Stephen Shang of Honeywell

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In our ongoing series of interviews with Chairman’s Circle members, AmCham China Senior Director of Communications Graham Norris sat down with Stephen Shang, Honeywell China President and CEO.

Shang has more than 30 years of experience in China and throughout the Asia-Pacific region. He was previously the Vice President and General Manager of Honeywell’s Environmental and Combustion Controls business, where he grew the business fourfold.

Q:  A lot of Honeywell’s success seems to come through localization and local innovation. How do you get that right balance between localizing the company, its products and services, and maintaining the core values of the company?

A:  One of the things that Honeywell does well is that we have a very good process for technological development, for product development and for managing the business. So we can let local leaders make decisions as long as we know they are following the process. The company runs as a matrix, so we have several ways to look at ongoing business and evaluate it to be confident that we know enough of what’s happening to let the leaders on the ground make the decisions.

Another part is when Dave (Dave Cote, Honeywell’s Chairman and CEO) joined the company 12, 13 years ago, he never wanted to make China just a low-cost manufacturing center. He wanted to make China, in his words, part of a ding, which is a vessel with three legs. Our ding has a leg in the US, we have a leg in China and we have a leg in Europe. He wanted to develop the China business into a team concept, very much the same as in the US or Europe. So we have an R&D team, we have a very strong marketing team and we have a very strong manufacturing team, and on top we have good financial controls. If you look at the 12,000 people we have in China right now, we might have only a few dozen expats, so over time expats are coming in to give training to the locals, giving their expertise, but many of the positions have now been replaced by locals.

And as we have become more successful with the products we are developing here, we select the ones that we believe will have similar success in the high-growth regions – India, Indonesia, Turkey, Brazil, Mexico. These are urbanized countries, not as rich as Europe or North America, that have financial capability close to China’s.

Q:  It seems that Honeywell creates the infrastructure and lets the local team operate as it sees fit within that infrastructure. Obviously you are heading that local team now, so what is your vision for Honeywell in China?

A:  Soon we will be kicking off a global training session named “Becoming the Chinese Competitors.” We have been learning from Chinese competitors how to be fast, how to be agile and how to really go local, not the “multinational local,” but how to really become local successfully.

We’re a business unit growing 20 to 30 percent verses a business unit growing 2 to 3 percent, so there is a big challenge internally for us and how to become “The Chinese Competitor.”

We already see Chinese competitors in places like Brazil and Turkey, but eventually they will be in Germany and in the US. We need to help our colleagues in those countries understand how Chinese companies will work, and they will be ready when these guys show up in their segment of the business.

Q:  What advice would you give people who are looking to rise through the ranks and become real leaders in their companies?

A:  Most major corporations want the senior leaders to do mentoring. I do not mentor. What I do is I invite about 20 to 25 people to have a project team with me, and all these people are managers from different business units and I kind of cross-match them to different teams, and then we set up live projects for these people, things that they have to develop and turn into a business. This is very interesting and this is a way that I have a chance to communicate to them what my beliefs are. I will support them with funding and people, and basically I hope through this process that the message goes out.

The key thing is that really I want them to understand this is a company for everybody. It’s a US company and what we do is that we welcome initiative, innovation. If our managers do not bring ideas to the table, then we can never grow and never be successful.

Q:  You make your job sound pretty easy, but there must be some things that keep you awake at night.

A:  No. I was talking to a guy yesterday and it was his last day. He is stepping down as the chairman of the company. They had just appointed a new successor for him and he went through a big battle to make sure his No.2 man stepped in. It’s an SOE (state-owned enterprise) so usually the government parachutes someone in, and if someone parachutes in, then all of his buddies are in jeopardy. So this way all of his buddies are OK.

I went to Tianjin to have dinner with him. Very emotional, lots of baijiu and everybody got half drunk. And he said you know you are even a few years older, but you look several years younger than I am. What is the secret? I said look, there’s a couple of things. When you run a large corporation like mine or yours, my philosophy is that you tell everybody the same thing. You have to be consistent and you have to be transparent. So everybody knows what they’re required to do. What is good and what is bad they don’t need me to measure. Go measure it yourselves. You know my easiest comment always is when I am doing business with you, when I am still running a business I say, “Hey, how much money are you going to make this year?” He has to tell me because he should know; he has to know how much his bonus is and his business plan. I don’t have to know how much money he is going to make, he should know.

The reason things don't get done most of the time is because of lack of communication. But my job, my biggest job, is to help them resolve it. When I see things like this happen, I say, “Why don’t we go to a room?” My meetings usually start with lunch. We have coffee, we sit there and bitch about the weather as usual and talk about who got drunk last night. And after two hours of this lunch, everyone is relaxed and they start to say they know what the problem is, and everything gets resolved.

Q:  Who has inspired you as a leader?

A:  Oh, many people have. When I went through the first year of university, my English sucked. You know I was just afraid to talk, although I could read. So my English teacher told me I really had to improve my English or I wasn’t going to graduate.

I can still remember this guy, he was a long-haired hippie, an English teacher and guitar tutor. He said, “You’ve gotta talk more, you’ve gotta face people. Go find a summer job to talk more and face people.” So for one summer, I was a Fuller brush salesman. They give you a box, you knock on the door and whoever comes to the door, you just start talking. After three months of these conversations, even though it’s very simple dialogue, I wasn’t afraid to speak English any more. That was a big inspiration.

Q:  You've lived in Beijing for five years now. How do you handle the pollution?

A:  You can’t. I have a Honeywell air cleaner in my home, a Honeywell air cleaner in my office. I still take my son to ski on the weekends, wearing a mask. You can't let it slow you down, you have to go out and do whatever you want to do or whatever you can do. You know, weather like this isn’t going to be fixed in two or three years; it’s going to be 10, 20 years before it’s fixed so we cannot stay inside for 10, 20 years, right?