What Transformational Leaders Do

David Cote’s Steps to M&A Success
Why David Cote?

Wearing faded blue jeans and a sport shirt, David M. Cote thrusts his right hand forward to give a firm, welcoming handshake. If it weren’t for the corporate trappings at Honeywell’s Morristown, New Jersey, headquarters (soon to relocate in nearby Morris Plains), one might never guess that Cote is the CEO of a $38 billion diversified technology and manufacturing leader. With his left hand, he takes a deep gulp from a can of Mountain Dew, motioning visitors to pick their way through the clutter of personal memorabilia that has overflowed from a nearby bookshelf onto the floor, and to find a seat. Among other trophies, the collection includes an autographed baseball from former Red Sox manager Bobby Valentine, various jewel-encrusted ceremonial daggers from Tashkent and Afghanistan and a pair of Vietnamese beverage decanters, each containing a cobra with a scorpion in its mouth.

The product of a modest upbringing in the New Hampshire mill town of Suncook, a French-Canadian community, Cote worked his way through UNH pulling night shifts as an hourly employee at a nearby GE jet engine plant. Upon graduation, he briefly tried his hand at cod fishing before joining the corporate world at GE.

There, he progressed through a series of top positions over the ensuing two decades. In fact, Cote was once considered a dark horse candidate to succeed Jack Welch. When that didn’t happen, he landed at the helm of the $16 billion auto, aerospace and IT industry supplier TRW—which he steered until Honeywell recruited him as CEO in July 2002.

He knew he had his work cut out for him. GE’s bid to acquire Honeywell had recently collapsed and company was rife with factionalism, struggling to reap rewards from a rash of M&A activity, particularly its 1999 merger with AlliedSignal. The old Honeywell was noted for its innovations and savvy marketing, but it tended to overpromise and underdeliver. The former Allied-Signal, which had merged with Honeywell in 1999, was a proven by-the-numbers execution leader but often starved investment in new products and ideas. The acquisition of Pittway, a home security and surveillance firm, in 2000 also presented cultural problems. The company resisted the parent culture at every step, stubbornly keeping its own methods and worsening the culture clash.

Instead of relying on values, which can be slippery and hard to measure, Cote sought to unify the company around 12 behaviors that he wanted to see throughout the firm. These include customer focus, self-awareness and championing change. (See sidebar, p. 32, for the full list.) This ultimately became the basis of the Honeywell Operating System (HOS), more colloquially known as One Honeywell (One Hon). The system also expects everyone from the hourly worker on up to come up with two implementable ideas. The aim is to identify improvements and opportunities as part of its “continuous improvement” behavior.