We think strategy and culture are two fundamentals that must work synergistically to produce, maintain and increase enterprise value. Achieving this requires an effective, strategic and competitive enterprise design. That means the design of the enterprise must enable and guide thinking and action that results in the business becoming or continuing as a leader in its chosen market segment(s). In our discourse, claims of knowledge or expertise are acceptable only to the extent there is a history of accomplishment.
Danaher Corporation, originating in 1969, shifted to be a manufacturing company in the 1980's. Today the company is global with a range of offers in industrial and consumer products. It operates in the market segments of Professional Instrumentation, Medical Technologies, Industrial Technologies, and Tools & Components.
The founders, brothers Steven and Mitchell Rales (still active with ownership of 17%), committed to continuous improvement and customer satisfaction. Danaher was one of the first American companies to utilize the principles of kaizen, the Japanese word for continuous improvement. Danaher is number 3 in the top 20 public companies for returns to investors for the past 30 years (April 1982 through April 2012) with a compound annual return of 23.9%. $10,000 invested in Danaher stock in April 1982 would be worth about $6.2 million today. While an emerging private company, the founders formulated a clear business strategy and culture for building enterprise value that they continue to use today.
Danaher's fundamental business strategy is to be the low cost, high quality provider in their markets. In the 1980's they developed the Danaher Business System (DBS). For decades the DBS was practiced and refined, and not made a big deal of by the company. In fact, it's reported that questions about the DBS were usually went politely unanswered. Today Danaher's culture is emphasized and has the 2nd location in the navigation bar on the website.
Stating that "Our values and culture are critical elements of our past and future success", the company articulates its culture...
The Best Team Wins
- Associates are our most valuable assets.
- We're passionate about retaining, developing and recruiting the best talent available.
- Danaher and its associates win because:
- We are team-oriented with involvement by all.
- We seek fact-based, root cause solutions, not blame.
- We are accountable for results, and we deliver.
- We are non-political and not bureaucratic.
- We have high integrity and respect for others.
- Winning is fun!
Customers Talk, We Listen
- Quality First, ALWAYS!
- We base our strategic plan on the Voice-of-the-Customer.
- Robust repeatable processes yield superior Quality, Delivery, and Cost that satisfy our customer's beyond their expectations.
Continuous Improvement (Kaizen) is Our Way of Life
- The Danaher Business System IS our culture
- We aggressively and continuously eliminate waste in every facet of our business processes.
Leading Edge Innovation Defines Our Future
- We continuously apply our creativity to the technologies of products, services, and processes.
- Out-of-the box ideas, both large and small, add value to our enterprise.
- We accomplish "breakthroughs" through the Policy Development process.
We Compete For Shareholders
- Profits are important because they attract and retain loyal shareholders.
Although I'd heard of Danaher in the 1990s, I haven't paid much attention to them until recently, when a company I became a possible candidate for acquisition by or alliance with Danaher. As I've researched and learned I accept that the management of Danaher is knowledgable and expert as evidenced by their accomplishments. I also find this to be a good illustration of our thinking about strategy and culture.
Questions for Reflection
I recommend you read again the articulation of Danaher's culture, reflecting on:
- What mood does the narrative produce?
- How is this narrative effective, strategic and competitive?
- Using Danaher's statement as a standard, what do you see as weak, flawed, missing or incomplete with your business system or articulation of culture?
- Who in your company must participate in constituting, refining and producing culture?
- What new actions (if any) will you take on constituting or strengthening your culture?
As accompaniments to this post, I specifically recommend:
Your questions and/or comments welcome.