# Halma _One small step at a time_ --- In 1997, David Barber gave a speech explaining how Halma - then a small engineering conglomerate - had delivered over 20% compound annual EPS growth for twenty years, ranking among the top performers in the UK. There were no dramatic restructurings, no transformational acquisitions, no pivots to hot sectors. Just a clear financial model (20-30% EPS growth, 40% ROCE, self-financing), applied with relentless discipline across a portfolio of small industrial businesses. Nearly three decades later, Halma is a FTSE 100 company worth over £10 billion. It has raised its dividend by 5% or more for over 45 consecutive years - a record unmatched in the index. The same playbook is still working. --- Barber called it the centipede approach. Rather than betting on big strategic moves, you make incremental improvements across the portfolio. Do less of what gives below-target returns. Do more of what exceeds targets. Each small improvement builds on the last. Big strategic pivots look decisive - they generate board excitement, consultant fees, and press coverage - but they also carry execution risk, integration risk, and the risk of being wrong about where the world is heading. The centipede just keeps walking. Trim the underperformers, reinvest in the outperformers, repeat. No single decision is bet-the-company. But the aggregate effect, over decades, is transformation. Halma went from tea trading to life-saving technology through this process: thousands of small choices in roughly the same direction. --- Halma targets small [[Niches]] - businesses with fewer than 10 home competitors and fewer than 80 globally. Market shares of 60-70% are common. Short-term operators see this as a problem. You've saturated the market. Where's the growth? Halma, taking a long-term view, sees it differently. High margins from market leadership fund investment in growing the total market - new applications, new geographies, new adjacent problems your technology can solve - rather than fighting competitors for slices of a fixed pie. When you dominate a niche, market expansion is your growth strategy. The competitive moat funds the R&D that widens the moat further. This only works if you resist the temptation to diversify into unfamiliar markets where your competitive edges don't translate. Halma's risk hierarchy put bolt-on acquisitions (in familiar fields) at the bottom and diversifications at the top. Seventy percent of their deals are bolt-ons. --- Plenty of investors and business operators understand reinvestment, quality, and focus. What set Halma apart was the systematic application over decades. A clear, simple mathematical model (just like [[Bergman & Beving]]) allowed Halma to set targets in the mid-1970s that have barely changed. The companies that win over decades are rarely the ones making headlines. They're the ones running the same playbook, year after year, resisting the pressure to be interesting. Barber's speech was given in 1997. Since then: the dotcom crash, the financial crisis, a pandemic, multiple recessions. Halma's centipede has kept walking, and kept delivering. ---