Being an innovative company is not easy by any means and some of my colleagues, including myself, have written about innovation in the past. I follow quite a few product manufacturing companies and Johnson Controls Inc. is one I’ve followed since my days as an Electrical Engineering undergraduate. A brief history on JCI notes that it has been around since the 1880’s and through its evolution has grown to a market cap of around $32B. They had some major M&A activity as well, selling off their automotive business to Visteon and another spin-off joint venture, BUT their core focus of building efficiency products and services still remains.
So, why am I writing about JCI? Well, easy, their stock price has more than doubled over the past year, they made public claims that they would grow earnings per share by 50% and have done just that. But, how… well, by being innovative while keeping to traditions. In today’s age, companies like Uber stand out to me as innovative, as also mentioned by Russ Pearlman in his recent blog: In innovation the same as legal protection?
What stands out to me about JCI’s approach is that they aren’t a “new, hot company”; they’re simply revisiting how they look at their future and their competitive advantage. They believed that organic growth and that expansion to other markets, like APAC, would lead a good portion of this growth, and that the remaining gain would come from investing in a “new” innovation team and strategy. This team essentially looked at developing new technologies (nothing drastically new here), but also looked at new business and operating models that would make their current or previous models seem antiquated and obsolete in some cases. This was to drive their competitive advantage in an upward direction by having their internal team show them a new way to approach business before another competitor or comparator was able to put them out of business.
Not traditionally where companies invest their dollars, but if you have tracked their growth over the last year, I can’t imagine why more are not approaching it through a similar lens!