Leadership in Action: Maximizing shareholder and stakeholder value

Creating today’s Raytheon Technologies was massive, challenging and extraordinarily complex—and it happened during the pandemic.

In 2018, Greg Hayes, then CEO of United Technologies, had a vision to make the industrial conglomerate more focused, efficient and responsive. Achieving that vision required seismic changes and hard decisions, executed quickly and at scale.

CEO Greg Hayes and the Board of Directors engaged in analysis and had long debated the merits of remaining a traditional conglomerate versus breaking into three focused businesses. As part of ultimately reaching the critical decision to separate, he created “red” and “blue” teams to argue as strenuously as they could for and against a possible breakup. And the changes themselves were complicated, including spinning off subsidiaries Otis Elevator and Carrier and, later, merging with defense leader Raytheon—all against an ambitious timeline.

“Greg was looking at opportunities to create value,” says Kelly Grier, EY’s US Chair and Managing Partner and Americas Managing Partner, “and he looked to EY to help think through the variety of means by which that could be achieved.”

There’s going to be tough decisions, but either we do it or somebody else will.
Greg Hayes
CEO, Raytheon Technologies

Enter Sharath Sharma, Americas Leader, Strategic Transformations and CEO Services at EY, who guided the companies’ leaders through the change. “This was about as complex a situation as you can imagine,” he recalls. “There were multiple incoming and outgoing management teams, with multiple priorities.” In addition to aligning the strategy, cost takeout targets and timelines and regulatory approvals for the reorganization, the process required integrated input from over 500 legal entities in more than 70 countries, coordinated to a strict timetable. “We brought EY’s resources and global relationships to bear—and we were able to execute on the original timeline,” Sharma says.

That kind of timeliness is critical to lead effective change, Hayes notes. “Time is a finite resource,” he says. “You can always borrow more money or get more land or materials, but you can’t get more time.”

Corporate transformation is never easy. “From my personal experience, you need the right team—and for that team to be committed to your vision,” Grier says. “And you have to be courageous and relentless, because you’ll be tested along the way.”

Those qualities are essential for making the difficult, even painful choices inevitable in a reorganization. Hayes acknowledges his decisions haven’t always been popular. “But all have been to set up the business for sustainable growth over the long term,” he says, noting that improving the firm’s resilience will benefit employees, communities and partners as well as shareholders.

The work is never finished: “We need to bring our people along on the journey,” he says.

“That means fostering an environment where people feel they can speak truth to power.” Hayes says. “It’s rare that the CEO will be the smartest guy in the room. The key to consensus building is to have a diverse group of smart people around you who can offer contrarian viewpoints openly and honestly. To me, that is the most important thing a CEO can do.”

This is part of Leadership in Action — a master class series featuring prominent CEOs highlighting the decisive moment where bold decision-making has made a material impact on their company and career.

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