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honeywell is a 35 billion dollar company
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in the multi industry space so we have a
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number of different businesses i work in
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honeywell aerospace or about 13 billion
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in size we have probably the most
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diverse aerospace portfolio out there we
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serve air transport and regional
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customers we have business and general
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aviation customers as well as a large
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defense in space business and our
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products range from gas turbine engines
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turbofans turbo props and auxiliary
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power units that power everything from
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tanks to airplanes business jets and
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helicopters we also have cockpit
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avionics surveillance systems inertial
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navigation systems so we're very diverse
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and it makes it a very exciting business
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to work on strategy
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one of the benefits of that wide range
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of products and services we sell as long
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as well as the number of customers we
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have both domestically and globally is
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that diversification really does help us
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the diversification helps in a couple
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ways one is there's a 50 year history of
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defense in commercial markets running
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counter cyclical so that helps us quite
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a bit because if some businesses are
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going up others are coming down and we
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can balance that the benefit of that is
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that we get to move our people around so
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we can shift them back and forth so we
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get more efficient resource use
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especially for folks like engineers it
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also means that our manufacturing and
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supply chain can be a bit more stable
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than if we were in only one of those
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areas so the good thing about that
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diversification is when you run into
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cycles like the one we're about to go
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through or starting to go through you
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know are the amount that we're going to
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move is going to be less and we can
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shift resources back and forth and grow
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the still you know experience growth and
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key businesses
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I think what we're trying to do is not
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take anything that's a drastic or
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short-term oriented really continue to
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think about the long run but be very
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prudent and that the trick in this kind
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of market is to make sure that you have
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accurate forecasts of what's going on
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you stay extremely close to the customer
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to know what's actually happening to
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their demand that you understand not
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just what your customer is saying but
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what the underlying trends are driving
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the demand in the market and as long as
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you can track your supply chain to
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what's happening in the market pretty
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accurately then you don't have to take
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huge drastic changes typically the big
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ones you read about or when someone's
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reacting as opposed to trying to stay
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ahead of it so for us it's mostly about
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staying ahead of it really understanding
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it it's a very long cycle business we're
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in and that helps quite a bit and so
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within aerospace I think we're just
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trying to stay ahead of what's going on
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in the aftermarket which is where the
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airplane flight hours are in the OEM
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side which is where they're building
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aircraft or platforms as well as all the
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programs that we have in the defense and
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space world
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it'll be interesting to see what happens
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with the new administration I think one
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of the things is they are definitely
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taken a hard look at the defense budget
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figuring out where they're going to
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spend money what programs are going to
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do well our mantra is pretty
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straightforward there one is we're
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trying to make sure that we've got
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programs that offer very high value to
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the warfighter soldier centric as we
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call it means the things that are going
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to support the soldier and our closest
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to the soldier are the things they're
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going to stay funded and we need to
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continue there's also a global aspect to
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this too that so programs like Joint
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Strike Fighter which are nine countries
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involved it replaces a lot of aircraft
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it offers tremendous value to all the
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services you may see some changes in
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that but will be harder for that kind of
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a program to see huge impacts so again
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diversification really helps us quite a
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bit being as global as we are helps but
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a bit so that it's not a business that's
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a hundred percent dependent on the u.s.
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we're actually quite global in a number
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of our markets so it will have an effect
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on our defense business i'm sure it's
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probably a little bit further out there
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also and timing because you know it's it
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like i said it's a long cycle industry
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it takes a while to kind of move the
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direction so for us it's making sure
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we're on the right programs making sure
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we execute the programs that we're on so
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that they don't run over budget and over
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cost those are the programs that are
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going to see the most pressure
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one of the things that's important to do
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is make sure that you're not making all
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your decisions in individual stovepipes
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because if you do it that way what tends
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to happen is a business that isn't going
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to have a lot of growth opportunities or
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because of the competitive nature or
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because it's older declining technology
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might actually be where a lot of the
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profit is generated right typically
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things that have been in the market for
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a while and that we're servicing over
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the long run have very high aftermarket
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revenues if you took all of that profit
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and plowed it back into that business
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then and so if you're organized in a way
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that causes that to happen what can
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happen is that you're actually not able
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to fund the higher growth more
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innovative opportunities and in
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aerospace I would say we have a
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tremendous number of innovation
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opportunities our challenge is not
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thinking up new ideas we have tons of
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great ideas we actually have thirty to
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fifty percent more ideas and
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opportunities than we actually have
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capacity or willingness to fund so the
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trick for us is making sure that we
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actually look across the whole business
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and make sure we're funding those things
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that are truly innovative truly
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differentiable and create the most value
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for our customers and not just letting
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you know a business that's generating a
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lot of cash fund itself but have to
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think about overall so we have a large
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process where we actually go through
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currently doing this right now there's
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about 750 individual opportunities that
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we're evaluating for what we're going to
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fund and how we're going to take it
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forward so you have champions for each
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one of those that present their ideas
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and and what it would cost and what the
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benefits are and what kind of value
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they're creating and we have a process
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of going through and evaluating which
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ones we want to fund
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I think you have to start with the
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customer and you have to start with the
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concept of value and so we spend a lot
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of time forcing our teams to not just
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explain you know well here's how much
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it's going to cost if I add some you
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know margin to it here's what it you
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know what I should charge the market for
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to think about incremental improvements
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but to rather start with what are the
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customers needs what are problems that
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you're trying to solve for that customer
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what's their nest best alternative to
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what you're offering them and how do you
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create value and value to us is not a
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nebulous concept it's three things it's
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one it's it's a for a specific customer
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segment so it's not just general for the
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market but you're talking about specific
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customers to its measured in currency
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and we don't that doesn't have to be
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dollars but it has to be currency so
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it's it's not something nebulous but
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truly measured in currency and three
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it's always relative to the next best
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alternative sometimes that next best
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alternative is do nothing keep what they
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have sometimes it's a competitor with
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their offer and sometimes it's a future
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competitor that might be emerging so you
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have to be very careful to make sure
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you're not just creating value but only
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to find out that you know the next best
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alternative is just as good so we really
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try to hone that concept and make sure
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that we're thinking that way when we
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develop our new products and services
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managing global organization is truly a
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challenge and if you think about many
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aerospace companies are organized in
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some kind of matrix right you have to
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pick customer or product or geography or
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function or some combination and
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generally you end up with a bit of a
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matrix where you have one or two primary
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and the others have to work across that
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so we've recently set up a global
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structure where we have a president in
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asia-pacific who sits in Shanghai and a
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president of our what we call amia which
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is Europe Middle East Africa and India
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and so we've created a virtual
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organization there I actually have
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people who report to me who are in in
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our Switzerland office as well as in
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Prague I've got people in Shanghai but
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also in Mexico and a couple locations as
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well as folks around the u.s. so it is
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me it is difficult to manage across that
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I think that the key is to make sure
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that people's roles and responsibilities
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are clear and that people know each
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other I mean the simplest thing is our
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CEO likes to say that if you don't know
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somebody if you haven't met them you
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probably have a bit of distrust if you
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know them and you've met them and you've
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talked to them you tended to have a bias
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towards trusting them so part of what
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you got to do is connect people get them
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to know folks and in a matrix as
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complicated as we've created it's it's
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important that you know who to pick the
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phone up to and who to call how do you
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create a virtual team that crosses those
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boundaries and actually works together
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and I think we've got some great success
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stories in in Europe as well as in Asia
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that are working very well across those
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boundaries
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