DANAHER BUSINESS SYSTEM
Tom Joyce, President & CEO
Dan Comas, EVP & CFO
MAY 2018
2
Forward Looking Statements
Statements in this presentation that are not strictly historical, including any statements regarding events or developments that we anticipate will or may occur in the future are "forward-
looking" statements within the meaning of the federal securities laws. There are a number of important factors that could cause actual results, developments and business decisions to
differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These factors
include, among other things deterioration of or instability in the economy, the markets we serve and the financial markets, contractions or growth rates and cyclicality of markets we
serve, competition, our ability to develop and successfully market new products and technologies and expand into new markets, the potential for improper conduct by our employees,
agents or business partners, our compliance with applicable laws and regulations (including regulations relating to medical devices and the health care industry), our ability to effectively
address cost reductions and other changes in the health care industry, our ability to successfully identify and consummate appropriate acquisitions and strategic investments and
successfully complete divestitures and other dispositions, our ability to integrate the businesses we acquire and achieve the anticipated benefits of such acquisitions, contingent
liabilities relating to acquisitions, investments and divestitures (including tax-related and other contingent liabilities relating to the distributions of each of Fortive Corporation and our
communications business), security breaches or other disruptions of our information technology systems or violations of data privacy laws, the impact of our restructuring activities on
our ability to grow, risks relating to potential impairment of goodwill and other intangible assets, currency exchange rates, tax audits and changes in our tax rate and income tax liabilities,
changes in tax laws applicable to multinational companies, litigation and other contingent liabilities including intellectual property and environmental, health and safety matters, the rights
of the United States government to use, disclose and license certain intellectual property we license if we fail to commercialize it, risks relating to product, service or software defects,
product liability and recalls, risks relating to product manufacturing, the impact of our debt obligations on our operations and liquidity, our relationships with and the performance of our
channel partners, uncertainties relating to collaboration arrangements with third parties, commodity costs and surcharges, our ability to adjust purchases and manufacturing capacity to
reflect market conditions, reliance on sole sources of supply, the impact of deregulation on demand for our products and services, labor matters, international economic, political, legal,
compliance and business factors (including the impact of the UK’s decision to leave the EU and changes in US policy stemming from the current administration, such as changes in US
trade policies and the reaction of other countries thereto), disruptions relating to man-made and natural disasters, and pension plan costs. Additional information regarding the factors
that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our 2017 Annual Report on Form 10-K and Quarterly
Report on Form 10-Q for the first quarter of 2018. These forward-looking statements speak only as of the date of this presentation and except to the extent required by applicable law, the
Company does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
All references in this presentation (1) to company-specific financial metrics relate only to the continuing operations of Danaher’s business, unless otherwise noted; (2) to “growth” or
other period-to-period changes refer to year-over-year comparisons unless otherwise indicated; (3) to Operating Profit below the segment level exclude amortization; and (4) to “today”
refers to the Company’s performance for the first quarter of 2018. We may also describe certain products and devices which have applications submitted and pending for certain
regulatory approvals.
DBS OVERVIEW: EVOLUTION FROM LEAN TO BALANCED
APPROACH INCLUDING GROWTH & LEADERSHIP
DBS is our sustainable competitive advantage
Impact of DBS on Growth
What You’ll Learn About the Danaher Business System (DBS)
DBS in action at recent acquisitions: from process to results
3
Building outstanding leaders through DBS
DBS is Our Competitive Advantage
4
1984 1991 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017E
Evolution of the Danaher Business System (DBS)
As portfolio evolved, so has DBS – from Lean to a balanced approach
OUR SHARED PURPOSE
HELPING REALIZE LIFE’S POTENTIAL
Leadership
Lean Growth
Leadership
Lean Growth
Leadership
Lean Growth
Leadership
Lean Growth
TODAY
Mid-1980s
LEAN
FOCUSED
ADDED
GROWTH
2001
2016
ADDED
LEADERSHIP
2009
LAUNCHED
SHARED
PURPOSE
5
“OMX” is Operating Margin Expansion; “WC” is Working Capital
SHAREHOLDER
CORE REVENUE GROWTH
OMX
CASH FLOW / WC TURNS
ROIC
CUSTOMER
QUALITY (EXTERNAL PPM)
ON-TIME DELIVERY (OTD)
ASSOCIATE
INTERNAL FILL RATE
RETENTION
8 CORE VALUE DRIVERS
Core Value Drivers (CVDs) are How We Quantitatively Measure
Success
All operating reviews begin with discussion of CVDs
Leadership
Lean Growth
6
Strategic Plan/
3-5 Year Break-
through
Objectives
Develop Annual
Breakthrough
Objectives
Determine
Improvement
Priorities
ID Measures,
Metrics and Key
Resources
Deploy
Improvement
Priorities with
DBS
Keep Score
Monthly &
Annually
Problem
Solving
Process
What
How Much
Who
By When
How
What is the Annual Process to Drive Performance?
Converting our strategy into execution through Policy Deployment
7
8
DBS Fundamentals are the Foundation
Expand capabilities, drive consistent execution and sustain outstanding results
DBS FUNDAMENTALS
PROBLEM SOLVING
PROCESS
VOICE OF THE
CUSTOMER
STANDARD WORK
VALUE STREAM MAPPING
TRANSACTIONAL
PROCESS IMPROVEMENT
VISUAL & DAILY
MANAGEMENT
KAIZEN 5S
Leadership
Lean Growth
“Common sense, vigorously applied”
What Differentiates DBS
9
DBS is diversely applicable and always relevant – at any business, in
any end-market
It is a mindset and it is our culture – DBS is who we are, and how we do
what we do
DBS is constantly evolving: in the spirit of continuous improvement, we
are always “DBSing” DBS
DBS overview: evolution from Lean to balanced approach including
Growth & Leadership
DBS is our sustainable competitive advantage
IMPACT OF DBS ON GROWTH
What You’ll Learn About DBS
DBS in action at recent acquisitions: from process to results
10
Building outstanding leaders through DBS
11
DBS Growth Tools
DBS Growth comprised of innovation & commercial tools
Strategic Product
Envelope
Product Planning
Group
Customer
Segmentation
Danaher Innovation
Process
Accelerated
Product Development
Speed Design
Review…
COMMERCIAL TOOLS
EXAMPLES:
EXAMPLES:
Transformative
Marketing
Value
Selling
Lead
Nurturing
Funnel Management
Strategic
Negotiations
Sales Force
Initiative…
Leadership
Lean Growth
INNOVATION TOOLS
12
DBS Innovation Tools
Replicable process for innovation provides competitive advantage
Strategic
Product
Envelope
Problem to
Portfolio
(P2P)
Product
Planning
Group
NPD
Project
Management
Launch
Excellence
Define the
attractive domain
for innovation
Define a winning
roadmap for
attractive segments
Coordinate execution
& resources across
multiple projects
Drive cross-functional
development
of each new product
Generate & fulfill
demand for the
new product
DOMAIN
ROADMAP
EXECUTION &
RESOURCES
CROSS-
FUNCTIONAL DEV.
FULFILL DEMAND
FROM MARKET
INSIGHT…
…TO MARKET
SHARE
13
DBS Innovation in Action: Speed Design Review at Hach
BASICS OF SPEED DESIGN
REVIEW (SDR)
• Gather VOC; go to Gemba
• Obeya room with cross-functional
teams together
• Simultaneous product & process
optimization
• Rapid prototyping & evaluation
SDR IN ACTION: HACH CM130 CHLORINE
MONITORING SYSTEM FOR DIALYSIS
RESULTS
NEW ADJACENT
ADDRESSABLE MARKET
+$50M1
ST
FDA
CLEARED
ONLINE CHLORINE ANALYZER
FOR DIALYSIS
Customer purchased Hach drinking water
product to try in a dialysis capacity
VOC
GEMBA
SPEED
15 product design “sprints”
Dialysis clinics are required to test
water every 4 hours
14
DBS Commercial Tools
Integrated marketing & sales tools to drive commercial execution, accelerate growth
DAILY MANAGEMENT | GROWTH ROOM | STANDARD WORK
Market Insight
and Visibility
Sales
Productivity
and
Prospecting
Lead
Generation
and Campaign
Awareness
Customer
Buying
Journey &
Insight
TRANSFORMATIVE MARKETING
SALES
STANDARD WORK
Market Overview
and Channel
Strategy
Sales Funnel
Management
Market attractiveness
—
How do we win?
Market segmentation
—
Customer profile
What triggers interest?
—
Sources of info
Value Proposition
—
Customer benefit
Customer Buying
Behavior
Monthly “Key”
Opportunity Review
Are we in control? What’s working? What’s not working?
Commercial Execution Driving Growth at Pall
Using DBS to improve S&M processes and drive better growth
+50%
CONTACTS / VISIBILITY
LEADS
+6.5x
OPPORTUNITIES
+2x
WIN RATE %
+15%
2017
RESULTS
MARKETING
FUNNEL
SALES
FUNNEL
SITUATION AT ACQUISTION
• Limited process for improving market visibility
• Little to no digital marketing capabilities
• No repeatable process for generating / nurturing high-quality
sales leads
DBS ACTIONS
• Transformative Marketing: Disciplined marketing campaigns to
improve visibility & account coverage
• Lead Handling: Prioritize & deliver more qualified leads to sales
• Funnel Management: Streamlined sales funnel process to improve
win rates
BIOPHARMA
“WIN THE SPEC”
15
DBS overview: evolution from Lean to balanced approach including
Growth & Leadership
DBS is our sustainable competitive advantage
Impact of DBS on Growth
What You’ll Learn About DBS
DBS IN ACTION AT RECENT ACQUISITIONS: FROM PROCESS TO
RESULTS
16
Building outstanding leaders through DBS
MARKET
COMPANY
VALUATION
Our Strategic Approach to M&A is a DBS Process
• Secular growth drivers
• Fragmented
• Higher barriers to entry
• Optionality with multi-industry
portfolio
• Competitive market position
• Strong brand / channel
• Consistent revenue visibility
• Higher margin businesses
• Cultural fit
• Focus on ROIC
• DBS opportunities
• Sustainability
• Synergies with DHR OpCos
• Combination of value & growth deals
Selectively pursuing value creation opportunities
“ROIC” is Return on Invested Capital
17
Core Revenue Growth
+
Margin Expansion
+
Strong Free Cash Flow
+
Acquisitions
=
TOP QUARTILE EPS GROWTH &
COMPOUNDING RETURNS
How We Create Value: Running the Danaher Playbook
IMPROVE COST
STRUCTURE
Balanced approach to create shareholder value
G&A
S&M
OMX
Core
Growth
R&D
Gross
Margins
REINVEST
FOR GROWTH
ACCELERATE
MARGINS &
CORE GROWTH
18
INITIAL PRIORITIES / KEY AREAS OF DBS FOCUS
Initial priorities and areas of DBS focus are tailored to each acquisition
Acquisitions: a Tailored Approach with DBS
19
Outstanding franchise
in attractive, fast-
growing markets
Highly innovative,
differentiated products &
technology
Added attractive packaging
print inspection adjacency
Strong global dental brand
that brought presence in
implants & digital dentistry
1) ACCELERATE INNOVATION
2) IMPROVE EXECUTION
3) REDUCE COSTS
1) ENHANCE COMMERCIAL
EXECUTION
2) IMPROVE OPERATIONAL
LEVERAGE
3) BUILD SCALE GLOBALLY
1) IMPROVE MARKET
VISIBILITY
2) BUILD OFF EXISTING PID
CUSTOMER BASE
3) ENHANCE MARGINS
1) BUILD ON NEW PRODUCT
INITIATIVES
2) ENHANCE GO-TO-MARKET
STRATEGY THROUGH
SALES-FORCE EXPANSION
3) REDUCE G&A
Tailored Integration with DBS: 2015 Pall Acquisition
Rapid DBS adoption has been a critical driver of Pall’s great start
20
• >50 DHR associates facilitating
DBS post close
• >300 kaizen events in year one
post close
• >70% of associates completed
DBS training in the first 90 days
INTEGRATION PROCESS
NUMBER OF
NEW PRODUCT
LAUNCHES
COST SAVINGS
ACHIEVED
>$200M
+50%
ON-TIME-
DELIVERY
IMPROVEMENT
>2,000BPS
ACCELERATE
INNOVATION
IMPROVE
EXECUTION
REDUCE
COSTS
RESULTS SINCE ACQUISITION
DD DD
~50% ~55%
Flat/LSD
Mid-
teens
AT ACQ.
TODAY
1 YEAR IN
LSD MSD
~50% >50%
High-
teens
~25%
Core Growth
Gross Margin
Operating
Profit Margin
Flat/LSD MSD
~70% >70%
LDD >20%
Core Growth
Gross Margin
Operating
Profit Margin
Update on Recent Larger Acquisitions
AT ACQ.
TODAY
AT ACQ.
TODAY
Deals at or above initial expectations
2 YEARS IN
3 YEARS IN
ACQUIRED DEC 2014
ACQUIRED AUG 2015
ACQUIRED NOV 2016
Core Growth
Gross Margin
Operating
Profit Margin
21
DBS overview: evolution from Lean to balanced approach including
Growth & Leadership
DBS is our sustainable competitive advantage
Impact of DBS on Growth
What You’ll Learn About DBS
DBS in action at recent acquisitions: from process to results
22
BUILDING OUTSTANDING LEADERS THROUGH DBS
Associates are key to sustaining our competitive advantage
Leadership: Evolving Strategic Approach to Talent
DEVELOPING LEADERS
• Development primarily “on the job”
TALENT
• General industrial talent
• Outsourced talent acquisition
ORGANIZATION
• OpCos & Corporate
10+ YEARS AGO
• Progressive responsibilities &
formalized development programs
• Science & technology talent
• Internal talent acquisition & cultivation
• Platform leadership driving strategic
moves & portfolio evolution
• OpCos execute strategic decisions
TODAY
*OpCo Presidents & Above
~80%
*
AVG. INTERNAL
FILL RATE
SINCE 2015
+15%
R&D NEW
HIRES 2017
+15%
CUSTOMER-
FACING NEW
HIRES 2017
23
Stretch roles
Application of key
learnings, develop
Delivering results
Experiential learning in
trainings
EXPERIENCE
COACHING
TRAINING
Development plan
execution
Senior leader coaching
Mentoring
Best practice sharing
Coaching guides
70%
20%
Situational Leadership
General Manager
Development Program
Danaher Leadership
Program
10%
DBS Building Leadership: Developing Leaders at Danaher
Utilizing a combination of development programs and processes
LEADERSHIP ANCHORS
• Models humility, transparency & integrity
• Builds people, teams & organizations
• Drives innovation & growth
• Charts the course
• LEADS THROUGH DBS
What Good Leadership Looks Like at Danaher
Compensation based on both CVD performance and Leadership behavior
25
“OMX” is Operating Margin Expansion; “WC” is Working Capital
SHAREHOLDER
CORE REVENUE GROWTH
OMX
CASH FLOW / WC TURNS
ROIC
CUSTOMER
QUALITY (EXTERNAL PPM)
ON-TIME DELIVERY (OTD)
ASSOCIATE
INTERNAL FILL RATE
RETENTION
8 CORE VALUE DRIVERS (CVDs)
LIFE
SCIENCES
DIAGNOSTICS DENTALENVIRONMENTAL & APPLIED SOLUTIONS
Leadership Development Across Danaher: Recent Moves
Multi-industry structure a differentiator in talent attraction, development, retention
WATER QUALITY PRODUCT ID
PREVIOUSLY
PRESIDENT
EVP OF LIFE SCIENCES
PLATFORM
PREVIOUSLY
PRESIDENT
PRESIDENT
PREVIOUSLY EVP OF
LS & PID PLATFORMS
EVP OF DX & DENTAL
PLATFORMS
PREVIOUSLY EVP OF
LS & PID PLATFORMS
EVP OF DX & DENTAL
PLATFORMS
PREVIOUSLY
PRESIDENT
PRESIDENT
PREVIOUSLY
HEAD OF R&D
PRESIDENT
PREVIOUSLY HEAD OF T&M
GROUP EXECUTIVE FOR
DENTAL
PREVIOUSLY
PRESIDENT
PREVIOUSLY
PRESIDENT IND.
PREVIOUSLY
PRESIDENT
PREVIOUSLY GROUP EXEC
OF PID PLATFORM
EVP OF EAS PLATFORM
PREVIOUSLY
HEAD OF R&D
PRESIDENT
PREVIOUSLY
PRESIDENT
GROUP EXECUTIVE FOR
WATER QUALITY
PREVIOUSLY
FINANCE
CFO
26
“Common sense,
vigorously applied”
DBS is our sustainable competitive advantage
27