George David has been CEO of United Technologies Corporation (UTC) for more than a decade.

During that time he has received numerous accolades and awards for his performance as a CEO. Under
his leadership UTC, a $343 billion conglomerate whose operating units include manufacturers of elevators
(Otis Elevator), aerospace products (including Pratt & Whitney jet engines and Sikorsky helicopters), air
conditioning systems, and fire and security systems, has seen earnings grow at 10–14 percent annually—
impressive numbers for any company but particularly for a manufacturing enterprise.

According to David, a key to United Technologies’ success has been sustained improvements in
productivity and product quality. The story goes back to the 1980s when David was running the international
operations of Otis Elevator. There he encountered a Japanese engineer, Yuzuru Ito, who had been brought
in to determine why a new elevator product was performing poorly. David was impressed with Ito’s methods
for identifying quality problems and improving performance. When he was promoted to CEO, David realized
that he had to lower the costs and improve the quality of UTC’s products. One of the first things he did was
persuade Ito to work for him at UTC. Under David, Ito developed a program for improving product quality
and productivity, known as Achieving Competitive Excellence (ACE), which was subsequently rolled out
across UTC. The ACE program has been one of the drivers of productivity improvements at UTC ever
since.

Early in his tenure as CEO, David also radically reorganized UTC. He dramatically cut the size of
the head office and decentralized decision making to business divisions. He also directed his accounting
staff to develop a new financial reporting system that would give him good information about how well each
division was doing and make it easier to hold divisional general managers accountable for the performance
of the units under them. He then gave them demanding goals for earnings and sales growth and pushed
them to improve processes within their units by implementing the ACE program.

At the same time David has always stressed that management is about more than goal setting and
holding people accountable. Values are also important. David has insisted that UTC employees adhere to
the highest ethical standards, that the company produce goods that have minimal environmental impact,
and that employee safety remain the top consideration in the workplace.

When asked what his greatest achievement as a manager has been, David refers to UTC’s
worldwide employee scholarship program. Implemented in 1996 and considered the hallmark of UTC’s
commitment to employee development, the program pays the entire cost of an employee’s college or
graduate school education, allows employees to pursue any subject at an accredited school, provides paid
study time, and awards UTC stock (up to $10,000 worth in the United States) for completing degrees.
Explaining the program, David states, “One of the obligations that an employer has is to give employees
opportunities to better themselves. And we feel it’s also very good business for us because it generates a
better workforce that stays longer.”

David states that one of his central tasks has been to build a management team that functions
smoothly over the long term. “People come to rely upon each other,” he says. “You have to have the same
trusting relationships. You know people; they know you. You can predict them; they can predict you. All of
that kind of begins to work, and it accelerates over the tenure of a CEO. If you have people
bouncing in and out every two to three years, that’s not good.”

According to Sandy Weill, former chairman of Citicorp and a UTC board member, David has the right mix
of toughness and sensitivity. “When somebody can’t do the job he’ll try to help; but if that person is not
going to make it work, that person won’t be on the job forever.” At the same time Weill says, “He does a
lot of things that employees respect him for. I think he is a very good manager. Even though David is
demanding, he can also listen—he has a receive mode as well as a send mode.” 49

CASE DISCUSSION QUESTIONS

1. What makes George David such a
highly regarded manager?
2. How does David get things done
through people?
3. What evidence can you see of David’s
planning and strategizing, organizing,
controlling, leading, and developing?
4. Which managerial competencies does David seem to
possess? Does he seem to lack any?