Quotes from David Cote

At Honeywell, we asked business leaders to think not just about the next five years when they presented strategic plans, as they traditionally did, but also to craft the following fiscal year's plan.

When institutionalizing the culture, don't just graft it blithely onto existing processes or practices. Go deeper and question whether those processes or practices themselves need improvement.

Most companies have succession plans for their leadership ranks, but it devolves into a rote exercise, and the organization lacks a clear sense of who will fill key roles in case of departure. It's another instance of what I call "compliance with words rather than compliance with intent.

I often quoted a popular Chinese proverb when addressing our leaders: "The best time to plant a tree is twenty years ago. The second best time is today.

If you want to perform well over both the short and long term, pay close attention to executive leadership in general. As much as you might invest in areas like culture, process transformation, and M&A, you'll only make progress if you have talented senior leaders who are both committed to the company's strategies and capable of executing on them. Having the right number of those leaders matters too.

Just as you're pushing for more efficiency throughout the organization via process change, you can also keep your organization increasingly slender and nimble as you grow by maintaining a leadership corps that is relatively small and stable but that punches far above its weight.

Recognizing the limitations of our existing policy, we changed it to a so-called sunshine policy, allowing employees to accept a gift as long as they disclosed it to their boss. The message I wanted to send was that we expected our buyers to use their own judgment and not just adhere mindlessly to a given rule.

We made performance reviews more substantive and serious by changing them to include a measure on each of the Twelve Behaviors, and by requiring that each manager secure his or her boss's approval of each appraisal (see chapter 5

As you tighten up R&D, you'll be in a stronger position to grow sales even more by expanding geographically. When I joined Honeywell, three-quarters of global GDP occurred outside of the United States, but only 40 percent of our sales originated there. That thirty-five-point gap spelled opportunity.

As you pursue long-term growth, don't limit yourself to the specific initiatives discussed here. Stay alert for new growth areas.

we started to work on new digital business models—like enabling and reselling Wi-Fi time on aircraft, and our Sentience platform for developing new software products

Today, almost half of our engineers company-wide are developing software—a massive change from years past.

Companies that step up to repair the harm they've caused and prevent new harm from occurring have a much easier time attracting top talent to their doors. It's probably going to be cheaper for your organization to resolve your legacy issues now than it will be a decade from now, when the harm will have mounted even more.

people sometimes use teamwork as an excuse for suppressing dissenting opinions.

Over the next six months, we discovered the company had been pursuing deals in an ad hoc, opportunistic way, struggling in four key areas: identifying which companies to acquire, performing due diligence on these companies, calculating their value, and integrating acquisitions into our business. Taking stock of our deficits led us to a powerful, four-step model for pursuing M&A

We never minded paying a fair price, but overpaying was anathema to us—and it should be to you.

The Five Initiatives 1.?Growth (via customer service, globalization, and technology) 2.?Productivity (went hand-in-hand with growth) 3.?Cash (improve working capital and have high-quality earnings) 4.?People (keep the best talent, organized the right way and motivated) 5.?Organizational enablers (including Six Sigma, Honeywell Operating System, and Functional Transformation)

Joseph L. Bower's The CEO Within, which argued for choosing leaders inside the company to serve as CEO. According to Bower, you wanted a special kind of insider: someone who intimately understood the company and its operations, but who could also maintain a sense of distance and understand what about the company needed to change—an outsider's perspective from someone on the inside.

While at General Electric, I'd noticed firsthand what a big difference it made to be in a good industry. When I ran General Electric's major appliance business, we had a great position but were in a crummy, highly competitive, low-growth industry. No matter how hard we worked, we stood little chance of excelling—the pressure on prices was just too intense. It was far easier, I found, to make progress with a business that occupied a bad position in a good industry.

I had found so far at Honeywell that executives and managers often made presentations far longer than necessary, overwhelming audience members with facts, figures, and commentary in an effort to preempt sharp, critical questioning.

Entropy is the rule in organizations, as it is in the physical universe. Over time, all organized systems evolve toward chaos. Unless you pursue change relentlessly, your efforts will eventually wither away.

we made a practice of publicizing internally the top ten and bottom ten performers on HOS. Leaders and teams liked placing in the top ten, but they absolutely detested being publicly identified as a bottom-ten performer. This tactic helped generate a sense of urgency around HOS, raising performance across the entire organization. In fact, I recommend using this tactic whenever you're trying to change anything in an organization.

Regarding a prospective company's position in its industry, think hard about whether you might roll up multiple players in a fragmented industry to create a juggernaut. When we entered the gas detection business, there were no big players, but over an eight-year period we were able to acquire several companies, roll them up into a single Honeywell business, and become number one in the industry.

When both introducing and sustaining change, leadership matters. The organization needs to see that you, personally, are taking this seriously. As we rolled out HOS, I talked about its importance for our business at every opportunity. I held regular meetings to make sure we were actually implementing it and that we were getting the results—something I didn't do for Six Sigma, and a reason it underdelivered.