Much has changed at SPX since CEO Chris Kearney first joined the company as vice president and general counsel in 1997. At the time, the company was a Muskegon, Michigan-based U.S. automotive supplier with less than $1 billion in annual revenue.
By the time he took the CEO seat in 2004, a seemingly endless stream of acquisitions—21 in 2000 alone, and about 98 total, says Kearney—had transformed SPX into a multi-industry provider of engineered solutions. Bursting at the seams in its Michigan offices, the company relocated to accessible, business-friendly Charlotte, North Carolina, the hometown of United Dominion, a diversified manufacturer it had recently acquired.
Enter Kearney. “We were at a point were we had to mature and figure out what we really wanted to be going forward,” he recalls. After sifting through a portfolio of businesses that spanned nine business platforms and identifying those with the most growth potential, Kearney set about divesting the company of the rest. The result? SPX became a global company focused on servicing three broad end markets: energy, food and vehicle services.
From there the former automotive supplier motored along pretty well, reporting annual revenue growth of between 8 percent and 10 percent until the economic downturn hit. “We started to see a dropoff in 2009,” says Kearney, who notes that SPX closed 16 facilities, reduced head-count by 13 percent during the rough patch and reduced its debt. “We used that bad time pretty wisely and did some significant restructuring.”
In 2010, as signs pointed to recovery, Kearney set a course for growth with the launch of an initiative geared toward generating promising innovations. The cornerstone of the effort was the formation of a centralized Innovation Council charged with identifying and developing game-changing technologies—SPX’s most crucial challenge going forward. Made up of scientists, engineers, lawyers and marketing executives, the Innovation Council hosted 25 idea webcasts with employees.
“The challenge was, ‘If we would allow you to do anything you wanted to in terms of launching new products or breakthrough ideas in new businesses, what would you do?’” explains Kearney. The series of webcasts netted approximately 170 ideas, which were winnowed down to 10 over the course of a year.
“We knew that to get traction on this initiative, we needed a real process that required this corporation to put money where its mouth was by funding those best ideas,” reports Kearney. “So what followed was a Socratic dialogue with the business, where we went through a selection process and chose 10 ideas to [put a total of between $10 million and $15 million behind].”
While none of those seedlings have germinated into products or services as of yet, several have serious potential, he reports. “There were five or six exciting ideas that are under development and which we’re tracking on a regular basis,” he says. “One of the best is a breakthrough wireless broadcast technology that gets about 10 times the coverage of a normal cell tower and costs about 25 percent less to operate. We believe it provides a terrific solution for rural parts of the world that lack infrastructure.”
“We were at a point were we had to mature and figure out what we really wanted to be going forward.”
But perhaps more than any one idea, Kearney is most excited about the cultural shift that the program has brought to SPX. “To the extent that you can find breakthrough ideas and create these new breakthrough businesses, you will have the opportunity to up the ante in a bigger way on change,” he says. “And when you are successful with it, that success becomes very contagious.”
“So the most important thing is igniting this passion and interest in innovation and bringing your businesses more in touch with their end markets—which is what we think we’re doing,” he adds. “That’s the new frontier in the next stage of development for us.”