Lessons for Your Business Toolbox: A Conversation with Stanley Black & Decker President & CEO Donald Allan Jr.

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Text, Wednesdays with Woodward (registered trademark) Webinar Series. 

Travelers Institute. Travelers. 

Joan Woodward. 

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JOAN WOODWARD: Good afternoon and thank you for joining us. I'm Joan Woodward, and I'm honored to lead the Travelers Institute, which as you all know, is the public policy division and educational arm of Travelers. Welcome to our Wednesdays with Woodward Webinar Series, where we convene leading experts for conversations about today's biggest challenges, both personal and professional. 

So, before we get started, I'd like to share our disclaimer about today's program. 

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Text, About Travelers Institute (registered trademark) webinars. The Wednesdays with Woodward (registered trademark) educational webinar series is presented by the Travelers Institute, the public policy division of Travelers. This program is offered for informational and educational purposes only. You should consult with your financial, legal, insurance or other advisors about any practices suggested by this program. Please note that this session is being recorded and may be used as Travelers deems appropriate. 

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I'd also like to thank our webinar partners today, the MetroHartford Alliance, the Insurance Association of Connecticut, the Master’s in FinTech Program at the University of Connecticut School of Business, and the Connecticut Business & Industry Association. Thank you all for being with us, and welcome to your employees and your partners.

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Text, Lessons for Your Business Toolbox: A Conversation with Stanley Black & Decker CEO and President Donald Allan Jr. Logos, I.A.C., Insurance Association of Connecticut, UCONN School of Business MS in Financial Technology, Travelers Institute (registered trademark), Travelers, CBIA, MetroHartford Alliance

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Now on to our program. Chances are you've got a tool from Stanley Black & Decker in your garage or in your kitchen. Headquartered in the United States, Stanley Black & Decker is the world's largest U.S.-based tool company with revenues of $15.6 billion. The 180-year-old company employs more than 50,000 employees globally who produce and power the hand tools we all recognize as well-engineered fasteners and other industrial equipment that go into major infrastructure projects and even into our cell phones. 

The company's iconic brands include DEWALT, BLACK+DECKER, CRAFTSMAN, STANLEY, Cub Cadet, Hustler, and Troy-Bilt. That's a lot. So today we're going to take a deep dive into this iconic company. Find out their secret sauce for their amazing success over the years. How did they navigate the pandemic, dealing with supply chain issues, and now inflation? The global manufacturing company is led by President and CEO Donald Allan Jr., who is joining me today on our program. 

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Photos of Joan Woodward and Donald Allan. Text, Speakers. Joan Woodward, Executive Vice President, Public Policy; President, Travelers Institute, Travelers. Donald Allan, CEO and President, Stanley Black and Decker. 

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Don became the CEO in July of 2022 after serving as the company's President and CFO. He's been with Stanley Black & Decker since 1999. Prior to his time with Stanley Black & Decker, he was with Loctite Corporation and Ernst & Young. Don has a bachelor's degree from the University of Hartford, right in Travelers’ backyard, and just yesterday, Don was elected Chairman of the University of Hartford Board of Directors. So welcome, Don. Thanks so much for being here. 

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In a split screen, Donald Allan joins. He sits in front of a row of DEWALT products. 

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DONALD ALLAN: Thank you, Joan. It's great to be here with everybody. 

JOAN WOODWARD: All right. So, before we get started, I wanted to see how much our audience knows about Stanley Black & Decker. I may have given some of this away already, but let's go to the audience quiz. So, the question for my audience-- and everyone please answer, it's obviously anonymous-- which of these things does Stanley Black & Decker produce? What do they manufacture in your view? Knowing what you know about them today. Let's see what our audience is saying. 

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They're all thinking. Audience answers are coming in. Tools for astronauts, OK, parts for cars, parts for cell phones, all of the above. So, Donald, looks like we have 89% of the audience, I think I might have given some of this away, saying that you produce all of the things above, true? 

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He nods. 

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DONALD ALLAN: That is true. Outstanding. 

JOAN WOODWARD: Wow. So we want to get into the tools for astronauts, the parts for car, the personal cocktail makers, I mean, this is a plethora of items. But you've been with Stanley Black & Decker for more than 20 years now. What are the biggest changes and challenges you have seen during your tenure? 

DONALD ALLAN: Well, again, thank you, Joan, for inviting me to this forum. I really do appreciate the opportunity to spend time with all of you and get you to learn more about Stanley Black & Decker and the journey that we've been on, but just as importantly, the journey we want to go on in the future over the next several decades. 

And I think a lot of you are aware that Stanley Black & Decker has been around for a very long time, and they were two separate companies until about 12 years ago when they merged. And so Stanley was formed in 1843, BLACK+DECKER was formed in the later 1800s. And we have amazing legacies of tools and products that they provide to the construction industry, the industrial manufacturing industry and other major manufacturers across the globe. 

And I have been fortunate enough to be with the company for 24 years. Actually, this past Monday was my 24th anniversary at Stanley Black & Decker. And it's been a wonderful journey that we've been on. It's been full of amazing ups, and it's been full of a lot of challenges, and I've seen two or three different recessions. I saw the Great Recession back in 2008 and 2009. Like all of you, we went through a pandemic over the last three years and trying to navigate that. 

In a company that has been very resilient and very strong for a long, long time, close to 200 years, it really has been put to the test. And so when I think about the biggest challenges that we've experienced, it varies because when I look at the 24 years that I've been here-- back in the Great Recession, we were all worried about where the world was going, and we had to make a lot of challenging decisions, and ultimately, we decided to merge with BLACK+DECKER about a year after that recession, and really created a much stronger company that we have been for the last 12 years. 

And then the pandemic comes along and massive, massive supply chain issues, supply chain issues that we had never seen in the past for a company like us who has long supply chains. And what we mean by that is we make certain products in other parts of the world that we bring into the U.S. then we bring into Europe. So about 50% of what we sell in the United States gets made in the United States, but there's another 50% that's made in different parts of the world like Mexico, Asia, et cetera, that have much longer lead times to get our product in. 

And when we couldn't find enough semiconductors to go in our power tools, we were looking for more lithium-ion battery cells that would go into the battery packs that attach to our power tools. Like many manufacturing companies, it was an intense period of time of really trying to find enough products, parts and components to manufacture and create the products that we sell to end users and our big customers like Home Depot and Lowe's. 

And then the logistical aspect of just moving things around the world during the pandemic was incredibly challenging as well. So I'd say there's a lot of challenges that I've experienced, but I have to say the last three years were definitely probably the most significant amount of challenge ever experienced by me in my career. 

It may have been the biggest challenge this company ever experienced in its entire history. I don't know for sure because there, obviously, was the pandemic about 100 years ago as well that the company had to navigate at that time. But I had a hunch the supply chain wasn't quite as complicated a hundred years ago as it is today. 

JOAN WOODWARD: Yeah. Wow. I interviewed Karen Lynch, the CEO of CVS Health care a few months back, and as a CEO, I can't imagine what it's like running the kinds of companies that you and her were running during the pandemic with the supply chain, and just the employee engagement and getting employees to come back to work, and we'll talk about all that.

But I want to talk about something you talk about, which is organizational change. And you're saying you want to be a more simplified organization in a world that's so complex, that you just said it was so complex. How do you talk about simplifying your organization, and why do you feel like there's a need to make this shift? 

DONALD ALLAN: Yeah. I think that over the last two decades we've created a really impressive, strong company, and by a lot of people on the leadership team. We've had two previous CEOs who guided us on that journey. I was the CFO for a large part of that time. And a lot of other senior leaders in the company and a lot of the brands that you mentioned in your introduction were acquisitions that we did along the way, such as the CRAFTSMAN brand as an example or Cub Cadet, another example. And we acquired these brands along the way to build what we are today, which is the No. 1 tools and outdoor product company in the world. 

At the same time, we had other parts of our company that people don't hear as much about that provide some of those components and parts in cell phones. As part of that question that was asked at the beginning, we have a BLACK+DECKER brand that is actually a very appliance-oriented brand, and things like cocktail-making machines, and vacuums, and other types of products, toasters, et cetera, are all part of that brand that many people know about, but people tend to focus more on the tools part of our company. 

And as we've built this company and we've done acquisitions and grown organically, we created a very complex portfolio of businesses. And you may not be aware that we actually had a commercial security business for a period of time that we sold about a year ago that was, basically, very similar to a company like an ADT, where we would provide security services to a large commercial building. 

And so, like the Travelers headquarters in Hartford, Connecticut, we would provide the security in that particular building. And that would be putting in cameras, putting in wiring, putting in alarm systems, and then we'd also do the monitoring of that as well on an ongoing basis. That was a business we built from almost scratch, and then we decided about a year ago that we were maybe becoming too complex of a company, and we wanted to get back to some of the core basic things that make Stanley Black & Decker really successful, which is primarily tools and outdoor products. 

And we made that decision, we decided to sell our security business, which we did do, and that did close in the summer of last year, and we'll continue to focus on being a simpler set of portfolio of businesses. But what comes along with acquisition sometimes is your processes, your systems, your organization structures, they get very complex. And as you get bigger, you also see that bureaucratic processes and steps begin to seep into the culture of the company, which really slows down your ability to respond and be resilient and be agile. 

And as I was looking at the company and the board was talking about me becoming the next CEO, I was very passionate about the fact that we need to simplify this company. We're going to sell our security business, we might sell other businesses in the future, we'll see, but we're going to get back to being a tools and outdoor business, and we're going to get back to doing things in a more focused, prioritized way that will allow us to gain market share, improve the profitability of the business, generate strong cash flow, and return value to our shareholders and other stakeholders, such as our employees. 

And actually, I wasn't sure how it would resonate with the team and our 50-plus thousand employees, but it turned out to be a very refreshing perspective because I think most people recognized how complex we had become. And so it's easy for me to say, let's go simplify. But then it becomes, how exactly are you going to simplify the organization? So we put forth some pillars of focus. 

One is, how do we make our supply chain more focused and closer to our customers? And so the length of the lead time is reduced dramatically, which means we'll move more manufacturing into the United States and more manufacturing into the European region as well to serve those markets. We'll also be focused on reducing the number of SKUs that we sell. So when you do acquisitions, you can build a set of products and what we call SKUs, which is basically an individual product like a screwdriver or a power drill. 

And suddenly, we have 150,000 SKUs across our company, and we should probably have more like 50 to 60,000 SKUs, maybe 80,000. And so we're going through a simplification of the portfolio of the products that we sell as well, and that helps simplify your supply chain. We're also looking at all of our functions and how they do their jobs in finance, IT, HR, engineering, marketing, and doing things in a more simplified fashion where, instead of it taking 10 steps, maybe it takes six or seven steps to do. 

And it's been a refreshing mantra for our company that we've been focused on, but it's not easy. It takes time. And there's no simple fix that you suddenly-- three, six months later it's all behind you. It's going to take three to four years to really do this. But it's going to make us a more agile and resilient company, which is really what we all need to have in today's world. Because if you just think about the volatility of the world and our ability to respond and be agile and be resilient, it's becoming more and more a necessity for a company to be successful to navigate these challenging times.

JOAN WOODWARD: Yeah, I think any time you just-- it resonated with me because any time a leader in my organization would come to me and say, let's simplify and reduce inefficiencies in our processes, I mean, that's really welcome news to employees because you can get frustrated with the complexities and inefficiencies, as you just said. But as you also said, it's very hard, right? And so luckily, your culture has welcomed that leadership in the simplification realm. 

But also, you talked about diversification of your product, your physical product, you can touch and feel. And, obviously, that has led to your great success as well. So let me just ask you this question then, can you define your leadership credo? Like, if you had to say one or two things about how-- you just talked about working with the board to sell the idea of simplifying in a very complex company. What do you say your leadership style is? 

DONALD ALLAN: Yeah, I think there's probably four or five things that I try to exhibit in my leadership every day. And I-- the first thing that I tend to start with is that I really believe in, in a world of business, you should have passion, you should be highly motivated, but you should be calm. And there shouldn’t be drama in the system, that you really should be-- you should be excited about what you're doing, but you should be calm in the thought process and your decision making. 

Because unnecessary drama and emotions do distract your organization, and it can result in people running to the right when you don't really want them to run to the right; you want them to stay the course in the middle. And I think that calming presence is really important, and it also does exhibit that you're confident in your point of view that you're presenting to people because you're presenting it in a way that has some passion to it, but it's done in a calm way. 

And the other thing that I believe in is being very transparent. And transparency is a word that's easy to say, but it's not always easy to live. And because sometimes when you're being transparent, you're delivering challenging news or challenging message. But what I have found-- and I've learned this over time, I wasn't always this way-- is that when you're not transparent, it actually makes it more challenging. 

And you're not doing that person any justice by not delivering a balanced, transparent message. Just like I expect people to be transparent with me if they're worried about something in the company, they're concerned about something, I would expect them to have no hesitation to come and talk to me and our leadership team about what that concern is. 

But it doesn't always work that way because people are concerned, how are they going to react if we bring some bad news to them? Will they handle it the right way? Will they criticize me or us as a result of that? But that's a cultural thing that I've really pushed hard through my leadership style, and as people see that there is no overreaction. It's just, OK, we have a problem, let's figure it out how to solve it. What are we going to do about it? What are our options? Let's discuss them, and then let's make a decision. 

And then the last thing I'd say is listening and being respectful to people is really important. As a leader, obviously, respect is incredibly important. But listening is sometimes hard for senior leaders to do because they usually have a very strong point of view. And you can listen by just sitting there and not saying anything as the person talks, but I mean really listening. Like, what is the person saying to you? 

Because sometimes people deliver a message that is not as direct as maybe the way I am direct to people, and you have to interpret what they might be saying to you. Other times the message is very direct, and you know exactly what the message is. But I really believe that listening is an art. It's hard for people to figure out how to do it effectively. 

And sometimes it requires listening and then processing after the fact and saying, OK, what exactly was that message that I got? Is it as clear as it sounded, or is there something underneath that, and it may require a follow-up and discussion? And I think when leaders fall in the trap of not listening is when they start to lose touch with what's actually happening in a company. 

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He nods. 

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JOAN WOODWARD: Well, I've just learned a big lesson because I have a hard time listening sometimes, too. And so you just checked my own personal leadership style. And it's true, sometimes you have to meet people where they are because not everyone is as direct as maybe you and I are, and what words will come out of our mouth. So meeting people where they are and really listening to them. I really love what you just said. And the transparency, also, is very important. 

We have a little theme here at Travelers: if you're going to fail, fail fast. Fail fast, learn from your mistakes, and pivot. And so we do a lot of test and learning, as I'm sure you do, too, and so empowering those employees to come to you with honest feedback of whether something worked or didn't work. So I really love that. What has been kind of your biggest leadership lesson along the way, and maybe what advice would you have for emerging leaders in your company? 

DONALD ALLAN: Yeah, I would say that one of-- I've been asked this question a lot in a lot of different settings, and my answer tends to be pretty narrowly focused. There's a lot of things you can do and learn to be a better leader and a better performer in an organization, a better team member. 

But with my experience, one of the things that I always found is when you put yourself in, what I call, uncomfortable situations, which is a stretch-type situation where there's an opportunity to solve a problem, and if you volunteer to go lead an effort to solve that problem, even though you may only have 10% of the solution in your mind, and you're going into something that you've never done before that could be very challenging, stretching yourself into that and stretching your capabilities and your experiences is incredibly important to make you a broader leader, a broader individual. And some examples of that in my own career is that I had opportunities to do certain roles overseas. And I did them in different ways, such as a European CFO role, a South American CFO role, and it's some of the biggest learning experiences that I had as a finance individual at that stage in my finance career. 

But it actually also helped me learn how to work with different cultures, how every country's culture is a little bit different, and what motivates them, what excites them is a little bit different, and how you communicate has to be a little bit different. And so when you have those types of broadening experiences in a country where you don't speak the language, like an example of I was in Brazil and I don't speak Portuguese, you try to navigate that when you're talking with people where their primary language is Portuguese and their secondary language is English. 

And you're trying to have an effective set of ability to communicate, and you have to really figure out how you motivate and inspire them. Those types of experiences are invaluable, and you don't necessarily at the time recognize how much you're learning and how much it's going to help you become whatever you want to strive towards in the future, but then you reflect on it later on and you realize, my goodness, that was probably one of the most broadening experiences I've ever had. And it helped accelerate my progression in my career because I stretched myself into a pretty uncomfortable zone for a period of time. 

JOAN WOODWARD: Actually, that's one of my biggest pieces of advice to young people is take a risk on yourself, and don't assume that you're going to fail at it. Just take a risk because you don't have to have every ingredient that might be on that position description immediately, but getting in there and learning as you go. So that's great advice. 

1. We're going to drill down on the manufacturing challenges. Let's get into your business. So you said you have over 50,000 employees globally; what are the biggest challenges? You talked about Brazil; what are the biggest challenges now in the global manufacturing business? 

DONALD ALLAN: Well, I think the biggest challenge we're dealing with is tied to the supply chain that I was describing earlier. And it's also just navigating a very volatile world where you have to be looking at what's happening in different parts of the world that might affect your manufacturing in a country like Thailand, as an example. Where Thailand makes a large chunk of our tape measures that we sell across the globe. 

We have a tape measure plant in New Britain, Connecticut, that makes the other significant portion of it, but about half is made there and about half is made in Thailand. And what's made in New Britain feeds primarily the U.S. market, and what's made in Thailand feeds the remainder of the world. And you have to be cognizant of what's happening in that country, as well as 60 other countries that we have facilities and employees at, and you have to navigate through. 

And I actually think that manufacturing is an area that-- we all are talking about getting more manufacturing back to the United States, some of it back to the European markets to serve Europe. But it's not as simple as just saying that because of the things that have been done in the manufacturing space for the last 40, 50 years, where a lot of the U.S. manufacturing and European manufacturing migrated to Asian countries, with a heavy weighting to China. 

And so, what also happened at the same time is all the suppliers that actually produced components and parts to our manufacturing locations, they also migrated to those countries. And so, when-- it's easy for me to say, hey, I want to-- for some of our BLACK+DECKER products that we now manufacture in China, I want to manufacture that here in North America. Let's make that change, and the cost differential has become less and less as costs in China rise over time, and the freight costs become higher and expensive, and you can minimize that as you move the manufacturing. 

But what makes it complex is not so much the plant that we create in North America that will assemble the products, it's that whole vendor supply base that feeds the plant that doesn't exist anywhere else in the world other than Asia. And so, you have to work with your suppliers to help migrate some of their business to other parts of the world as you move your manufacturing operations. 

So it's a very complex thing to do, but it's a necessary thing to do. Because as I said earlier in my first set of comments, we have to find a way to get closer to our customer, and how we manufacture, and have the ability to meet their needs in a shorter cycle. And I'll give you an example. We have customers like a Home Depot who is a fantastic customer. But when they put an order in our system, they want it in their distribution center in 24 hours. So think about that. There’s things that you order on Amazon that you don't even get delivered in 24 hours. 

And so, for a set of power tools like DEWALT brand of power tools, they're saying, OK, if I order 10,000 of those tools, I expect them to be in my DCs within 24 hours. Our current network is not really built to serve that effectively today, so instead it might take two days versus one day. And so, we have to change our network of distribution, getting our manufacturing closer to our customers to serve that need. And as a result, there has to be some radical changes to our supply chain. And so, we've launched a major transformation of supply chain, as I said earlier. 

It will be beneficial from a cost point of view. It will reduce our costs by about a billion five, which is significant. It will allow us to take some of those savings, about 500 million of it, and reinvest in some front-end user activation activities, more feet on the street selling our products, more digital marketing investments in other types of brands, investments as well. But it's a major, major initiative that will happen over the next three years. 

But it's necessary because as we reduce the complexity of the portfolio, we get much more strategic on how we source things from that supply base I was describing. And, of course, there'll be some facility optimization that we do and ultimately other things of excellence in that area. It is a necessary change for us to do that. And what's interesting about it, which is the next question you're going to ask me, Joan, is we have to have enough employees in the United States to actually be able to manufacture these products as we bring them back, and that is turning out to be quite a challenge. 

JOAN WOODWARD: Yeah, let's talk about the labor market because Jay Timmons, the head of the National Association of Manufacturers, recently said there are millions of people ready to work in the U.S., and manufacturers have hundreds of thousands of unfilled jobs. I think today there's 11 million job openings in the United States, and that's a real challenge.

 Even in the insurance industry, we-- during the pandemic, I think, people rethought their lives and what they wanted to do with their lives, and so there's been a disruption of the labor market. Of course, we've had immigration policies that don't allow for a lot of immigrants coming to do some of these jobs. But what are you doing specifically to help fill that labor gap? 

DONALD ALLAN: Yeah, I mean, it's a real issue. You just gave some really good statistics, and there's projections out there that there's probably a need for about five million to six million more manufacturing jobs by 2030, and as more companies like us begin to migrate more manufacturing back into the United States.

 And I've talked to Jay, and he's made those comments, but at the same time, there's not millions of people sitting out there just waiting to be given a manufacturing job. There's a lot of people that are out there working in a lot of different industries doing different things that provide them a lot of flexibility. There's people doing things like DoorDash, Uber, all these other types of activities that allow them to create certain levels of income that maybe give them more flexibility in what they're trying to do in their particular life.

And I think in manufacturing, we have to really look at this from two different angles. One, I do think we need to solve the immigration situation where we have appropriate regulation around immigration, but we allow immigration to happen. We need more people coming into this country that can take advantage of the wonderful things that happen in the United States and eventually becoming a U.S. citizen. 

It's a realistic issue. We have an aging population, which we're part of that. We're part of the aging group, but we don't have as much people coming into the workforce going forward. We're going to need immigration to really allow that to happen in some way, shape or form. And I just think we need to figure out what the right process is to ensure that we do it in an appropriate way. 

But the other thing is, what do we do to really get people more attracted to the manufacturing sector? And so companies like us have been working with governments, local governments, local universities and colleges, and local trade schools to begin to focus on, how do we invest in our younger generations so that they understand, from our perspective at Stanley Black & Decker, two different things? One is the manufacturing job opportunity, the other is maybe a trade skill opportunity, where maybe they want to become a plumber, or they want to become a construction worker. 

And how would they do that? What's the value of that? Potentially learn about our tools and get them invested in trade schools, versus-- it's great for us to be pursuing other areas like data analytics and artificial intelligence, those are all things we need, too, but we also need folks that are going to want to educate themselves in these particular areas. And so we're investing in that, and we're actually working with the Business Roundtable to do that.

We kicked off an initiative about three weeks ago at the Connecticut Science Center where several of our university leaders were there, Governor Lamont was there and other individuals from his staff. And we began the process of really what are the investments we're going to make in this area to attract people to not only these particular roles, but maybe also keep them in Connecticut? And it's something that I think we're excited about and energized about, but it's a massive undertaking that a lot of companies and a lot of governments, local governments, and a lot of universities need to collectively figure out how to attack. 

JOAN WOODWARD: Right. And not everyone needs a university degree for these jobs. And so I'm assuming you have hundreds of job openings right now on your website for people to go take a look and apply. So, I know we do at Travelers. 

DONALD ALLAN: Thousands. Yeah. 

JOAN WOODWARD: Thousands of openings, exactly. OK. So let's shift a little bit. I have a couple of quick topics I want to hit on because they really are important, and we get these questions a lot at Travelers. I want to talk about ESG. Environmental, social and governance issues are really top of mind for a lot of CEOs these days. What are you seeing in the manufacturing world with regard to ESG? 

DONALD ALLAN: Yeah, I think there's three areas that we have been trying to focus our energy on. We kicked off a really formal ESG strategy back in 2017. And our previous CEO, Jim Loree, was a big, passionate supporter and advocate for that and created a lot of energy in our company around it. Because of some changes in the company and the portfolio of the company, we're actually going through a little bit of a rebaselining effort right now of, basically, rebasing our goals for what we want to achieve by the end of this particular decade. No major shift in the strategy overall. 

But it is focused in three different areas. And the first would be-- would be people. And so, how do we empower people and power makers so that we help upscale individuals so they can have higher-- achieve higher levels within their career? How do we do some of the things I was just talking about that might get people more into the trades and more into the manufacturing industry that is going to be beneficial not only to our company but be beneficial to our economy here in the United States and other countries as well? 

The second pillar is product, which is, how do we make our products more sustainable? And so we’ve come up with a product recently in about the last few years called reviva. And what it is, is it's a product that is under the BLACK+DECKER brand that was made out of-- a significant portion was made out of, basically, old, used water bottles. And so water bottles that were taken through a recycling process, and we were able to take a large component of that and use that as part of the tool. 

And it's a consumer tool. It's not a heavy-duty construction power tool. But it's a consumer tool that anyone can use at home in what I would call light, do-it-yourself activities in your house or in your neighborhood. And there'll be more of those types of things happening over time as we continue to focus on, how do we make our packaging sustainable? How do we make our products sustainable? 

Big effort in our company to reduce the amount of plastic in our packaging, and we've made great effort-- great achievements in that over the last three years, but we have more work to be done. And then the last area is just what we can do in other areas that reduce our carbon footprint. And so, how do we in our manufacturing processes, how do we get to basically a net zero impact? And then look at what our supply base does that feeds our manufacturing process, and how do we get them to eventually get to a net zero carbon impact over time. That's a challenging journey. 

And I think what we have in our control in the first-- Scope 1 is how that's referred to, I think we'll be able to achieve that. When you get to the other scopes, which is in other companies that supply you, that's probably a longer challenge that'll take some time. And we don't have all the answers. I mean, some of this is going to have to be innovation that we don't know about that will evolve in the next decade. But those three areas are really where we're trying to focus our energy in ESG. And then clearly, there's a diversity, equity, inclusion aspect that we have a lot of effort and focus on as well. 

JOAN WOODWARD: Actually, I want to move to that because I have a quote from you. You recently said, quote, "Diversity, equity and inclusion are essential for achieving our vision, fulfilling our purpose and being a sustainable company where the most talented people can thrive." So talk about your diversity, equity and inclusion initiatives. 

DONALD ALLAN: Yeah, I think diversity, equity and inclusion has always been a big part of our culture. And we have definitely ramped up our efforts in this area over the last probably decade or so. And I describe it as a-- there's really-- there’s never an end point to this. It's a journey that you're just continuing to try to get better and better over time. 

And there's different metrics that you have to measure these things, such as gender diversity, ethnic diversity. And we've made nice progress. Today women make up about a third of our workforce. And that's great progress, but we want to be better. We set a goal of 50/50 diversity related to gender, and we can get to that. It'll take time, but I think-- I do think it is achievable over a reasonable time horizon. 

But you're going to have to take-- you have to approach things differently, and I think we've embedded a lot of these things in our culture over the years where you do your best to create-- every time you're hiring a role whether it's internal or external, you do your best to make sure you're really creating diverse slates of candidates. And sometimes that can be challenging given the amount of information that can be shared through a process of gathering resumes and things like that, so you do your best. 

But it also is about looking at some metrics and saying, well, what is our goal? We're at one-third gender diversity, we want to get to 50/50, so what's our goal in between, and how do we hold ourselves accountable to that? And if we're not on track, what are the things that are preventing us from achieving that? 

We've also put a lot of effort into, like most companies, into employee resource groups. And we have a significant amount of groups, about 12 right now, that-- a women's network, and this month we’re celebrating Women's History Month, and International Women's Day about a week and a half ago. We have an African American ancestry group that we celebrated last month. 

And so we really try to take groups of people that fall into these different pools of diversity and have them think about, what can they do in Stanley Black & Decker that it will help us on this journey and helps our company. Because we do believe-- and you read the quote-- diverse teams are better teams. Diverse teams are stronger teams. And if you look at the data, diverse teams actually perform better than non-diverse teams. 

JOAN WOODWARD: That's correct. 

DONALD ALLAN: So in a company if it's about performance, then diversity has to be on your agenda because ultimately, a diverse team is going to perform better than a non-diverse team. 

JOAN WOODWARD: Exactly. The statistics have proven that out. And our CEO, Alan Schnitzer, talks about diversity as a business imperative that it's not a nice to do, it's a must do. And so alongside you, I think we have 10 or 12 employee resource groups. 

And not only-- I think we talk to people about, don't just join the one that you most closely align to, but we want lots of men in our women's network. We want that allyship. Because without allyship, we're just talking amongst ourselves. We want others in the group. I'm a member of six or seven different diversity networks right now at Travelers, and I'm an ally to all of them. And I think encouraging people to get a little bit out of their comfort zone and be an ally for a group that might not look like them is really, really also encouraging of a culture. 

I want to talk about your culture because I read Forbes has named your company one of the best in the world for employees. Fortune has also called Stanley Black & Decker one of the most admired companies. So I've heard about your culture, obviously, I'm in Hartford a lot, and I know a lot of folks who work there. What is this special secret sauce that you guys have to-- you have a lot-- your retention is very high as well for your employees. What is your culture? How can you describe your culture for us? 

DONALD ALLAN: Yeah, I think the culture is built on a lot of high level of respect for each other, a high level of teamwork. And we really do-- we really try to use the word we versus I. Obviously, the word I has a place in the narrative in certain settings, but it really is about a team. And there is no one person that makes Stanley Black & Decker successful. It's a team of people, 55-plus thousand employees, that make our company the success that it's been. And more importantly, it makes the company capable of navigating challenging times. 

I mean, we're dealing with a challenging time right now. We've dealt with three years of challenging times in the pandemic. And it's this culture that actually helps us navigate through it, and it goes back to that level of respect that we're all part of a team. This is-- we believe in learning, but the way that we learn is we don't go-- we don't embarrass people when they make a mistake. 

Sometimes folks unknowingly say in a public setting, OK, Joe, what did you learn from this experience? What did you do wrong? Or what did the team do wrong? Share that with the rest of the team or the organization. The intention of that’s very good, but actually you make that person in that team feel horrible when you do that. Versus if something happens, you don't dwell on if somebody made a mistake, you just look at the facts. What are the facts? 

So we thought when we put this together, this plan together, we thought we'd get to here and we only got to here. OK. What are the facts that are saying that that happened? OK, well, that means we should have-- we should do this going forward. We should do that going forward. And you focus more on the discussion of what you do moving forward, and you focus less on, quote unquote, "What were the bad decisions that were made." And that's not always easy for people to do, but the more you get into the habit of doing it, the more it becomes part of your DNA. 

And then the last thing I'd say about the culture is people do-- they, quote unquote, "trust the system," which is we have a system of trying to develop people. We have a system of communicating and being transparent. We have annual reviews. We have merit programs. We have bonus programs. We have career paths for individuals. 

And sometimes-- I'll use myself as an example-- I can look back on my career and say there was a point-- there were a couple of points in time where I was sitting there saying, why am I still in this job? Why have I not gotten promoted to the next job? And I'm getting frustrated because I'm ready for the next job, and I'm not getting promoted. 

And I got a lot of good mentorship along the way saying, yeah, you're right, but just trust the system. People know that. People understand it. Sometimes it takes an extra two months or so or three months before it happens. And I think there's a lot of people that understand that in our company that-- and they don't make it personal, they make it more about the team, and how the team can be successful. 

And then I always say that-- what's deep, deep embedded in this culture, and it has been there for hundreds of years, is that we've always had great people, we've always had great brands, and we've always had a great innovation machine. And when you have those three things as a foundation that you can build a culture on top of, in some ways it does make it easier to build a really solid culture that helps you navigate these types of challenging times. And culture is not something you think about and focus on a lot when things are going really well. When things are going bad, then you really have to-- you have to lean on that culture to help you get through it and navigate it. 

JOAN WOODWARD: Well, that was really well said and it's very, very similar to our culture, which we use the word collaboration. It's a very big word around here, and so thank you for that. I want to pivot to our last segment before we get to audience questions, which is technology and innovation. And then talk about some of your products. So first, let's talk about how technology has really changed the manufacturing sector. You mentioned AI. Are you using ChatGPT? This innovation is coming at us so fast, artificial intelligence. Tell us what you're seeing and then we're going to go right into your products. 

DONALD ALLAN: Yeah. In the manufacturing space, it's evolving very quickly the amount of technology that's impacting manufacturing, which is actually going to be beneficial as we try to move our manufacturing closer to our customers as I described earlier. The level of robotic automation has changed a lot in the last 10 years.

 And so, you can actually have robots that do partial assembly activities in a manufacturing plant right next to a human being. And so, you can be on an assembly line and a power tool is being put together, and it's going to be a mix of robotics and individuals. That's going to continue to improve and evolve. 

But what's also happening at the same time is the amount of data and information that you get off a manufacturing production line has increased dramatically in the last decade or two. And so now when you're running a plant, the leaders of a plant, they're looking at data on a board live that's actually happening related to a multiple set of production lines. And they can see, OK, well, that production line is behind schedule, what's happening there? And they can analyze the data and try to understand. 

And then there's predictive analytics, which is taking that data, and as you build the history of the data over time, you can begin to predict what might happen on a production line when you might have a failure with a machine, and you actually predict that that's going to happen. And so, we're just-- we're tipping the iceberg on that piece. 

I wouldn't say that we're heavily into that yet because we're probably-- we're in the robotics stage, and we're in the data collection stage. That predictive piece is next where we would go, which, obviously, allows you to evolve to artificial intelligence, which you really start to get to a point where the computer is starting to recommend decisions that a leader can look at and say, I agree with that or I don't agree with that. 

And we're not there yet, but that's kind of the evolution of where manufacturing is going. And I think there's companies that are further along in that journey than we are. There's certain German companies that are kind of at the end of that spectrum and really highly automated, using artificial intelligence data to help make decisions in the plant. But it's exciting where that's going. 

But what we realize is that it doesn't make people go away, it just changes their jobs. And so we have to be retraining them as these changes are happening so that they can-- maybe before as a supervisor of a line, they were more hands-on helping figure out how to produce something, where now they have to be more data-focused and analyzing data. And so we have to give them the skills and the training so they can actually do that. 

JOAN WOODWARD: Great. I want to get into your products now because last year alone you launched 1,000 new products. Fast Company has called your company among the best places to work for innovators. How do you keep ahead of this innovation curve? How do you know what the customer is going to want next before they even know it? As Steve Jobs said, they don't even know what they want next, and I'm going to build it for them. But talk to us about a company that launches a thousand new products every year. That's really-- that’s a lot of innovation. 

DONALD ALLAN: Yeah. When I came to Stanley 24 years ago, I never would have guessed innovation was such a big part of a tool company. Because if you're somebody that uses screwdrivers, hammers, drills, saws, miter saws, you probably don't think there's a lot of innovation in that, that it's something that was created decades ago and that's about it. But actually, in this particular industry, innovation is a big part of the business model. 

And there's, really, three different types of innovation. There's what we call core incremental innovation, which is just making the product a little bit better. And so, adding a little bit of functionality that basically achieves a couple objectives. One, it makes the user of the tool more effective in their job, like a professional construction worker that for a nailing gun, maybe they can now put nails in a roof at a pace that's 20% more than the previous version of the tool.

And then the second thing is the wear and tear on the user. So the professional-- I'm sure some of you have worked in a professional construction job. I did it way back in the day when I was in college, and using tools all day long really does wear on your muscles and your body all day. And the more vibration you have in the tool, the more you feel that over time. And so to minimize the amount of vibration in a power tool is incredibly important. Then there's other things like, how do you enhance battery life on a cordless power tool so that they can use it longer before it has to be recharged. 

And then there's the second category, which we call breakthrough, which is really looking at something new to the world, the Steve Jobs type of thing. This kind of like, people don't even know they need this, and how do you introduce something like that? And a good example of that for us was that we introduced a set of products under the DEWALT brand called FLEXVOLT. And what it is, is it's a battery pack and a set of tools that can flip between a 60-volt battery tool to a 20-volt. 

And so we have different tools that run on 20-volt battery packs and different tools that run on 60-volt battery packs. Obviously, the bigger tools are 60-volt. And one battery that actually can go in either one of those tools, and when it snaps in, it knows it's 20-volt or it knows it's 60-volt. And that was a breakthrough innovation that the professional construction industry just has loved. And it's created close to 7, $800 million in annual revenue for us since we launched that about five or six years ago. Well, on-- it's going to be over a billion dollars probably three or four years from now. 

And then the last category is just pie-in-the-sky innovation. Just thinking about where the construction industry might go in the future with 3D printing and other types of construction technology that will make the industry much more efficient and effective, and what is the role of Stanley Black & Decker in that. 

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JOAN WOODWARD: OK. Fantastic. I want to go to some audience questions now. First, a couple comments. One person weighs in and says, your products are incredibly reliable. I absolutely love my under-the-counter can opener, which has lasted now more than 12 years. So thank you for that. Don, let's get personal. What is your favorite tool? I mean, do you have a garage full of tools, and do you have time to use them, and are you a handyman? Give us your-- What's your favorites? 

DONALD ALLAN: I know this is going to be disappointing, but I am not a handyman. However, I do know how to use the tools, and I do know how to do certain things. It's just not-- it's not my passion on the weekend. But that being said, I do have a garage full of tools. But I think probably my neighbors use the tools more than I do. 

JOAN WOODWARD: That's hilarious. I want to be your neighbor. 

DONALD ALLAN: But my favorite tool, though, is that FLEXVOLT technology. We have a tool that's a chainsaw. And it's a reasonable-sized chainsaw. It's not a real large chainsaw. It's a good size that anybody can use. And I have to say, when I get it out to do something in the yard with it, I'm suddenly looking for more things to cut up because I love the tool, and I really-- I use it as much as I can. So that's probably my favorite tool. 

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JOAN WOODWARD: I have to say, my husband has several chainsaws and is also looking for things to cut up in the yard a lot. OK. Another question coming in from the audience, what's the next new thing for Stanley Black & Decker. Obviously, we're not going to give any proprietary secrets away, but what is-- is there something new coming down the pike that you can kind of give us a sneak peek at? 

DONALD ALLAN: Well, I think that the next really big thing for us and the innovation front, if you look at the products behind me in the background, this is in a Home Depot store. And those are large, obviously, lawn mowing type of machine. And so, the one to this side over here, this is basically a zero-turn mower. And so it has the capability of doing a 180-degree turn right on a dime. 

And these are all gas-propelled today, but this industry is quickly changing to battery-powered technology, which is great for the environment. It's amazing how much pollution a small gas engine puts into our environment. It's actually, in many cases, worse than today's cars because so much work has been done to make our cars more efficient from an oil combustion point of view over the last two decades. 

That's not true necessarily with these types of engines. So we have-- we now have battery solutions in walk-behind mowers. So the ones you kind of walk behind in your yard. We have battery solutions for ride-on mowers, and then we're going to have solutions in this space probably in the next three years that will be battery-operated, which is incredibly exciting. I just think it's a great positive product for the environment, but also, it's going to be higher levels of functionality. 

It'll be quieter. I mean, how many times have all of you sat out in your back porch and somebody is using some loud, blowing machine or mower. And the great thing about the battery-operated versions, they're dramatically lower noise and much quieter. 

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JOAN WOODWARD: That's great. That's great. And then another comment coming in from our audience and just a suggestion, and I actually have to agree with this woman-- I'm not going to name her name-- but she says she's very petite, as am I, I'm short, and my hands are small. And as you said, if you're using a power tool for a long time, you get tired. And I pick up my husband's drill, and it's so huge. Have you ever considered making a line of products for women, honestly? Because I honestly-- [LAUGHS] I would buy a drill if it was made, like, for a petite hand. Or is that market so small that women just don't want to be bothered, and you won't look at it? But anyway, just a suggestion from one of my audience. 

DONALD ALLAN: It's a great suggestion that we've actually looked at over the years, and we have not come up with a perfect solution yet. We do have smaller versions of our DEWALT brand that are much smaller tools that, actually, are good. I actually don't have a big hand either. I have a small hand, so some of the bigger tools are really hard to hold for long periods of time. But there are smaller versions of DEWALT that you can get both of those in Home Depot. 

JOAN WOODWARD: Oh, really? OK. Well, I'm going to get back to this lady who asked this question, and she can go look for the smaller version. Is there a brand name on it, or is it just-- 

DONALD ALLAN: Yeah. It's called DEWALT ATOMIC in Home Depot, and it's called DEWALT XTREME in Lowe's. 

JOAN WOODWARD: Oh, fantastic. See, so you do have a solution, fantastic. And then, last question coming in on your blender. You have something new out there for making cocktails. I mean, tell us about this thing. 

DONALD ALLAN: Yeah. It was like three years ago, we were working with a joint venture startup company that had basically developed this machine, which is like a Keurig machine that makes cocktails. So you put a little pot in there, and then you have four cylinders of four different types of alcohol, depending on what types of drinks you want. And you put that in there, and you put your ice in your glass, and you put it underneath, just like a Keurig machine, and it'll make a cocktail for you. And so we have a new cordless version now, which is run on a battery pack versus plugged into an electronic outlet. But yeah, it's an exciting-- it's a great thing-- it's a great party topic set of machine to have. If you're having a party at your house, people just love it. 

JOAN WOODWARD: Awesome. Awesome. A conversation starter. All right. I'm going to get myself one of those for sure. Don, listen, the hour has just flown by, and you've just been incredibly generous with your time, your thoughts. And I like how you talk about your leadership style, just stick to the facts, no drama. And it was really-- it was just refreshing. Be a listener. I mean, there's so many lessons learned, I think, in leadership as well as all the other things we learned about your company. So, again, thank you so much. 

And, also, I want to thank you for being such a community leader in Connecticut. I know you do a lot of charitable work around town, and it's not gone unrecognized. You're a leader in that space, too, and also a big champion for the state of Connecticut to thrive. So thank you so much. Keep doing what you're doing. Come back any time, we'd love to have you. And, again, thanks. I'm going to let you go, and I'm going to talk about our next upcoming programs. I know you're a busy guy. Thank you. 

DONALD ALLAN: Thank you, Joan. Thank you, everybody. 

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Text, Upcoming webinars: March 29, Total Worker Health, Are You Looking at the Full Picture? April 5, The Evolution in Professional and Financial Lines Insurance. April 26, Surety Protects: The Economic Value of Surety Bonds. Register: travelersinstitute.org 

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JOAN WOODWARD: Alrighty. So, folks, also fill out our survey. It's in the chat feature there about today's program. Upcoming next week on March 29th, a conversation about workers compensation. So all my friends in business insurance, you do not want to miss this. And the workforce well-being, Total Worker Health. We have a renowned expert from the CDC with us, Dr. Casey Chosewood, and then our very own Travelers’ Alan McAlister is going to talk about containing workers compensation cost. 

April 5th we're going to do deep dive into the trends and personal-- I'm sorry, professional and financial lines of insurance. Given what we've seen over the last few weeks with some of the banking issues out there in financial lines, we're going to talk about that. So tune in then. 

Then on April 26th, we're going to drill down on a report about the economic value of construction surety bonds. So we're going to pivot between some of just general interest, I'm going to go deep dive into the insurance space in the next month. So please join us. We're thrilled to have you. And send us your recommendations for upcoming topics. We love to hear all the comments. And, of course, check out travelersinstitute.org for replays of sessions like today. So, be well my friends, and we'll see you next week. 

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Text, Wednesdays with Woodward (registered trademark) Webinar Series. Watch Replays: TravelersInstitute.org. Connect, Linked In, Joan Kois Woodward. Take our Survey, Link in Chat. #WednesdaysWithWoodward. 

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