Opinion

CARTER: A Review Of David Cote’s ‘Winning Now, Winning Later’

(Photo by Miguel Villagran/Getty Images)

James Carter Head of tax policy implementation on 2016 Trump transition team
Font Size:

Amazon currently offers more than 100,000 titles related to “corporate management.” Reading two books per week, it would take even the most ardent reader more than 961 years to read them all. Where to start? I suggest starting with David Cote’s recently-published book, “Winning Now, Winning Later: How Companies Can Succeed in the Short Term While Investing for the Long Term.”

Unless you’re deeply familiar with U.S. manufacturing, David Cote isn’t a name you’re likely to recognize immediately. He’s the former chairman and CEO of Honeywell, currently the 92nd company on the Fortune 500. More importantly, Cote knows what he’s writing about. And he doesn’t hold back.

Cote tells a story of redemption. Having learned the importance of humility and hard work at the service station his father ran, he admits to having shoplifted as a youth and, for a time, of having sported a college grade point average of 1.8 out of 4.0. That is, he admits to being human and fallible.

That Cote turned his life around, rose through the corporate ranks and ultimately reinvigorated Honeywell — swelling the company’s market capitalization to roughly $120 billion (an increase of 500 percent!) by the time of his departure as chairman and CEO — is truly inspirational.

But Cote’s accomplishments at Honeywell weren’t a result of his snapping his fingers and wishing it so. Cote intentionally and systematically changed Honeywell’s corporate culture and implemented intellectually rigorous processes to bank “short-term results while also investing in the future to achieve great long-term results.” Much of his book addresses his long-standing goal of achieving these “two seemingly conflicting things at the same time.” As he writes, “Any ninny could improve a given metric — that didn’t take much thought or creativity.”

Cote’s book delves into the essence of effective leadership, the importance of properly aligned incentives and corporate processes and the under-appreciated role accounting plays in decision-making. Cote’s faith in intellectual vigor drives his approach to these matters.

Yes, accounting! A company that fudges its accounting is lying to itself … and everyone else. A company that lies to itself makes (likely bad) decisions based not on fact, but on whimsy. Cote rightfully lashes out at companies that “fall back on the same old strategies, policies, and procedures, relying on accounting sleight-of-hand to make it all work.”

Similarly, Cote berates the all-too-pervasive focus in corporate America on achieving quarterly numbers, even if doing so undermines a company’s long-term prospects. A short-term focus incentivizes companies to make poor decisions and encourages them to corrupt their accounting systems to justify those decisions. Combating short-termism was one of the first problems Cote tackled at Honeywell.

As Cote tells it, “Our leaders were going through the motions, only pretending to run their businesses strategically or even competently.  It was all a big mess — short-termism run horribly amuck.” (Read Cote’s book to find out how he dealt with that mess!)

Not content to end his book there, Cote writes at length about how to (and how not to) conduct successful corporate mergers & acquisitions, how to handle personnel management and the vital importance of planning for leadership transitions.

“Winning Now, Winning Later” emphasizes execution. Strategies, multiplied by intentions, equal absolute zero unless accompanied by execution. As Cote writes, “The trick is in the doing.”

But, before action can occur, as Cote writes early in his book, thinking hard is “the only real answer.” Thankfully, David Cote’s book provides the reader with 265-pages of “thinking hard.”

James Carter served as a deputy assistant secretary of the Treasury and deputy undersecretary of labor under President George W. Bush.