Brown: L3Harris is 'in the market on a couple different assets'

By Marjorie Censer  / December 16, 2019

L3Harris Technologies is making "very good progress" on preparing parts of the company for divestiture, the company's chief executive told Inside Defense earlier this month.

In a phone interview, Bill Brown said L3Harris is "in the market on a couple different assets."

"Focusing the organization is very important," he added. "It's not about selling businesses to raise cash. . . . It's really about focusing the portfolio, focusing the management team, focusing investments on places that are strategic."

Brown said L3Harris will be moving to divest parts of the business "that don’t have a foundation in technology differentiation."

"I expect the businesses that remain with the company, over time, will get stronger with more investment of dollars, investment of capital or [research and development]," he added.

However, Brown declined to say when to expect transactions. "They occur when they occur," he said, "but we're working very aggressively on them."

He said he also expects that divesting businesses will allow L3Harris to focus its independent research and development dollars on its core work.

Brown said L3Harris is reworking its IRAD process to a "more centrally coordinated R&D model."

"L3 was very disaggregated," he added. "A lot of the spending was happening deep in the organization, it wasn't clear what the business cases were. . . . There wasn't a stage gate or checkpoint process built in that allowed you to monitor developments over time."

Brown said a more centralized process will ensure the company is effectively deploying its research funding.

He said the company will likely dedicate about 4% of sales to IRAD.

"I don’t see it substantially going above 4[%], but, again, it depends on the opportunity set that happens to be in front of us," Brown said.

He said the changed approach to R&D is part of a broader shift within the company to an operating model, which affects career paths, benefits and shared services, among other areas.

Meanwhile, Brown said acquisitions will likely not be a focus of the merged company for the first year or two.

He said he's "a little bit more hesitant" to take on smaller acquisitions because they can get overlooked by the management team. Still, Brown said there may be opportunities to add unique technologies.