Strategy to action
From mechanics to innovative embedded systems with high
customer value
ICES 2011
2011
Anders Cöster
New technology and Process Development
ASSA ABLOY, Shared Technologies
1947
1
ASSA ABLOY
2
ASSA ABLOY is the global leader
in door opening solutions, dedicated
to satisfying end-user needs for
security, safety and convenience
3
Our business is total door opening solutions
seamlessly connected to the building
ASSA ABLOY divisions 2010
Product
Offering
% of Group Sales
Organization
Mech & el mech
locks, cylinders &
security doors
Americas
Electronic access
& identity
Global Technologies
14%
ASSA ABLOY Entrance Systems
11%
Automatic
entrance solutions
26%
EMEA
34%
(HID & Hospitality)
5
Asia Pacific
15%
75%
Our vision
 To be the world-leader, most
successful and innovative provider
of door opening solutions
 To lead in innovation and offer
well-designed, convenient, safe
and secure solutions that create
added value to our customers
 To be an attractive company
to work for
6
Financial targets
Over a business cycle
 Organic growth based on innovation is the main value driver
 Acquisitions add complementary growth and value creation in a
consolidating industry
 EBIT Margin is the measure of efficiency and shows our ability to
convert organic and acquired growth to value
Operating income*
EIBT (Earnings Before Interest and Taxes) MSEK
Quarter
*Excluding restructuring costs quarter 2-4 2006, quarter 3-4 2008 and quarter 4 2009
12 months
Who we were…
…and who we are today
9
Historical locks
The oldest known lock was found in the Khorsabad
palace ruins, Assyria (Irak)
Estimated age: approx 4,000 years
Padlock, China
Ming dynasty, 14th century
Roman key
Approx 200 B.C.
Door lock, Nepal
Medieval
130 years of growth and innovation

1881 August Stenman AB (hinges and screws)

1939 Start of lock production

1947 Worlds first 7-pin cylinder

1990s electro-mechanical lock breakthrough

1994 ASSA + Abloy merge = ASSA ABLOY

2000 Yale + ASSA ABLOY = Worlds largest lock company

2001 Cliq; platform for intelligent cylinders

2008 Aperio; first lock with wireless technology

2010 Worlds first mobile key service built on NFC
ASSA ABLOY today
 Own operations in more than 60 countries
 Authorized distribution covering the world
 About 37,000 employees
 Sales of about SEK 37 billion
12
Strategy
13
Our strategy is product driven with
customer focus
 Product driven
– We believe that the product is the driving force for growth
and we develop innovative high quality products, solutions and
services which meets or exceeds customers’ expectations
 Customer focus
– We believe that customer focus and relevance is best built through
a segmented market approach offering a superior
understanding of the customer need
Strategic actions
 Increase market
presence through
customer relevance
 Product leadership
through innovation
 Radically reduce
our break-even
cost through
cost efficiency

 Increase market
presence through
customer relevance
Increase
market
through
presence
Product leadership
through Innovation
customer relevance
 Radically reduce
our break-even
cost through
cost efficiency
Sales split
Group overview
End users
Residential
25%
Commercial
and institutional
75%
Recurring business
New
construction
Product mix
Mechanical
Locks &
Security doors
33%
36%
After market
67%
Electromechanical and
electronic locks
64%
Increased share of fast growing products
– electromechanics
2000
14 sek bn
Security
doors
Security
22%
14%
Electronics/
electromech
20%
2010
37 sek bn
doors
22%
Mechanical
locks &
accessories
66%
Mechanical
locks &
accessories
42%42%
Electronics/
electromech
36%
36%
Our brand strategy
ASSA ABLOY as master brand
United sales force and progressive
implementation on products
Product brands capitalizing
on installed base
Two focused brands in
special segments
Four Global brands where
market position is unique
Customer focus through segmentation
The segmented approach assures customer focus and relevance
and provides us with a superior understanding of the customer
needs.
Residential
DIY
YALE
Locksmiths
Distributors &
Wholesalers
Integrators
ASSA ABLOY
HID
MUL-T-LOCK
PEU
High
Security
Hospitality
Automatic
Doors
OEM
ASSA ABLOY
ABLOY
ASSA ABLOY
HOSPITALITY
ENTRANCE
SYSTEMS
 Increase market
presence through
customer relevance
Product leadership
 Product
leadership
through Innovation
through
innovation
 Radically reduce
our break-even
cost through
cost efficiency
Product leadership – boost benefits
Major leaps on customer benefits with every new product
Boost benefits
Reliability
Functionality
Security
Performance
Safety
Design
Integration of functions
Design
Security and safety standards
Open towards other systems
Ease of installation
Ease of operation and maintenance
Life cycle costs
Convenience
Product leadership through innovation
 We are convinced that innovation is the most important driver for
growth
 We have more than doubled investments in R&D the last five years
and have over 1 200 engineers
 We assure long term competitive advantage by continuously
improving our products in terms of benefits, costs and quality
Product leadership – cut costs
Sustainability and VA/VE.
 Increase market
presence through
customer relevance
 Radically
reduce
Product leadership
through
Innovation
our
break-even
through
cost
Radically
reduce
our break-even
cost
efficiency
cost through
cost efficiency
Radically reduce our break-even cost
through an efficient manufacturing footprint
Radically reduce our break-even cost
through lean operations
 Every main site in ASSA ABLOY has dedicated lean resources
 Lean starts from the customer and gives:
– Improved quality and customer
benefits
Information flow
– Reduced lead time
– Less cost and improved
efficiency
Material flow
Voice of the customer
29
Voice of the customer process
Initial analysis
Insight/foresight
based idea
generation
Gateway development
process
30
Evaluation and
control
Voice of the customer process
Initial analysis:
Scan environment
Insight/foresight
based idea
generation
Gateway development
process
 Stake holder map
 Customer segmentation
 PEST
 Market intelligence
 Channel analysis
 Competitor analysis
 Omnibus research
31
Evaluation and
control
Voice of the customer process
Initial analysis
Insight/foresight:
Generate options &
select opportunities







Gateway development
process
Observational research
Customer visits
Focus groups
Surveys and questionnaires
Problem detection study
Value analysis
Creative idea generation
32
Evaluation and
control
Voice of the customer process
Initial analysis
Gateway development
process: Select &
refine options
Insight/foresight
based idea
generation








33
Experiments and choice models
Field experiments/prototype tests
QFD
User clinics
FMEA
Validation of qualitative data
Package testing
Copy testing
Evaluation and
control
Voice of the customer process
Initial analysis
Insight/foresight
based idea
generation
Gateway development
process
Evaluation & control:
Evaluate success
 Brand awareness
 Customer satisfaction
 Tracking studies
 Returned items
34
Voice of the customer – a continuous process
35
Voice of technology
36
Voice of Technology
 To search for and explore new technologies and
methodologies with potential applications within present
or future ASSA ABLOY products and platforms as to
create innovative and competitive solutions.
 Voice of Technology and Voice of Customer are two
connected iterative processes – one is dependent on the
other
Slow
New physics
Keyless
entry
MBS
ROI
Scientific
research
Industrial
research
Aperio
ver 1.0
“Voice of
Science”
Concept project
or prestudy
Aperio
ver 2.x
Voice of
technology
New product
project
Voice of the customer
Added
function
project
Fast
Innovation level
High
Process innovation
reduces risk!
Low
Research in process
potentially brings
risk down
Primary drive

Technical research
projects creates
innovation and long
term value at the
cost of higher risk
Customer
need

New
technology
Development risks
Low
38
Risk
High
Lean Product Development (LPD)
The company’s vision
Product
vision
Product
vision
39
Front load the process — and succeed
Ability to influence outcome
This is how we
should spend
the time
High
This is how we
normally spend
our time
60%
Low
35%
5%
Pre-Study
Requirement Definition
Time
Specification
Product & Design
40
Industrialization
Launch
Follow-up
Aperio – A case study
41
The recognition
 Aperio receives Integrated Security Product of the Year
award at IFSEC 2011
42
The start (back in 2006)
Or how we listened to the voice of…
 …the customer
– Dramatically reduced installation cost
– Easy integration
– Lower unit cost
– Same (almost) functionality as standard products
 …technology
– New radio technology
– No wires
– New microprocessors with very low power consumption
– Battery operated (40.000 opening during 2 years on same battery)
– New actuators
– Small size & low power
 …business
– The product should be adopted to the strategy and current business model
43
The challenges
 On the very limit to what we could do
– Several innovations necessary
 Develop a lock product dominated by software
– Especially firmware underestimated (4 embedded microprocessors)
 Weak in-house radio competence
– Had to be built up
 Waterfall development process didn’t work
– Not possible to write a ―complete‖ spec up front
 The change of goal
– From a new product to a new generic platform
 Very high expectations on sales volume
– ―It’s an product with electronics!‖
44
How did we actually succeed?
 Customer & Market
– Clear customer value
– Thorough market survey before project start
– Open communication protocol
– Key factor for wide market acceptance
– Aperio finds new market segment
– Wireless technology was disruptive in the lock industry
 Technology and process
– New micro-power processors, radio technology and actuators
– Long battery life a key performance factor
– Shift from waterfall to agile (SCRUM) methodology
– Dramatic increase in development productivity
45
Challenges in
front of us
 The lock industry has been ―protected‖ for 100+ years
– How to sell new technology in traditional markets?
 The mechanical key will disappear
– Physical vs logical access
 Shorter product life cycles
– From many years to months
 Software and the cloud
– ―Real‖ products vs services and hosting
 New security threats
– Mechanical manipulation vs ―hackers‖
46
Finally
47
Thank you for listening!
 Partners (consultants
and experience
exchange)
 Skilled engineers
(embedded systems,
mechatronics)
ASSA ABLOY AB
Shared Technologies
 Researchers and
diploma workers
Anders Cöster
[email protected]
+46(0)70 3336028
48