kaizen-<\/em>based systems, Danaher established the Danaher Business System (DBS) in the mid-to-late-1980s. Over time, Danaher has effectively linked its business model to its operating model. According to former CEO Larry Culp, \u201cThe DBS process system is the soul of Danaher; the system guides planning and execution.\u201d (HBS Danaher case)<\/p>\nAs a large operating company, Danaher has a track record of improving its portfolio companies\u2019 operations, resulting in improved performance and growth. With a winning business strategy,\u00a0Danaher has provided 21% annual returns since 1997 to shareholders. (beta.finance.yahoo.com\/quote\/DHR) Since launching DBS, Danaher\u2019s strategy has been to implement its proven operating system to eliminate inefficiencies. (http:\/\/www.leaninterim.com\/danaher-business-system-implementing-real-lean-thinking)<\/p>\n
Four \u201cP\u2019s:\u201d\u2014people, plan, process, and performance\u2014create the foundation of DBS. Continuous improvement and operational efficiencies are built into the system. Danaher has thrived by creating an environment that encourages employees to seek improvement and find\/explore entrepreneurial gaps. Recently, Danaher expanded DBS into new areas that focus on innovation and growth, aiming to drive improvement in product development, marketing, and sales. (Danaher case)<\/p>\n
DBS is not unique in today\u2019s context. In fact, it is a copycat\u2014DBS was formed using other operating methodologies (lean\/kaizen<\/em>\/TPS) that Danaher implemented ahead of others in industry. While lean and\u00a0kaizen\u00a0<\/em>became commonplace in some manufacturing companies by the mid-to-late 1990\u2019s, Danaher was a decade ahead of its competitors. What is unique is the way in which Danaher linked a relatively new way of operating to its business strategy. By the late 1980\u2019s, DBS became firmly entrenched in firm culture while the company was still in its early stage. (web.archive.org\/web\/20081010225950\/http:\/\/www.psekd.com\/Company\/Danaher_Corp)<\/p>\nWhile providing a good example of an effective operations model, I also selected Danaher for this blog because it takes a page out of the LEAD textbook. The implementation of DBS is a massive \u201cchange management\u201d challenge. With each new acquisition, DBS is implemented almost immediately, system-wide, and from top-down. While we have analyzed other lean\/kaizen<\/em>\/TPS-based operating models in TOM, none were implemented inorganically within a relatively short timeline. In other words, an employee at Toyota expects to operate in an environment driven by TPS. However, if I am an employee at a tire manufacturer acquired last Tuesday by Danaher, and suddenly face DBS today, how will I react? How will my company react?<\/p>\nI am sure many of you have read about or experienced instances of a takeover, after which a company is either gutted or faces changes to its way of doing business. How big and what type of disruption does DBS create? The answer: \u201cIt depends.\u201d According to HBS\u2019s Danaher case, the implementation of DBS at Radiometer was relatively\u00a0smooth (but required\u00a0considerable planning). Danaher surprised Radiometer\u2019s executive team, who believed their operations were as efficient as possible;\u00a0as it turned out, DBS drove\u00a0considerable process improvements. On the other hand, one online blog (taken with care\/context\/partial skepticism) portrays employees at various Danaher operating companies with less optimism. (glassdoor.com\/Reviews\/Danaher-Reviews) The comments range from: \u201cDanaher doesn\u2019t train us well\u2026\u201d to \u201cDanaher is only worried about \u2018reaching their numbers\u2019\u201d and \u201cDanaher will strip [the company down] to achieve higher profits\u2026at the expense of the individuals making [the profits] happen.\u201d<\/p>\n
This is likely contextual; the degree of buy-in to DBS and Danaher culture by an operating company\u2019s leadership is a likely driver of implementation. Per the HBS case, Radiometer executives quickly bought into DBS and pushed it throughout Radiometer organically. If I were Danaher,\u00a0I would ensure a company\u2019s executive team fully supports DBS before going forward with an acquisition. If unachievable at that time,\u00a0I might wait to complete the acquisition until I have fully convinced the company of DBS\u2019s benefits, particularly since performance is dependent on successful DBS implementation. Secondly,\u00a0I would ensure each employee receives the requisite training to succeed.<\/p>\n
Danaher\u2019s business and operating systems support each other. With a business strategy designed to identify and acquire companies that will benefit from DBS, Danaher has achieved considerable growth in top line, bottom line, and market share for its portfolio of operating companies. Additionally, DBS touches every business competency\u2014ranging from marketing\/sales to in-factory production. (Danaher case) So while not superbly unique, DBS stands out as a proven operating system that supports and sustains its parent company\u2019s business model and aims. Throughout the last 20 years, Danaher has shown tremendous growth and returns; by many accounts, the credit belongs to DBS.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
While not groundbreaking today, Danaher’s operating model in the 1980’s sought to ensure maximum effectiveness and efficiency. By aligning its operating model and business model since its early days, Danaher today has become a $19B industry superstar.<\/p>\n","protected":false},"author":1255,"featured_media":3825,"comment_status":"open","ping_status":"closed","template":"","categories":[685,682,687,681,686,684,542,683],"class_list":["post-3824","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-change-management","category-danaher","category-danaher-business-system","category-dbs","category-industry-leader","category-kaizen","category-lean","category-tps"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\n
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