ADT CEO Details His Bet on Innovation to UVA Darden Students
By Dave Hendrick
The ADT Corp. is the best known and largest home security provider in the United States and Canada, with roughly six times as many customers as its closest competitor.
While the company is known for its brand and scale, President and CEO Naren Gursahaney (MBA ’89) noted that it has not always had a reputation for innovation.
“For the last three years, I have been focused on how you take a 140-year-old company and position it to be the market leader for the next 140 years,” Gursahaney said at a Leadership Speaker Series event at the University of Virginia Darden School of Business.
In an era where technological disruption continues to upend legacy business products and models, from taxicabs to smoke detectors, the company that doesn’t innovate stands a real chance of being superseded by upstart competitors.
Gursahaney took the top spot at ADT following its spinoff from Tyco International, which he joined in 2003. He led a corporation-wide operational excellence initiative and helmed two multi-billion dollar divisions over a nine-year period at the company.
When he received the offer to become CEO of the soon-to-be publicly traded ADT, Gursahaney was wary of some of the unique pressures that he knew accompanied such positions, but also realized he’d be “crazy to turn down the opportunity.”
The ensuing three years have been the most exciting and challenging of his career, Gursahaney said, noting that he took the top spot amid a wave of new technologies entering the home.
As Gursahaney sees it, the boom in home automation and connected devices presents a significant opportunity for ADT. While the company has by far the largest share of the market among the roughly 20 percent of Americans who subscribe to a professionally installed, professionally monitored home security service, that remaining 80 percent is largely untapped.
Moreover, these are precisely the people who are now buying connected devices and gadgets — Nest thermostats being perhaps the best known example — that are increasingly found in U.S. homes.
Gursahaney likens the evolving model of ADT’s business to the entertainment channel HBO, as one can receive HBO through any cable provider, to any television and to a host of devices. ADT, which has a partnership with Nest, wants to come bundled with whatever home automation device the consumer brings into the home.
If a potential customer is spending their own money to buy a device that includes the ADT option, Gursahaney says his company can offer the monitoring service at a significantly lower price point and with no long-term contract, which would appeal to consumers who rent their homes or other individuals who have not shown interest in a professionally installed security system.
The company anticipates making a significant push into the space in 2016, including through the debut of the new LG Smart Security monitoring device to be sold by LG, which includes motion sensors, high-definition video and other security features with optional professional monitoring and video hosting by ADT.
“This will be the product that starts to open up the other 80 percent of the market,” Gursahaney said.
Such products are the fruit of the bias for innovation that Gursahaney brought to the company.
Indeed, Gursahaney said a key part of making ADT more innovative was committing to the concept by incorporating innovation into the company’s key values of trust, service and collaboration. ADT hired a chief innovation officer, charged with finding ways to engage the entire organization with innovative problem solving, shortly after Gursahaney came on board, and the company has considerably strengthened its ties to Silicon Valley.
While not resting on its reputation, Gursahaney said the company’s historical attributes would be key to its future successes, noting brand strength, monitoring infrastructure and relationships with first responders as bulwarks against future competitors.
The University of Virginia Darden School of Business delivers the world’s best business education experience to prepare entrepreneurial, global and responsible leaders through its MBA, Ph.D., MSBA and Executive Education programs. Darden’s top-ranked faculty is renowned for teaching excellence and advances practical business knowledge through research. Darden was established in 1955 at the University of Virginia, a top public university founded by Thomas Jefferson in 1819 in Charlottesville, Virginia.
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Darden School of Business
University of Virginia