The document summarizes an interview with George Oliver, CEO of Johnson Controls. Some key points: - Oliver believes global economic growth will continue in the coming years but will slow eventually. He focuses on reinvesting in innovation to prepare. - To attract talent, companies must offer purposeful work, diversity and inclusion, and financial success. Automation will impact all companies and require developing new technical skills. - The future of industrial infrastructure involves converging hardware and software, using data analytics from sensors to optimize buildings and create new solutions. Leadership requires being both a technology and industrial company. - Building trust requires living by strong values like integrity, understanding customers, teamwork, and sustainability. Success comes

1. strategy+business
ONLINE APRIL 4, 2018
INSIDE THE MIND OF THE CEO
Business Leaders as
Catalysts for Change
Today’s CEO creates opportunity through innovation and customer
awareness. Strong cultural values come from the top.
BY BOB WOODS

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Bob Woods
bob.woods@comcast.net
is a writer based in Madison,
Conn., who specializes in business
topics and has conducted CEO
interviews for PwC-related
publications.
Innovation and leadership have always been closely linked. For example, when
Milwaukee inventor Warren Johnson developed the first electric thermostat in
1885, it led to the development of Johnson Controls, a company that has gone
on to have a steady track record of innovation. George Oliver, CEO of the com-
pany since the fall of 2017, has become a leading proponent of agile business
innovation, and a guide to the technological and social crosscurrents facing in-
dustrial companies.
Oliver is a veteran of three well-known organizations. Trained as a mechan-
ical engineer at Worcester Polytechnic Institute in Massachusetts, he came up
through the leadership ranks during a 23-year career at General Electric. He
held key leadership roles in aircraft engines, appliances, and water and process
technologies, and worked closely with then-CEO Jack Welch and the other in-
fluential leaders of GE during that period. He then joined Tyco, the world’s
largest fire protection and security company, in 2006 as president of its safety
products division, expanded his responsibilities with electrical metal products in
2007 and fire protection in 2010, and became CEO in 2012.
In 2016, Tyco and Johnson Controls merged; the following year, Oliver was
named chairman and CEO of the combined company. He assumed control
as the company was in the midst of change, shedding much of its legacy in
automotive seating and interiors to focus on advanced automotive batteries and
technologies for buildings, particularly “smart” structures that integrate cooling,
heating, safety, and security systems.

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Oliver sat down with strategy+business in Johnson Control’s North American
headquarters in Milwaukee to talk about the trends facing industrial companies
today, the changing nature of digital technology, its implications for strategy,
and the ways in which the building industry can influence others.
S+B: The chief executives who responded to PwC’s 21st CEO Survey were broadly
optimistic about economic growth. How do you feel about the economic climate, in
the U.S. and globally, over the next few years?
OLIVER: We have been in a longer, lower-growth economic recovery, both in
the U.S. and internationally, since emerging from the Great Recession almost
10 years ago. Although growth has been noticeably slower over the course of
this expansion, there have been pockets of strength in end markets such as resi-
dential and non-residential construction; heating, ventilation, and air condition-
ing (HVAC); automotive; and technology. Perhaps a silver lining to the slow-
er-growth recovery has been the lack of a buildup in imbalances that would
typically happen over the course of a normal economic cycle. More recently, we
have seen growth rates sync up globally, which has had the effect of accelerating
the pace of expansion.
So I would agree with my fellow CEOs in saying that I remain optimistic
about global growth continuing over the next few years. The question eventu-
ally becomes, at what point do things start to slow down? You need to ensure
you are allocating your investment dollars accordingly, and that is something
I spend a lot of time thinking about — reinvesting in the business organically,
“The question eventually becomes,
at what point does global growth
start to slow down?”

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continuing to drive innovation throughout the organization, and expanding our
service offerings, all while keeping a close view on where we are in the cycle.
S+B: What challenges do companies face in attracting talent in today’s highly
competitive market?
OLIVER: From my experience, and although attitudes change from one gener-
ation to the next, a few things are constant. People want to come to work for
companies that are financially successful and leaders in their industries, but also
successful in creating opportunities for employees. They also want to do pur-
poseful, challenging work that makes an impact. That’s especially true for the
millennial generation. In our company, that means making HVAC equipment
more efficient, reducing energy consumption, and creating a more sustainable
world. It also involves protecting facilities and people and creating a safer envi-
ronment. This generation also wants to work in an environment that is inclusive
and diverse regarding gender and ethnicity.
S+B: How will automation affect this new workforce?
OLIVER: I don’t think there’s a company today that’s going to be immune from
the impact of automation. Developing a workforce that has the technical skill
sets to develop relevant capabilities for automation is going to be critical.
S+B: How do you see the 21st-century industrial infrastructure evolving, with
technology-driven platforms involving energy, the Internet of Things, embedded
analytics, and robotics?
OLIVER: There are big opportunities. In our industry, for example, today’s build-
ings are served with multiple HVAC systems, as well as multiple building man-
agement systems, all of them discrete. There is a small amount of convergence
among them beginning to happen. With the new infrastructure, that type of
convergence will happen sooner [than it otherwise would]. The ability to merge
separate systems into one architecture is going to distinguish some companies,
especially when it is combined with skill at automation. This will give customers
many new opportunities. In buildings, for instance, using data from the multi-
ple sensors that are deployed in our systems, we can apply analytics and artificial

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intelligence, and create new solutions that optimize the utilization of space, im-
prove comfort, and effectively track assets.
S+B: Is it safe to say that any company that offers this would have to make a tran-
sition from an industrial to a technology company?
OLIVER: Very much so. Leadership in the building industry will involve being
both a hardware and a software company. The hardware half comprises the tra-
ditional HVAC systems, from residential equipment up through the heaviest
HVAC chillers in commercial buildings. The software half is relatively new:
building management, building controls, electronic fire protection, electronic
access control, electronic intrusion video, and so on. Winning companies will
bring those systems together to drive much more optimization of the building.
Efficiency will come through improvements in hardware, and optimization [will
come] through software.
At Tyco, prior to the merger, about 60 percent of our engineers were software
engineers. We were already going from a hardware-centric fire and security com-
pany to a much more platform-oriented, software-centric company. The value
proposition is driven by the integration of the data and the analytics that are
applied and the new business models that can be created [using] that data.
S+B: More and more companies are competing on their reputation. What are com-
panies doing well to build trust among their various stakeholders?
OLIVER: The most important element in any company’s success is values. I think
“I don’t think there’s a company today
that’s going to be immune from the
impact of automation.”

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quite a bit about how that plays out with trustworthiness, sustainability, and rep-
utation. When Johnson Controls and Tyco came together, each company had its
own set of values. Then we went through a process, led from the top, to define
one set of values that would bring the two companies together successfully. It was
fascinating to me, because the two sets of values weren’t fundamentally different.
The values I support start with integrity. You walk the talk, you say what
you’re going to do, you do what you say. You meet commitments to customers,
employees, and shareholders. Without trust and reputation, nothing else matters,
because the lack of trust puts a lot of risk in everything else you try to achieve.
Successful companies are also totally focused on understanding customers.
In days past with longer cycles, companies had time to be a little bit more inside
out, to develop the next new product, and there was more time to lead in that
fashion versus with today’s fast pace.
These days, the only way you’re going to continue to win is to have a view
of the customers. What are their problems? And to be laser focused on solving
those problems and creating value, whether through energy reduction or im-
proved operational performance.
Another important thing that ties integrity together is teamwork. In today’s
environment, working in silos, whether functional or through different business-
es, reduces the speed of your ability to serve customers. Successful companies find
a way to work in a boundaryless fashion, to leverage skill sets to ultimately win.
If you can instill a set of values that become your business’s underlying frame-
work, then everything else becomes easy. Typically, you will fail if you cannot
“Sustainability is about focusing on
all constituents — including the
communities your company serves.”

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create that framework for people. If you get the framework right, your employees
will get up every day excited about what they do and energized around making
a difference — you’re going to win. They’re going to find ways to work together
and be successful.
One of our core values is safety. At Tyco, we were a life safety company. Fun-
damental to my leadership was the concept of “zero harm,” that is, creating an
absolutely safe work environment. When employees come to work, they go home
in the same shape at the end of the day. We’ve significantly reduced lost-time ac-
cidents and have significantly enhanced the workplace for our customers because
of this effort.
S+B: What other values are important?
OLIVER: Sustainability is about focusing on all constituents — including the
communities your company serves. That involves not only managing environ-
mental quality, but creating opportunities that allow people around you to be
successful as they grow. Here in Milwaukee, we have invested in economic de-
velopment, and we work hard to help address the challenges that are faced in the
local communities. Globally, our employees give back by providing more than
125,000 hours of volunteerism. Nothing makes you prouder as a CEO.
S+B: Do you believe that CEOs of publicly held companies should be solely focused
on their fiduciary responsibilities to shareholders without emphasizing societal
issues?
OLIVER: Companies that deliver on their fiduciary responsibilities to support
their shareholders understand that it isn’t sustainable without delivering for their
customers, developing their employees, or building the communities that the
company works within.
Corporations go through cycles of greater and lower levels of social responsi-
bility. During the last decade or two, corporations have really stepped up their
efforts on this. We recognize in our own company that no matter how tough an
environment we are in, or no matter what challenges we face, we stay focused on
delivering our fiduciary responsibilities, which is sustained by supporting all of
our constituencies. This serves us at any point in the cycle.

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S+B: This is your second position as CEO. What has been the same about your role
in both instances?
OLIVER: It really comes down to developing strong values and a strong culture.
This requires leadership right from the top, starting with the CEO setting the
stage. Developing a strong, single culture is core to success after a major merger
like ours last year. Most important is to be visible and set expectations — what
we’re going to do — and then be a role model for how we do it.
When I go into the field to meet customers, employees want to bring me
to their best customers. And I always say, “Why don’t you bring me to a more
challenging customer? Maybe I can help.” We can listen, we can learn, we can
improve. There’s a view that our employees want the CEO to hear about all the
great things we do. Well, the CEO also wants to know about the things maybe
we don’t do well, so we can learn and get better.
S+B: How has your understanding of leadership changed over time?
OLIVER: I’ve recognized that whether it’s business cycles or technological advanc-
es, everything’s happening faster. No matter where you sit as a CEO, you’ve got
to be a technology, commercial, and operational leader. The days are past when
you could be really good at one of those things and delegate the others. The
CEO today is much more multidimensional.
That’s not to say that you don’t delegate. But you’re present for the learning
that’s happening in each of these areas. For instance, you can translate detailed
information about technological disruption into strategy. What are customers
doing? Why is that relevant, and how is that going to change the products you’re
developing? Or what is their biggest problem that you’re trying to solve? For ex-
ample, how do buildings connected with the Internet of Things and other digi-
tal platforms create new business models?
I love engaging with people, because I think that life is a journey of learning.
I took this from Jack Welch, having worked within GE for 23 years. Organi-
zations have structure, and there’s accountability within the structure in how
you perform work, deliver for your customers, and ultimately deliver for your
shareholders. The best way to get a sense of that structure and how it all is ac-
tually working is to get out into the field and meet with customers, meet with

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employees, meet with shareholders, and spend time on university campuses.
Through your exposure to those lenses, you stay fresh and relevant.
This is a new type of business leader: a catalyst for change. You get there
by driving more strategic choices, creating opportunities, and fashioning the
future. +

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