The Re­tool­ing of Stan­ley Black & Decker

Forbes - - Strategies - By amy feld­man

Jim loree wants to turn a 175-year-old man­u­fac­turer into a com­pany as in­no­va­tive as any in sil­i­con Val­ley.

In 2014 Stan­ley Black & Decker set up engi­neers in a Tow­son, Mary­land, strip-mall of­fice with in­struc­tions to come up with some­thing new in cord­less power tools. Three months later, James Loree, the com­pany’s chief op­er­at­ing of­fi­cer and chief-exec-in-wait­ing, had a look.

The Tow­son engi­neers demon­strated a clever way to ar­range cells in a bat­tery to make the volt­age ad­justable. Loree asked what they would need to get the bat­tery out the door in a year. They said $30 mil­lion. “I looked at the CFO and said, ‘Are we good for that?’ and he said, ‘You bet,’ and off they went with their $30 mil­lion,” Loree says.

Stan­ley is an an­cient firm, still mak­ing tape mea­sures in the rust­belt city of New Bri­tain, Con­necti­cut, where Fred­er­ick Stan­ley opened a hinge-and-bolt shop in 1843. How does a com­pany sur­vive for 175 years? By throw­ing money at long shots like that bat­tery. “His­tory is lit­tered with sto­ries about legacy com­pa­nies that were com­pla­cent, in­wardly fo­cused, ar­ro­gant,” Loree says.

Stan­ley’s vari­able-volt­age bat­tery didn’t reach stores un­til June 2016, but it looks like a win­ner. Lithium-ion bat­ter­ies are get­ting big enough th­ese days to run not just hand­held drills but also stand­ing equip­ment like ta­ble saws. The big tools, though, need a much higher volt­age to op­er­ate ef­fi­ciently. The de­sign­ers in Mary­land fig­ured out how to make bat­ter­ies in­ter­change­able by hav­ing the tool tell the bat­tery what kind of juice it wants.

With this trick Stan­ley gets car­pen­ters ad­dicted not just to its tools but also to its bat­ter­ies, which re­tail for up to $199 apiece. They’ll pay ex­tra to be able to build a house with­out wor­ry­ing about lug­ging a noisy gen­er­a­tor to the job site and trip­ping over power cords. Stan­ley is haul­ing in $300 mil­lion a year on its Flex­volt bat­ter­ies and wants to see a lot more break­throughs, mean­ing in­no­va­tions that will each add $100 mil­lion or more to rev­enue.

Loree, 59, who has been run­ning the com­pany for two years, is a fi­nance guy, not an en­gi­neer. He joined Gen­eral Elec­tric in 1980 as an au­di­tor and spent 19 years there, mostly at GE Cap­i­tal. In 1999 John Trani, the GE alum then run­ning Stan­ley Works, brought Loree in as chief fi­nan­cial of­fi­cer.

Trani was try­ing to turn around a trou­bled com­pany whose $2.75 bil­lion of rev­enue came mostly from hand tools like tape mea­sures and builders’ hard­ware like hinges. “It couldn’t ship ef­fec­tively. It had a weak sup­ply chain,” Loree re­calls. “Al­most all the things you could think of that could go wrong for the com­pany were go­ing wrong.”

Slowly, Stan­ley did turn it­self around, and in

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