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02
Lessons Learned – Security
As we pride ourselves on continuous
improvement, we looked at the challenges
faced in 2013 as an opportunity to better
prepare the Company for the future. The
performance of our Security segment fell
significantly below our expectations in
both Europe and North America in 2013.
It has been and will continue to bea
priority for us to learn from what went
wrong and lay a new foundation for sustain-
able, long-term success inSecurity.
In Europe, we were impacted by the oper-
ational underperformance of the legacy
Niscayah business, compounded by
a weak macro-economic backdrop. We
worked diligently to implement important
remedies during the year which centered
on three primaryareas:
1. Centralized Operating Model—we
are restructuring the operating model
of the legacy Niscayah business
sothat we have full operational control
ofbranch activity at the country
level and can focus efforts on driving
productivity, field efficiency, and margin
improvementactions.
2. Talent—we upgraded under-
performing management in several key
positions at both the headquarters
and countrylevels.
3. Sales Orientation—“Hunters” versus
“Farmers”—the Niscayah organization
was overly dependent on “farming”
referrals from their former owner, which
necessitated a culture change as well
as the replacement and upgrade of the
majority of the sales force during the past
twoyears.
In North America, the majority of the 2013
operational performance issues centered
around taking on too many changes at
once, primarily in our electronics and
commercial locks units. The changes we
implemented in these businesses resulted
in a temporary setback to the overall
performance of North American Security.
However, we firmly believe that our North
American Security management team is
on top of the issues, as evidenced by the
steady increase in operating margins from
14% in the first half of 2013 to 16% in the
second half of the year. We fully expect
operating margins in our North American
Security business to continue to trend
towards their more historical high-teens
levels as we move through2014.
We are bringing all the necessary
resources to bear to improve the Security
business and are confident in our ability
to succeed. Stanley Security has one
of the best global footprints in the world,
is the only integrator with scale in both
mechanical and electronic security, and
carries a high margin recurring revenue
model with low capital intensity. We
believe that Security is a valuable part of
our portfolio which will generate returns
to shareholders consistent with our
long-term financial objectives, ultimately
delivering organic growth and above line
average operatingmargins.
Stanley Black & Decker 2013 Annual Report
Revenue Growth in 2013
+8%
Total Revenue Growth