Make Strategy Part of Leaders' Daily Work

Excerpt from Winning Now, Winning Later: How Companies Can Succeed in the Short Term While Investing for the Long Term (6.30.2020, HarperCollins Leadership)

Beyond our uncompromising stance toward presentations, we took steps at Honeywell to make our planning process more regular and substantive. By setting aside growth and operations days for myself, I created time in my schedule as well as in that of my staff to hold follow-up consultations with our business leaders. These were one-to-two-hour-long meetings on a variety of topics, held every six weeks, and organized around presentations that were short (no more than ten pages long) and that contained up-to-date data on the business’s financial and operational performance. Our follow-up consultations forced leaders to gather and analyze data regularly throughout the year, since they now bore responsibility for reporting it to me. Strategy would no longer be a one-time annual event that everyone quickly forgot.

To further intensify this drumbeat of information, I asked the businesses to provide me with monthly reports on the Five Initiatives (covered more in the video) that defined our overall corporate strategy: growth, productivity, cash, people, and improvement initiatives such as Honeywell Operating System (what we called “enablers”). I wanted leaders at all levels in our businesses thinking about their strategies in some fashion almost every week.

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As Roger Fradin recalled, such focus helped his organization because it prompted everyone to pay more attention to their markets. “We were all over what was going on with our competitors every day in the market,” he said. “We were all over what was going on with our customers. I’m exaggerating by saying every day. But that was the culture. That was what the conversation was about.”

By checking in more frequently, we could also focus better on challenging, longer-term goals. Take our fluorines business. During the 1990s, we had invented a fluorine molecule called hydrofluorocarbon (HFC) to replace the hydrochlorofluorocarbons (HCFC) and chlorofluorocarbons (CFCs) that had been degrading the ozone layer. Used in industrial contexts as refrigerants, HFCs served as an excellent substitute because they didn’t deplete the ozone layer at all. Unfortunately, they were 1,300 times more potent than carbon dioxide in their contribution to global warming. To stay ahead in the industry, we needed to create and patent yet another replacement agent that wouldn’t exacerbate climate change or deplete the ozone layer. That was a massive technical undertaking, requiring hundreds of millions of dollars in R&D spent over a number of years.

To assure that business leaders didn’t cut R&D funding over that time and that they continued to assign their best people to the effort, we held regular strategic update meetings in which we discussed the team’s efforts to date and any support the team needed. That oversight, along with an absolutely superb technology effort, made all the difference, allowing us to make slow but steady progress. After five years of dedicated effort, we invented a breakthrough molecule called a hydrofluoroolefin (HFO) that, according to independent studies, had a global warming effect 20 percent lower than carbon dioxide. As a result of that invention and the long-term contracts we were able to secure, our fluorines business today is thriving and highly profitable, with sales of over $1 billion.

The monthly reporting updates on the Five Initiatives we required of various businesses also helped, again because they allowed leaders to stay engaged and hold teams accountable. Our government services business provided a range of technology-based services to law enforcement, the military, and other government agencies to help them monitor data in the field, communicate securely, track conditions and local facilities, and so on. Around 2005, this business had adopted a strategic goal of seeking out bigger contracts (over $100 million) with government agencies. Since the business wanted to expand in size, it seemed to make sense to pursue bigger contracts, and leaders were convinced we could execute on them.

Month after month, I’d read updates sent along by leaders of this business. About eighteen months into the new strategy, it struck me that I hadn’t seen us land any big new contracts lately, so I asked our leaders to analyze results over the period. It turned out that we had bid on eleven contracts but had landed only one, and on this one we were already the incumbent. That realization prompted us to reassess our strategy. We discovered that our customers didn’t believe we could execute on the bigger contracts, and that in any case, they found it overly burdensome to transfer their business from their existing partner to us. We changed our strategy, pursuing smaller contracts in hopes of winning a higher percentage of them. Before long, our business started growing again.

As I like to say, modifying a famous statement of Thomas Edison’s, “Business is 1 percent strategy and 99 percent execution.” Take the time you need up front to get the strategy right so that you can then get the execution right. In particular, when leaders present executive summaries for their strategies, have them highlight what has changed in comparison with previous strategies. Organizations that shift their strategy every couple years become directionless and ineffectual. By taking extra time to ensure that your strategy makes sense and spending just a bit of time on a daily basis validating it, your organization can spend 99 percent of its time executing instead of flailing.

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