Everyone wants a simple set of rules that, if followed, generate untold riches.
It seems like Honeywell might have found those rules.
The maker of living-room fans and aeroplane parts has increased its share price by 250% over the last 14 years, when current CEO David Cotes took over the company.
It’s been an incredible run for the company. The S&P 500 increased only 91% over the same amount of time. Honeywell had a loss of $0.27 per share when Cotes took over and some investors think the company’s turnaround is is due to Cote’s ability in the CEO role.
“Under Mr. Cote’s leadership, Honeywell has had a rigorous process of evaluating leadership candidates,” Howard Rubel, an analyst at Jefferies, said in a note to clients.
“The creation of Five Initiatives or business principles early in Mr. Cote’s role as Chairman and CEO have served the company well.”
These Five Initiatives are part of the orientation given to new hires at the company and most of them are applicable to every business out there.
Today, Honeywell announced Darius Adamczyk will take over the company, making it the perfect opportunity to take a look at the principals that guided Cotes through his 14 years.
The company has obviously grown since 2002. It makes a wide wash of products. It has grown by focusing on its customers, sales and marketing, globalization and a well-planned road map for creating new products.
As a company grows and adds employees and managers, it can be easy to get lost in a large web of bureaucracy. In order to make everyone at the company more efficient, you have to make it a priority of the company.
Even teenagers know how important cash can be. Honeywell calls it “the lifeblood of any business.” The company focuses on increasing cash flow so it can continue to grow and reinvest in the core business.
A good employee can make all the difference, and Honeywell focuses on hiring the best. Whether its a really productive low-level employee, or an effective manager, like Cotes, people are what make a company tick, and it’s worth investing in hiring and motivating the best.
The last initiative is specific to Honeywell, as it focuses on their supply chain management system, and proprietary product development techniques. But, other businesses can learn from Honeywell’s practices.
These five initiatives are an enabler, allowing the company to hone its focus into a few key areas. Developing similar practices at any business can be effective.