David Cote’s Winning Now, Winning Later

David Cote’s book, Winning Now, Winning Later, details the leadership principles he followed as he transformed Honeywell during his tenure from 2002 to 2017. The book is like having a “teach me everything,” 4-hour private consultation with David Cote.

Leading a business whose culture is truly committed to optimizing both short- and long-term results is no small feat. The pressure to deliver to the current quarter or annual plan are inescapable, but – as a servant leader – our mission is to be the caretaker of today’s business while also shaping the business of tomorrow. The balance of short- and long-term leadership is essential.

Mr. Cote’s first two chapters explain that this balance is more than ideology – it is a proven model that delivers results. A McKinsey study found that, on average, long-term focused firms generated 47 per cent more revenue growth and 36 per cent more earnings growth than companies that took a shorter-term approach. Mr. Cote emphasizes that leaders must foster a culture that believes it can achieve two seemingly different things at the same time – short-term performance and investment in the future.

Mr. Cote emphasizes that “Leadership, at its core, is an intellectual activity.” That intellectual mindset creates a corporate discipline. Cote explains that “You need to take enough time to get the strategy right so that you can get the execution right.” The gap between average and excellent is very tight and the key difference comes down to successful execution of the right strategies.

During his time at Honeywell, Mr. Cote tasked the company with aggressive growth objectives, while also mandating that fixed costs remain flat. In other words, Cote guided increasingly profitable growth by focusing simultaneously on top-line and bottom-line growth metrics. Chasing after revenue or bludgeoning costs might help a company achieve short-term results, but it does not serve the company’s long-term objectives.

A focus on process improvement is a cultural discipline and Mr. Cote anchored this into the fabric of Honeywell with a program called HOS (Honeywell Operating System). Chapters 3-6 provide excellent suggestions for developing a process improvement culture.

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Cote emphasizes that excellent companies find a way to look beyond the individual steps – recognizing that most processes reach across departmental boundaries. It takes a unified team of functional leaders to come together to achieve true process improvement. Mr. Cote states: “Smart leaders get beaten every day by others who have better judgement, less ego, and more common sense, who pay more attention to execution and detail, who possess better interpersonal skills, and who can recover from setbacks better, think more independently and work harder.”

Growth is imperative for all leaders but pursuing growth through acquisitions can be an elusive and risky undertaking for most companies. Mr. Cote shares a gold mine of how-to advice on acquisitions in chapters 7-8. He explains that companies with short- and long-term disciplines securely intact can create a competitive growth advantage in the marketplace. With fine-tuned processes from continuous improvement efforts (such as the HOS) already in place, integrating other companies via acquisitions can accelerate growth in ways a short-term minded company could never achieve.

Mr. Cote explains that “You need to put in place a legitimate acquisition process, and you need to follow that process rigorously.” Further, Cote lays out the definition of a desirable company to acquire, as a company with “a great position in a high-growth industry.” In other words, only acquire companies that present stable revenues and operating processes that have room for improvement.

The book covered far more topics and provides much more insight than what I have included in my summary. It really is a must-read for senior executives. Perhaps the best way to wrap up this summary is by quoting the key phrase on the sleeve-cover at the back of the book: “A comprehensive solution to a perennial problem.”