Valuing Quality Over Cost – the Louis Chenevert Story

INTRO

Louis Chenevert doesn’t appear to be the model American businessman. As opposed to traditional notions of high-powered, aggressive, and greed-lusty CEOs, Chenevert demonstrates an alternative approach to business success and wealth acquisition.

 

RISING THROUGH UTC

From his tenure at General Motors, where he rose to the managerial level quickly, to his stint at Pratt & Whitney, before ultimately arriving as the CEO of UTC (United Technologies Corporation), Chenevert took a traditional trajectory to business leadership. However, his navigation of the manufacturing and industry domains – both of which have suffered in the post-WWII American experience – show both his prowess and his imaginative leadership. (Read Louis Chenevert’s Business Successes Past, Present and Future)

 

CHANGING THE MODEL

One of his most controversial decisions at the helm of UTC was to bring home workers and manufacturing proper to the company’s headquarters in Connecticut. Connecticut traditionally has not been the most favorable – or profitable – state in which to conduct business, but more radically, this move (in a stern departure from the mold) contrasted sharply with a climate in which most major American businesses were exporting manufacturing, labor, and operations offshore, where labor costs are cheaper. Click Here for more information.

 

LESSONS LEARNED

The results are stark: in his tenure at UTC, Louis Chenevert managed to increase the stock price of UTC 200 percent, from 37 dollars a share to 117 dollars a share in 2014. How could this be possible with such an expensive labor and manufacturing unit? Chenevert reasoned, correctly, that offshore industry would lead to less quality and thus devalue the UTC products, brand, and its ability to attract investors and customers in the long-term.

 

See Also: https://www.forbes.com/lists/2012/12/ceo-compensation-12_Louis-R-Chenevert_FTA5.html

 

CONCLUSION

Chenevert did one last radical thing at UTC – he left the company at its peak, walking away from an empire thriving from his leadership at the top. This was a fitting end for the businessman who prioritized quality over cost-savings, people over products, and vision and long-term values over short-term returns.

 

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