Passed Over for GE CEO, Dave Cote Thrives at Honeywell

In the spring of 1999, General Electric Chief Executive Officer Jack Welch invited Dave Cote to dinner in his private dining room at GE’s headquarters in Fairfield, Conn. At the time, Cote was a 25-year GE veteran who’d worked his way up from an hourly job on the floor of GE’s aircraft engine plant in Hooksett, N.H. Since 1996, he’d been running GE’s appliances unit and was now one of a half-dozen GE executives competing to succeed Welch as CEO. Welch cut to the chase: Cote would not get the job.

The news wasn’t a surprise. “I could see the handwriting on the wall that it wasn’t going to be me,” Cote says. Not only was GE Appliances missing short-term financial targets, it was also the company’s only unit to see its profit decline in 1998. Meanwhile, Cote’s rivals were thriving. Earnings at GE’s medical systems division, run by Jeff Immelt, grew 25 percent in 1999. Jim McNerney’s aircraft engines unit had doubled its revenue over the previous five years. Under the direction of Robert Nardelli, GE’s power systems division had increased sales of its steam turbines and gas-fired generators by 33 percent since 1994. Although Welch told him he could stay at GE, Cote was gone by that fall, making him the first to bow out of the competition. “I wanted to see what I was capable of,” Cote, now 60, says.