If you have ever been involved with business before, there is a high chance you know how staggering between short-term goals feels like. You may think this is the way to accomplish your goals. However, that’s not true!
There is an approach that could be taken to ensure that the long-term ambitions are met while you meet short-term ambitions. What you are about to read will show you the way, as the following chapters depict the experiences of David Cote who was the head of one of the most inspiring turnabout works of the business sphere. And they are not vague mottos or trendy phrases: You will be able to obtain actual working ways that will act as a foundation for your enterprise, and start your journey with courage.
In the following chapters, you will discover:
- How to fix the errors someone else made
- when to believe in the system
- Why being patient and taking your time is beneficial in the long run
Chapter 1 – Make challenging inquiries that result in a climate where there is accuracy and precision
David Cote contacted the Aerospace division of the company about 1 year after he was assigned the role of CEO at Honeywell, to be updated about the recent works. The team had prepared a detailed presentation –150 pages consisting of different engine and aviation plans – however, these plans were interrupted by the challenging inquiries Cote was pointing towards them, such as the building procedure of particular cockpit components, or the price of particular power units.
The aviation team failed to go back to their already constructed plan of talking agenda, as the challenging questions put them on edge. But these inquiries needed to be made to understand how particularly this team operated. Since the team could not go through with their planned agenda, Cote found out that the money spent by the Aviation team was not completely in the light, which would create many problems for Honeywell.
It is not easy to achieve success both short-term and long-term. If the short-term tasks are done automatically and without being aware of the process, it is possible to find yourself in an effort to finish them without giving it the necessary effort. The initial step should be to gain awareness of the current situation of your business. Knowledge is quite important.
However, the process of gaining knowledge can’t be done alone. This approach should be embraced on a company-wide level in order for it to be beneficial. Making sure that the meetings that are held offer enough space for the people to depict their opinions can be one of the stages.
One approach Cote followed was inquiring about the junior-level workers first so that they would not imitate what their senior-level managers were saying. He additionally made it necessary for people to support their ideas with facts. That way, messy ideas were stopped – he even disclosed to the HR department that in the case resolutions were reached through emotions, his emotions would be the deciding factor – HR offered solid information that supported where they were located on a benefit change that was suggested. The way a business is run is through the collective mind power of the team members.
Chapter 2 – Come up with a strategy that is in parallel with your long-term ambitions and make it understandable
Cote was faced with a mean event when he was about to make his initial Earnings Per Share (EPS) projection. The departments in Honeywell were going out of their way to try and achieve impossible goals by employing temporary accounting methods to make their data look better. That caused Cote to decrease their gains by 20 percent. You might probably assume how that was received in Wall Street even if you are not Warren Gate!
The bottom line is, that if the efforts you are making are not leading you to the right path, they are meaningless.
Imagine that your enterprise is a rowboat. You will stay in your place if the people working for you are not acting together. If you are planning for something in the long term, it is best to make sure that you are conveying it to others, and that everyone is on the same wavelength. If not, you will not be able to row the boat by yourself.
A calculated method would be that every team player knows the direction to row. A better-calculated method ensures that short-term ambitions are in parallel with long-term ambitions, that way every team member is aware of how daily assignments work in the favor of the business’ bigger goals. It would be better if these ambitions have their foundations on calculated market research, and are carefully planned. An instance would be the time when Cote had a long-term project of coming up with a different refrigerant that would be used instead of hydrofluorocarbons that Honeywell was utilizing, which are strong greenhouse gasses. Even though this process lasted for five years and cost millions of dollars to the company, the process gave birth to the result of Honeywell taking ownership of a new molecule that did not contribute to global warming, and bringing back 1 billion dollars.
It would be not wrong to say that convincing people to change their methods of working for short-term plans to this approach can be difficult. Cote implemented new strategies in the company to make people better at analyzing. As a first step, he implemented a new rule that would require the leading people to portray their strategies for the upcoming 5 years, as well as their financial plans. The importance of this rule was the fact that it allowed them to focus on more specific targets. In the end, they did better in terms of going over the budget in emergencies.
However, strategizing is not something that is done for one time only, it needs to be reviewed over and over again. Cote made it a habit to use some of his time to catch up with the team leaders of Honeywell so that he could be updated on the current projects and how these projects were aligning with their goals. Thanks to these m settings he’s done, Cote found out that their company was not quite successful with obtaining bigger contracts, so he switched their goal to scoring smaller ones, which in the end, made a profit for the company.
Chapter 3 – It is best to not ignore legacy problems, since they can bring back profit when they are solved
Everyone knows how it feels to look at the sink and see it filled with dirty dishes that do not belong to you. Thousands of roommates from everywhere have had fights over this very subject because people don’t like tidying up a mess they did not create!
There might be times when there is no other option. It is possible that when you become a manager in a business, you will be left with legacy problems that belong to other people who came before you. Procrastinating might seem like a good option, but it is not. If you want to be successful now and later, better get to work now.
By the time Cote became the team leader at Honeywell, he found out that they had issues they were facing legal problems about the environment. This was due to the fact that the previous leaders did not give it the necessary attention, and did not take accountability. It cost a lot of money to the company, and it scared off some investors when people responded to the legal lawsuits badly.
In order to solve these issues with a straightforward attitude, Cote took immediate action; he reconstructed the Health, Safety, and Environmental division in the company, and he hired the attorney Kate Adams. Kate Adams was the daughter of the person who built the National Resource Council. This meant to the regulators that Honeywell was ready and prepared to take accountability.
It did not take long after the brand new team was built for Cote and Honeywell to start taking action about the environment. The cleaning of the Baltimore harbor which cost 100 million dollars can be an example. The Environmental Protection Agency and the City of Baltimore worked together with Honeywell in order to rebuild Harbor Point for this event.
These types of decisions are not only good for your prestige, but they also offer financial benefits. Even though it might be painful to pay extra for these types of issues, procrastinating them also increases their cost as well. Not to add that the better prestige you have, the more you tend to earn.
The overall reaction to this approach taken by Honeywell was so good that the Maryland senator congratulated Cote personally at an event they attended together. Because of the overall improvement in public opinion, JP Morgan increased the stock of Honeywell by 2 points, as he thought that Honeywell was doing good with handling the environmental issues. Difficult tasks can lead to extraordinary results.
Chapter 4 – It is crucial to better the process, however, hurrying is not the way
What is your way of preparing for the day in the morning? Most people usually follow a ritual that they have that consists of getting up, shaving, freshening up, etc. These routines can be an instance of what we call the “process”, certain steps are taken that are necessary to achieve something you have set in mind.
Would you say you assess your process often? Do you think you would be able to track every single step you take in the mornings, even the time that is required for every item on the list? I don’t think so. You might be questioning how crucial that is when it comes to your morning routine, however, it is pretty significant when running a company.
Fundamentally, it could be said that each company is built on a series of processes. If there is apparent development in the processes you follow, then effectiveness in your company will surely follow. This, however, is not a temporary adjustment, but a permanent one. You could be working in any area, there will always be opportunities for you to develop what you already have. There might be times when they appear very suddenly. Before, many processes in the Honeywell company were built on compressed air, and it was implemented by Cote to evaluate them again. After the reevaluations, it was noticed that there were over 1600 leaks in those systems that the processes were built on, which resulted in them profiting $800,000!
Do not forget that this can’t be done by yourself. The other players in your team might have a broader perspective; get their opinions about effectiveness.
Honeywell Operating Systems (HOS), can be considered as one of the most crucial successes of Cote, as it allowed team leaders and employees to communicate in a better way. It was inspired by the Toyota Production System, and it created the opportunity for higher-level professionals to get in contact with their employees, through kaizen workshops in which they could give true reviews. This worked wonders, as it allowed people who work in the company to give honest feedback, even to the point where the mistakes in an Italian company’s products were decreased by 80%.
It is still important to not forget that this is not a quick and easy solution. Slow and steady wins the race. And this way, you can take pauses and implement changes as the reviews flow in. Another benefit of moving slowly and steadily is the fact that the adjustments are not temporary.
Cote chose 30 factories to try out HOS at, and this whole process went on for 3 years. He did this on purpose though, to change the way his employees were used to. That way, he also made the statement that these adjustments were here to stay, and they were here to ensure that all the team members were doing their tasks in a more effective way. He managed to affect both the leaders in the team and the workers, and this resulted in an overall rise in team motivation.
Chapter 5 – Know what your company culture is going to be, and build your foundations based on that
What is your goal for today, and what is the reason? The logical guess would be something on your to-do list, a small item such as replying to your email or doing your school work. You will most likely get those items done unless an emergency comes up. Try broadening the time required for certain tasks, to a year or a month maybe. These new ambitions are likely larger and less concrete. But what is the way to achieve them?
What we call the “culture” in the company is the unifying force within an enterprise that allows the people in it to feel a sense of support and community, while maintaining the connection between long-term and short-term ambitions. To achieve success, it is crucial to establish a culture within the company.
Shortly before Cote became the CEO of Honeywell, there was a unification with another company, AlliedSignal. This caused the employees of the respective companies to rarely communicate with each other, as they belonged to different parts. The plan Cote followed as he wanted to bring together the distanced members of the company, was implementing a 12-rule policy called “One Honeywell”. Cote was understandable with his demands for the company; in these rules, he wanted people to have attitudes that would make each other better and think universally.
This, however, is not enough if it is just there as a set of rules that are not internalized by the company yet. The culture we mentioned before, can only exist if you manage to implement your rules into every part of your choice-making. In other words, the company culture has to be your aim.
One of Cote’s aims was to ensure that the meetings held by the managers would allow them to connect with the other members of the company, and establish a togetherness. The result of this approach showed itself in very noticeable ways. An example of that might be the time when Performance Materials and Technologies uncovered that they had the opportunity to buy gas flares from an inside company instead of a different company. The inside company, Callidus, had better products! This change caused Honeywell to gain a great number of profits. But it doesn’t end here. This move was also a signifier that Honeywell had the intention of unifying its resources to achieve something bigger and better.
Chapter 6 – Utilize effective processes analyze feedback thoroughly, and take the weight away from your company
It is a known fact that if too many people try to do the same thing at once, it might go badly. Especially in the process of making choices, less is more. A sufficient number of leaders should be enough, but if there is more than the required number, things might go south.
Even though Honeywell did not have too many employees, decreasing the number even more would be beneficial. Now, by the time he became the leader of Honeywell, he had not implemented any emergency measures. However, if one of the 740 managers of the company has left their duty, he would take on the job to assess the situation and decide if it would be better to hire someone new or give their tasks to other people by distributing them. This way, he knew where the excess cost was going. At one point, he identified that one of the leaders was responsible for very long trips with other executives. Cote made the decision that there would no longer be these trips, and the manager’s contract was finalized.
Cote noticed that whenever a manager left their job 2-3/10 times, a replacement was not necessary. This decision caused Honeywell to make a lot of profit: their shares increased by 83%, their market cap increased by 400%, and there also have been changes in the senior leaders’ incentive compensations.
If you ever come across leaders who are sufficient in their jobs, it is better to ensure that they receive what they deserve. In order to receive accurate reviews from your employees, performance feedback is an excellent tool.
Also, don’t forget that your employees should be assessed based on their general performance, and not on how they performed recently on shorter tasks. In the end, it is not realistic for leaders to gain money from long-term projects if they are dependent on shorter ones. Cote created a connection between their long-term projects and executive compensation, and he did this through various choices and restricted stocks. In order to receive a good response from the team, he brought to the company some short-term rewards based on their performance on these projects.
Chapter 7 – The way that goes to an improvement both now and in the long term depends on the resources you put into R&D and customer satisfaction
Now imagine that you are dealing with a customer who requires a challenging product immediately. On the other hand, imagine a researcher who requires money to put into the research of a high technology product for R&D. You only have a limited amount of money you can spare for these people. What is the solution? Who should get it?
Even though this might feel like an easy job, you would be surprised to find that managers have to decide on matters like this quite often. Based on what you have read up until that point, it would not be wrong to assume that putting your resources into Research and Development (R&D) usually pays off.
Do not forget that short-term goals and long-term goals are interlinked. Trying to increase customer satisfaction might be a great method to make your gains higher quickly without having to spend a lot. Recall the meticulous assessment methods that were discussed before. It is possible to gather information about ways to elevate your company and apply new strategies to be able to achieve a better level of customer content; you just need to analyze well and connect team members.
The way Cote learned that the inside feedback did not go hand in hand with the actual customers’ opinions was through communicating with them. He analyzed the methods that were being implemented by the company and found out that the plant managers were in fact manipulating the stats. In the case of a delivery that was not done correctly, the managers would record it as a normal and mistake-free delivery, since they did not want to take responsibility. This was not true, however, because what the customers were concerned about was the fact that there was an issue and not the reasoning behind it. Honeywell managed to gain profit in time by implementing the strategy of accurately analyzing their methods and developing better ways to evaluate customer feedback.
The step after increasing the profit for the short term is to ensure that it applies to the long term as well. R&D investments are quite important for companies– even though it is possible to not see the results immediately, you can be sure that the noticeable profit will be observed again and again in the upcoming times. Utilizing the connection that different organizations have determining which areas have potential, and then making your investments in those areas will keep you in the competition for your long-term goals.
Even though during Cote’s reign in the company the R&D cost was increased three times, the profit he gained in this sector cannot be compared to it. Cote managed to focus more deeply on the investments, research, and engineering that was done in the developing countries, and that caused him to make even more profit since Honeywell is known to have extraordinary information about markets that are still developing and areas where there are issues with technology. One other thing he implemented in Honeywell was putting the R&D strategies in the spotlight, therefore connecting long-term goals with those that were short-term, as he interlinked the larger works with those that required development.
Winning Now, Winning Later: How Companies Can Succeed in the Short Term While Investing for the Long Term David M. Cote Book Review
You don’t have to make a decision between long-term and short-term achievements. It is possible for you to achieve both long-term and short-term success if you go through the steps of detailed strategizing, and implementing a better company approach.
Plan your system down to every detail, and be aware of the process.
Take the time to analyze your path with your business team. Ensure that there are plans for times when things go wrong or off the plan. Where are the different areas where different people in the group have difficulties? The way to make the system more effective is to comprehend the current progress, see where the errors happen, and understand how other people in the group react to those said errors.