At Johnson Controls, growth is good

A: If you go back 13 years, we were in the position of divesting our battery division. We had just lost the Sears contract. But that business got back on its feet quickly, and we were able to take what we learned and cut our costs across all plants worldwide. Collectively, we identified a $2 billion gap between our best-performing locations and the rest of our businesses. Every year, we try to lop off a third of that. Sometimes, when you have a business that is in a crisis mode, you can learn from that experience and share it.

Q: Deep down, you must fear making a bad acquisition that ranks up there with AOL-Time Warner. How can you be sure that never happens?

A: (Laughs.) A lot depends on the size. If it's something $3 billion to $4 billion, we feel good about our ability to incorporate that given the size of our business. As you get into something more significant, you worry about the market moving or some assumption you've made being derailed. We feel pretty good about our capabilities.

Q: What, then, keeps you awake at night?

A: Most of my worries are going to be around competition and technology. If you look at what would ever derail us long term, it will be something in that area, where a new competitor, new technology, a disruptive technology comes into our market. I remember the shift into the digital world caught the company by surprise, but that was 20 years ago.

Q: What do you think are the most common mistakes companies make that stunt growth?

A: They're looking at what they need to do to improve efficiency. Those things are valid, but you get hung up and forget to focus on what the customer is looking for. Also, the reward system for the management team. If you've got one that only drives the stock price, that can stunt growth because they might forget about the life cycle value of having a customer relationship. If quality begins to erode, you know something is wrong. If there are issues with safety in a plant, you're going to get sensitive.

-- This embed didnt make it to copy for story id = 4304327.
  • 1
  • |
  • 2
  • |
  • 3
Join the Discussion
blog comments powered by Disqus
You Might Also Like...