Emerson Electric Company Analysis

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Emerson Electric Company Analysis

Key Takeaways

  • Emerson believes that the most effective digital transformation involves a combination of top-down and bottom-up change.
  • The company has its own dedicated organization focused on digital transformation technologies and programs, which initially brought together its existing software, tools, and analytics abilities.
  • Emerson is competing in a very fragmented industry for big customers with lots of negotiating power.


We provide a thorough overview of Emerson Electric, including its key company information, values, digital strategies, challenges, and competitors. Because Emerson provides its own digital transformation services and products, any public content on the issue was focused on what it provides, rather than what it is doing internally. We can, however, assume that the approach Emerson takes to its digital transformation services would be a reflection of the approach it takes within its own processes.

Company Overview

  • Brief description: Emerson was founded in 1890 in St. Louis, Missouri. It started out as a manufacturer of electric motors and fans, and over time has grown into a global technology solutions company.
  • Annual revenue: US$18.2 billion
  • Funding history: While Emerson hasn't received series funding, it has made numerous acquisitions in order to grow, and has provided funding. In the 1990s, its acquisitions totaled US$2.5 billion. In 2006, it acquired Germany-based Knürr AG and U.S.-based Artesyn Technologies, and in 2008, Aperture. Various key acquisitions followed, including Locus Traxx and PakSense in 2016, and Intelligent Platforms in 2018. Last November, Emerson announced a US$100 million commitment to Emerson Ventures. The corporate venture capital initiative aims to foster innovation.
  • Products and services: Emerson has two business platforms; Automation Solutions and Commercial & Residential Solutions.
  • Automation solutions include operations management software, automation and control and advanced industry software, measurement instrumentation, valves and regulators, control and safety systems, asset performance management, electrical components, lighting, various types of welding, ultrasonic cleaning, and other products. Services cover consulting, life cycle, education and training.
  • Commercial and residential solutions include heating and air conditioning products, residential electronics, refrigeration, construction materials and tools, food waste disposers, food waste management, and more.
  • Digital transformation: Emerson provides digital transformation consulting and products. One of their products is Plantweb, which uses operational analytics to drive digital transformation. Plantweb is IIoT architecture with remote monitoring using intelligent field sensors, communication gateways, software, and partner technologies.

Corporate Values

  • Purpose: The company says it is driven by one single purpose: "We drive innovation that makes the world healthier, safer, smarter and more sustainable."
  • It identifies five key causes: Planet, champion (helping customers through regulatory challenges), humanity, inclusion, and future (promoting STEM education programs).
  • The company has eight core values: Integrity, safety and quality, supporting its workers, a customer focus, continuous improvement, collaboration, innovation, and the next generation.

Digital Technology Strategic Initiatives

  • Recent: In 2019, Emerson established a "dedicated organization focused on digital transformation technologies and programs." The new business focuses on helping manufacturers implement digital transformation, and was initially based on existing tools that the company was providing, such as consulting, project execution, smart sensor technologies, data management and analytics.
  • Last year, Emerson explored combining its software assets with Aspen. In the deal, Emerson would own a majority of the company, but it would continue to operate separately. The deal would help Emerson with its existing software assets and there are potential knock-on effects for the rest of the company’s industrial businesses. With its focus on digital transformation being relatively recent, the company's stand-alone software business accounts for just 6% of its total revenue.
  • Future: In terms of future plans, while the CEO doesn't address digital strategies, he does note that the company had one of its strongest years in 2021 and is "driven by the energy of transformation, we’re seizing the opportunity to think differently, catalyzing creative investing, taking bold and decisive action, and reimagining the Emerson and the world of tomorrow." Karsanbhai is vague, noting a plan to modernize the company's workplace, and "foster a culture of inclusivity and diversity."
  • He also mentions appointments to positions which strengthen the company's focus on increasing women in leadership positions, and on sustainability. But the company, in its press releases, statements, and reports, provides little concrete insight into its own strategies, beyond a hint at a comprehensive review and having a current "objective of positioning Emerson into end markets with higher underlying growth rates and supportive macro-economic trends."

CEO Quotes on Digital Strategy

  • The CEO's press and public comments and talks have focused on the company's products, including its own digital transformation product, rather than on what the company is doing internally. Currently the CEO, Lal Karsanbhai, said in 2019 when he was the executive president of Emerson’s Automation Solutions business, “With our new Digital Transformation business, we are strategically focused on guiding customers to the right strategy, helping them drive improved organizational alignment, and implementing programs that accelerate improved business performance.”
  • Emerson's CTO wrote for Forbes that a combination of top-down and bottom-up approaches to implementing digital transformation is best, "digital transformation only works if there is a tight connection between corporate digital teams driving the vision and field-level plant operations targeting specific, measurable problems to solve. One of the best ways to accomplish this is to establish a DX team tasked with bringing corporate- and plant-level IT, operational technology (OT), engineering and business leaders together to prioritize problems they want to solve and then implement pilot projects."
  • "The true benefit of digital transformation is what it empowers: relevant time data and smart analytics that drive business value. Data is a critical currency that enables leaders to make business decisions with the best, most current information. Digital transformation takes existing data as well as insights from new sensors and makes them actionable, giving plant managers the power to detect issues before they arise, to mitigate problems and optimize operations," wrote Karsanbhai.

2021 and 2020 Digital Strategy Highlights

  • The company's 2021 annual report did not mention any internal digital transformation strategies.
  • Likewise, the 2020 annual report didn't mention any internal digital strategies, but it did recognize that the pandemic had "catapulted digital transformation technologies from basic measurement, monitoring, control, data management and optimization opportunities into critical investments for sustaining and future-proofing businesses." The report acknowledged that the way Emerson and its industries operated had been transformed, suggested that the above quote also applies internally to the company, not just to its customers.
  • The now CEO, Karsanbhai, stated, "Many of our customers have actively considered embarking on a digital transformation journey for years. The COVID-19 pandemic created a new urgency, accelerating automation as industries quickly pivoted to continue meeting needs with a reduced and distanced workforce."
  • Within its digital transformation offerings, Emerson sees software as a "key value driver," and in 2020 had a $2.4 billion software-enabled innovation portfolio. With remote working, digital security also became even more important, and the company uses IIoT to "empower" employees "with the knowledge, behaviors and tools they need to reduce threats."

Marketing Tech Stack

  • Emerson uses 57 technology products and services including HTML5, Google Analytics, and jQuery.
  • Emerson is actively using 135 technologies for its website, including Viewport Meta, IPhone / Mobile Compatible, and SSL by Default. Emerson uses HCL Commerce for ecommerce, AJAX libraries for content delivery, Viewport Meta for mobile functions, Euro for payment, CoreMedia, Atlassian Cloud, and Salesforce for content management, and AppNexus, The Trade Desk, and DoubleClick.Net for advertising.
  • To get more insights into the marketing software that Emerson uses, we looked at the marketing positions they have available, to see if they stressed experience using particular programs, however most ads did not. One ad did mention ValveLink™ Software, but this product belongs to Emerson and the position involves helping customers. It is possible Emerson also uses the program. A marketing automation position mentioned using Eloqua Marketing Cloud.

Corporate Challenges

  • Emerson is operating in an automation market that is highly fragmented and competitive. While the CAGR is accelerating at 6.15%, Emerson has to find ways to stand out from all the other companies providing similar services. Some of Emerson's competitors have substantially greater sales, assets and financial resources than it does.
  • Pricing in the automation and control systems market is key challenge for companies like Emerson. There is a high installation cost and most solutions are provided at exorbitantly high prices. These prices are the main turn off for end users, particularly in residential buildings. Cost recovery can take a very long time. At the same time, research and development in Emerson's key fields also has a very high cost.
  • And while Emerson faces these high spending costs, it also has a lot of very big customers with strong bargaining power. Meanwhile, its key products are self defeating. That is, when its clients use its products and services to rationalize their operations, they may no longer need Emerson as much, or at all, and so there is a loss of income.
  • For the Washington Post, Emerson has had a "crusty" internal culture and outdated operations and practices, and it has been up to its new CEO to modernize the company and shake up its work culture over the past year.

Major Competitors

  • ABB - Headquartered in Sweden, ABB is a "pioneering technology leader" that supports utility, industry, transportation and infrastructure customers.
  • Honeywell International - A US, publicly traded company, Honeywell focuses on four key areas; aerospace, performance materials and technologies, building technologies, and safety and productivity solutions for businesses.
  • Johnson Controls International - Headquarted in Ireland but also an American company, Johnson Controls provides customers with efficiency, controls, and automation services and products, with a focus on sustainability.
  • Legrand - A French industrial company, Legrand leads globally in producing switches and sockets, and specializes in electrical and digital building infrastructures.
  • Rockwell Automation - This US company provides industrial automation, with a focus on Iot and innovation.
  • Schneider Electric - A global company which specializes in digital transformation of automation and energy management solutions for industries and homes.

Other Important Facts

  • Emerson has been a Fortune 500 company for the past 24 years.
  • Since 1954, the company has only had four CEOs. That doesn't include the new one who started in 2021, Lal Karsanbhai.
  • Overall, in 2021, the CEO's strategic focuses were culture (ie employees, diversity, innovation), portfolio evolution and execution.
  • Emerson has recently turned towards a strong focus on sustainability, and just published its ESG report, with a net zero target in value chain emissions by 2030.

Research Strategy

Because one of Emerson's key product offerings is digital transformation, we found that any quotes or talks or press releases they had provided on the topic were focused on their services, rather than on what they have been doing internally and with their own processes. We therefore attempted to research their digital transformation by examining elements of such transformation, such as digitally empowering employees or upgrades to digital interactions with customers, but we found that any information here was also focused on what Emerson recommends or provides, rather than on what they are doing. In their section on employees in their 2021 annual report, for example, Emerson talks about surveying employees and keeping their wages competitive, but not about implementing any digital upgrades. Quotes from CEOs and recent and future initiatives that were specifically internal, were limited, and even the annual reports focused product changes and evolution rather than on any workplace, marketing, distribution etc strategies.

For the competitors, we used a recently released market report about the automation market, that identified Emerson as one of the top companies, along with other top companies in the industry. Another market analysis of the company confirmed these competitor choices, and we also considered the competitors identified by Craft.

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