The CEO of $116 billion industrial giant Honeywell says that the company's ambitious transformation into a software powerhouse will hinge on acquisitions and investments in emerging tech like AI and quantum computing

  • In just a few months, Honeywell unveiled the world's most powerful quantum computer, launched a new partnership with SAP, entered the Dow Jones Industrial Average, and scaled up production of critical equipment to fight the COVID-19 crisis. 
  • Now, as Honeywell prepares to celebrate its 100th anniversary as a publicly-traded company, CEO Darius Adamczyk is doubling-down on a push to create the industrial software giant of the future.
  • Honeywell continues to eagerly look for acquisitions that can help support that pivot, according to Adamczyk, and price is not an issue. 
  • And despite the industry's early days and a rough economic climate, it continues to invest in quantum — including working on a second, more powerful computer. 
  • Sign up here to receive updates on all things Innovation Inc.

It's been a busy few months for Honeywell CEO Darius Adamczyk. 

In March, the company unveiled a quantum computer that surpassed the capabilities of Silicon Valley competitors like Google and announced JPMorgan Chase as an inaugural customer. 

Just days after that, COVID-19 began to quickly spread through the US and the company immediately ramped up production of face masks to help mitigate a shortage of the protective equipment in the early days of the crisis.  

In June, Honeywell announced a new partnership with SAP to help building managers automate aspects of their facilities. It also rolled-out an ultralight cleaning system to help airlines better sanitize planes in-between flights. Then, in August, the company was added to the Dow Jones Industrial Average.  

Now, as Honeywell prepares to celebrate its 100th year as a publicly-traded company, Adamczyk has no plans to slow-down the firm's transformation from a manufacturing giant best-known for digital thermostats to a software powerhouse that can rival the offerings of firms like Salesforce. 

"We're an industrial technology company that continues to stay relevant by anticipating the needs of our customers, anticipating where the world is going, and then investing in those technologies to make sure we capture that value," he told Business Insider. "My personal goal is to continue to stay relevant, to continue to drive the transformation." 

In just over three years at the helm of Honeywell, Adamczyk has left a lasting mark on the company, perhaps most notably by elevating Forge — the firm's software division — to its own business unit (it previously spanned different verticals, like aerospace and e-commerce, which elicited some confusion among employees as to their exact role within the company). Now led by Que Dallara, the department is one of the most visible aspects of Adamczyk's ambitions to double-down on software. 

"We had to reorganize, we had to bring in some people from the outside, we had to kind of redo our path to the future," he said. "Now, we have that clarity and, and it's a very focused organization. 

Business Insider talked to Adamczyk to learn more about Honeywell's acquisition plans, what's next for quantum computing, and future partnerships with tech giants. 

Acquisitions and partnerships 

Adamczyk and his top lieutenants have repeatedly said Honeywell is on the hunt for acquisitions that can help bolster their existing offerings in areas like software-as-a-service — which could include startups in emerging sectors like artificial intelligence. 

And with over $15 billion in cash on-hand at the end of the last quarter, Adamczyk says there's no strict limit to what the firm would spend for the right company, thought it would need to fit his dual-objectives: a fit with Honeywell's strategy for the right value. 

"We're continuing to look for those deals and hopefully we'll be announcing something in near future," Adamczyk said. "Spending money is easy, but making the right decisions and spending the money on the right acquisitions has been tougher." 

In a sign of how serious it is about hunting for the right candidate, Honeywell recently brought on Emily McNeal, the former chief financial officer at Walmart-owned Flipkart, as the global head of M&A.  

Alongside acquisitions, Adamczyk also said Honeywell is expanding its existing venture with SAP and in talks with other firms for similar partnerships.

"For them to be effective, the strategies truly have to be complimentary," he said. "That would be the primary filter that we're going to use to make sure that we can have productive partnerships." 

The early quantum wars

While quantum computing is still in its early stages within enterprises, many top companies are setting the groundwork now to capitalize on the likely lucrative market. 

While traditional computers rely on strings of bits that can be labeled a one or a zero, qubits — which are essentially the building blocks of quantum — can be both at the same time. That gives the systems tremendous compute capabilities and could open the door for calculations deemed impossible by today's standards. 

And while it's a nascent industry, the competition is already fierce. IBM, Microsoft, Google, Amazon, Honeywell, and a slew of well-funded startups are all vying for early dominance. 

Despite the impact coronavirus has had on Honeywell's earnings — sales dropped 19% in the most recent quarter — Adamczyk says its investment in quantum remains steady. The unit has begun to generate revenue, but not nearly as much as its other verticals. 

And Honeywell's already building a second, more powerful quantum computer than the one unveiled in March. 

"We're already seeing real traction to real problems, real customers using quantum computers," he said. "It's going to take several years for the commercial impact of quantum computers to be understood, to be well used. But you have to take these steps." 

Adamczyk related the investments in quantum to Honeywell's efforts on renewable technologies (including a new, non-glass vial that could be widely used when a coronavirus vaccine is discovered): 

"Some of them will be huge commercial successes," he said. "Some of them may fizzle out. But we know we're going to participate and we're going to have a role."

Source: Read Full Article