Winning Now, Winning Later

1. Balance Short-Term Needs with Long-Term Vision

Unless you do, you and your team or organization will never reach your full potential.

The core dilemma. Leaders often face the challenge of prioritizing between immediate financial targets and long-term strategic goals. Many default to short-termism, sacrificing future health for present gains. However, this approach is detrimental in the long run.

Intertwined performance. Strong short-term and long-term performance are not mutually exclusive but tightly intertwined. Actions taken to improve operations now can position the organization for future success, and vice versa. This requires a comprehensive mindset shift at every level of leadership.

Three Principles:

1. Scrub accounting and business practices down to what is real.
2. Invest in the future, but not excessively.
3. Grow while keeping fixed costs constant.

2. Intellectual Rigor and Honesty are Foundational

Challenge yourself, your team, and your organization to think harder about customers, markets, and processes than you previously have.

Beyond binary oppositions. Achieving both short- and long-term goals requires a commitment to intellectual rigor and honesty. Leaders must challenge themselves and their teams to think critically, ask tough questions, and seek out satisfying answers, even if they reveal difficult truths.

Leadership as intellectual activity. Leadership is fundamentally an intellectual activity that requires analytic rigor and attention to detail. Leaders must become scholars of their business, actively engaging in critical inquiry and challenging conventional wisdom.

The "Any Ninny" theory. The best leaders acknowledge tensions within organizations and probe deeper to resolve them. They challenge themselves and others to understand their businesses better and rethink them so that they can achieve two seemingly conflicting things at the same time.

3. Strategic Planning Must Drive Action

Somehow, we’ve convinced ourselves that we can only invest in the future if we let short-term performance tank. But that’s not true.

Eradicate quick fixes. To overcome short-termism, leaders must eradicate quick fixes that prioritize immediate gains at the expense of long-term health. This includes practices like distributor loading, capitalizing R&D expenses, and selling off businesses for short-term profits.

Reinvent planning. Strategic planning should be an ongoing intellectual exercise, not a one-time annual event. Leaders must commit to honesty, transparency, and real conversations about the business, its challenges, and its future.

Perpetual restructuring. Instead of periodic mass layoffs and closures, companies should adopt a more gradual and moderate approach to restructuring. This involves keeping fixed costs constant while growing sales year over year, and reinvesting a portion of the added profits into growth initiatives.

4. Address Legacy Issues Head-On

You can’t build a good house unless you have a strong foundation.

The cost of short-termism. Many companies face legacy issues, such as environmental liabilities, asbestos claims, and underfunded pensions, due to previous leaders' failure to consider the long-term consequences of their actions. These issues can threaten an organization's capacity to compete and grow.

Strategic resolution. Leaders must address legacy issues head-on, even if it depresses earnings in the short term. This involves setting aside resources, building a dedicated team, and taking a proactive and collaborative approach to resolving these issues.

The business case. Resolving legacy issues can build goodwill, save money, and attract top talent. It also allows the organization to focus on growth and innovation, rather than being bogged down by legal battles and public outcry.

5. Process Improvement is a Continuous Journey

The trick is in the doing.

Beyond specific processes. Managing for both the short and long term isn’t about changing specific processes, policies, or strategies, but rather about adopting a different, more intellectual mind-set. Planting seeds for the future while also achieving short-term results is much harder to pull off than just aiming for one of these goals exclusively.

Honeywell Operating System (HOS). HOS is a comprehensive system for organizing work that mobilizes other well-known process improvement tools like Lean methodologies and Six Sigma, galvanizing leaders and frontline workers to improve operations in their facilities.

Perpetual restructuring. Perpetual restructuring won’t allow you to maximize quarterly results, since you’ll always be investing some percentage of profits back into the business. But as time passes and those investments come to fruition, you’ll see additional and ever-increasing performance gains, which in turn enable additional investments.

6. Culture is a Strategic Imperative

Leadership matters—it really does.

Beyond motivation. Mobilizing people is only a small part of a leader's job. The best leaders dedicate most of their time to making great decisions and executing consistently with those decisions.

Defining the culture. Leaders must define the culture they want to create, and then embed that culture into every aspect of the organization, from training programs to performance evaluations. This requires consistency, relentless effort, and a willingness to challenge existing norms.

One Honeywell. The "One Honeywell" culture emphasized teamwork, customer focus, and a commitment to both short- and long-term goals. This culture helped to break down silos, improve communication, and create a sense of shared purpose throughout the organization.

7. Leadership Transitions Demand Careful Planning

We can’t regulate our way to long-termism—the problem is too complex and deeply entrenched.

The risk of transition. Leadership transitions can be a time of great uncertainty and disruption for organizations. To minimize these risks, leaders must plan for the transition well in advance, identifying and developing potential successors.

A decade-long process. Honeywell's CEO succession process involved a decade-long effort to identify, develop, and test potential candidates. This included giving them progressively bigger jobs, providing mentorship, and assessing their performance against key criteria.

A two-year transition. The transition of power was carefully managed over a two-year period, with the outgoing CEO providing support and guidance to the incoming CEO. This allowed for a smooth and seamless transfer of leadership, minimizing disruption to the organization.

8. Invest in Growth, Even in Downturns

It’s incumbent on leaders to pursue growth and deliver quarterly results.

Beyond cost-cutting. While cost-cutting is often necessary during downturns, leaders must also continue to invest in growth initiatives to ensure long-term success. This includes areas like R&D, globalization, and customer experience.

Strategic allocation. Resources should be allocated strategically to areas that will deliver the greatest return on investment. This may involve reallocating resources from underperforming areas to high-growth opportunities.

The power of process improvement. Process improvement can reduce costs while also proactively reducing harm to employees and the environment. Why wait for environmental and safety lapses to pile up? Attack them before a lawsuit, injury, or public outcry forces you to.

9. Portfolio Management is Key to Sustained Success

The trick, as I like to say, is in the doing.

Beyond acquisitions. Strategic mergers, acquisitions, and divestitures should be part of every company’s efforts to generate impressive long- and short-term results, complementing organic growth initiatives like globalization and R&D.

A disciplined approach. To succeed with M&A, companies must develop a disciplined process for identifying, evaluating, and integrating acquisitions. This includes setting clear criteria for target selection, performing rigorous due diligence, and developing a detailed integration plan.

Divestitures are important too. In addition to acquiring companies, leaders must also be willing to divest themselves of underperforming or non-core businesses. This frees up resources to invest in higher-growth opportunities and improves the overall performance of the portfolio.

10. Globalization Requires a Local Mindset

We can win against Chinese companies and turn our competition with those firms into a source of opportunity.

Beyond Western markets. To achieve long-term growth, companies must expand their presence in high-growth regions like China and India. This requires a shift in mindset, from simply selling Western products in these markets to becoming a local competitor.

Becoming the Chinese competitor. This involves hiring local talent, developing local sourcing, and adapting products and services to meet the specific needs of local customers. It also requires empowering local teams to make decisions and take ownership of their businesses.

Flexibility is key. There is no one-size-fits-all approach to globalization. Leaders must be willing to adapt their organizational structure and decision-making processes to meet the unique challenges and opportunities of each market.

Last updated: February 28, 2025