Description
Business leaders often take actions that prop up earnings in the short term, but compromise their companies' long-term health. David Cote, the much-respected former leader of Honeywell International and one of the most successful CEOs of his generation, shares a simple, paradigm-shifting method of achieving both short- and long-term goals.
Short-termism is rampant among executives and managers today, causing many companies to underperform and even go out of business. With competition intense and investors demanding strong quarterly gains now, leaders all too often feel obliged to sacrifice the investments so necessary for long-term growth.
Dave Cote is intimately familiar with this problem. Upon becoming Honeywell's CEO in 2002, he encountered an organization on the verge of failure, thanks to years of untrammeled short-termism. To turn the company around, he and his team adopted a series of bold operational reforms and counterintuitive leadership practices that enabled them to "do two conflicting things at the same time"--pursue strong short- and long-term results. The outcome was phenomenal. Under Cote's leadership, Honeywell's market cap grew from $20 billion to $120 billion, delivering returns of about 800%, two and a half times greater than the S&P 500.