Harris Continues to Broaden Its Competitive Advantage
When almost half a company’s workforce of nearly 14,000 employees are engineers and scientists, developing some of the world’s most advanced technology, it creates a culture of unparalleled excellence. This includes the latest air traffic control networks and satellite ground systems like the GOES-R (Geostationary Operational Environmental Satellite R-Series) contract with NOAA (National Oceanic and Atmospheric Administration), used for the detection and tracking of hurricanes and other severe weather in the continental United States and western hemisphere. Did we mention that their radios support the largest public safety communications systems – including our statewide law enforcement radio system –and our warfighters around the world?
To add to that culture of precision and excellence, a focus on innovation was one of the goals Harris Corporation CEO Bill Brown set for the company when he took the reins in 2011. “I can’t believe it has been three years,” Brown reflected. “We have been through some challenging times with changes at the Federal level, but what I am continually struck by is the breadth of services we provide, not only to the U.S. government, but to our commercial and international customers.
“We have a broad and robust classified business that is growing. Though the budgets for the intelligence community are declining, we are increasing in that space. It is a testament to the type of skills we bring to bear and the difficulty of the problems we are solving on our customers’ behalf. Harris has a lot of people with deep customer knowledge and expertise.”
It is just one example of why during Brown’s tenure Harris stock has almost doubled from $36 in 2011 to almost $70 as of October 2014. “That depth and breadth has allowed us to have resilience, in spite of declining government budgets. Three years ago I couldn’t tell you what ‘sequestration’ meant, but we have lived through it with continuing good cash flow and a solid balance sheet. The fact that we weathered what many believe is the most challenging period, positions Harris very strongly for the future. We are a lot more diversified than I realized coming in three years ago,” Brown said.
Turning the Page
Harris has a history that goes back over 100 years, but technology is like Winston Churchill’s comments on art, “Without tradition, art is like sheep without a shepherd. But without innovation, it is a corpse.”
Though Brown’s career took him in a corporate business path, at his core he is a technology guy with an engineering degree, who enjoys the fact that he can delve into the R&D that is at the heart of the company. “I look at where we are and where we are headed and it is an engineer’s dream. I get charged up about the things we are doing from a new technology standpoint.”
Commenting on the company’s trajectory he said, “Harris is a very good company, but I think it can be a great one. We could be the best; the best place for people to work, the best place for people to invest their well-earned capital and the best place for customers to buy. We are good at all these things, but we can be great.
The challenge of any CEO or any senior leader is to surround himself with the best. Brown observed, “We have to field the best people on the planet, people who are diverse, who are performance-driven, who are entrepreneurial, who want to make a difference and challenge the way we do things every single day.
“Though we have been around for 119 years, every one of our 14,000 people needs to be entrepreneurial. The market is changing; the days when government could afford the most elegant state-of-the-art solutions money could buy, I think are gone. Everyone needs to adapt to the new reality, challenge the status quo and do better every day. I think this is the heart of what an entrepreneur is.
“This poses a challenge for some who have a deep but narrow experience base. When you are focused on the way things have been done in the past, it can be difficult to change your perspective and discover the way things can be done. In five years, we won’t just be competing with the traditional technology/aerospace companies but also new competitors that are looking at problems from an entirely new perspective and business model – such as Google and Amazon. That is why we have to continuously reinvent ourselves.”
Harris engineers have always been innovative in producing technologies and products for their customers, but Brown wants to focus that innovation on a broader spectrum. “What I tell our team is that you need to innovate yourself —the processes, the metrics and how you define performance — to look inside the company, and to innovate the business model, so that it improves over time.”
Investing In Innovation
Harris has annually funded $264 million in R&D, a whopping 5.3 percent of their revenue. This has produced a remarkable patent portfolio that has kept Harris on the cutting edge of new technology development.
Instituting a portfolio management approach, standardized processes and success metrics to ensure their funds are spent wisely and driven to result in truly new-to-the-world solutions, Harris is innovating how to use its innovations.
Historically, Harris operated like three businesses or three siloes, much like a holding company, where each sector is virtually independent of each other. Brown is looking at how to bring the company together as more of an operating company, asking the question, “How could we use technology developed by one organization in an adjacent market supported by another organization?” Rather than just optimizing that technology on a business unit level, optimizing it on an enterprise level. As he said, “I think there is great opportunity in making this ‘technology factory’ more efficient and effective.”
Harris developed core technology centers of excellence (see sidebar on page 24), where they identified 11 core capabilities of the company. Then they selected leaders across the company who can recognize the expertise in one area and help bring it to a need in another. It is a vehicle for applying technologies in new market segments and in different sectors of the company. “Harris has had a knack for combining technical knowledge with market knowledge to create entirely new business models for our customers,” Brown observed. An essential move in an increasingly competitive and cost-driven market.
“Government customers used to want ‘innovation’ at any cost and now they want affordable innovation. The marketplace is forcing us to become a better company and a lot of our technology is relevant in a number of markets.
New Opportunities & New Markets
Harris acquired a company called CapRock that provides managed satellite communication both to energy companies (off-shore oil platforms and remote sites) and to the cruise ship industry. Over the past year and a half they have won the two largest cruise lines in the world, first Royal Caribbean and then Carnival. This took Harris’ market share from 5 percent of the satellite communications on these large ships to a 40 percent share and growing.
“We are unique in that we can not only operate within the traditional government procurement model, but also integrate a commercial approach that enables us to be more nimble and respond quicker to technology innovations and market trends. For instance, legacy tactical radio communications could only exchange voice messages. Today, we integrate wideband networking technology into radios to deliver secure voice, data and video information from a variety of sources — such as aerial drones — to the warfighter,” Brown explained.
Another technology that could produce significant results for Harris and the energy industry is using radio waves to extract oil sand. An idea that came out of a “what if and why not” brainstorming session, involves putting a radio antenna underground to heat the oil sand, enabling the oil to be extracted, instead of using costly and environmentally damaging steam. The concept has been field tested in Alberta, Canada, with positive results and is getting favorable reviews both from the oil companies and environmentalists.
Of course, the most noticeable investment locally is the $130 million put into the new six-story Harris Technology Center in Palm Bay. Establishing the company as a competitor in the global market for engineering talent, the new center, which officially opens in January 2015, will provide a working environment for about 1,400 employees. State-of-the-art in design, in employee amenities and in environmental considerations, Brown said his only regret is that the building isn’t large enough to house all of the company’s Palm Bay employees.