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Mr. Leon Veretto – Director of Operations Analysis, United Technologies
NGS Commencement Address – March 24, 2007
Good Afternoon.
 Thank you Dr. Gee, it is an honor to be here today to acknowledge the United Technologies employees that are graduating from the National Graduate School. - United Technologies along with many other Fortune 500 companies acknowledge the strong Quality Management Curriculum of the NGS and we are proud to be a strategic learning partner.
- Today there are 23 dedicated UTC students who have fulfilled the requirements of this program that will receive a Masters of Science in Quality Systems Management. It is my pleasure to celebrate this accomplishment with you, your families and your friends and to offer you my congratulations.
The graduates today began the program in September of 2005.
- So you have put 18 months into this education which is a significant personnel investment which I believe will have strong returns.
- In addition to the rigorous course work, a requirement for graduation was a team project which focuses on process improvement or solving a complex business issue related to your work.
- Each student had to generate a savings of $350K from their project assignment (10X the cost of the program) in order to meet the graduation requirements of this program.
- This is a unique and effective model and a model we like at UTC for several reasons.
- Company gets a great payback right away
- I believe classroom learning combined with hands on application is the most effective way for people to learn.
- Curriculum is customized to the company needs, which provides a direct and immediate benefit. The customization is directly aligned with our ACE Operating System which we consider to be a key strategic weapon at UTC.
UTC believes strongly in training and development and our Chairman & CEO, George David, has been clear that we want to have the best educated work force. To drive this effort, UTC has an Employee Scholar Program which is the benchmark of corporate America. Employees are able to get a degree in any field and all costs are covered – tuition, books, fees, etc… Additionally employees are granted time off with pay to complete studies. Once a degree is completed UTC provides the graduate with company stock worth $10,000. Over the past 10 years UTC has invested over $600M and approximately 21,000 employees have received degrees. I think this clearly demonstrates our belief in the value of education and the impact it has on driving business results through trained, empowered and engaged employees.
UTC is a terrific company and quality is a strategic imperative.
o In today’s challenging business environment we must develop and deliver to our markets the most technologically advanced products, at the most competitive price with perfect quality in order to achieve and sustain the position of industry leaders.
- Our customers and a significant percentage of the world’s population depend on us – here is why!
- Hamilton Sundstrand makes aircraft control systems (fuel, environmental, etc…) and they control some function of every commercial aircraft. Pretty important to have perfect quality.
- Sikorsky which makes Helicopter’s, rescue people in trouble all around the world and Sikorsky Helicopters are essential weapon systems for the armed forces in protecting our country.
- Carrier refrigeration makes the transport of food products possible all around the world.
- Otis elevators, the number one elevator company in the world, will take you to the top of buildings in virtually every major city in the world.
- Pratt & Whitney engines power over 50% of the world commercial aircraft and fly millions of people safely to their destinations every day. They also provide the power for the US military’s most technologically advanced fighter aircraft which are vital to the security of our country as well as the world.
- UTC fire and security products are used to protect people and property throughout the world – fire extinguishers, smoke detectors, armed guards, etc…
- UTC Power Fuel Cells provide 100% of the Power to the Space Shuttle
- You have to admit we make great products. I think it is clear that UTC keeps the world moving and people everywhere rely on the quality of our products and services. So we need to have the best quality systems possible to keep our customers satisfied.
To support this strong culture of quality and continuous improvement we have an Operating System called Achieving Competitive Excellence(ACE) which defines the way we do work at UTC. This system drives us to be customer focused, data driven and process oriented and pushes us to constantly look for ways to close gaps between goals and actual results. The cultural side of ACE is extremely important to its success. Some of the key cultural aspects include:
- Treasure problems for their learning potential – in order to improve you need a clear understanding of your issues. We encourage people to highlight problems, find true root cause and drive corrective action.
- Another key element of the ACE culture is said best by Ito-San, our Japanese guru and teacher, “People are the most important asset of a corporation”. His other quote is “shinny eyes, good hearts, and good minds always make quality products”. This speaks to the importance of employee engagement and empowerment and the importance of education and continuous learning in the success of a business.
So ACE is a powerful system that has yielded us some key results:
- From the early 90’s to today UTC has gone from $6B market value to $60B
- Sites that have achieved Silver and Gold site level have shown significant improvements in business metrics including;
- OTD improvements
- Reduced escapes to customers
- Improved inventory levels
- Improved profitability
- Improved employee satisfaction
- Improved customer satisfaction
- Improved revenue – in fact, our organic revenue growth has been 9% in 2006, 8% in 2005 and 7% in 2004 – 2 to 3 time GDP). This speaks to the quality of our products and services.
- UTC has seen a lot of success over the past few years but we still have a lot of opportunity with only 17% of our sites at Gold & Silver levels. Our president, Louis Chenevert recently targeted all divisons to achieve 70% Gold & Silver sites by 2009. The benefits of this will be substantial.
The curriculum you have worked through over the past 18 months aligns very well with the ACE Operating System and supports one of the biggest challenges of accelerating the implementation of ACE which is developing the competency to apply the tools of this system. It is great to see Lean, Passport, RRCA, Process Cert in the NGS curriculum. These are the tools that we believe make a real difference and the competency you developed is extremely important to UTC’s continued success.
Earlier I talked about the fact that each student had to do a project as part of the curriculum that paid back 10X the tuition of the program.
- I am pleased to hear that the students doubled that savings to $700k per student through a combination of 9 team projects.
- UTC will recognize significant savings from all of your efforts.
- We all know that it takes a tremendous effort to generate a cost savings of this magnitude.
- I congratulate you on your dedication and personal commitment to contributing to UTC and to your own personal development.
- These projects are very impressive and it shows that business opportunities come in many different forms.
I have been at UTC for 20 years and I believe there are several things that make people successful, here are a few:
- Show strong leadership by taking ownership of key projects – take charge, do not assume someone else has the ball. Most projects have many stakeholders and cross many functions – be the one that pulls it all together from a full value stream stand point.
- Develop strengths in project management and ACE. Defining the issues, setting goals, assembling the right team, motivating and aligning the team, planning the project, using the ACE tools and achieving results. I truly believe that the better you are at this the more benefit you will bring to UTC and the more opportunities you will have personally.
- Display energy, passion and a positive attitude in everything you do – it’s contagious and people will want to work with you and follow you.
- Invest in your personal development as you are demonstrating here today
So keep these items in mind as you continue to journey at UTC
In closing, I would like to thank the NGS for their support in providing UTC with strong instruction and a well aligned curriculum and I would like to thank all the graduates for their efforts and contributions.
Congratulations on your accomplishments – I wish you all continued success.
Thank you.
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