In the fast-paced world of business, leaders often feel pressured to focus solely on short-term goals and quarterly results. However, truly successful companies find ways to achieve both short-term wins and long-term sustainable growth. In "Winning Now, Winning Later," former Honeywell CEO David M. Cote shares his insights and strategies for balancing immediate needs with future aspirations.
Drawing from his experience leading Honeywell through a remarkable turnaround, Cote provides a practical roadmap for building lasting success. This book is not filled with vague platitudes or catchy slogans. Instead, it offers concrete, actionable advice for placing a business on solid footing and confidently moving forward.
Throughout the book, Cote emphasizes the importance of analytical rigor, strategic planning, addressing legacy issues, continuous process improvement, strong company culture, lean leadership, and balancing customer satisfaction with research and development. By following these principles, leaders can position their organizations to thrive both now and in the future.
Ask Tough Questions
One of the first lessons Cote shares is the importance of asking tough, probing questions to truly understand how a business operates. When he became CEO of Honeywell, Cote didn't simply sit back and listen to polished presentations from his executives. Instead, he constantly interrupted with specific questions about costs, processes, and decision-making.
This approach may have ruffled some feathers initially, but it allowed Cote to quickly identify issues that were being glossed over or hidden. For example, by pressing the Aerospace division on details, he uncovered that they weren't being fully transparent about costs, which was causing cascading problems throughout the company.
The key is to create an environment of analytical rigor and attention to detail. Leaders should:
- Ask pointed questions about specific processes and metrics
- Require data to back up claims and projections
- Dig into the details rather than accepting surface-level explanations
- Encourage others to think critically and analytically
This rigorous approach helps break the habit of simply coasting from one short-term goal to the next. It forces leaders and employees to truly understand how the business functions and where improvements can be made.
Importantly, this culture of analytical thinking needs to permeate the entire organization. Cote provides some practical tips for fostering this mindset:
- In meetings, ask junior employees for their opinions first to get unfiltered ideas
- Require people to support arguments with concrete data
- Create space for people to explain their thought processes
- Push back on vague or feeling-based decision making
By cultivating analytical rigor throughout the company, leaders tap into the full brainpower and creativity of their workforce. This sets the stage for both short-term wins and long-term strategic thinking.
Create a Strategic Plan
While asking tough questions helps leaders understand the current state of the business, creating a strategic plan provides a roadmap for the future. Cote emphasizes that all the hard work in the world doesn't matter if it's taking you in the wrong direction.
A good strategic plan aligns short-term operations with long-term goals. It helps everyone in the company understand how their day-to-day work contributes to larger objectives. The plan should be:
- Based on solid data and careful market analysis
- Focused on concrete, achievable goals
- Communicated clearly throughout the organization
Cote provides an example from his time at Honeywell. One long-term strategic goal was to find an environmentally-friendly replacement for the hydrofluorocarbons used in their refrigerants. This required significant R&D investment over five years. However, it ultimately led to a patented new molecule that generated over $1 billion in sales while addressing an important environmental issue.
To implement strategic thinking throughout Honeywell, Cote used several techniques:
- Required team leaders to give presentations outlining 5-year operational goals and 1-year financial targets
- Held regular follow-up consultations to review progress and make adjustments
- Encouraged narrowing focus to the most important priorities
This approach helped break the habit of short-term thinking. It also improved budgeting and resource allocation by giving leaders a clearer picture of long-term needs and opportunities.
Importantly, strategic planning is not a one-time exercise. It requires ongoing attention and refinement. Regular check-ins allow leaders to track progress, identify issues early, and pivot as needed. For example, through these reviews Cote realized Honeywell wasn't winning enough large contracts. This allowed him to shift focus to smaller deals that ultimately delivered the desired growth.
By creating and actively managing a strategic plan, companies can ensure short-term efforts align with long-term aspirations. This provides a framework for sustainable success.
Address Legacy Issues
When taking on a leadership role, it's common to inherit problems created by previous management. These legacy issues can be tempting to ignore or postpone dealing with. However, Cote argues that addressing them head-on is crucial for both short-term credibility and long-term success.
At Honeywell, Cote discovered the company was embroiled in multiple environmental lawsuits stemming from years of skirting regulations. These ongoing legal battles were extremely costly and damaging to the company's reputation. Rather than kicking the can down the road, Cote took decisive action:
- Rebuilt the Health, Safety, and Environmental division
- Brought in respected environmental attorneys and experts
- Launched proactive environmental initiatives
One flagship project was a $100 million cleanup of Baltimore's inner harbor. By partnering with the EPA and local government, Honeywell transformed a polluted area into a sustainable waterfront neighborhood.
While the upfront costs of addressing legacy issues can be painful, the long-term benefits often far outweigh them:
- Improved reputation with regulators, investors, and the public
- Reduced ongoing legal and compliance costs
- Increased employee morale and pride in the company
- New business opportunities from improved standing
In Honeywell's case, their environmental efforts led to praise from politicians, upgraded stock ratings from analysts, and new contracts based on their enhanced reputation.
The key is to approach legacy issues proactively and transparently. By taking responsibility and demonstrating a genuine commitment to improvement, companies can turn liabilities into assets. This clears the way for future growth while avoiding larger costs down the road.
Focus on Process Improvement
A critical element of balancing short-term and long-term success is continuously improving business processes. Cote emphasizes that no matter how well a company is performing, there are always opportunities to operate more efficiently.
However, process improvements shouldn't be rushed or implemented haphazardly. Cote advocates for a steady, methodical approach:
- Thoroughly analyze existing processes to identify inefficiencies
- Gather input from employees at all levels
- Implement changes gradually to ensure they become permanent
- Continuously refine based on feedback and results
One of Cote's major achievements at Honeywell was introducing the Honeywell Operating System (HOS). Based on Toyota's renowned production system, HOS provided a comprehensive framework for ongoing process improvement. Key elements included:
- Regular kaizen workshops bringing together workers and managers
- Structured opportunities for honest feedback
- Clear metrics to track quality and efficiency improvements
By giving everyone a voice in the improvement process, HOS drove both immediate results and long-term buy-in. For example, one Italian factory saw product defects drop by 80% after implementing HOS.
Importantly, Cote took a patient approach to rolling out HOS. The initial implementation in 30 factories took three years. This deliberate pace allowed time for training, feedback, and refinement. It also demonstrated to skeptical employees that this wasn't just another "flavor of the month" initiative.
The steady implementation of HOS and other process improvements yielded significant benefits for Honeywell:
- Increased efficiency and productivity
- Reduced costs and waste
- Improved product quality
- Higher employee engagement and morale
By focusing on continuous, incremental process improvement, companies can achieve short-term wins while building the foundation for long-term success. The key is patience and persistence in analyzing, implementing, and refining new approaches.
Define and Reinforce Company Culture
While processes and systems are important, Cote argues that company culture is what truly links short-term actions to long-term goals. A strong culture provides a shared set of values and behaviors that guide decision-making at all levels of the organization.
When Cote joined Honeywell, the company was still struggling to integrate cultures after a recent merger. To address this, he took several steps to define and reinforce a unified Honeywell culture:
- Articulated 12 core behaviors expected of all employees
- Launched a "One Honeywell" initiative to break down silos
- Expanded leadership gatherings to build connections across divisions
- Encouraged internal sourcing of products and services
Importantly, Cote didn't just create a list of values and consider it done. He made sure cultural principles factored into all major decisions and initiatives. Some practical ways he reinforced the desired culture included:
- Recognizing and rewarding employees who exemplified core behaviors
- Incorporating cultural elements into performance reviews
- Aligning incentives with desired cultural outcomes
- Consistently messaging cultural values in communications
By making culture a priority, Cote was able to create a more cohesive organization aligned around common goals. This paid off in tangible ways, such as increased collaboration between divisions leading to new business opportunities.
For example, by encouraging internal sourcing, Honeywell's Performance Materials division discovered they could buy superior gas flares from another Honeywell company rather than an outside supplier. This led to tens of millions in new sales while reinforcing the "One Honeywell" culture.
A strong, well-defined culture provides a framework for employees to make decisions that balance short-term needs with long-term objectives. It also creates a sense of shared purpose that can drive engagement and innovation. Leaders should view culture as an ongoing priority, not a one-time initiative.
Build a Lean Leadership Team
While a strong culture empowers employees at all levels, having the right leadership team in place is crucial for executing on both short-term and long-term goals. Cote advocates for a lean but highly capable leadership corps.
When Cote took over at Honeywell, he didn't make drastic cuts to leadership. Instead, he took a measured approach:
- Analyzed whether departing leaders truly needed to be replaced
- Looked for opportunities to consolidate roles and responsibilities
- Eliminated clearly redundant or unnecessary positions
This gradual process allowed Cote to identify excesses without disrupting operations. For example, he eliminated an executive position focused on scouting global manufacturing locations after determining the extensive travel involved was inefficient.
Over time, this approach yielded significant benefits:
- 14% reduction in senior leaders eligible for incentive compensation
- Only 14% increase in total bonus money despite 83% rise in share price
- 400% increase in total market cap with a leaner leadership team
The key is finding the right balance - enough leaders to operate effectively, but not so many that they create inefficiency and unnecessary costs.
For the leaders that remain, Cote emphasizes the importance of rigorous performance reviews and appropriate compensation structures. Some of his recommendations include:
- Substantive, data-driven performance evaluations
- Compensation tied to overall company performance, not just short-term metrics
- Mix of short-term bonuses and long-term incentives like stock options
- Clear paths for advancement based on merit
By building a lean, high-performing leadership team with the right incentives, companies can make better strategic decisions while controlling costs. This creates a virtuous cycle of improved performance and increased resources to invest in future growth.
Balance Customer Experience and R&D
One of the most challenging aspects of winning now and later is balancing resources between immediate customer needs and long-term research and development. Cote argues that with the right approach, companies can excel at both.
On the customer experience side, Cote recommends:
- Gathering detailed feedback on pain points and unmet needs
- Using rigorous process analysis to identify inefficiencies
- Implementing targeted improvements to exceed expectations
- Ensuring metrics accurately reflect the customer perspective
At Honeywell, Cote discovered that internal metrics painted an overly rosy picture of customer satisfaction. By digging deeper, he found that plant managers were manipulating data to look better. For example, late deliveries caused by sales errors were being marked as on-time from the plant's perspective.
By refining metrics and processes to align with actual customer experiences, Honeywell was able to quickly boost satisfaction and revenue at minimal cost. These short-term wins freed up resources to invest in long-term R&D initiatives.
For R&D, Cote's approach included:
- Steadily increasing overall R&D spending (tripled over 15 years at Honeywell)
- Balancing long-term "moonshot" projects with incremental improvements
- Leveraging global talent by expanding R&D in developing countries
- Centralizing R&D planning while maintaining flexibility for business units
This balanced portfolio approach allowed Honeywell to bring new innovations to market quickly while also pursuing transformative long-term research. By expanding R&D globally, they were able to tap into new talent pools and gain insights into emerging markets.
The key is viewing customer experience and R&D as complementary rather than competing priorities. Short-term improvements in customer satisfaction can generate the resources needed to fund long-term research. And R&D breakthroughs ultimately lead to better products and experiences for customers.
By taking a holistic view and making strategic investments in both areas, companies can create a virtuous cycle of innovation and growth.
Conclusion
Throughout "Winning Now, Winning Later," David Cote emphasizes that achieving both short-term results and long-term success is challenging but entirely possible. By implementing the strategies and principles outlined in the book, leaders can position their organizations to thrive in both the present and the future.
Some of the key takeaways include:
Foster a culture of analytical rigor by asking tough questions and requiring data-driven decision making.
Create and actively manage a strategic plan that aligns short-term operations with long-term goals.
Address legacy issues head-on rather than kicking them down the road.
Continuously improve processes through steady, methodical analysis and implementation.
Define and reinforce a strong company culture that guides behavior at all levels.
Build a lean but highly capable leadership team with the right incentives and performance metrics.
Balance investments in customer experience and R&D to drive both immediate results and future innovations.
Cote's approach at Honeywell demonstrates that these principles can yield remarkable results. During his tenure, Honeywell's market capitalization grew from $20 billion to $120 billion, while also making significant strides in areas like environmental sustainability and technological innovation.
The core message is that short-term and long-term thinking are not mutually exclusive. With the right mindset and strategies, leaders can make decisions that satisfy immediate needs while positioning the company for sustained success. This balanced approach creates a virtuous cycle of improved performance, increased resources, and new opportunities for growth.
By rejecting the false dichotomy between short-term results and long-term planning, companies can build lasting competitive advantages. In an increasingly complex and fast-paced business environment, the ability to "win now and win later" may be the ultimate differentiator between good companies and truly great ones.
Cote's insights provide a valuable roadmap for leaders seeking to achieve this balance. While the specific tactics may need to be adapted for different industries and situations, the core principles of rigorous analysis, strategic planning, continuous improvement, and cultural alignment are broadly applicable.
Ultimately, "Winning Now, Winning Later" is a call to action for business leaders to think more holistically about success. By considering both immediate needs and future aspirations in every decision, companies can create sustainable value for shareholders, employees, customers, and society as a whole.
The journey to balance short-term and long-term success is not easy, but as Cote's experience at Honeywell demonstrates, the rewards can be transformative. With patience, persistence, and a commitment to continuous improvement, leaders can position their organizations to thrive both today and for years to come.