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Accelerating Innovation, Disrupting the Building Automation Industry and ‘Driving to 1M’
Scott Cochrane, President and CEO of Cochrane Supply & Engineering, Interviews Ken Schmidt, Global Managing Director, Tridium
Many Tridium leaders have come in and made some big lofty promises...but not Ken. He said, “Scott, I’m here to learn.” He didn’t promise me anything but to do the best job he could, keeping Tridium on the right path by listening to his customers and guiding his team. Ken has seen some big changes at Honeywell over his 15+ years, but I doubt he ever saw a year like 2020. Even with all the challenges, Ken led Tridium to one of its most successful years ever which is a huge accomplishment. With the success comes investment, with investment comes decisions—and with that, Ken, what is your plan?!
Cochrane: You have been at Honeywell for more than 15 years, tell me about your journey and how you ended up as Tridium’s general manager?
Schmidt: I started the same year Tridium was acquired by Honeywell. Like Tridium and many people at Honeywell, I joined the organization as part of an acquisition. In 2005, Honeywell acquired my employer of the time, Zellwegger Analytics, a gas detection company. At Honeywell, I’ve held different sales, product marketing, strategic marketing and management positions.
Cochrane: Would you say you came out of the gas detection industry? Or were you in other segments prior to your role at Honeywell?
Schmidt: To give you more background, I’m a forensic chemist—a long time ago, I worked for the Michigan State Police. I studied to be a ballistics and explosives expert, which stemmed from my young interest in chemistry, but I never worked in that field. Right out of school, I had to pay the bills since my wife was going through veterinary school. The fastest route to a good salary was at Miller Brewing Company where I moved from beer driver into sales and sales management. Eventually, I wanted to get into something more scientific, or at least use my degree, and that’s how I got into the gas detection business. Prior to Tridium, I was always in the Honeywell analytics and gas detection side of the business.
Cochrane: So, you’re a chemist by education and early experience, and with that you got into gas detection. Cool!
Schmidt: I love the forensics side of science because you’re not only a chemist or only a physicist. You need to understand and be ready to apply all the different sciences because the problem is always different. It’s the same thing in business. You need to use different levers and triggers to get the best result for the customer and for the business. Once inside Honeywell, my group went on a big acquisition spree and acquired nine gas detection companies. Each one came with its own unique qualities and problems. I was moved into each one of them as they came on board to take them on a journey to becoming a Honeywell employee. That’s not always the easiest transition for a lot of people. It’s about finding the right people.
One lesson I took away from my years integrating new acquisitions is that founder-owned companies have very strong leaders. When you take that leader out of it, you must bring the business acumen and the decision-making power up across all levels of management. So, once I’d get a business settled and set straight, I’d move on to the next one, eventually I landed at Tridium in 2017. Tridium was acquired by Honeywell in 2005, but up to the point when I moved into Tridium, I don’t think there was any systematic integration at all. They needed that chemist-leader that would find the right triggers and levers to improve Tridium’s performance inside Honeywell and that could position Tridium as the catalyst accelerating Honeywell’s transformation into an industrial software company. My first year at Tridium involved running sales globally. Then when the seat opened, I moved into the role of global managing director of Tridium.
Cochrane: Great background. So, can I say that you’re a Taylor boy in the published article?
Schmidt: Yeah, I’m a downriver Detroit kid! I grew up in the Detroit area. To this day, I am the biggest Detroit Lions and Michigan State fan you’ll find… even this year.
Cochrane: Well speaking of years, Tridium just had one of its best years ever. The company has been built through innovation, that is what makes Tridium so special. How have you been able to keep the magic alive within a huge organization like Honeywell?
Schmidt: It starts first and foremost with our employees and our Niagara community. I’ve never come across a group of people who are so dedicated to wanting to be – not only innovative – but also market disruptors. There’s so much pride in the community and so much passion and success surrounding it. You add to this community an understanding of Honeywell’s bigger technology goals, and the teams that support it, and you get even greater potential for disruption.
Cochrane: Another chemistry formula?
Schmidt: Yes, it’s about ingredients, catalysts, and timing. Previously, large companies like Honeywell have not been big fans of open systems. They have liked to close things off– but, that’s changing. Honeywell is transforming itself into a software industrial. This transformation is making the Niagara Community’s ability to innovate and disrupt easier. When Honeywell thought of itself as purely a hardware manufacturer, the software was focused strictly on that Honeywell hardware. Whereas, the focus now is all about developing software to open and expand the world of connected hardware. We’re not worried about who gets what slice of the Tridium pie — what we’re worried about is making the pie bigger.
As a software innovator inside Honeywell, your challenge is synching your ideas for growth and success with the goals of Honeywell and being able to communicate that Win-Win strategy. With the right communication and the right business plan, we have the formula to make things happen. We’re going to continue to invest in adding the right new team members to take the next step in disrupting the market.
Regarding our growth strategy, we try to look at market obstacles in different ways. For example, in Asia, the Niagara Community is not as big as in the Americas. Seeing this gap, Tridium’s APAC leader decided a few years ago to go to the top Chinese universities to engage them in Niagara training, further supporting the government’s goals of increased IoT adoption and smart buildings. He built around our basic Niagara certification (TCP) class, a classroom-study curriculum and a Niagara development kit packaged and priced for students. He started by training the first 20 students at the top universities in Shanghai. Today, the Niagara curriculum is taught at more than 35 of the top universities in China. We’re talking about the Chinese equivalents of MIT and Caltech, graduating 20 students per semester, twice per year. To further illustrate the impact of this strategy, China has a national contest for innovation. Students can use whatever tool they want. Last year, over half of the entrants chose Niagara as the platform for their IoT projects. In 2020 there was a $50,000 prize for the top contender and that winner used Niagara as their base for innovation. Our APAC team has certainly set the bar high in terms of training the next generation on Niagara, and that is because they started with a bigger vision. We’re trying to extend the best APAC strategic initiatives, like this one, into other regions and bring the best ideas from the United States over to Asia and Europe as well.
Cochrane: I love that. That’s so good for Tridium in the future in Asia. Incredible how half of the students choose Niagara.
Schmidt: Worldwide, we are busy training the next generation of Niagara developers and users. That’s a challenge we must take on. In China, most new Niagara-based applications are not for traditional HVAC. These students are going into industrial and banking and other vertical industries, and they are using Niagara as the basis for their development work. They’re using it in a huge variety of applications. We’re seeing excitement for the platform from this next generation.
Cochrane: Obviously you’ve had challenges. Can you talk about the challenges you experienced when you came into the job, and how you see them today? In other words, after a few years in your role at Tridium, how do you look at things differently?
Schmidt: Keep in mind, I’ve had two different roles since you’ve known me. I think it was the best way for me, though. Doing the sales role meant getting out and talking to Niagara customers. Over that first year with Tridium, I spent most of my time listening. I was ‘seeped’ in the market issues and the technology solutions before I became the managing director. The early problems for me were around our go-to-market strategy. I’ll quote you, Scott. You said, “I probably spend more time building the demand than you guys do.” I took that to heart. One of the things I did early in my role is to build a system of demand generation to try to drive as much demand back to our community as our community does for us. That’s really what helped our success last year. That’s a long cycle, right? To have someone in the mindset of “I have something that works fine” to journey to “I only want to use Tridium going forward.” We don’t take orders directly. All of our business goes through our channels. We just want to keep fueling our channels.
As I transitioned into my current role, I recognized the need to renew Tridium’s innovative spirit. It is always there inside Tridium with our employees. The ‘stretch’ has been to get the funding and ‘buy-in’ to our approach from Honeywell. Now, Honeywell is putting the needed wind in our sails—we’re getting the support to invest in the business and its talent. The Tridium community performs year in and year out—it’s undeniable. So, as we think through the next generation of products and services, I have a much easier way of being able to bring in funding and investment to get it done. We couldn’t be more excited about the future.
Cochrane: Like I said earlier, Tridium just had one of its best years ever, so whatever you’re doing is working. Expand on that a little and describe what has been successful for you in leading Tridium in profitability and volume. Why did that happen?
Schmidt: We need to own our destiny. I struggle with people who say, “All these roadblocks are in my way.” Now, we are doing our best to work with our partnerships and to evangelize Niagara like we did in the early days. Our message of openness—open protocol, open distribution—a.k.a. ‘Buy from whom you want,’ open pathway for data from edge to cloud—it resonates today more than ever. We are focused on accelerating the spread of that message. People and companies need flexibility. Niagara is a tool that allows you to say ‘Yes.’ There was a time nobody got fired for putting a propriety system in. People thought “open” meant risky. But Tridium has made security a priority, and customers have grown to trust the open framework due to Niagara’s enterprise-grade cyber defense.
We achieved success in 2020 by working with our community and driving business back into our channel. Success doesn’t happen in one year though. When I first joined the team I saw a chance to make our processes better. It frankly started with one of my first conversations with you, Scott. I remember that first time as part of Tridium I flew to Detroit and we talked through a lot of things we’ve been doing since. To come full circle, I brought my propensity for forensics and the discipline of a scientist and you gave me the outcome-based, evidence-based clues as to how to grow this business. What came next and will continue is commitment to win based on the evidence of what works.
Cochrane: Good stuff. Next, Honeywell has developed Honeywell Forge Enterprise Performance Management solution that is leading the effort to transform the company into a software industrial. How do you see the Niagara Framework by Tridium as a part of the cloud offerings from Honeywell?
Schmidt: I see that Niagara is core to everything that Honeywell Forge is doing. The problem Niagara solves for customers is data normalization. Niagara makes messy data clean, and this tidy database is something you can build upon across a multitude of hardware assets. The messy data problem is universal; it is felt well beyond buildings. Honeywell Forge purpose-built on a native edge-to-cloud, data-driven architecture designed to accelerate digital transformation of operations. Niagara can bring many data types into the Honeywell Forge cloud in an organized and secure manner. Consider just in the realm of buildings, Honeywell Forge technology will allow us to add features to Niagara-based solutions that we have never seen before.
Cochrane: Niagara is ‘Driving to 1M’ now, about to hit 1 million instances installed—that's a huge accomplishment for software native to the BAS industry! At the rate of increase in Tridium business, how soon can we expect you to hit 10 million?
Schmidt: Well, it took us 20 years to get to one million. The first 10 years got us to 200,000. The second 10 years we added 800,000. So, at that rate of exponential growth, and with the new products and innovation, our hope is to drive it even faster. I’m hoping to accomplish 10 million in 10 more years, but with a great breakthrough, we could do it even faster! We’re shooting for faster. As we hit the edge, we plan to increase the number of instances in the market and the adoption of edge devices could really increase the rate.
Cochrane: The Niagara Framework is currently being utilized by countless BAS manufacturers, making it one of the most common platforms in BAS. How do you plan to keep your position as a leader in Building Control Platforms?
Schmidt: I think it starts with accelerating our innovation and looking at disruption as the positive thing that it is. Disrupting the status quo drove this business back in the 1990s and early 2000s, and we still need to disrupt in the 2020s. All the tech business books now talk about building a flywheel that perpetuates a cycle of success. That’s what Niagara is. If we can continue to add the right tool sets and options to the Tridium product list, our customers will continue to build more and more creative solutions. Niagara has attracted the best manufacturing partners, the best systems integrators (SI’s) and the best development partners into our community. We want to be known as the organization and the community that provides the most value to the marketplace.
We remain relevant in the market when we create a win-win situation for the customer, the SI, the distributor and Tridium together. Our success is driven from there. Our job is to continue to create a process whereby our community and our customers share in the value that we create. Of course, the flywheel demands continuous attention and investment. So, we continue to build and enable the Niagara community, adding new people from all geographies and making Niagara training more accessible to tech students of all stripes. We leverage and promote new apps from our software developer partners including Honeywell. We have one of the strongest innovation flywheels in this market, and we’re just going to spin that thing. People come to work for us because they want to be a part of that excitement. That breeds the next generation of talent and innovation. It’s a balance between people and product. We’ve been fortunate to have both.
Cochrane: Well, you are well-respected by your team. They like you. With that, your team is responding to you in great ways. I think it’s because of the way you treat them, also because you have a passion for Tridium. You love this industry and can’t stop thinking about it. Welcome to that weird state of mind! Enjoy it until retirement!
Schmidt: Thank you. I think the thing that I’m the worst at is self-promotion.
Cochrane: That’s because you’re real, buddy. Looking forward to talking again soon!
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