This is the latest in our “Masters of Manufacturing” series, presented in partnership with The Indiana Economic Development Corporation. Each month we share insights and ideas from innovative, growth-minded manufacturing CEOs from across the nation as they navigate this tricky time in history.
Talent shortage? What talent shortage? Stanley Black & Decker has become “a magnet for digital talent,” said President and CEO James Loree. “A lot of CEOs will tell you that it’s so hard to find those people, but we actually don’t have a problem in that regard. People find really inspiring the notion of coming to this iconic company and becoming part of a contemporary movement to transform it.”
Loree has been leading an overhaul of the 175-year-old tool manufacturer based in New Britain, Connecticut, since he became CEO in 2016. The merger of The Stanley Works and Black & Decker in 2010 created a stable of renowned consumer and business-to-business brands starting with their eponymous ones and others that would include Bostitch, Dewalt, Irwin and, in 2017, the coveted Craftsman brand that peeled off from troubled Sears Roebuck.
He had joined the company as CFO in 1999 when Stanley Black & Decker generated just over $2 billion in sales. But over the last four years, Loree has presided over significant growth both organically and through acquisitions, so that the company has become a $14.4-billion enterprise with more than 58,000 employees across 60 countries. In 2019, Stanley Black & Decker posted a three-percent gain in revenues including three-percent organic growth.
“I had a lot of time beforehand to think about this,” Loree told Chief Executive. “But I knew that, when I took over the CEO role, I needed to find a way to elevate the company to another level so that it could be sufficiently agile to absorb all the change that was coming.”
Loree began his tenure with three strategic objectives: to continue Stanley Black & Decker’s top-quartile financial results and build on its “performance-oriented culture,” to “become known as one of the great innovative companies,” and to “elevate ESG” concerns. “I came out and made these superordinate objectives for my era,” Loree said.
He integrated these three goals with a pre-existing operations-oriented management structure at the company that was known as the Stanley Fulfillment System. Loree’s predecessor, John Lundgren, had established “SFS 1.0” in 2006, then updated it in SFS 2.0 in 2014. It included five core elements that ranged from commercial excellence to the origins of digital transformation to the notion of continuous improvement in customer-facing processes. “It was a great way to grind out a few more points of organic growth every year,” Loree said.
But Loree’s three missional pillars and SFS 2.0 would face major challenges and opportunities as he eased into his tenure. Beginning in 2018, for example, the company faced “external headwinds beyond anything we’d ever experienced.” Financial hits averaging a total of about $300 million a year came in the form of President Trump’s tariffs on European steel and aluminum as well as huge inflationary bumps in the prices of other raw materials such as resins; five years before, all of those factors had combined to form only a $135-million annual load.
“It was shocking on the one hand,” Loree recalled. “But on the other hand, it really enabled us to focus on performance resiliency. To us, it translated into taking technologies that existed—such as AI, machine learning, analytics and Industry 4.0—and applying them to value pools such as procurement, pricing, functional transformation and organizational efficiency. We applied them to create sufficient value to offset the volatility that had become so intense.”
Loree also leaned heavily into the potential of “purpose” to lead cultural transformation. Stanley Black & Decker didn’t have a purpose-oriented corporate coda, but in 2016 he appointed a team to excavate and synthesize what the company stood for: “For those who make the world”; or, as on the company’s web site puts it, “Stanley Black & Decker makes the hardest-working tools, solutions and services for the world’s hardest-working people.”
The power of that exercise and of deploying the purpose statement impressed Loree and inspired him to approve important ways for making it meaningful to employees. One of them was “democratizing communications” within Stanley Black & Decker by creating internal social-media platforms. “This was a leap of faith,” he said. “Who wants to open up the employee base so everyone can participate in a conversation? What are they going to say? But it had the benefit of contemporizing the company in the minds of people and liberating them to pursue our purpose and our objectives.”
Loree also has paid particular attention to challenges in the middle ranks of the organization, where the pressures to execute strategic imperatives and to lead cultural change have come together in very demanding ways. He wants them to become “ambidextrous leaders” who can “optimize the franchise in the near term and do their jobs, but also be able to sense new threats and opportunities coming down the pike.”
As at many companies, Loree said, the importance of middle leadership at Stanley Black & Decker had been overlooked. “At the top of the company, it’s easy to embrace” new missions and directives, he said. “But lower in the organization, these things become more esoteric because people are just trying to get their jobs done. Leadership in middle jobs is getting harder and the changes are coming faster, and they don’t have the bandwidth to digest all of this change.
“So we’re trying to increase their bandwidth through encouraging and teaching them to become ambidextrous leaders [who] can be externally focused and think about different time scales. We want people even in the middle to be doing forward-looking things and become change agents in their own roles.”
Perhaps befitting the organizational bent that he honed earlier in his career in the financial trenches, Loree also has made sure to update the operational framework for carrying out all of this with SFS 3.0, which was rolled out last year. The biggest change was putting the company’s people together with technology in the middle of the new construct, with the goal of creating synergies that would result in performance resiliency, “lifelong learning” for employees and “extraordinary” customer experiences.
Ever in search of improving the company’s stewardship, Loree also launched Stanley Black & Decker’s “leadership principles for the 2020s,” leveraging what he called “neuroscience-based” leadership training that takes advantage of how the brain works.
“We want to create clarity, inspire engagement, and grow and deliver,” Loree described the goals of the training that is being led by the NeuroLeadership Institute. “We want to have a growth mindset where our leaders exhibit behaviors from each of those principles. For example, under “creating clarity,” we want our leaders to define their vision, set clear expectations and prioritize for impact.
“The training makes this all simple and easy to understand. Now these behaviors are actually being trained for 6,000 managers in our company.”