Keeping Growth Going - ITW

Want a winner, regardless of market changes?  Look at Illinois Tool Works (ITW) (see chart here).

ITW has grown, regardless of market shifts and economic changes, for over 20 years.  And this troubled year, 2008, ITW has grown another 2.4 percent (see article here).  While other big companies are seeing revenue declines of nearly 50% (look at Chrysler), and some are disappearing overnight (Lehman Brothers and Bear Sterns) it's a rare story to hear of a company growing these days.  Yet, ITW keeps plugging along. 

ITW is in a wide variety of businesses.  The company has over 800 subsidiaries - and it doesn't even require they all use the same accounting system - much less adhere to a common "core".  Businesses are expected to meet their forecasts, or change in order to meet them.  Acquisitions help the company keep trying new things in new markets - constantly maintaining White Space.  It's not important what market they're in, or what products they sell, or what technology they use.  What's important is if the business is able to sell more product and meet profit targets while doing so. 

That willingness to keep White Space wide open has served ITW well for over 2 decades - and is doing so now.  Revenues keep growing, via acquisition and ongoing business, despite changes in markets around the world.  ITW is avoiding the draconian downsizings we read about across the country, and is not harping about insufficient capital while pursuing sales globally.  Instead of focusing on a core business, and watching that market disappear out from under it, ITW keeps itself firmly growing in a wide variety of businesses creating better results for employees, suppliers and investors.

Long term success comes from avoiding Creative Destruction.  Focus is of no value when your focus becomes obsolete.  Companies that focus eventually end up out of step with changed markets - and wondering how to save themselves.  ITW avoids that problem by constantly entering new markets, and trying new business models.  A company based on White Space has proven it can grow, even in an economy like this one.