Honeywell - Not just your Grandma's Thermostat
I remember the first time I heard of Honeywell, I saw the the name printed on the bottom of a thermostat. It was a hot summer day, and I was trying to find any way to get the temperature. Banging on the thermostat, I remember wondering to myself, how boring would it be to work at a thermostat company?
Boy was I wrong. Over the past week, I took a look at the 10-k from Honeywell. In it, I saw a completely different company emergy. Honeywell may well be one of the most surprising companies that I have heard of, and has more in common with the anonymous mega-corps we see in movies, than the wholesome thermostat company I always thought they were.
So what does Honeywell do? Well - a better question is what doesn't Honeywell do?
They are involved in everything from commercial technologies for Aerospace, building technologies and performance materials for the resource extraction, home and building safety and monitoring equipment and productivity solutions.
They sell everything from parts to Aircraft companies, controls and sensors to your locl building for energy management (read Thermostats), automation controls and instruments for resource extraction companies in oil and gas, and personal protection equipment.
Oh yes - they were also constructing the equipment needed for many of our essential workers.
In the tech world, we're so used to singular focus in how companies operate. While tech companies can dip their feet in different businesses, it's rare that you find truly orthogonal movements and product offerings. Also, everything is underpinned with software - if it isn't going to be produced and optimized through software, then it will not made.
For example, you won't see Microsoft start a service where it begins to manufacture knobs for mining cranes one day.
That's what makes many of these older mega-corps so interesting. By virtue of time, and by virtue of the length of time that has passed since their inception, they have branched out into many different industries in pursuit of further profits.
So - what kind of risks does a company like this face, and what kind of problems and opportunities can one glean from this?
First, in these larger buying cycles, there is gross inefficiencies in any B2B purchasing cycle. Particularly for their aerospace and industrial sales, the company highlights long business sales cycles as a key problem.
Why does it take so long for sales to occur between massive corporations? The length of time means that there are large amounts of cross-functional communication required.
There are products currently, like Slack, that are great for one to one and one to many communication patterns. However, that often isn't the key problem. The problem often is that for massive corporations, there are huge issues between getting stakeholder alignment.
A second risk raised by Honeywell is foreign currency and raw materials. These two are high exchange and high volatility assets that cycle through the company a great deal.
This makes it difficult for the company to plan into the future what the financial committments are. While at a small scale the fluctuations may not be impactful, the small scale changes can add up immensely as a company grows.
Here, the opportunity exists for companies to provide an alternative way to finance these products. Perhaps there are companies that are willing to trade the potential upside of purchasing assets at a discount for a gauranteed price that they will be able to purchase at.
The final risk raised is through innovation and productivity delays. As companies increase in size, it attracts a lot more bloat. It takes longer for ideas to percolate through the ranks and get implemented.
Are there ways to improve communication internally? What are ways for massive groups of people to come to a decision quicker? Are there ways for employees to quickly format emails in the style needed to get something across to those around you.
As seen above, there are many different opportunities one can pursue in these larger companies. While the companies grow, there will always be opportunities to create a product or a service to help address that need.