Insights on Leadership at United Technologies Corporation
published: June 29, 2011, recorded: February 2007, views: 3039
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The Otis elevator, Carrier air conditioner and Black Hawk helicopter are well known names for many people -- unlike United Technologies Corporation. George David wouldn’t have it any other way. This CEO promises that the “parent will never get in front of the subsidiaries,” because “familiarity breeds favorability.” In David’s 30-plus years at UTC, he has built these time-tested brands by focusing on productivity. Design, engineering, and manufacturing process changes have paid off in spades, with UTC 2006 revenues standing at $48 billion and growth in productivity running at 5-7% annually. David offers numerous examples of UTC’s successes.
Jet engines are miracles of engineering, according to David, having the “characteristic of being able to operate in temperatures over the melting point of metal without melting.” Pratt & Whitney, another UTC subsidiary and maker of the industry’s top jet engines, has so improved the manufacturing process of these delicate mechanisms since 1968 that the mean time between engine failures has gone from once every six months to once in every 35 years.
The Otis Elevator Company used the same pulley-counterweight system for most of its 150 years. Big steel wires hauled loads up and down buildings, and required a large motor room at the top to house the gear. A recent breakthrough has led to small steel wires encased in a very bendable synthetic medium, so there’s no need for a motor room, and the system can capture energy when the load goes down. Orders for Otis elevators have grown three times in the last 12 years, and its workforce has increased 25%.
Key to such successes is flow optimization, says David, and simultaneous work: short assembly lines with quality checks along the way. “There is no force more powerful in modern business than productivity,” he says. “You do it or die. And it is what gives goodness to life. It’s the reason the stock market has done what it’s done in the last 15 yrs. Make no mistake. It’s nothing else. It’s product underneath everything.”
David concludes with several of his “17 Keys to the Corporate Lock” -- his philosophy and approach to organizational life (don’t expect a book, he warns): One needs “relentless constancy of purpose” and “high energy.” People with more ambition than energy “are doomed to a bad life.” He’s impatient when staff come to him with problems rather than solutions. “You decide what to do,” he says. “Be independent, work far away, have a plan, milestones, send a note once a month and come back a year later and say it’s done. That’s a scarce resource; if you have it, you’ll go a long way.”
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