Execution as attitude - Management - Lawrence A. Bossidy

Chief Executive, The, May, 2002 by Lawrence A. Bossidy

When Lawrence Bossidy took the helm at Honeywell, the company was in the midst of chaos. Today, it's a $24 billion, customer-oriented powerhouse. Here, Bossidy shares some of the strategy and action that made it happen.

There is a lot of talk about organizational change, but talk is one thing -- getting it done is entirely another. In my experience, the only way to implement fundamental change in an organization is to instill an execution discipline.

When I took the helm at Honeywell, then known as AlliedSignal, in the early 1990s, I confronted a variety of challenges, including:

* 51 separate components or fiefdoms, all operating independently and fighting with each other for resources;

* Capital spending running amok among too many projects;

* Declining revenues, escalating expenses, and inadequate resources to fund new product development;

* An overabundance of administrative paper and bureaucracy; and

* Employees concentrating on identifying things that were wrong rather than focusing on corrective measures.

We had a $14 billion company, with plenty of money but no resources -- in other words, all the resources were committed. But I soon discovered AlliedSignal had enormous resources; they were simply nor being applied to our primary mission.

We instilled a sense of urgency from the outset, telling employees the company's very survival depended on everyone changing the ways they thought about the company and how we did business. We all had to become change agents overnight. We had to be comfortable knowing that the full fruits of our labors would not be evident for many years to come. And we insisted that everyone think differently, to question everything they were doing. Most people don't think differently unless encouraged to do so.

It was a difficult mission for us, but one we successfully accomplished. Ten years later, Honeywell is a customer-oriented, $24 billion powerhouse, with the best cost structure in its history and a work force relentlessly dedicated to pursuing growth and productivity.

What contributed to our success? One of the first things we did was set out to transform the company's culture. We focused on executing our plans as flawlessly as possible, instilling accountability at every level of the organization and establishing metrics to measure our progress.

Change can't occur without laser-like accountability and metrics to measure how you are doing. I encourage organizations to measure their financial performance against two-year plans. This facilitates an understanding of what has worked well and what needs improving. And it clarifies those who are delivering against the plan and those who aren't. In my world, if you don't measure it, it doesn't get done.

The key to change on this level is having an execution discipline. Having an execution discipline is about getting the job done, to be sure, but with a broad systematic view -- one that integrates the mission objective with the tools, the metrics, the people, and the processes that will get you there. Quite simply, organizations that can't execute fall by the wayside.

ELEMENTS OF CHANGE

To ensure this approach succeeds, you have to establish operating mechanisms to align behaviors. At Honeywell, we accomplished this by focusing on four elements:

* Prioritizing our spending;

* Approaching goals in terms of entitlements;

* Introducing Six Sigma and digitization as the engines to help create and drive our productivity culture; and

* Linking career development to our productivity mission.

These four elements lead quite logically from one to another. Start with prioritization. Say you've got 20 projects and can't decide which to fund. So you underfund all of them. As a result, everything is delayed and your accomplishments are lessened. That's called the Sprinkle Theory, and it's a colossal drag on American business.

The solution is to prioritize, and to be disciplined about it. You need to get people together and be decisive on funding priorities. Narrow your project lists and then fund the selected ones heavily. It significantly speeds up their completion and more readily ensures their success.

Another important element is to think about goals in terms of entitlements. One thing I've learned in business is that if you tell people what the goal is, they will stretch to reach that target. But goals are merely stepping stones to reaching entitlements, which help to continue to stretch people to the utmost.

Entitlements are what can be attained if everything is executed perfectly. It is a wonderful concept that has elevated and positively impacted the thought processes of our people. A lot of companies are proud of their process improvements, but they fall short because they don't embrace the concept of entitlement.

APPLYING SIX SIGMA

To reach entitlements, you have to apply sophisticated analytical approaches. That takes me to Six Sigma and digitization. At Honeywell, we found that by committing to these approaches, we could significantly increase our productivity across the company. We've generated an estimated $3.5 billion in savings through Six Sigma and digitization methodologies since 1995.