What does it mean to be Emerson?This is the title of the latest Emerson annual report. It's a good lead in to "The Emerson difference".
Chuck Knight, former Chairman and CEO, and now Chairman Emeritus, has left his planning stamp on the Emerson culture. David Farr, the new CEO and Chairman, is continuing that focus. The transition from Knight to Farr was seamless. The processes continued, the basic strategies continued, and all the key managers stayed to contribute.
Results, not politicsEmerson is an achievement oriented culture. Delivering results is valued far above personalities or internal politics. Large egos with no results don't last long. High value is placed on getting things done, making decisions and taking ownership.
Open Communications at all levelsAt many companies, people really don't know how parts of their own businesses are performing. That just doesn't happen at Emerson. All Emerson divisions have quarterly employee communication sessions where division performance is openly communicated, along with strategic goals and how that division is doing relative to the goals. All managers and supervisors know the full P&L, down to individual product lines.
Strong commitment to technologyEmerson invests strongly in engineering and development in good times and in bad. Critical programs are considered vital to the business. Funding is simply not pulled away in bad times, for any reason.
Customer Commitments are "sacred"Emerson stands behind its commitments. Customer problems are fixed as a high priority. People who go beyond the call of duty to satisfy customers are honored and celebrated. Emerson people are empowered to make decisions which benefit the customer, without going through endless chains of command.
Accessible ManagementTop leaders, like CEO David Farr, are very accessible. David Farr, John Berra and others return virtually all e-mail in a matter of hours, certainly no more than a day. They don't seem to insist on following every rung of the hierarchy. Front line sales people communicate directly with the top, especially when it relates to customers.
Legendary Emerson Planning RegimenEmerson takes planning very seriously. Every division presents a full and detailed plan every year at Emerson's HQ conference center. The full executive staff is there, and fully engaged. The strategy is examined in excruciating depth. Plans are compared to the previous years, as well as YTD accomplishments vs. plan. A full presidents council review is held every 3 months for every division. At this review, actual quarterly results are compared with the plan, prior year's performance, market activity, plus competitive analysis and performance for each division. Opportunities and challenges are discussed and appropriate actions determined. Future forecasts are updated; if at variance, then the actions to be taken are presented. There is always a thorough reasonability check.
Emerson Division Board ReviewsEvery Emerson Division has a full board meeting every three months. The Division Board reviews customers and competitors, markets and new market opportunities, sales and bookings, forecast results, year over prior year and quarter over prior quarter. Technology, products and new product development status are discussed at length and analyzed against current technology developments. Emerson prides itself on technology leadership and this is tracked by the quality of new products, uniqueness and percentage of new products in the sales mix.
Emerson Acquisition RecordAcquisitions are taken very seriously. When a company is acquired, Emerson knows exactly how they will be using the acquired capabilities to get full results on the investment. Perhaps the best Emerson acquisitions are the ones they didn't make. This can be measured by the disasters that competitors have had with acquisition screw-ups - usually resulting from poor analysis of strategy and prior development of tactics needed to make the acquisition a success.
People EthosOne might expect a successful company like Emerson to be ruthless - but they are not. The company goes well beyond any normal expectations to take care of individual needs. At a time of uncertain situational ethics, treatment of Emerson people goes well beyond legal or operational demands. Emerson is compassionate in a way that is not seen at most other companies. Says one long-term employee, "When Emerson makes a commitment, it's a bond of steel!"
Leadership developmentEmerson selects the best "high potential" people, and makes development plans for each individual. "Hi-pots" are identified, developed and tracked early to ensure that there is always a crop of leaders. Many companies have a revolving door; that simply does not happen at Emerson. The company is well known and sought after as a training and development ground, resulting in a constant inflow of excellent new management. Emerson seems to attract some of the best people in the industry, and keeps developing the next wave of leaders.
John Berra, President of Emerson Process Management has been with Emerson since 1976; he was at Rosemount when it was acquired by Emerson. John provided some of these insights. He is passionate about Emerson:
Yokogawa targets the top-spotProclaiming its intention to become the world's leading process automation supplier, Yokogawa unveiled it's new Vigilant Plant system concept, at the ARC Forum on February 2, 2005 in Orlando, Florida.
Yokogawa's President and CEO, Isao Uchida, openly boasted (unusual for the Japanese) that Vigilant Plant systems will win a leading market-share for Yokogawa by the year 2010.
Walt Boyes, outspoken editor of CONTROL magazine wrote in his weblog:
Pinto's PointersYokogawa always had leading market-share in Japan, their primary market. They have good products, but with some gaps in their product offerings. Historically, their issues have been that their systems are hard to use, particularly the software. Vigilant Plant does not really bring anything revolutionary - Yokogawa is simply trying to compete with Emerson's Plant Web strategy.
Yokogawa has always had problems managing itself as a global company. In the past, decisions have been kept in Japan without allowing much local autonomy. It remains to be seen whether that changes in the US.
I have met Uchida-san personally, and have a lot of respect for his leadership. When he was originally given the assignment to sell Yokogawa products in the US, there was no support structure and all literature was in Japanese. So he knows first hand what it's like to try to gain market share outside of the home base.
One has to be a little surprised about the latest bold projections. Previously Vision 21 / Action 21 were Yokogawa committments to achieve 500B yen in revenues and 50B yen in operating profit for FY05. Estimates for FY04 (3/31/05) are revenues of about 400B yen and profits of about 15B yen. This would mean growth of some 25% and 230% respectively - not impossible, but unlikely.
Mr. Uchida's public statements are clearly intended to send a message to his own troops about his expectations. It remains to be seen whether or not Yokogawa's organization can make it happen. Time will tell if this is just sales-campaign rhetoric.
Yokogawa is an excellent company and all their key competitors take them very seriously. Mr. Uchida's boasts won't be taken lightly. Watch out for the sparks!
Invensys (Foxboro) gets a new US President - ex-HoneywellLast week, Invensys finally announced good news - Q3 earnings (Dec. 31, 2004) were expected to be in line with market expectations, and they expect to meet full-year targets. Short term "operational issues" at the controls unit were offset by better performance at the other 4 businesses. The stock went up 13.2% at 19.2p. It closed at 19.75p on Friday 4 Feb. 05.
This past week, Invensys Process Systems (Foxboro) announced that Virginia Burnell has been appointed president of North American operations. Burnell was previously VP & GM of Honeywell Hi-Spec Solutions, global advanced software applications. More recently, she was VP & COO of PAS Inc. which manufactures process control alarm management software.
Mike Caliel, president of Invensys Process Systems, made the announcement:
"Ginny really understands the Industrial Process Control market, particularly Refinery, Chemical and Oil& Gas markets. She has a strong personality, is very energetic and very customer savvy. Strategic planning is probably not her long suit - she was primarily focused on tactical and short term planning as it related to her sales background. This new job will be a stretch; but then, it probably would be for anyone, considering Invensys' current status.
"Basically, Ginny is a good person. I have no idea what the culture is at Invensys and how they would accept a hard driving, system-and- solutions oriented woman. The products businesses will not get much of her attention. She really understands certain customer segments and what drives customer buying decisions. I have my doubts as to whether she's ready to put up with what appears to be an unrelenting drive to improve profitability. Her skills will certainly help Invensys on the growth side of the equation, provided she has the tools (systems) to compete."
The end of oil - resurgence of nuclear powerConsider this:
In 1969, the geologist M. King Hubbert showed that a graph of world oil production over time would looks like a bell curve, with a peak around the year 2000. Hubbert had a track record as a prophet: his 1956 forecast that US domestic oil production would peak in the early 1970s proved correct. Remember what happened to gas prices?
Most experts agree that by 2010, market pressures will grow so intense that they will stimulate the resolve necessary to develop new energy sources. By 2019, the year in which Hubbert's theories predict that global oil production will drop to 90% of current rates, hopefully the world will have found replacement energy sources. But that's just Hope - governments tend to remain hands-off until too late in the game.
Nuclear power plants will make a comeback. Ultimately, the US will simply switch to nuclear power, the ONLY energy-efficient fuel. Coal (and oil-shale) with ease the transition from oil. The US will switch to high-efficiency diesel and hybrid automobiles in order to ration our remaining oil reserves for as long as possible. The future will be based on renewable and energy-efficient (nuclear) resources.
Must-read book: The Bottomless WellPeter Huber and Mark Mills have written one of the best-ever books on energy technologies: "The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy".
I must tell you, I couldn't put it down till I read the whole thing. And I'm now re-reading my favorite sections. Indeed, this book has radically changed my own views on energy. You know, I'd buy this book just for the clear charts and graphs.
No, this is NOT a book which says oil will run out. Rather it emphasizes that, as humanity advances, more and more energy will inevitably be found - from the "bottomless well" of ingenuity and progress.
This iconoclastic book explains why the demand for energy can only go up. Most of what we think of as "energy waste" is actually beneficial - it signals progress, with energy usage a cheap byproduct.
More efficient cars, engines, and light-bulbs will never lower demand - they'll increase it! Why? Because cheaper and better products stimulate demand, and increase total energy usage. As energy becomes more "ordered", waste is both necessary and desirable, and the price really doesn't matter very much.
In the automotive sector, gas prices matter less and less, and hybrid engines will most likely lead us to cars propelled by the coal-fired (and then nuclear-generated) grid. Expanding energy supplies mean higher productivity, more jobs, and a growing GDP. Across the board, energy isn't the problem; energy is the solution.
Wow! Get this book, and read it! My Pinto guarantee applies - if you don't like the book, mail me your copy, and I'll refund your money! (Heck, I don't know why I do this....)
eFeedbackRon Bengtson [Ron@AmericanEnergyIndependence.com] who sent me the link to the article on 'The Saudi Syndrome', had these additional comments:
"Looking back on the history of America's growing oil dependency and comparing it to the present trend in outsourcing and importing, we have what can be considered a 'map' that revels where America is heading. If we continue down this path, our future will be one of increasing economic dependency.
"If the American people cannot agree that oil dependence is a problem, and what to do about it, then how will the USA solve these other problems that are leading us down the road to economic disaster?"
J. Mathene [firstname.lastname@example.org] makes these predictions about China:
"The Chinese are betting they can run out the competition before the impact of their economic policies hit home. American industry is trying to weather this economic tidal wave.
"As long as China continues to grow they must import vast quantities of raw materials, and they are paying extremely high prices for these materials. If you keep your currency artificially low to run out the competition from the rest of the world, but have to purchase materials at a high price, sooner or later this affects your bottom line. We saw this occur when all the other Asian nations were forced to allow their currency to float, those economies basically crashed. In my opinion China is headed in that same direction.
"Whether I am right or not time will tell."
"I work with the old (207 years) Mission San Luis Rey parish church (Oceanside), which is a mile from me, to refurb older PII and PIII computers, clean them, reformat the drive, load 98 SE and generally get them to work as well as possible. Then the group sends them to Mexico, for school kids and schools where these are considered leading edge systems. I'm sure there are similar groups everywhere, and others that send them to Africa and other developing areas where these systems are high tech. But there's always the cost to ship.
"Some are pushing for total destruction of CD and DVD disks, but only a few companies offered data destroyers for hard-drives. Software that supposedly totally blanks the drive makes sense for a large company that might be moving dozens or hundreds of systems a year - since many will have classified data on them. Like that FBI laptop that "disappeared" along with secret data.
"Whatever happened to those 'Mission Impossible' recorders that self-destruct? Now THAT would do it. Poof!"
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