AIChE: Integrate Safety into Business Strategy

Tuesday, April 12, 2016 @ 01:04 PM gHale


By Gregory Hale
When a company is in decline, the goal is to find a way to improve margins and make it a shining star, but in that reengineering process, it would be easy to push safety aside.

If company leaders are thinking ahead, they will see by applying strong safety principles, they will end up in a position to become a more productive company.

Take Andreas Kramvis, vice chairman Honeywell.

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He took one of Honeywell’s four strategic business groups — Specialty Materials. While guiding Specialty Materials through recessionary times in 2008 and 2009, he was able to strengthen the business’s ability to run its plants, bring new products to market and execute on growth opportunities. What was once a moribund business, is now a star performer at Honeywell.

Success in business depends on continuous adaptation to events and circumstances, and not being afraid of pulling the trigger on cutting product lines that have become unprofitable.

But the question remains, how do you take a company in decline and make it a shining star in a major conglomerate while also maintaining a safe environment?

Kramvis feels if you are changing a business you have to do three things in a holistic way:
• Change a business in a fundamental way
• Change how the business operates
• Change the culture

“This was an old business and not doing all that well,” Kramvis said during his keynote address entitled “Transforming a Business for Success” at the 2016 AIChE Spring Meeting in Houston, Texas, Monday. “The goal was to understand the basics. We took the business that was not doing well at all.” Kramvis was able to increase margins from 13.3 percent in 2008 to 21 percent this year.

They had record profitability and added different product lines. In addition, there were three main companies within Honeywell he worked with: UOP, Honeywell Process Solutions and Advanced Materials.

Kramvis admitted he is not a safety expert, but he knows the importance that discipline brings to any manufacturer.

“I don’t understand the buzzwords, but I understand (safety) at a high level,” he said.

“We believe safety will be integrated in the plants on the process side and on the technical side in a big way. To integrate safety in a business strategy, you must recognize the value of process safety in making your business a safe, reliable and responsible partner,” Kramvis said.

In addition, he said companies need to ensure business leaders recognize the importance of understanding and managing inherent risks.

Leaders must also create an environment of openness and continuous improvement by systematically thinking forward, engaging process safety experts, monitoring trends, continuously raise the bar and avoid downside possibilities.

Also, they need to deploy a strong management operating system and invest in processes, assets and people to reduce risk, he said.

The importance of safety does play into the growth of a company, but there are other factors involved in that journey.

In looking to grow a company, Kramvis shared his management philosophy:
• A successful business has its roots in the marketplace
• Strength in technology is essential
• Knowledgeable and empowered people are key
• Excellence in operations is required
• Strong management control through a consistent operating mechanism is necessary
• Superior strategy and risk balancing are essential

He also said there are some simple diagnostics to look at: Are we growing with the market, below market, above market, pricing power, cost control and reallocation of resources.

You also have to look at when times will be tough. “When things are bad, how well are you going to be?”

“I believe you have to be reallocating and looking to the future. Markets change, but understand what the high leverage points are,” he said. “Drive strength in technology and excellence in operations.”

“The goal is to eliminate any undue risk. We started an initiative that will start moving process safety into the future,” Kramvis said. “We believe if we integrate that into the design we will gain in process safety. It will lead to increased safety in the coming years.”