Danaher Business System: Lean Thinking and Strategy

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"When you boil it down, simplicity, focus, and repeatability are at the heart of everything"

- Larry Culp, CEO of Danaher Corporation

"The purpose of lean thinking is not to cut your cost or inventory, but to change your strategy. When you make things flow in a smoother, more effective way, you can gain market share dramatically against your competitors"

- Art Byrne, An Ex-Head of Eight Danaher Corporation’s Companies

Danaher Corporation (Danaher), founded in 1982, had evolved into a multi-billion dollar conglomerate by 2012, thanks to its numerous acquisitions and the robust operating strategy that it used to integrate them. According to observers, Danaher, which achieved a double-digit profit percentage in 2012, owed its expansion and success to the constant stream of acquisitions it had undertaken since the 1980s.

The integration of all these acquisitions was underlined by an operating strategy that Danaher had evolved and which had come to be known as the Danaher Business System. The Danaher Business System was essentially a lean operating mechanism that scrutinized every process in the company, be it in manufacturing, new product development, or sales and distribution; it ironed out the inefficiencies in the concerned process and standardized the ensuing process.

The entire operations at the company were based on the tenets of the Danaher Business System. However, some analysts wondered whether there could be a limitation to an acquisition-driven strategy in terms of, for instance, a culture clash, given Danaher’s institutionalized mechanism of implementing the Danaher Business System in the acquired entity.

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