Our strategy

We have a vision for our business: We are proud to be Smiths, pushing boundaries to deliver innovative solutions for the world's challenges.

This drives us towards our ambition: To establish Smiths as one of the world’s leading technology companies.

We'll achieve our ambition through our strategy: To outperform our chosen markets and deliver world-class competitiveness and innovation, underpinned by our strong financial framework. 

1. Outperform our chosen markets

We actively and constantly manage our portfolio of businesses, with the aim of being competitively positioned in attractive global markets with strong long-term profitable growth prospects.

That means serving markets where we can sustainably achieve a top three leadership position. Today we consider 80% of our portfolio to be well positioned, up from 60% in 2016, with more to come.

PRIORITIES:

  • Focus the portfolio for growth through organic investment and a highly disciplined approach to acquisitions and disposals

  • Increase our focus on higher-growth regions
2. Deliver World-class competitiveness

We drive outperformance and competitiveness through increased investment in R&D and innovation, supported by our i3 group-wide innovation framework; by a relentless focus on excellent execution through our shared operating model (the Smiths Excellence System) to improve speed and efficiency across our whole value chain; and by building a learning organisation through our people plan that's all about enabling our colleagues to be the best they can be.

PRIORITIES:

  • Deliver the Smiths Excellence System (SES) – a shared operating model focused on continuous improvement, speed and efficiency

  • Create a culture of innovation

  • Build a learning organisation
Smiths Interconnect Product Closeup
3. Strong financial framework

Our strong financial framework gives us the flexibility to create superior returns and invest in our growth. It helps us manage our business efficiently.

That includes optimising the generation of cash and allocating our capital to the best organic and inorganic opportunities to drive growth. Guided by our strong governance framework and robust approach to risk management and financial control, it helps us create value for our stakeholders.

PRIORITIES:

  • Deliver profitable growth with sustainable margins

  • Focus the portfolio on sustainably competitive and asset-light businesses

  • Apply strong financial discipline to the way we manage the business and invest

Our strategy explained

This short video shows our colleagues how our culture, strategy and operating model all fit together to help us create value in our business.

Smiths Interconnect Monet and Volta Products
Our business model
Our business model enables us to deliver value to our stakeholders on a sustainable basis. It starts with the core characteristics that define our businesses and the values that guide how we behave and encompasses our shared operating model, focused on excellence, innovation, and consistent execution.
Business Model

Key Performance Indicators

Our KPIs are aligned with our strategic objectives. Progress against them is monitored by our management processes and they drive our executive remuneration policy.

Operational Performance

Portfolio strength

AMBITION:

85%+ revenue from top three positions in attractive markets

STRATEGIC OBJECTIVE: 1

R&D cash costs as % sales
R&D cash costs as % sales

AMBITION:

5.0-6.0%

STRATEGIC OBJECTIVE: 1

Vitality index
Vitality index

AMBITION:

~20%

STRATEGIC OBJECTIVE: 1 & 2

Stock turns
Stock turns

AMBITION:

~6.0x

STRATEGIC OBJECTIVE: 2

Aftermarket
Aftermarket %

AMBITION:

60%+

STRATEGIC OBJECTIVE: 1

Employee engagement
Employee engagement

STRATEGIC OBJECTIVE: 2

Financial Performance

Underlying revenue growth
Underlying revenue growth

AMBITION:

Outperform our chosen markets

STRATEGIC OBJECTIVE: 1

Revenue growth from higher-growth regions
% revenue from higher-growth regions
STRATEGIC OBJECTIVE: 1
Operating margin
Operating margin

AMBITION:

18-20%

STRATEGIC OBJECTIVE: 2 & 3

Cost of poor quality
Cost of poor quality

STRATEGIC OBJECTIVE: 2

Procurement savings
Procurement savings

STRATEGIC OBJECTIVE: 2

ROCE
ROCE

AMBITION:

16-18% through the cycle

STRATEGIC OBJECTIVE: 2 & 3

Working capital % sales
Working capital % sales

AMBITION:

~20%

STRATEGIC OBJECTIVE: 2

Cash conversion
Cash conversion

AMBITION:

100%+

STRATEGIC OBJECTIVE: 2 & 3