A never-ending story
Endress+Hauser could still be flourishing in a hundred years’ time. And the family could still bear responsibility without involvement in the day-to-day business. Klaus Endress, President of the Supervisory Board, and Matthias Altendorf, CEO of the Group, talk about the past and future of the family-owned company.
Mr Endress, Endress+Hauser turned 70 this year. Does a company age like a human? Or is there an elixir for keeping it young and vital?
Endress: We humans will hopefully become old. But then we’re subject to biological restrictions. Companies are different. I like to describe them as a collection of nice things. Buildings, like the one we’re sitting in, machinery and equipment, products, processes, strategies – everything a company needs. But that’s all those are: just things. They don’t set themselves in motion, that is done by people: the customers, the employees and the shareholders. And when these groups work and interact well together, then the company will do well. Customers, employees and shareholders age too and other, younger people follow in their footsteps. This is an unfolding process, which is why a company has no inherent age limitations.
What does it take for this to happen?
Endress: Top of the list come the shareholders – the family. There has to be unity. And that means cultivating common ground and solidarity. That’s why we created a Family Charter in 2006 with jointly defined guidelines for interaction within the family and its relationship with the company. Various institutions exist to ensure that our creation retains its zest and vitality.
Mr Altendorf, Endress+Hauser posted solid business figures for 2022 despite strained supply and logistics chains, energy shortages and a war in Europe, and in the face of inflation and rising interest rates in many countries. What underpins this success?
Altendorf: It’s the same things that made us successful in the past. First, our employees who handled every challenge with dedication, skill and flexibility. Second, the efficient structures that we have built and improved over many years and decades. Combined, they enabled us to operate successfully and uphold our ability to deliver despite all the adversities.
What is necessary if the company is to continue developing well in the future?
Altendorf: Like any team aiming for success, we need to concentrate on the factors that we can influence: stay close to the customers, develop innovative products, maintain excellent production and logistics networks. Our corporate culture helps us do that. And today, with our experience from the pandemic, I would emphasize that we is more important than I. Cohesion makes us competitive.
“The sense of responsibility, the spirit of Endress+Hauser, knowledge of the business and products, all of that has to stay alive in the minds of the Endress family.”
Supervisory Board President of the Endress+Hauser Group
If you look back 10 years, what has changed the most?
Endress: Back then our strategic focus on biotech was still new. It was the only industry that continued to boom during the financial crisis. But we were a nobody in this sector. That’s why we headed down this path. We strengthened the analysis business and reinforced our expertise in the field of advanced analyses. And we learned a lot about the industry and its processes. That took a lot of hard work. But it paid off, as became evident during the pandemic. Our products have a dominant presence in every plant manufacturing the Covid vaccine. Today we can claim to be someone in the biotech industry! We have also made considerable improvements in the way we collaborate within the company compared to before. This is where Mr Altendorf has accomplished things that I was no longer able to achieve…
Altendorf: …and with me, there will be other issues I’ve been working on but cannot finish.
Endress: We were also still a long way from the goal of acting as a single company. Hopefully we can bring that to completion now. Yes, a lot has happened in the past 10 years – and that’s a good thing!
Endress+Hauser experienced strong growth during that timeframe. What do you attribute this to?
Altendorf: We simply continued to improve the good things of the past. The essential structures have stayed the same. To some extent, much was already foreshadowed. I may have fine-tuned some things, rethought them or brought in other approaches. But the success factors remain the same.
And those are?
Altendorf: Being close to customers has always been a strength of ours. Digitalization broadened the perspective here, but the underlying principle remains unchanged. Our portfolio has always been characterized by high standards of quality and innovative products. We internationalized sales early on, then established sales support in important regions. We internationalized production beginning in the mid-90s – from the region, for the region. That’s certainly an important success factor. Moreover, despite the growth, we were good at integrating smaller business acquisitions into the Group. This comes down to putting our trust in people, and them putting their trust in us. You get that through excellence in leadership culture and the leaders themselves.
You just listed a lot of things… What sets Endress+Hauser apart from other companies?
Altendorf: You have to look at every company on its own merits, including the ecosystem in which it operates. But I’m convinced that an excellent corporate culture and practicing what you preach on customer closeness are always fundamental to a company’s success, regardless of industry or region. Here at Endress+Hauser, we have always put people first. A company is composed of people and it is they who make the difference. All of this has been rooted in the company for 70 years. And behind that are decades of work and extensive investments – in people, buildings, plants, networks… things that aren’t copied so easily. We can do so many good things at Endress+Hauser because we have shareholders who think long term. Shareholders who offer the company knowledge, warmth, values and protection. And who show respect for people’s achievements.
“An excellent corporate culture and practicing what you preach on customer closeness are always fundamental to the success of a company, regardless of industry or region.”
CEO of the Endress+Hauser Group
The people at the top are likewise important to a company’s success. Mr Endress, you once said that you will only have done your job well when you have an able successor. Will that also be the case when you step down from the Supervisory Board at the end of the year?
Endress: Things continue to work out wonderfully with my successor as CEO. But it always brings up the question of what comes next. I’ve known for 10 years that I need a good successor when I reach the age limit of 75. Having given it a lot of thought, I found my ideal candidate: Matthias Altendorf. He has known the company for 35 years and for almost a decade has led the Group as CEO with prudence and success. Moreover, he exemplifies the values that define Endress+Hauser. We have gotten along very well over the course of many years and trust one another, which is why I’m pleased that he agreed to take this step and join the Supervisory Board as President.
But it wasn’t your decision alone…
Endress: That’s correct – and it shouldn’t be. The decision was made in consultation with the Family Council and with the agreement of the shareholders, the Supervisory Board and the entire family. Considerable thought and discussion went into making this decision, which took shape over time.
That also means a new hole has to be filled…
Endress: Internal succession arrangements have the advantage that we know the people very well – often for many years. That lowers the risk. The downside is the need to fill the gaps that such changes open up. And Mr Altendorf’s move creates a big one. The CEO has operative responsibility. That’s a heavy load. Endress+Hauser is a technology company. For that reason, the CEO has to understand not only the business side but also our technologies and markets. After all, the CEO has to see where new opportunities are opening up and where we can find other customers. Growing into this role is demanding. But Mr Altendorf and I agreed that there was a person we could trust to do so: Dr Peter Selders, Managing Director of Endress+Hauser Level+Pressure. For years, he has done a great job overseeing one of our biggest worldwide operations. And he is up to the task.
Altendorf: I’m firmly convinced that the way we have arranged this succession is exemplary. We have examined these questions intensively time and again.
If this most recent succession works as well as it did with the transition from Mr Endress to me, then we will have done everything right…
Endress: …and done the company a lot of good.
What does this decision mean for you, Mr Altendorf?
Altendorf: One important aspect for me is that, provided I stay healthy, I can apply all of my knowledge, skills and commitment to help guide this company for another 12 years into the next generation. Then hopefully the young members of the family and a new generation of management will carry this mindset even further forward.
What does the change in the Supervisory Board mean for the family?
Altendorf: Even if the President is not a family member, two people from the family should always be on the Supervisory Board. This allows the family to continue to have a formative influence on the company. No one can better represent the family on the Supervisory Board than the family itself.
Endress: Steven Endress, my eldest brother’s eldest son, will hand over responsibility for Endress+Hauser UK and eventually join the Supervisory Board. It’s a pity that he is leaving the operational side of the business because he has done a fine job. On the other hand, we’re pleased that he is joining the board where he can contribute his operational experience.
What is the implication of no longer having a family member involved in the day-to-day business?
Endress: The shareholders must always bear responsibility for the company. They needn’t necessarily be involved in its day-to-day business, but they should be active! The sense of responsibility, the spirit of Endress+Hauser, knowledge of the business and products, all of that has to stay alive in the minds of the Endress family. Along with Sandra Genge and Steven Endress, my daughter Sarah is heading down this path. All three are at different stages, with Sandra and Steven on the Supervisory Board and Sarah as President of the Georg H Endress Foundation. They should grow more and more into the company, participate in events, be visible and approachable figures for our employees and continue to carry the torch as ambassadors. And there will be further members of the younger generation joining the company. Perhaps someone from this circle will emerge to take an operative role. There is a lot of history yet to be written!
Then let us look forward again… Mr Altendorf, the news seems filled with crises. How confident are you heading into the anniversary year?
Altendorf: Personally, I am always confident. And collectively we have reason to be confident. 2022 was a good year for us. We have lots of orders in hand for the current year. Inflation and interest rate increases will of course cause the economy to cool. Much will depend on how quickly the Chinese market recovers from the effects of the pandemic and how strongly interest rate increases affect the American economy. As soon as these two engines pick up steam again, the global economy will follow. As for Europe, the war in Ukraine is hanging over us like a dark cloud. We must simply wait and see how this develops. We can only influence what lies within our own capability: customer closeness, innovative products, good logistics… We have invested heavily and will continue to do so. We’re primed for growth!
Do you share this confidence, Mr Endress?
Endress: Absolutely! After so many consecutive years of success, of course we ask whether we can better it yet again. Other companies are not doing badly either… but few are doing as well as Endress+Hauser. That’s something special! Orders in hand will certainly help us this year. And then, as Mr Altendorf points out, we have to stay flexible and customer focused and continue to build on what we have done well in the past. But this will not be enough over the long term. We need new customers – again and again, we just have to find them! In this regard there are many ideas and opportunities – of that I’m confident. In my presentations I always say that a hundred years from now we will still have work to do – well-paid work – just as long as we stay focused on the markets and customers and continue to improve. For me, it’s a never-ending story!
Published 29.03.2023, last updated 17.04.2023.
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