Our strategy

At Smiths, we are dedicated to being Pioneers of Progress, improving our world through smarter engineering.

Our strategy to achieve this is to Outperform our Chosen Markets and Deliver World-class Competitiveness, supported by our Strong Financial Framework.

Strategy wheel
Person with machine
1. Outperform our chosen markets

We actively manage our portfolio of businesses. They operate in growing markets where we can achieve a sustainable top three leadership position.

  • DEFINE OUR BUSINESSES:

Our businesses share the same characteristics: technology differentiation; increasing digitisation; sustainably competitive and asset light; and high proportion of aftermarket and services.

  • FOCUS ON ATTRACTIVE MARKETS:

We focus the portfolio on attractive markets with strong long-term growth drivers. 

  • MAXIMISE GROWTH:

We maximise growth through organic investment and a highly disciplined approach to acquisitions, disposals and integration

Person at whiteboard
2. Deliver World-class competitiveness

We drive discernible, sustained competitive advantage through focused deployment of innovation and investment; attracting and retaining the best talent; and relentless execution through our shared operating model and the Smiths Excellence System (SES).

  • INNOVATE TO EXCEED CUSTOMER EXPECTATIONS:

Our Group innovation framework drives change and helps our businesses to nurture key projects, which deliver meaningful benefits for customers.

  • ENGAGE OUR PEOPLE TO DRIVE THE BEST PERFORMANCE:

Our People Plan is focused on building a learning organisation which attracts and retains talent; engages, develops and inspires our people; and embeds our values.

  • EXECUTE CONSISTENTLY:

SES ensures that we focus on continuous improvement, speed and efficiency. Our operating model optimises global business services for maximum effectiveness.

Smiths Interconnect Product Closeup
3. Strong financial framework

We maintain a strong financial framework by:

  • Focusing the portfolio on sustainably competitive and asset light businesses

  • Delivering profitable growth with sustainable margins

  • Maintaining balance sheet strength and investing with strong financial discipline.

Smiths DNA
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 people, innovation and excellence.
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
Portfolio strength

as measured by % revenue from top three positions

AMBITION:

90%+ revenue from top three positions in attractive markets

STRATEGIC OBJECTIVE: 1 & 3

Aftermarket and Services
Aftermarket & Services

as measured by Aftermarket % of sales

AMBITION:

50%+ as a percentage of total revenue

STRATEGIC OBJECTIVE: 1

Effective Innovation
Effective Innovation

as measured by Vitality Index

AMBITION:

~20% revenue from new products as a percentage of total revenue

STRATEGIC OBJECTIVE: 1, 2 & 3

Operational Excellence
Operational Excellence

as measured by stock turns

AMBITION:

6.0x stock turns

STRATEGIC OBJECTIVE: 2 & 3

Employee Engagement
Employee Engagement

as measured by employee engagement score

AMBITION:

Create a nurturing and inclusive working environment

STRATEGIC OBJECTIVE: 2

Safety
Safety

as measured by RIR

AMBITION:

Create the safest working environment

STRATEGIC OBJECTIVE: 2

Financial Performance

Growth
Growth

as measured by underlying revenue growth

AMBITION:

Outperform our chosen markets

STRATEGIC OBJECTIVE: 1 & 3

Performance
Performance

as measured by headline operating profit margin

AMBITION:

18-20% headline operating profit margin

STRATEGIC OBJECTIVE: 2 & 3

Returns
Returns

as measured by ROCE

AMBITION:

16-18% ROCE through the cycle

STRATEGIC OBJECTIVE: 2 & 3

Asset Light
Asset Light

as measured by working capital % sales

AMBITION:

~20% working capital as a % of total revenue

STRATEGIC OBJECTIVE: 2 & 3

Strong Cash Generation
Strong Cash Generation

as measured by headline cash conversion

AMBITION:

100%+ headline cash conversion

STRATEGIC OBJECTIVE: 2 & 3

Environmental Stability
Environmental sustainability

as measured by reduction in Greenhouse Gas (GHG) emissions

AMBITION:

net zero scope 1 and 2 emissions by 2040

STRATEGIC OBJECTIVE: 2 & 3