Developing Our Innovation Ecosystem

Stanley Black & Decker has always been known for market-leading product innovation. Today, we bring thousands of new products to market each year and, in Tools & Storage, our three year new-product vitality exceeds 35 percent. But we know this is not enough. In the digital age, disruption can turn any industry upside down. We intend to be not just a leader, but to embrace technological change to become a disruptive force among global diversified industrials.

We are developing an innovation ecosystem and cultivating our innovation culture to realize our vision to become known as one of the world’s great innovators. We are pursuing this goal by applying advanced technologies from across the spectrum to our products, processes and business models. Our ecosystem harnesses the potential of internal and external resources through collaborative relationships with entrepreneurs, academic institutions, research labs and other parties. Our people are inspired by the power of innovation in connection with our purpose, “For Those Who Make The World."

This is more than a set of initiatives. This is who we are.

Our Innovation Ecosystem

Advanced Data Analytics

Artificial intelligence is optimizing the dispatch of our Security service technicians, resulting in faster resolutions while reducing carbon-emissions.

There’s untapped value in data we already capture and opportunities to drive actionable intelligence back into the business. Our data scientists are turning this data into information and insights throughout Stanley Black & Decker. For example, in our Commercial Electronic Security business artificial intelligence is optimizing the dispatch of our service technicians, resulting in faster resolutions and a more scalable operation, while reducing drive-time carbon emissions.

In Tools & Storage, machine learning is improving the effectiveness of promotional offers, leveraging data from hundreds of previous promotions, enriched with economic, demographic and industry trend information to determine which promotions we should run. And in our Engineered Fastening business we are developing algorithms and mathematical models to better predict demand and manage our manufacturing and supply chain operations in response to the volatility inherent in developing thousands of customer-specific fasteners for all the diverse industries we supply. This is enabling us to better match our global capacity and inventory to our customers’ needs.

In addition, we are recognizing that the data and insights our own products capture have tremendous value to our customers. For example, our stud welding and riveting solutions now provide real-time data on throughput and quality of customer assembly lines, which our customers then leverage to drive their own improvements.

STANLEY Ventures

14

investments made
in 2018

We created STANLEY Ventures to bring outside innovation into Stanley Black & Decker through strategic venture capital investments. We partner with early-stage businesses to advance cutting-edge technology and solutions relevant or potentially disruptive to our business. We make minority investments and help existing leadership of the companies perfect and scale their ideas, generally in exchange for technology rights. Fourteen companies were added to the portfolio in 2018, for a total of 20 since the founding of STANLEY Ventures. In three years, we’ve had two successful exits and acquired one company outright, 3XLogic.

Some of these investments are already making an impact, such as Pillo with their launch of Pria^TM by BLACK+DECKER,^TM a remotely monitored automated medication management and home health assistant, and Viakoo, the creator of the software systems that power our new security camera solution, STANLEY IntelAssure.

STANLEY+Techstars Partnership

The STANLEY+Techstars Additive Manufacturing Accelerator program selects startups from around the world, with the goal of bringing breakthrough manufacturing technologies to market. This mentorship-driven, entrepreneurial program identifies 10 startups at a time to co-locate with us in Hartford, Connecticut. There they have access to mentoring and resources to help transform their ideas into viable businesses.

We are working with the City of Hartford and local manufacturing companies to help revitalize Hartford and make it a top destination for talent. This initiative is part of our broader commitment to empower makers and innovators around the world. The companies work in our new Manufactory 4.0 Advanced Manufacturing Center of Excellence. The three main elements of additive manufacturing are hardware (3D printers), software (operating systems and decision-making algorithms), and materials.

70%

of the first STANLEY+Techstars class hailed from outside the U.S., including Canada, Ireland, Israel and Ukraine.

Startups in the program are already making tremendous progress. A few examples include:

MetalMaker 3D
Profoundry solution built in our Manufactory

Kwambio
Began pre-orders for their commercial 3D Ceramics printer

Calt Dynamics
Developed 3D printer using their patented process, Physical Mask Curing

Astroprint
Relationships with 20% of 3D printing manufacturing market

In 2019, we are expanding the scope of our Techstars partnership to include ecologically-friendly packaging.

Breakthrough Teams

We know that breakthrough innovation will inspire our people and shape our future. In innovation hubs around the world where commercial, startup and academic resources are concentrated, our businesses have launched offsite breakthrough innovation centers dedicated to developing game-changing solutions, each with a long-term potential to generate annual revenue in excess of $100 million. The breakthrough teams within Tools & Storage, Engineered Fastening, Oil & Gas, Hydraulics, and Security pursue ideas on their own, but also collaborate. A centralized breakthrough team serves as a shared resource to coordinate efforts, drive internal initiatives and explore ideas that cross over our traditional businesses.

Digital Accelerator

Our Digital Accelerator was formed four years ago to catalyze and support a digital transformation across our global enterprise. In 2018, the Accelerator, located in Atlanta, Georgia, added new resources and capabilities in the areas of artificial intelligence, robotics, the Internet of Things and experience design for cyber-physical environments. For example, our AI team is working on algorithms to predict which engineered fasteners will work best for given customer applications. Robotics in manufacturing is well understood, but an emerging and exciting area is in autonomous and mobile robotics. Our approach leverages internal and external partners to accelerate the implementation of digital solutions to enhance our products, business models and processes. The Accelerator is also exploring augmented reality to help maintenance and repairs happen easier and faster.

ELU – Exponential Learning Unit

Our new ELU group in Silicon Valley is focused on accelerating the development of disruptive, breakthrough solutions and the rapid commercialization of such innovations. Often, these innovations do not have a natural commercialization pathway within our existing business models or would be constrained from successfully scaling with the speed required for success if incubated within our core organization. ELU taps exponential organizational techniques that emphasize speed and empowerment to help formulate, scale and commercialize offerings, while working closely with our established businesses, our Chief Technology Officer, our Breakthrough Innovation teams, Stanley Ventures and the Digital Accelerator. The E in ELU stands for exponential, and that’s the kind of impact we seek.

The ELU operates with a startup mentality. Its initial focus will be on commercializing new revenue streams in the additive manufacturing and construction technology ecosystems, as well as advancing internally developed startups that leverage digital business models. Over time, ELU will be applied in our traditional organization to continue our cultural transformation in this era of accelerating technological change.

Innovation Product
Innovations

Innovation Process
Innovation