HIGHLIGHTS: Jennifer Scanlon - CEO of UL Solutions

0:00Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi everybody, I'm Nikolaj Tangen and the CEO of the Norwegian Sovereign Wealth Fund. And today I'm in properly good company with Jennifer Scanlon, President and CEO of the remarkable UL Solutions. Now, UL Solutions specialize in safety testing across a wide range of areas, from household appliances, industrial equipment, building materials, medical devices, lots of interesting things we're going to talk about. And we own 1.6 % of the company, equivalent to$160 million.

0:35Jennifer, huge pleasure to have you on today. Oh, it's such a pleasure to be here, Nikolai. We're thrilled to be part of your portfolio as a newly public company. Absolutely. So let's just kick off with the basics here. What exactly do you guys test? So we test products, and we test products in the industrial space where our customers are in the B2B environment, and we test products in the consumer space where our customers are really in the B2C environment. And then we have a whole set of offerings of software and advisory services that help those customers have better usage of the data and some of the advisory services that they need to get their products to market.

1:16Now, how do you test? What kind of things do you do with the products? Visiting our labs is always such a crowd pleaser. We do things like we drop things from six feet high, see if they break. We break things. We may try to put an anvil on top of, let's say, a helmet for personal protective gear. We try to blow things up. Our fire labs here in Northbrook at our headquarters, we're constantly lighting things on fire. And then all over the world, we're trying to ensure that the way that products are used over and over again meets a set of standards. We may stick a boot in a pool of water for 48 hours with sensors inside to see if there's any leakage.

2:04Anything you could possibly think of to test a product, we probably do. Is there much difference between the various geographical areas? So do we test more in Europe, for instance, than you do in the U.S.? And the U.S. is certainly the most highly regulated market. In fact, the U.S. in many cases requires third-party testing. Not every market requires third-party testing of distinct products, but the U.S. has a much greater amount of third-party testing requirements. And that's from regulations, but it's also from the way our insurance industry works. And it's also, quite frankly, our tort system here.

2:44And so that third-party testing can really protect manufacturers in addition to protecting consumers. So that's kind of how we think about it all over the world. As a manufacturer, you're trying to get products into multiple markets. So you're looking for what's the common denominator of tests that can get your product all over the world, and then what's distinct for each market. And we help our customers maneuver through all of those regulations. What's the weirdest thing you test? What's the weirdest thing we test? I'll tell you one of the most fun things we've tested. Two years ago, we stacked up 2 million soda pop cans in our large-scale testing lab.

3:33and our team probably worked a good portion of a week just to get those stacked. And then what happens is somebody walks through the middle and drops a lighted piece of paper and walks away. And we've got all these sensors and we're behind glass, and they waited to see what would happen. And in that particular test, and I don't even know whether they were testing labels or aluminum or the warehouse itself. I don't even know exactly who they were testing on behalf of. But what they thought was going to happen was that those aluminum cans would collapse upon themselves from the heat. Instead, they exploded outwards, failed test, but a lot of information for that customer in determining how they needed to either, again, manufacture that container or build out that warehouse to hold those types of products.

4:25Now, one of the reasons we think testing is a good industry because it's a relatively cheap thing to do, and it has huge implications for the product, right? So these kind of things, what do they cost? What does it cost to test something? It can range. If I'm rubbing my sweater 10 ,000 times, that has to be in and out in the lab in about three days, and it's a pretty low-cost test. If you're testing, let's say, a product that's going to 26 markets around the world, and it has a big life or health safety risk, that can cross into a much greater part of new product development, into the hundreds of thousands of dollars range.

5:14What do you think being a listed company has done to the culture? Has it changed much? It's absolutely changed. I think even the process of getting to that changed us. But one of the greatest things that Being Listed has done for us is it really has taken us above the radar and it's helped us attract talent. I think it's helped extend our brand and our value with our customers. And certainly it positions us with the capital markets for growth in the future in an industry that's large and fragmented and growing. Are you a better leader now than you were? Absolutely. Absolutely. In what ways? I've learned one of the challenges of leadership, particularly when you're named CEO, is how your voice carries.

6:08And learning the lesson that you can say something and it's interpreted in a really unintentional fashion. And I've told this story a number of times and it really hit home for me early in being a CEO. So I was at my former company. I got in the elevator and I was with one of our engineers who was from a plant. And he was wearing a really nice Carhartt jacket and it was embroidered on the sleeve. They had won Best Employer for the region. And I said, wow, that is a nice jacket. That is so great. you guys won that award. And wow, what a nice jacket. Carhartt jackets are really nice. And he said, thank you.

6:5545 minutes later, I got an email from the plant manager that said, hey, Jenny, what size are you? And I thought, well, I wasn't trolling to get a free jacket. But then I realized that my voice carried. My voice carried that that engineer felt seen and heard that he called his boss to say, hey, Jenny complimented us in the elevator. and that that mattered. And it really taught me this lesson that you can say things and people interpret it different ways and you want to make sure that they're as much as possible interpreting it in the way that you intended. And so to be very careful about your voice, that it can't be used in an unintended fashion.

7:41And that's something I've become more deliberate about as a CEO than I was in my early days. Do you think people tell you the truth? I think the more senior you get in a company, the more deliberate you have to be about finding people who are willing to tell you the truth. I think having people around you, the ones who come in and tell you what you need to hear, whether or not you want to hear it, is extremely important. And knowing who those people are and ensuring that you provide the opportunity for them to provide that input is extremely important. There's a lot of people who only want to tell you what you want to hear.

8:23And that is a recipe for disaster. So we are introducing a new award in our company. It's an ice hockey puck and it's called the Straight Puck Award. And it's basically for people who are telling me things, the real truth. And I think it's great fun. we are kicking it off now so you can actually physically give them a puck you know it's just like hey thanks for the straight puck or here is a straight puck and uh so we see how that goes i think it's quite fun actually now you work for a safer world and um uh i think you were a lifeguard for seven years so are you like totally paranoid about safety are you just like one of these people who are afraid of everything or i'm not afraid of everything but i am my i have two daughters They're in their 20s.

9:11And when I was named to this job, they said, the headline should be, Mom, safety freak runs safety company. And I have always been attuned to managing risk appropriately. Risk management is important. And working in a manufacturing environment, a heavy industrial environment, we mined. We had paper mills. We had wallboard flying off lines at 600 feet a minute. You know, dangerous environments, plant management, you know, we had a plant management couple people who were missing a hand and, you know, other terrible things can happen to people in these environments. So I've always been attuned to focusing on how do you eliminate unnecessary risks?

9:57You know, life is full of risks, but, you know, it's, it's, you know, better to wear a bike helmet than not.

10:09Thank you.