursue a higher-profit product portfolio. In addition to consolidating traditional industrial products, 3M has made 15 acquisitions to enrich its product lines and increase connections between different product lines, mainly in the high-margin health care and security graphics sectors. As of 2018, healthcare and security and graphics-related products achieved operating margins of 30% and 25%, respectively, making them the second-largest revenue-contributing segments after industrials.
In addition, from 2005 to 2015, 3M acquired 6 technology platforms to integrate existing technologies and develop new high-tech products. For example, 3M acquired Membrana for US$1 billion in 2015, a leading supplier of microporous membranes for life sciences and industrial filtration, which can help 3M’s healthcare sector strengthen its products in drug sustained release, blood filtration, kidney dialysis, etc. ; can also enhance products in other sectors for residential water filtration, commercial food service, industrial filtration, etc.
In the other direction of mergers and acquisitions, like Honeywell, 3M advanced to high-end by streamlining its business.
For existing businesses, 3M has laid off 1,500 American middle-level managers (accounting for 1.7% of total employees), and closed sales outlets with poor operating conditions. In addition, 3M has also divested globally under-revenue businesses such as license plate conversions, printer cartridges, and packaging foam.
The companies that 3M has strategically acquired since 2003 have three main goals: to strengthen existing products and continue to strengthen their own competitive barriers; to enrich business branches and continue to broaden their control over businesses related to the industrial chain; to introduce technology platforms and continue to empower them with technology. Competitive advantage in key areas.
With the changes in the economic structure of the United States, 3M gradually got rid of its heavy dependence on industrial products, and instead seized the rising consumer and medical industries, developed important products such as post-it notes and protective masks, and successfully transformed.
In contrast, 3M's former competitor Northon, a company that also started with adhesives and less sanded paper, was almost the same size as 3M in the 1940s, but in the 1970s, it was only 1/6 of 3M. By the mid-1990s, Northon, whose business had shrunk, was eventually acquired by a foreign company.
Compared with 3M, which is constantly adapting to the times and bringing forth new ones, Northon's problem is that it is rigid in the adhesive business and cannot adapt to the new industrial structure in the United States.
Honeywell started with household temperature regulators and developed automatic instruments, but it is not limited to this; from civilian use to military production, the company has the support of the state and has made a big leap in technology. After the outbreak of World War II, Honeywell undertook a large number of defense and military orders with its precision instrument production capacity. Since 1940, they have successively produced tank periscopes and cannon sights, etc. The most outstanding achievement is the development of electronic automatic pilots for aviation reconnaissance and long-range bombers in October 1941, thus establishing the establishment of Honeywell Corporation. The foundation of the aerospace and defense industry sector. Regardless of whether the U.S. economy is in recession or development, Honeywell will give full play to its technical expertise, backed by solid basic technology, and promote business extension to various fields through continuous research and development, innovation, and precise horizontal mergers and acquisitions. Therefore, Its business has been growing.
Honeywell can have such a large scale today, relying on four words: continuous acquisitions.
Today's Honeywell International was formed in 1999 by the merger of Honeywell (Honeywell, Inc.) and Allied Signal (Allied Signal, Inc.). And these two big companies also have strong acquisition genes, and each once conquered several companies, code-named "acquisition maniac".
A single thread does not form a thread, and a single tree does not form a forest. Although Honeywell and AlliedSignal are strong enough, one specializes in military technology and industrial automation, and the other is good at aerospace. The products hardly overlap. The combination of strong forces can make the BRICS cooperation more "golden", so in 1999, the two major acquisition madmen announced their cooperation. And because the brand name of Honeywell has long been known all over the world, the two companies reached an agreement during the merger and chose to keep "Honeywell", and the new company name was directly called Honeywell International (Honeywell International). But even with complementary product lines, the new company struggled in the early days of the merger. However, in terms of strategic choices at this stage, Honeywell's insistence on "one main Honeywell brand" gives it an advantage in the turbulent revival in the future.
Honeywell's business covers a wide range of products, involving more than 15,000 products and services, more than 50% of which are energy-saving and environment-friendly. In Honeywell's overall brand promise (We are building a world that's safer and more secure, more comfortable and energy efficient, more innovative and productive.), the most critical factors are energy saving, safety, and Comfort and efficiency. All stories revolve around this brand promise and must be very relevant to the business.
At the business level, find out the coolest business and technology from each of Honeywell's business groups in order to differentiate it from other competitors. Generally, it is considered from the two points of value to customers and impact on society. In addition, the acquisition of all major orders and the participation of major projects, whether domestic or foreign, can be used for reference in China, which can be turned into cases and dry goods for future storytelling.
The third point is Spokesperson . With the above key messages, it is necessary to choose who to cooperate with and which aspect of the story to tell. Message and Story need to be spoken by people. These people are Spokesperson. The general manager of the department must be selected first, and then the experts (Subject Matter Experts) who will work with him/her must be selected. Candidates for experts are either Marketing Directors or people with technical expertise in R&D. The Corporate Communications Department will train and motivate the appropriate spokespersons.
Today, Honeywell divested low-margin non-main businesses, and kept pace with the times to expand and optimize its businesses through mergers and acquisitions. For example, as the turbocharger market became increasingly saturated and entered the stage of price wars, in June 2018, Honeywell announced the divestment of its non-core business turbocharger system, officially withdrawing from the low-profit value-added auto parts industry. In October of the same year, Honeywell acquired Transnorm, a leading warehousing automation solution provider, for 425 million euros to cater to the development trend of e-commerce.
The century-old experience of 3M and Honeywell shows that at the group level, it is necessary to keep pace with the times, innovate product lines through mergers, acquisitions, sales, etc., and keep the business portfolio in line with the needs of the times. At the same time, at the business level, it is necessary to Through research and development, firmly grasp the core technology and form a steady stream of innovation power.
In the stage of the industrial chain, with super technology as the core, a mature business model will be built, and influence will be exerted in all links of the entire industrial chain
3M has established itself as a leading global manufacturer of diversified industrial products through its strong R&D capabilities and global sales network. Honeywell has established itself as a world-leading technology and manufacturing company through its technological advantages in aviation, safety and technology.
Take Honeywell as an example. In 2002, the company was also facing the crisis of collapse, but its CEO took technology as the core and successfully made the company grow again through a series of business model improvements.
Long-term strategies are more conducive to the sustainable growth of enterprises. When Goldway took over as CEO of Honeywell in 2002, the company was on the verge of collapse. The biggest contradiction was the emphasis on short-term performance over long-term strategy. The same problem plagued many companies. Honeywell's top executives and managers were so busy doing everything they could to produce a good quarter that they didn't even dig into the operating processes of the business. They know nothing about technology, markets, and business cycles, their supply chains, key liabilities, and customers.
This creates a strange vicious cycle: working hard to achieve short-term goals, while long-term goals stagnate.
It’s one of the most pernicious beliefs in business today: leaders can’t pursue short- and long-term goals at the same time, but embrace short-termism.
According to a 2014 McKinsey study, two-thirds of executives and directors said that “the pressure on them to perform short-term performance has increased unabated over the past five years.” However, a study by McKinsey from 2001 to 2014 showed that companies that pursue long-term strategies have an average market value of US$7 billion higher than companies that only pursue short-term goals, and their average revenue growth rate is also 47% higher. 36% higher.
Obviously, long-term strategies are more conducive to the sustainable growth of enterprises. But why is short-termism prevailing? Is it really "you can't have your cake and eat it too" to balance short-term goals and long-term growth at the same time?
This requires the reconstruction of the "business model" under the conditions of the established strategy, a deeper understanding of the business of the enterprise and a broadening of the scope of one's grasp of emerging trends. At the same time, it is necessary to continuously improve the process and improve operating efficiency. Honeywell is an "elephant" enterprise, and its business covers air transportation, intelligent building technology, characteristic materials and technology, safety and production, etc. The key to enabling such an enterprise to achieve business growth while maintaining fixed costs remains constant business restructuring. In order for business reorganization to play such an expected role, it is necessary to continuously improve the operating process. Because in Cote's view, all businesses are nothing more than a collection of processes .
In 2003, Cote found that half of the 115,000 employees at that time were engaged in manufacturing in factories, and the leaders of factories everywhere operated according to self-righteous working methods. If the work efficiency of these employees can be improved, the company's profitability can be greatly improved.
In 2004, by referring to the Toyota Production System (TPS) and combining Honeywell's business practices, Cote designed a comprehensive system for Honeywell factory operations, "Honeywell Operations System" (HOS) , this system can simultaneously mobilize managers and front-line employees to act together to continuously improve the work process.
It took him 10 years to implement the HOS system throughout the company. Initially, the management and factory were reluctant to accept the HOS system, after all, the company had implemented similar process changes before without success. Faced with this situation, Cote did not adopt a radical pace of change, but proceeded in stages and step by step .
In 2005, he first used 3 years to test the HOS system in 10 factories, continuously improved and perfected the system, and then began to promote it on a large scale. In order to measure the advancement of HOS in each factory, he also set up relevant indicators, divided the implementation of HOS into different levels, and awarded them different levels of certification such as gold, silver, and copper according to the improvement performance of the factories.
This approach not only allows the company to track the progress of reforms in all factories, but also gives the factories the motivation to continue to move forward.
Source: "Long-Termism"
In the end, the HOS system not only reduces the cost, inventory and environmental impact of Honeywell's large and small projects, but also improves production efficiency, and also improves product quality, customer satisfaction and work safety. For example, before the implementation of the HOS system, it took a total of 42 days for the factory to produce a set of gas monitoring equipment from production to delivery to the customer. After the implementation of the HOS system, the entire cycle was shortened to 10 days, and the occupied factory space was also reduced by 75%. From the perspective of the entire company, the HOS system has reduced the cost of most factories by 15% to 20%.
The successful experience of these two companies shows that in order to become a "main chain brand", the company must focus on super technology and continuously innovate and expand in all links of the industrial chain. At the same time, enterprises also need to avoid entering fields that have nothing to do with their core strengths, so as not to consume too much resources and energy. At the same time, it is also necessary to avoid developing in revolutionary and explosive short-term fields, especially for small and medium-sized industrial enterprises, seeking the field with the least competition and the greatest opportunity is the most important survival proposition.
How did 3M and Honeywell avoid these growth misunderstandings in the four stages?
Category brand stage: Both companies focus on their core technologies and areas of strength, and avoid entering fields that have nothing to do with their core strengths . For example, 3M focuses on developing innovative materials science technologies, while Honeywell focuses on aerospace, technology and security.
Cross-category stage: Both companies insist on focusing on their super technology, rather than blindly pursuing short-term explosive growth . They have achieved steady growth by continuously expanding product forms and application scenarios.
Diversification stage: At this stage, both companies adhere to their super technology as the core and continue to expand the adjacent business fields of the industrial chain. They did not blindly pursue diversification, but ensured their own continuous growth by raising the entry threshold of competitors.
Industrial chain stage: At this stage, both companies build mature business models with their super technology as the core, and exert their influence in all links of the entire industrial chain. They did not blindly pursue expansion, but achieved long-term stable growth through continuous optimization and improvement, as well as effective resource integration.
The experience of 3M and Honeywell shows that if industrial enterprises want to achieve sustainable growth and development, they must focus on super technology, innovate and expand around the industrial chain, and avoid entering fields that have nothing to do with their core strengths. Sexual and explosive short-term field development. At the same time, they also need to continuously optimize and improve their business models, build strong barriers to competition, open up the upstream and downstream of the industrial chain, and have control over key adjacent business areas to achieve long-term stable growth.