While some big business CEOs embark on a massive change agenda once they take office, Neil Hunn says it’s different at Roper Technologies.
“It’s really sustaining and extending what we’ve done," he says. "What we have here is not broken.”
Hunn is the new president and CEO of Roper, a Lakewood Ranch-based conglomerate with subsidiaries in areas including software and industrial technology. Hunn has been with Roper for seven years, previously serving as COO, executive vice president and group vice president. He assumed the top role in September after Roper’s longtime leader, Brian Jellison, stepped down. Jellison passed away in November after a brief illness.
Jellison’s hallmark achievement, Hunn says, was hitting 19% compound annual shareholder return from 2003 to 2017, compared to 9% for the S&P 500 during the same period. “If I could look back over the next however long I’ll have the opportunity to be here — if we could sustain what we’ve done — that would be a great outcome,” Hunn says.
Roper, with $4.67 billion in revenue in 2017, has the right strategy in place to accomplish that, he says. The road ahead includes laserlike focus on making the right acquisitions and executing on a strategy that asks, in part, “How do you win?”
Hunn says he and Jellison shared a key understanding about the company. “It’s not just one thing that makes Roper great, it’s the combination of things that make it great,” Hunn says. “It also makes it hard to replicate.” Elements of that greatness, he says, include the fact that the company has 50 businesses that are leaders in their niches and can grow. He also points to the company’s decentralized governing structure and its capital deployment efforts focused on what he calls the “singular best opportunities.”
The businesses Roper acquires, Hunn says, have improved along the way. “The next business that we buy, we want it to be better than the last businesses we bought,” he adds.
A majority of the company’s cash flow, he says, minus dividends, goes to acquisitions. Over the next four years, the company will deploy more than $7 billion in capital. Assuming the right targets present themselves in the year ahead, Hunn says, “We’ll be very offensive in 2019.”
“What process or repeatable set of activities needs to occur to enable a result that’s consistent with strategy?” — Neil Hunn, president and CEO, Roper Technologies Inc.
Before making an acquisition, Roper filters the company through an analytical evaluation. It asks some key questions, too: Is it a business in a niche market? Is it in a leadership position in its niche? Does it have an ability to invest in itself to grow?
Hunn says it’s also essential the management team running a business Roper considers acquiring can thrive in Roper’s environment. Without question, he says, it keeps management teams in place after acquisitions.
In it’s strategic planning, Roper focuses on two questions, Hunn says: “Where do you play?” “How do you win?”
But it’s not just about planning — it’s about the strategy’s execution. To guide that, another question Hunn says the company asks is, “What process or repeatable set of activities needs to occur to enable a result that’s consistent with strategy?” Processes should include specific actions and be boiled down to bite-sized tasks. Everything should be purposeful, he says, tying back to the strategy.
In some companies, he says, as more pressing matters come up, strategy gets passed by. “The tyranny of the urgent takes over for leadership teams,” he says. Instead of having leaders focus on areas like supply-chain issues and handling customers, which can threaten to consume their time, it’s better to let the frontline managers focus on day-to-day issues.
Roper has developed tools to make strategy a daily and weekly activity, Hunn says, so that it competes for the time of executive teams. Talent development and deploying strategy, he says, are the best and highest use of executive leadership.
Coming off solid years in 2017 and 2018, Hunn says 2019 will be “steady as she goes.” He says, “The business is very well positioned across the portfolio.”