The Digital Domicile
Naren Gursahaney, CEO of ADT, details how technology is transforming our relationship with our homes.
When Tyco International Ltd. (NYSE: TYC) spun off its most successful brand as The ADT Corp. (NYSE: ADT) in late September 2012, Naren Gursahaney stepped into the role of CEO of the home-security company. The president of Tyco Security Solutions since 2007, Gursahaney had overseen the development and rollout of ADT’s Pulse, a multifaceted system that integrates security with energy management, video monitoring and more. Here he shares how ADT — the reported leader in home security, with 25 percent of the market — plans to stay ahead of the competition with technologically advanced systems that support customers’ ever more mobile lifestyles.
A positive spin on home security. Historically the choice to install a security system has stemmed from something negative. You bought one either because your insurance company required it or because something bad happened to someone you knew. Integrating such a system with home automation makes it a much more positive experience. Now you can operate your lights remotely. You can manage your energy savings from afar. Why do people spend money for cable every month? It adds value. Likewise, ADT is adding value.
A convergence of trends. We started to see the opportunity for ADT’s Pulse system five or six years ago. First, we noticed a move to more open technology standards, like Wi-Fi and Bluetooth. Before, both security and home automation had typically been closed networks. Second, the system technology became more affordable. Home automation had been out there for years, but it was a high-end proposition. Finally, the mobile culture was — and is — growing. Nowadays, people expect to use their smartphones or tablets to monitor their whole lives. This is why we launched Pulse in October 2010.
The fully connected home. ADT started with basic security, and we’ve since expanded into energy management, lighting and video. Most recently we rolled out electronic door locks that let you remotely deactivate security and unlock the front door. If FedEx Corp. (NYSE: FDX) were to drop off a package, for example, you could watch on a video screen as it’s being delivered to a secure place. On the energy management side, we’re working with municipal utilities to develop customer and home profiles. Being able to manage your thermostat is great, but customers want to know how they can optimize their energy use. Our new profiles, which are in development, will soon let you set more precise cycles — “away, going to run an errand,” “away for the day” or “away, extended.” We’re also looking at partnerships with manufacturers of Wi-Fi-connected TVs. If the doorbell rings, for example, we’d like to see an alert on a user’s TV screen with a prompt to use our Pulse application to see who’s at the door.
A leg up on the competition. Two categories of competitors have recently come into the home-security space: cable and telecom players, which are both in search of new revenue streams. These companies have high product penetration, so they’re fighting over market share. They are big players with a lot of resources and access to new technologies, and they have an existing presence in the home. But we know that the selling process is very different when it comes to security. We sell across the kitchen table to understand how our customers’ individual needs can best be met. It’s difficult to sell over the phone. We generally send a rep to the home. We’re not just installing a box.
What will come with a housing market recovery. A robust housing market is generally good for us, but it can be a double-edged sword. On the upside, buying or building a new home makes people ask themselves, “How do I want to outfit that home?” And on the downside, relocation is the No. 1 driver of what we call “disconnects,” or when people leave their security infrastructure behind, and that happens in a strong housing market where people are moving.
On helming a public company. I’ve been getting to know our new board of directors, helping to get its members up to speed on our company and our industry. When ADT was part of a multi-industry conglomerate, we always characterized our business by how Tyco was viewed. But now we’re a pure-play security subscriber business, so the way we create value for our shareholders is very different. I spent a lot of time leading up to the separation [from Tyco] visiting our teams in the field and refining our strategy. Now it’s all about building the right culture. We’re a consumer business that used to be embedded in a company that was primarily B2B.