May 28, 2020 • 39 mins
For anyone struggling to lead their company through the current climate, Dave Cote has some advice for you. The legendary former chairman and CEO of Honeywell ushered his company through two big recessions while growing it from a $20 billion business to a $120 billion one. Tune in as Dave tells Bob how he marshaled his company's leadership in a storm, what he learned from Jack Welch, and how his rural New Hampshire upbringing shaped his independent streak.
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Episode Transcript
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Speaker 1 (00:01):
You're listening to Math and Magic, a production of My
Heart Radio. So I drove to the University of New
Hampshire in staid I'd like to speak to the director
of admissions. She said, well, I'm sorry you don't have
an appointment, and I said, no, that's okay. I'll just
sit here and wait. So after about two hours as
she came over and said he's not gonna be able
(00:22):
to see you, and I said, no problem. I brought
a book and she finally looked at me and said,
you're not leaving. Ay you Well, she finally said okay,
he'll see you. And he said, okay, this is not
consistent with our rules. However, if you get me an
application in if it qualifies, I'll let you in. I
hustled and he let me in. Then, the arrogance of youth,
(00:44):
I didn't think to really thank him. Years later I
reconnected with him thanked him. Three years after that, he
was awarded New Hampshire's highest civilian honor, and he asked
me to be the guy presenting it to him. Hi,
(01:06):
I am Bob Pittman. Welcome to Math and Magic. Stories
from the Frontiers and Marketing And while we are still
in this pandemic fueled economic downturn, those frontiers can look
scary and there are often more questions than answers. Today
we have as our guest someone who has navigated waters
like this before and as a legendary American business executive,
(01:26):
and if anyone has useful insights gets him welcome. Dave Cody,
retired and legendary chairman and CEO of Honeywell and now
the executive chairman Averted Holdings. He also has a new
book coming out soon which we will dig into as well.
Dave has a remarkable success story. Morning grew up in
(01:46):
a small town New Hampshire environment, French Canadian background, and
even spoke French his first few years. He bounced around
before he finally finished college and joined GE where he
had a long and successful career in the Jack Welch years,
He was not picked this Jack successor, which Jack told
me later was one of his biggest mistakes, but that
did not slow Dave down. Dave went on to be
(02:09):
CEO of TRW and then to a long run as
CEO of Honeywell, where he grew the company's market value
from twenty billion to one hundred and twenty billion. During
his tenure. He's been a major voice in Washington for
business over his entire career. Dave loves music, people, and
the outdoors. Dave welcome. Nice to be here, Bob. Before
(02:30):
we get into the meat of it, Dave, I'd like
to do you in a feature. We called you in
sixty seconds. You're ready. Do you prefer Beatles or stones?
New Hampshire or New York, New Hampshire. Sunrise or sunset? Sunset?
Basketball or football? Basketball? Springer fall fall hunting or fishing fishing?
(02:54):
David ortiz Er, Tom Brady, Tom Brady Sweeter, say a
week scuba diving or skiing? Scuber pop or hip hop
music pop, It's about to get harder. Childhood hero Bill Russell.
First job picking blueberry, The craziest job you ever had,
(03:14):
digging cellar holes after the house had been constructed. Secret talent, well,
as I've described it, I seem to always know what
other people should be doing. Favorite artist probably John Lennon.
Historical figure you'd like to meet, Oh, George Washington. Title
of your memoir, So Winning Now Winning Later? Favorite food lobs,
(03:38):
the first concert Moody Blues. If you have one superpower,
what would you want it to be Wow. I guess
the ability to make people happy. That's a good one.
Let's jump in. You weathered the last two big recessions
and the driver's seated Honeywell. You took over Honeywell in
February two thousand two. You weathered the eight oh nine
(04:00):
Great Recession in the middle of your run. What advice
do you have for those of us running companies and
how to accelerate growth coming out on the other side.
I guess I'd have more than one piece of advice.
The first one to leaders is to not panic. There's
a real tendency amongst leaders to read what the herd
is thinking and kind of move with the herd. And
(04:22):
if there was any time where a leader has to
exercise independent thinking, it's a time like this. And it
doesn't mean driving for consensus, means getting all the facts
and opinions, being able to make a good independent judgment.
The second piece would be to think about recovery at
(04:44):
the same time that you're dealing with the recession. In
any recession, everybody is panicking and all they can think
about is what are they gonna do? And making decisions
for the short term, and they sometimes forget that no
matter how dire has have ever looked, recovery always comes.
So be thinking about your growth initiatives, whatever investments you
(05:07):
were making, how you maintain your base, how do you
treat your customers in particular during this time, But be
thinking about recovery at the same time you're reacting to everything.
I know a little bit about what you did. No,
I don't know. Nine you really use furloughs at a
time most people did not use furloughs. Can you talk
(05:28):
a little bit about that. It's very interesting to see, Bob,
now how many companies are using furloughs, and if you
go back to the Great Recession, no big company was
using them at all except for us that I'm aware of.
In fact, as a result of ours, Harvard Business School
wrote a case study about furloughs versus layoffs. And I'd
(05:50):
always been kind of nurturing this in the back of
my mind because I've been in businesses where they had
laid off a bunch of people and then they'd hire
them back, and in never quite made sense to me.
So it costs you six months between severance, warnack, whatever else,
then six months to get your money back for that
six months that they basically weren't doing anything. Then, assuming
(06:11):
it's an eighteen month recession, you get a return of
six months, and then you're scrambling to hire all those
people back because of the recovery. And I found myself
thinking about it like a plant and saying, if somebody said, Okay,
you're gonna build this plant, take you six months, then
six months to get your money back to even you'll
get a six months return, and then you shut it down.
(06:35):
How many people would do that. They'd say, well, that's silly,
but we do it with people all the time. So
we kind of broke ground on really understanding how to
do furloughs. And I was just looking for something that
was less costly because you didn't have to pay severance.
But I was also thinking about recovery and how could
I maintain what I called my industrial base at the
(06:56):
time so that they didn't just lose all that knowledge.
So we've worked our way through and found out it
was actually pretty difficult because state by state the rules
were different. Country by country the rules were different, so
you really had to figure it out. But it worked
extremely well for us. How did you think about reintroducing
(07:17):
your brands and your products to the marketplace after they
have been out of the people's minds during that slowdown.
I would say brand is probably less of an issue
for us, just because Honeywall is an industrial company. However,
the thing that we did do is we looked at
the recession and I wrote this in my share owners letters, saying,
(07:38):
there's three constituencies you have to manage customers, employees, and investors. Now,
this recession is a bit different, just because employees are
at a physical risk, so you have to take that
into consideration. First. I felt like we had to do
a great job with customers first, because if we didn't,
(08:01):
both investors and employees would suffer in the long term.
Anything that we had committed to customers, we made sure
that we prioritized. And after that then we figured out,
all right, it's going to be painful, so you have
to figure out what's the best way to manage the pain,
and we elected to have both investors and employees sharing that. Investors,
(08:26):
of course, because while we were able to hold our
margin rate flat, which was significant improvement over past performance,
a still sorid decline in earnings, with employees that we
took the approach to use furloughs instead of layoffs. But
we also worked on how could we impact benefits programs
(08:49):
like four oh one K matching, which you also see
a lot more of this time through because that wouldn't
affect people in the short term. They could still be
getting the salary that they needed in order to survive.
So let me ask you a question about your managers.
I think in any of these downturns, every manager, by
necessity switches their mindset from growth to survive. But as
(09:12):
you begin to come out and as you point out,
you should be looking for that recovery, how do you
get the managers to flip that mindset from survive to growth.
That ain't easy. I would say we were only about
four months into the Great Recession when we had them
thinking about, okay, how do you handle recovery? And this
(09:33):
is where I go back to independent thinking, because as
you start to have to make these difficult decisions, you
find a lot of your own staff not wanting to
make those decisions. And more than once I had that
discussions where I would start off with, look, that's why
they call it a recession. They don't call it a party.
We have to choose between two bad options. There's no
(09:56):
great third choice that's going to materialize, So you kind
of half that between discussion data and sometimes just having
to say I'm sorry, but I run the place and
I believe this is going to be the right thing
to do. It's not a very easy process, but one
(10:17):
that has to be managed. Let me ask a question
about predictions. You've lived through these before, you care to
make any prediction about when the recovery begins on this
one and the speed at which business returns. So this
is one where I tell every business leader, look, hope
for the best, prepare for the worst, because you just
don't know. Now if you said, okay, so given all that, still,
(10:41):
what do you think will happen. There's nothing that says
the virus has gone away. There's no vaccine on the horizon,
So I'd suspect that there is going to be more infection,
There are going to be more deaths when we get
back in the fall. But I also think there's going
to be a realization that we can't keep handling it
the way we have. This is just an incredibly costly
(11:06):
way to manage this, because right now we're putting an
unbelievable burden on the young. All of this is just
additional debt. But the economy will come back just because
we're gonna let people work. Let me go back a
little bit in time. You were a favorite go to
CEO for President Obama in spite of being a registered Republican.
(11:28):
I actually think you have more visits to the Obama
White House than any other ceo. How did that bond develop?
I got outreach from the Obama administration before they were
actually in office. I got this call saying, Hey, would
you participate in a group of CEOs coming to the
White House to talk about the stimulus plan in support
(11:48):
of it? And I said, yeah, absolutely, we got to
do this. The next day they called and said, well
would you lead the group? And I said okay. That
night they called and said would you be willing to
support it with the press. I said yeah, sure. So
on the eighth day we had our meeting. Then they
said okay, get ready, were going in the East Room.
(12:11):
Nobody prepared me for what was going to happen, because
when we walked out on that stage, I thought they'd
be like four or five reporters. There were two hundred cameras,
video cameras. It was kind of an interesting experience, but
I was strongly supportive, just like I am now with
(12:31):
a spending they've been doing, because you can't have government
falling back at a time like this. And I think
they appreciated the fact that, as a registered Republican, I
was willing to come and support what they were doing
because I did think it was the right thing for
the country. I was able to develop a feeling of
trust with people there. They knew I wouldn't say something
(12:53):
that I didn't believe, but they also knew they could
get the straight scoop from me without any kind of
ideology when it came to what was going on out
there or what we ought to be doing. Your predecessors
at Honeywell avoided Washington. You embraced it. Why did you change?
Is a symbiotic relationship between government and business, and neither
(13:13):
seems to understand the other all that well, and business
cannot be successful without government, and government's not going to
be successful without business. And I used to say with
government that not only does it regulate, but it enables business.
Business cannot ignore government because all that enabling is going
(13:38):
on and we need to be a part of it.
So I felt it was important for us to participate,
and I devoted a lot of time to it. Dave,
let's go back in time. You and I are the
same age, but from opposite ends of the country. You're
from the top of the country. Little town in New Hampshire.
Was it sun Cook? Yeah? Named after the sun Cook Indians.
Can you describe your early life? Paint a picture of
(14:00):
America and New Hampshire. It was a little French Canadian
milltown enclave in New Hampshire, which occurred throughout New England.
So until I was three, I spoke French only. We
spoke no English. My mom and dad had eighth grade educations.
My mom got a secretarial degree that took her a
(14:22):
year to get so that she could get a better job.
There weren't a want of role models, so it was
kind of tough just trying to figure out what do
I want to do? Where do I want to go?
What sounds like those from your background that you did
learn responsibility early and learned to be industrious. The story
goes that you actually want into town to pay the
family bills. You were the one that took the cash
(14:44):
and you were still a kid, And we go around
every one of the stores and pay the bills. It's
not a real story. Man, you are good. One of
the things that I have always told people is that
when they ask a question like you know, where did
you learn all your leadership lessons? And they expect me
to name a famous CEO, and I always tell him
the same thing, as you know, I learned most of
(15:06):
what I needed to know from my mom and dad.
They really were terrific and very good at instilling the
right kind of values, whether it was hard work, responsibility.
You need to be able to take care of yourself
and not expect others to do it. My mom would
give me the money to pay all the bills in Manchester,
(15:26):
which was twelve miles away. I had to get on
the bus I go into Manchester, and she had given
me all the directions that I had to memorize and
pay this much here, make sure you get a receipt
and go to this place. And I never thought too
much about it. I just did what she told me.
And I think back to my dad always telling us
(15:48):
be a leader, not a follower. My mom always saying
think for yourself. It really instills the right kind of values.
You've got this really interesting journey from high school to college,
I admitted. Then you decided you wanted to get on
with your life. You're work in your dad's garage, were
thinking about being a carpenter's apprentice with an uncohole, almost
(16:09):
joined the Navy, and at the last minute you were
saved by the director of admissions at the University of Hampshire.
You want to tell that story and how that changed
your life. If there's anything you can glean from what
you just said, it's that I was anxious to get
on with my life and make something of myself, but
I was totally directionless. I knew I didn't want to
(16:32):
keep living with no money the way I always had
to your point, after bouncing around enlisting in the Navy
and then backing out the day before I was to
be sworn in, Thank god that worked that way, I decided, Okay,
I need to get back into school. It seems to
be the only thing I'm good at. And I wasn't
good as a mechanic, I wasn't good as a carpenter's apprentice.
(16:54):
So I drove to the University of the Hampshire about
five minutes away, found the director of admissions. I went
to their office, and you recall these kind of days, Bob.
I had my jeans, my flannel shirt, my long hair
and went in and said I'd like to speak to
the director of admissions. She said, well, I'm sorry you
don't have an appointment, and I said, now that's okay.
(17:14):
I'll just sit here and wait. I'm sure he's bound
to have some time at some point. So after about
two hours of sitting there, she came over and said,
you know he's not gonna be able to see you,
and I said, no problem, I brought a book. I
can wait. Whenever he leaves, I'll catch him. She finally
looked at me and said you're not leaving, are you.
Well she finally said, okay, he'll see you. So I
(17:37):
went into his office and explained the whole thing, and
he said, okay, well, this is not consistent with our rules. However,
if you get me an application in by the end
of the week, if it qualifies, I'll let you in.
So I hustled got it into him and he let
me in. I always say that in the arrogance youth.
(18:01):
I didn't think to really thank him, and it was
years later that I said, cheefs you know, I had
to track that guy down. He really did something special
for me, and I did. His name was Gene Savage,
and I reconnected with him, thanked him, and come to
find out, I was not the only person he'd ever
(18:23):
saved like this. He was just that kind of guy.
And it was about three years after that he was
awarded New Hampshire's highest civilian honor, called the Petty Metal,
and he asked me to be the guy presenting it
to him. Breaking the rules does work sometimes, Yeah, it does.
Too Many people just kind of get into enforcing the
(18:46):
rules and don't really think sometimes about well, you know,
what's really the right thing to do here. But there's
a lesson in that. I think for business too. And
it sounds like you've used a lot in your career.
I have, and that includes giving people of second chance
when things are warranted, and I benefited from second chances
(19:06):
that I always kept that in mind. Just hold on
a second, because we've got so much more to talk about.
We'll be back after a quick break. Welcome back to
math and magic. You had an interesting path through college.
You worked full time at night, you did college in
(19:27):
the day. You took a year off to become a
commercial fisherman. Fortunately you came back to your census finished college.
You joined g E after college and began to move
up the ranks. When in that process did you realize
you had real management potential? Actually, I was working at
ge A is an hourly employee night while I went
(19:47):
to school those last couple of years. I graduated and
I went back to school just because I got scared.
I got married and we were living in this third
floor on he did uninsulated apartment in New Hampshire, which
means she gets chilly in the in the winter. And
first month my wife says she's pregnant, and then fourth
(20:09):
month she said she couldn't work anymore. And I realized,
oh my god, we have to live on my paycheck
now as an hourly employee. And about four weeks after
I graduated, they let me interview for an exempt job
and I got it, and I started kind of just
working from that point, and all I wanted was a
(20:30):
job that would pay more than the last one. Just
as I felt I was making some progress, I ended
up getting divorced. That put me back in the hole again.
So it probably took me until I was thirty before
I finally got to a point where I said, finally
I could pay my bills and not worry. The idea
of becoming a CEO didn't really dawn on me until
(20:52):
I was about forty years old and I was in
a job and said, son of a gun, I think
I'm actually not so bad at this. I think there'd
be a chance for me to do something somewhere. That's
the first time I ever really thought about it. Up
to that point. It was just a matter of get
a job that pays more, so I don't have to worry.
You wound up running the g E Appliance unit very successfully,
(21:14):
a six billion dollar business. There was a very visible
succession process when Jack Welch was going to step down.
Looking back on that process, was that a good way
to look for a successor? I mean, Jack says it
didn't work. It was a mistake for him. He missed you. Well,
it's nice to hear you say that. I have to
say that when I went through my own succession process,
(21:35):
I read a lot of literature trying to make sure
that I did it right. I didn't want to make
a mistake. I wanted the company to do well. Ten
years after I left. I really wanted to build an institution.
One of the things kind of struck me is how
really weak the literature is out there. And I read
a lot of stuff where they talked about this company's
(21:57):
great succession process and then you'd say, yeah, but you
know that guy got fired four years later, So how
good is the process if it yields a bad result?
So I took a different approach and went through a
bunch of interviews with retired CEOs, some of whom IT
had worked, some for whom it had not, and asked
(22:18):
them what did they miss, what did they like that
they had done, what would they have done differently? And
developed my own process. Well, shareholders clearly appreciate it because
the company kept growing as doing a good job, which
I think is a testament to the legacy you built.
But also that succession plan. When you left GE you
went to tr WT, but left pretty quickly to go
be CEO of Honeywell in early two thousand and two.
(22:41):
Why that jump tre w as a company was front
with difficulty. They had fired the three previous successors. So
when I went there, I said, we're going to set
up something so that if I'm not made CEO by
a certain date, you'll have to pay me ten million dollars. Now,
(23:03):
most people would look at that and go, oh, okay,
well that's not gonna happen. It nearly did. They damn
near fired me, and the CEO went to the board
demanding that I be fired. I ended up going through
a three month investigation by the board to find out
who was right here. Well, the board ended up deciding
(23:26):
that I was the right call. So they did end
up making me CEO, but they still didn't make my
life that easy. After that, Tom Neff reached out to
me in like December of old one and said, hey,
would you be interested in looking at the Honeywell job?
And at first I said no, and said, look, I've
(23:46):
just started here. There's a lot of things I got
to get done, and I just, you know, wouldn't feel
right about it. He said, well, I'll send you a
bunch of stuff, take a look, give me a call.
So he sent it to me, and I read all
the stuff, watched the videos, and I found myself thinking
why was I being so loyal to a group of
people who had exhibited no loyalty towards me? I thought, okay,
(24:08):
this is a better opportunity. I ought to give it
a try and see what I can do. So I
elected to join. I had no idea what I was
getting myself into. I knew it wasn't going to be easy.
But as bad as it looked externally, it was even
worse internally. For the first four and a half months
that I was the CEO, I was not allowed to
(24:30):
see the books and what I would ask a finance guy,
how's the quarter going? They literally said, I'm sorry, I've
been instructed not to answer any of those questions from you. Okay,
well i'll be chairman in four and a half months
and I'll find out everything then. So I waited, and
of course it was significantly worse than what anybody had
(24:54):
thought internally or externally. And it's one of the things
that you know, getting back to this point on success planning,
Jack Welch at the end of the day, his twenty
years were an amazing run, and I thought, jeez, you
know what was different is he was able to figure
it out. Whatever it was, however the future unfolded, he
(25:14):
was able to figure it out. And then I looked
at it said, well, you know, I kind of ran
into the same thing. What I ran into it any Well.
It was a lot different than what I'd been told
and people externally thought. But I was able to figure
it out and it became one of the kind of
big things I looked for in a successor. Was not
trying to predict the future because six months ago, who
(25:36):
would have predicted that we are where we are now?
You just don't know, but rather can you find somebody
who can figure it out? Well, it's interesting I've heard
people say, and I probably more in that camp, as
you actually can't plan for the future. Plans don't come true.
They just reduce your anxiety because you think you can,
you know, just to put it in perspective for people
(25:58):
to you know, before you arrived, Anywell was supposed to
be acquired by GE, and I think the government in
Europe called it off and it seems like Honeywell was
not prepared to continue to run as an independent company.
It was that what you were dealing with in terms
of the back story there to your point, the EU
put conditions on the GE refused to comply with, so
(26:21):
the deal fell apart. Then Honeywell sued GE for failure
to close the deal, and there was a small settlement,
and in the end, by the way, both Ge and
Honeywell took it to the European Court in the Hague
and they agreed that the EU had overstepped in their
(26:42):
compliance request. So it's a little piece of the story
that ends up getting lost. But yeah, there's that definitely
ended up happening. And the Ge folks were pretty much
running the company, and there were whole organizations that had
been told, look, you're gonna be restruct cheered out of
a job, so you ought to be looking now and
(27:03):
if you can find a job, take it. So we
had something like a third of our leadership positions were empty.
Hell of a beginning. It ended well. It was a
lot messier than people ever thought about, and I developed
some of that in the book. Let's talk a second
about company culture. You mentioned it earlier, and we were
talking about this downturn. You know, some people call it
(27:24):
the operating system of a company. If it's not right now,
the programs are going to work. Well, how do you
think about company culture and how do you develop it? Yeah,
I gotta completely agree on how important it is. And
I realized we had warring cultures because we had the legacy,
Allied Signal Legacy, Pitway legacy, honeywell, all the different views
(27:45):
on how the world ought to work. So the first
thing we did is said, okay, we need to focus
on something outside of ourselves. So we chose the customer,
and so let's make all our arguments consistent with what's
best for the customer. If we did that, then maybe
that would take a lot of the emotion out of it.
The second one was to develop twelve behaviors that said, Okay,
(28:10):
here's what we want our culture to be. And I
did that with my staff and I remember one of
my staff members saying, Dave, why are we spending all
this time on behaviors when we have all these strategic
issues we need to address. And my comment to them was, look,
I can make all the strategic decisions you want, but
if nobody does them, it really isn't going to make
(28:31):
a difference. Will feel better because we've made some decisions,
but nothing's going to happen. And what we need is
a culture where after decisions are made, something happens. The
thing that people like is to be part of something
bigger than themselves that's successful, and if we can do that,
people will feel good if they can see that their job,
(28:55):
the thing that they're doing every day, makes a difference.
That's the sort of thing that Bill's morale and I
spent a lot of time talking about it, a lot
of time implementing it. Honey Well operating system, which was
very consistent with our culture, managed to touch half our
people as a way of motivating them creating more fulfilling work,
(29:18):
and that that culture does make a difference. I'm a
very big believer in it. You did something very few
CEOs do. You left at the peak. You couldn't have
been more successful, more powerful, more applauded, and talk a
little bit about how you came to that decision. I
(29:39):
did love my job. I love doing it. It was
a labor love for me, and I loved working at
Honeywell and the people and what we accomplished there. But
I had a couple of things that I thought were important.
The first one was I really wanted ten years after
I left for people to say, wow, that Honeywell is
(30:01):
a great company. It just keeps delivering. Those guys keep performing.
And while I had I thought good people, good process,
good portfolio, I also thought it was gonna be really
important to pick the right CEO, and that's why I
(30:21):
put as much attention into it as I did. If
you have really good potential successors, they're not going to
sit in a job for five years waiting to see
if they're going to get the job or not. Because
recruiters are knocking on their door constantly. You need to
be able to create a tighter timeline so that you're
(30:44):
good people are gonna stick with you to see what
the decision is. The other piece of it was I
knew two thousand sixteen was going to be our toughest
year because we'd want piles of aerospace contracts and it
required a lot of what we call concessions. And I
(31:04):
had changed the bookkeeping, no longer put it on the
balance sheet and instead expense all that stuff, and a
bunch of those expenses were coming in two thousand sixteen,
and then I knew two thousand seventeen onward, we're going
to be better. And I thought, okay, better for me
to take that year so that the tougher year is
on me and my reputation can stand it, and then
(31:28):
for my successor to take it from that point forward,
where there's a little bit more of a tailwind. So
I put all those together and said, Okay, this is
gonna be the right time to go if I really
want ten years from now people to look back and go, man,
that Honeywell is a great company. Well, it looks like
you're on that path and you handled it very well.
(31:50):
You've got a book coming out. Why did you do
a book? What do you want people to take away
from your book? What I really wanted to do is
kind of my joke about business books is that just
about every business book I've read would have made a
great pamphlet that there's ten pages of important concept and
then to fifty pages of stories to support it that
(32:12):
you can fly right through. And I said, I wanted
something where at least every other page had something fought provoking,
where someone would say, oh, that's an idea I could
use that, or I could do this over here are jeez,
maybe I should modify how I'm doing something. So I
wanted to write something that was just very meaty, very substantive.
(32:38):
And one of the things that has bothered me is
all this discussion of short termism. It always comes across
like you're either short term focused or your long term focused.
It's mutually exclusive, and the way we ran hunting well
was that. I always said success comes from a comp
(33:00):
wishing two seemingly conflicting things at the same time. And
it's simplistic when people say I'm either short term focused
or I'm long term focused. You have to find a
way to do both. So how do you accomplish both?
So let's jump to you again. If someone listening to
(33:22):
this episode I would like a career like you've had,
is there one piece of advice you could give them
that puts them on that track. I guess everybody's going
to be different because capability is different. I might have
really wanted to be Hussain Bolt in the hundred meter dash.
I don't care how good my attitude was. I'd have
still been at the fifty meter market when he was finishing.
(33:46):
It wasn't going to happen. So make sure you're working
on the right thing. Hard work doesn't always pay off,
so make sure whatever you're working on is consistent with
your capability. Is the second piece I guess i'd add
is I always said advancement requires two things. Performance You've
(34:09):
got to be able to get results and get them
in the right way, and visibility, and visibility cuts both ways.
If you do a great job and it's visible, then
you'll do great. If you fail, well, that's also going
to be pretty visible. And I can't help. But I
guess I got to add a third piece. If you
(34:30):
are going to get ahead, it's important to be self
aware and to be a learner, and that all of
us have personal characteristics that are issues to our advancement.
Only you can figure out what that is. You'll get
advice from other people and sometimes it will be correct,
sometimes it won't, but you really have to figure it
(34:53):
out for yourself. It took me until I was forty
years old to realize that when everybody said I tended
to be defensive, they were right. And I realized I
had to start thinking differently about how I handle things.
And it made me a better leader because I realized
that that's the kind of person I was, and I
(35:14):
needed to be able to control how I reacted to
things in a way that would yield better decisions. Say
if this has been a great conversation as we wrap up.
We always end every Math and Magic episode with a
shout out to those two key disciplines of marketing and business,
which is the analytics and the sheer creativity. You've seen
(35:37):
a lot of people. If you think about it, who
would you give the shout out to? They can be
a complete unknown, or they can be somebody in history
of the greatest analytical business person. You could think of
Bob Rubin, former Goldman Facts and Secretary of the Treasury.
But he wrote a book called In an Uncertain World,
(35:58):
and it really had an impact on me because he
talked about how we all look at issues and make
a decision and assume that we've made the right decision,
and we just kind of go forward. And his point
was in every decision where maybe maximizing the probability we
(36:19):
made the right decision, but we need to recognize that
there's uncertainty and everything and that there are other outcomes
that are possible. So how do you think about those
that had a real impact on me? The most creative
who would you give the shout out to? For the
magician just comes up with those great ideas out of nowhere.
(36:40):
How about Bernie maydon Oh, Okay, we're gonna give it
to him, but we're gonna put that on a side
in the box and uh not not reward him too.
Much he sold billions without anybody noticing. I has to
talk about a magician. Dave, thank you so much for
being here today, and good luck with the book, and
thank you for sharing these experiences and these insights and on.
(37:02):
It was fun. Bob says, here are a few things
I picked up in my conversation with Dave. One, think
about recovery during recession. Dave was in the driver's seat
at Honeywell during the last two big economic downturns, and
no matter how dire things got, he always thought about
the long term impact of his decisions. As Dave said,
(37:23):
thinking about your growth initiatives, investments, and how to maintain
your customers are crucial to accompany's longevity. To exercise independent thinking.
While it's important to gather everyone's facts and opinions, it's
imperative that leaders make independent decisions during difficult times, even
if it's not among the consensus. As Dave says, independent
(37:44):
thinking is a rare but important commodity. Three. Don't try
to be something you're not. As Dave recounted, he went
back to school because he knew he was good at it,
and that mindset carried with him throughout his career. He
always stuck to the path he felt most called to.
It's a lesson he learned early in life to always
trust what you're good at and for break the rules.
(38:06):
Sometimes enforcing the rules isn't always the right thing to do,
and because Dave dared to do so, he got a
second chance to attend college, which changed the course of
his life. Thanks for listening. I'm Bob Pittman. That's it
(38:58):
for today's episode. Thanks so much for listening to Math
and Magic, a production of I Heart Radio. This show
is hosted by Bob Pittman. Special thanks to Sue Schillinger
for booking and wrangling our wonderful talent, which is no
small feat Nikki Etre for pulling research bill plaques, and
Michael Asar for their recording help, our editor Ryan Murdoch,
and of course Gayle Raoul, Eric Angel, Noel Mango and
(39:21):
everyone who helped bring this show to your ears. Until
next time,
You're listening to Math and Magic, a production of My
Heart Radio. So I drove to the University of New
Hampshire in staid I'd like to speak to the director
of admissions. She said, well, I'm sorry you don't have
an appointment, and I said, no, that's okay. I'll just
sit here and wait. So after about two hours as
she came over and said he's not gonna be able
(00:22):
to see you, and I said, no problem. I brought
a book and she finally looked at me and said,
you're not leaving. Ay you Well, she finally said okay,
he'll see you. And he said, okay, this is not
consistent with our rules. However, if you get me an
application in if it qualifies, I'll let you in. I
hustled and he let me in. Then, the arrogance of youth,
(00:44):
I didn't think to really thank him. Years later I
reconnected with him thanked him. Three years after that, he
was awarded New Hampshire's highest civilian honor, and he asked
me to be the guy presenting it to him. Hi,
(01:06):
I am Bob Pittman. Welcome to Math and Magic. Stories
from the Frontiers and Marketing And while we are still
in this pandemic fueled economic downturn, those frontiers can look
scary and there are often more questions than answers. Today
we have as our guest someone who has navigated waters
like this before and as a legendary American business executive,
(01:26):
and if anyone has useful insights gets him welcome. Dave Cody,
retired and legendary chairman and CEO of Honeywell and now
the executive chairman Averted Holdings. He also has a new
book coming out soon which we will dig into as well.
Dave has a remarkable success story. Morning grew up in
(01:46):
a small town New Hampshire environment, French Canadian background, and
even spoke French his first few years. He bounced around
before he finally finished college and joined GE where he
had a long and successful career in the Jack Welch years,
He was not picked this Jack successor, which Jack told
me later was one of his biggest mistakes, but that
did not slow Dave down. Dave went on to be
(02:09):
CEO of TRW and then to a long run as
CEO of Honeywell, where he grew the company's market value
from twenty billion to one hundred and twenty billion. During
his tenure. He's been a major voice in Washington for
business over his entire career. Dave loves music, people, and
the outdoors. Dave welcome. Nice to be here, Bob. Before
(02:30):
we get into the meat of it, Dave, I'd like
to do you in a feature. We called you in
sixty seconds. You're ready. Do you prefer Beatles or stones?
New Hampshire or New York, New Hampshire. Sunrise or sunset? Sunset?
Basketball or football? Basketball? Springer fall fall hunting or fishing fishing?
(02:54):
David ortiz Er, Tom Brady, Tom Brady Sweeter, say a
week scuba diving or skiing? Scuber pop or hip hop
music pop, It's about to get harder. Childhood hero Bill Russell.
First job picking blueberry, The craziest job you ever had,
(03:14):
digging cellar holes after the house had been constructed. Secret talent, well,
as I've described it, I seem to always know what
other people should be doing. Favorite artist probably John Lennon.
Historical figure you'd like to meet, Oh, George Washington. Title
of your memoir, So Winning Now Winning Later? Favorite food lobs,
(03:38):
the first concert Moody Blues. If you have one superpower,
what would you want it to be Wow. I guess
the ability to make people happy. That's a good one.
Let's jump in. You weathered the last two big recessions
and the driver's seated Honeywell. You took over Honeywell in
February two thousand two. You weathered the eight oh nine
(04:00):
Great Recession in the middle of your run. What advice
do you have for those of us running companies and
how to accelerate growth coming out on the other side.
I guess I'd have more than one piece of advice.
The first one to leaders is to not panic. There's
a real tendency amongst leaders to read what the herd
is thinking and kind of move with the herd. And
(04:22):
if there was any time where a leader has to
exercise independent thinking, it's a time like this. And it
doesn't mean driving for consensus, means getting all the facts
and opinions, being able to make a good independent judgment.
The second piece would be to think about recovery at
(04:44):
the same time that you're dealing with the recession. In
any recession, everybody is panicking and all they can think
about is what are they gonna do? And making decisions
for the short term, and they sometimes forget that no
matter how dire has have ever looked, recovery always comes.
So be thinking about your growth initiatives, whatever investments you
(05:07):
were making, how you maintain your base, how do you
treat your customers in particular during this time, But be
thinking about recovery at the same time you're reacting to everything.
I know a little bit about what you did. No,
I don't know. Nine you really use furloughs at a
time most people did not use furloughs. Can you talk
(05:28):
a little bit about that. It's very interesting to see, Bob,
now how many companies are using furloughs, and if you
go back to the Great Recession, no big company was
using them at all except for us that I'm aware of.
In fact, as a result of ours, Harvard Business School
wrote a case study about furloughs versus layoffs. And I'd
(05:50):
always been kind of nurturing this in the back of
my mind because I've been in businesses where they had
laid off a bunch of people and then they'd hire
them back, and in never quite made sense to me.
So it costs you six months between severance, warnack, whatever else,
then six months to get your money back for that
six months that they basically weren't doing anything. Then, assuming
(06:11):
it's an eighteen month recession, you get a return of
six months, and then you're scrambling to hire all those
people back because of the recovery. And I found myself
thinking about it like a plant and saying, if somebody said, Okay,
you're gonna build this plant, take you six months, then
six months to get your money back to even you'll
get a six months return, and then you shut it down.
(06:35):
How many people would do that. They'd say, well, that's silly,
but we do it with people all the time. So
we kind of broke ground on really understanding how to
do furloughs. And I was just looking for something that
was less costly because you didn't have to pay severance.
But I was also thinking about recovery and how could
I maintain what I called my industrial base at the
(06:56):
time so that they didn't just lose all that knowledge.
So we've worked our way through and found out it
was actually pretty difficult because state by state the rules
were different. Country by country the rules were different, so
you really had to figure it out. But it worked
extremely well for us. How did you think about reintroducing
(07:17):
your brands and your products to the marketplace after they
have been out of the people's minds during that slowdown.
I would say brand is probably less of an issue
for us, just because Honeywall is an industrial company. However,
the thing that we did do is we looked at
the recession and I wrote this in my share owners letters, saying,
(07:38):
there's three constituencies you have to manage customers, employees, and investors. Now,
this recession is a bit different, just because employees are
at a physical risk, so you have to take that
into consideration. First. I felt like we had to do
a great job with customers first, because if we didn't,
(08:01):
both investors and employees would suffer in the long term.
Anything that we had committed to customers, we made sure
that we prioritized. And after that then we figured out,
all right, it's going to be painful, so you have
to figure out what's the best way to manage the pain,
and we elected to have both investors and employees sharing that. Investors,
(08:26):
of course, because while we were able to hold our
margin rate flat, which was significant improvement over past performance,
a still sorid decline in earnings, with employees that we
took the approach to use furloughs instead of layoffs. But
we also worked on how could we impact benefits programs
(08:49):
like four oh one K matching, which you also see
a lot more of this time through because that wouldn't
affect people in the short term. They could still be
getting the salary that they needed in order to survive.
So let me ask you a question about your managers.
I think in any of these downturns, every manager, by
necessity switches their mindset from growth to survive. But as
(09:12):
you begin to come out and as you point out,
you should be looking for that recovery, how do you
get the managers to flip that mindset from survive to growth.
That ain't easy. I would say we were only about
four months into the Great Recession when we had them
thinking about, okay, how do you handle recovery? And this
(09:33):
is where I go back to independent thinking, because as
you start to have to make these difficult decisions, you
find a lot of your own staff not wanting to
make those decisions. And more than once I had that
discussions where I would start off with, look, that's why
they call it a recession. They don't call it a party.
We have to choose between two bad options. There's no
(09:56):
great third choice that's going to materialize, So you kind
of half that between discussion data and sometimes just having
to say I'm sorry, but I run the place and
I believe this is going to be the right thing
to do. It's not a very easy process, but one
(10:17):
that has to be managed. Let me ask a question
about predictions. You've lived through these before, you care to
make any prediction about when the recovery begins on this
one and the speed at which business returns. So this
is one where I tell every business leader, look, hope
for the best, prepare for the worst, because you just
don't know. Now if you said, okay, so given all that, still,
(10:41):
what do you think will happen. There's nothing that says
the virus has gone away. There's no vaccine on the horizon,
So I'd suspect that there is going to be more infection,
There are going to be more deaths when we get
back in the fall. But I also think there's going
to be a realization that we can't keep handling it
the way we have. This is just an incredibly costly
(11:06):
way to manage this, because right now we're putting an
unbelievable burden on the young. All of this is just
additional debt. But the economy will come back just because
we're gonna let people work. Let me go back a
little bit in time. You were a favorite go to
CEO for President Obama in spite of being a registered Republican.
(11:28):
I actually think you have more visits to the Obama
White House than any other ceo. How did that bond develop?
I got outreach from the Obama administration before they were
actually in office. I got this call saying, Hey, would
you participate in a group of CEOs coming to the
White House to talk about the stimulus plan in support
(11:48):
of it? And I said, yeah, absolutely, we got to
do this. The next day they called and said, well
would you lead the group? And I said okay. That
night they called and said would you be willing to
support it with the press. I said yeah, sure. So
on the eighth day we had our meeting. Then they
said okay, get ready, were going in the East Room.
(12:11):
Nobody prepared me for what was going to happen, because
when we walked out on that stage, I thought they'd
be like four or five reporters. There were two hundred cameras,
video cameras. It was kind of an interesting experience, but
I was strongly supportive, just like I am now with
(12:31):
a spending they've been doing, because you can't have government
falling back at a time like this. And I think
they appreciated the fact that, as a registered Republican, I
was willing to come and support what they were doing
because I did think it was the right thing for
the country. I was able to develop a feeling of
trust with people there. They knew I wouldn't say something
(12:53):
that I didn't believe, but they also knew they could
get the straight scoop from me without any kind of
ideology when it came to what was going on out
there or what we ought to be doing. Your predecessors
at Honeywell avoided Washington. You embraced it. Why did you change?
Is a symbiotic relationship between government and business, and neither
(13:13):
seems to understand the other all that well, and business
cannot be successful without government, and government's not going to
be successful without business. And I used to say with
government that not only does it regulate, but it enables business.
Business cannot ignore government because all that enabling is going
(13:38):
on and we need to be a part of it.
So I felt it was important for us to participate,
and I devoted a lot of time to it. Dave,
let's go back in time. You and I are the
same age, but from opposite ends of the country. You're
from the top of the country. Little town in New Hampshire.
Was it sun Cook? Yeah? Named after the sun Cook Indians.
Can you describe your early life? Paint a picture of
(14:00):
America and New Hampshire. It was a little French Canadian
milltown enclave in New Hampshire, which occurred throughout New England.
So until I was three, I spoke French only. We
spoke no English. My mom and dad had eighth grade educations.
My mom got a secretarial degree that took her a
(14:22):
year to get so that she could get a better job.
There weren't a want of role models, so it was
kind of tough just trying to figure out what do
I want to do? Where do I want to go?
What sounds like those from your background that you did
learn responsibility early and learned to be industrious. The story
goes that you actually want into town to pay the
family bills. You were the one that took the cash
(14:44):
and you were still a kid, And we go around
every one of the stores and pay the bills. It's
not a real story. Man, you are good. One of
the things that I have always told people is that
when they ask a question like you know, where did
you learn all your leadership lessons? And they expect me
to name a famous CEO, and I always tell him
the same thing, as you know, I learned most of
(15:06):
what I needed to know from my mom and dad.
They really were terrific and very good at instilling the
right kind of values, whether it was hard work, responsibility.
You need to be able to take care of yourself
and not expect others to do it. My mom would
give me the money to pay all the bills in Manchester,
(15:26):
which was twelve miles away. I had to get on
the bus I go into Manchester, and she had given
me all the directions that I had to memorize and
pay this much here, make sure you get a receipt
and go to this place. And I never thought too
much about it. I just did what she told me.
And I think back to my dad always telling us
(15:48):
be a leader, not a follower. My mom always saying
think for yourself. It really instills the right kind of values.
You've got this really interesting journey from high school to college,
I admitted. Then you decided you wanted to get on
with your life. You're work in your dad's garage, were
thinking about being a carpenter's apprentice with an uncohole, almost
(16:09):
joined the Navy, and at the last minute you were
saved by the director of admissions at the University of Hampshire.
You want to tell that story and how that changed
your life. If there's anything you can glean from what
you just said, it's that I was anxious to get
on with my life and make something of myself, but
I was totally directionless. I knew I didn't want to
(16:32):
keep living with no money the way I always had
to your point, after bouncing around enlisting in the Navy
and then backing out the day before I was to
be sworn in, Thank god that worked that way, I decided, Okay,
I need to get back into school. It seems to
be the only thing I'm good at. And I wasn't
good as a mechanic, I wasn't good as a carpenter's apprentice.
(16:54):
So I drove to the University of the Hampshire about
five minutes away, found the director of admissions. I went
to their office, and you recall these kind of days, Bob.
I had my jeans, my flannel shirt, my long hair
and went in and said I'd like to speak to
the director of admissions. She said, well, I'm sorry you
don't have an appointment, and I said, now that's okay.
(17:14):
I'll just sit here and wait. I'm sure he's bound
to have some time at some point. So after about
two hours of sitting there, she came over and said,
you know he's not gonna be able to see you,
and I said, no problem, I brought a book. I
can wait. Whenever he leaves, I'll catch him. She finally
looked at me and said you're not leaving, are you.
Well she finally said, okay, he'll see you. So I
(17:37):
went into his office and explained the whole thing, and
he said, okay, well, this is not consistent with our rules. However,
if you get me an application in by the end
of the week, if it qualifies, I'll let you in.
So I hustled got it into him and he let
me in. I always say that in the arrogance youth.
(18:01):
I didn't think to really thank him, and it was
years later that I said, cheefs you know, I had
to track that guy down. He really did something special
for me, and I did. His name was Gene Savage,
and I reconnected with him, thanked him, and come to
find out, I was not the only person he'd ever
(18:23):
saved like this. He was just that kind of guy.
And it was about three years after that he was
awarded New Hampshire's highest civilian honor, called the Petty Metal,
and he asked me to be the guy presenting it
to him. Breaking the rules does work sometimes, Yeah, it does.
Too Many people just kind of get into enforcing the
(18:46):
rules and don't really think sometimes about well, you know,
what's really the right thing to do here. But there's
a lesson in that. I think for business too. And
it sounds like you've used a lot in your career.
I have, and that includes giving people of second chance
when things are warranted, and I benefited from second chances
(19:06):
that I always kept that in mind. Just hold on
a second, because we've got so much more to talk about.
We'll be back after a quick break. Welcome back to
math and magic. You had an interesting path through college.
You worked full time at night, you did college in
(19:27):
the day. You took a year off to become a
commercial fisherman. Fortunately you came back to your census finished college.
You joined g E after college and began to move
up the ranks. When in that process did you realize
you had real management potential? Actually, I was working at
ge A is an hourly employee night while I went
(19:47):
to school those last couple of years. I graduated and
I went back to school just because I got scared.
I got married and we were living in this third
floor on he did uninsulated apartment in New Hampshire, which
means she gets chilly in the in the winter. And
first month my wife says she's pregnant, and then fourth
(20:09):
month she said she couldn't work anymore. And I realized,
oh my god, we have to live on my paycheck
now as an hourly employee. And about four weeks after
I graduated, they let me interview for an exempt job
and I got it, and I started kind of just
working from that point, and all I wanted was a
(20:30):
job that would pay more than the last one. Just
as I felt I was making some progress, I ended
up getting divorced. That put me back in the hole again.
So it probably took me until I was thirty before
I finally got to a point where I said, finally
I could pay my bills and not worry. The idea
of becoming a CEO didn't really dawn on me until
(20:52):
I was about forty years old and I was in
a job and said, son of a gun, I think
I'm actually not so bad at this. I think there'd
be a chance for me to do something somewhere. That's
the first time I ever really thought about it. Up
to that point. It was just a matter of get
a job that pays more, so I don't have to worry.
You wound up running the g E Appliance unit very successfully,
(21:14):
a six billion dollar business. There was a very visible
succession process when Jack Welch was going to step down.
Looking back on that process, was that a good way
to look for a successor? I mean, Jack says it
didn't work. It was a mistake for him. He missed you. Well,
it's nice to hear you say that. I have to
say that when I went through my own succession process,
(21:35):
I read a lot of literature trying to make sure
that I did it right. I didn't want to make
a mistake. I wanted the company to do well. Ten
years after I left. I really wanted to build an institution.
One of the things kind of struck me is how
really weak the literature is out there. And I read
a lot of stuff where they talked about this company's
(21:57):
great succession process and then you'd say, yeah, but you
know that guy got fired four years later, So how
good is the process if it yields a bad result?
So I took a different approach and went through a
bunch of interviews with retired CEOs, some of whom IT
had worked, some for whom it had not, and asked
(22:18):
them what did they miss, what did they like that
they had done, what would they have done differently? And
developed my own process. Well, shareholders clearly appreciate it because
the company kept growing as doing a good job, which
I think is a testament to the legacy you built.
But also that succession plan. When you left GE you
went to tr WT, but left pretty quickly to go
be CEO of Honeywell in early two thousand and two.
(22:41):
Why that jump tre w as a company was front
with difficulty. They had fired the three previous successors. So
when I went there, I said, we're going to set
up something so that if I'm not made CEO by
a certain date, you'll have to pay me ten million dollars. Now,
(23:03):
most people would look at that and go, oh, okay,
well that's not gonna happen. It nearly did. They damn
near fired me, and the CEO went to the board
demanding that I be fired. I ended up going through
a three month investigation by the board to find out
who was right here. Well, the board ended up deciding
(23:26):
that I was the right call. So they did end
up making me CEO, but they still didn't make my
life that easy. After that, Tom Neff reached out to
me in like December of old one and said, hey,
would you be interested in looking at the Honeywell job?
And at first I said no, and said, look, I've
(23:46):
just started here. There's a lot of things I got
to get done, and I just, you know, wouldn't feel
right about it. He said, well, I'll send you a
bunch of stuff, take a look, give me a call.
So he sent it to me, and I read all
the stuff, watched the videos, and I found myself thinking
why was I being so loyal to a group of
people who had exhibited no loyalty towards me? I thought, okay,
(24:08):
this is a better opportunity. I ought to give it
a try and see what I can do. So I
elected to join. I had no idea what I was
getting myself into. I knew it wasn't going to be easy.
But as bad as it looked externally, it was even
worse internally. For the first four and a half months
that I was the CEO, I was not allowed to
(24:30):
see the books and what I would ask a finance guy,
how's the quarter going? They literally said, I'm sorry, I've
been instructed not to answer any of those questions from you. Okay,
well i'll be chairman in four and a half months
and I'll find out everything then. So I waited, and
of course it was significantly worse than what anybody had
(24:54):
thought internally or externally. And it's one of the things
that you know, getting back to this point on success planning,
Jack Welch at the end of the day, his twenty
years were an amazing run, and I thought, jeez, you
know what was different is he was able to figure
it out. Whatever it was, however the future unfolded, he
(25:14):
was able to figure it out. And then I looked
at it said, well, you know, I kind of ran
into the same thing. What I ran into it any Well.
It was a lot different than what I'd been told
and people externally thought. But I was able to figure
it out and it became one of the kind of
big things I looked for in a successor. Was not
trying to predict the future because six months ago, who
(25:36):
would have predicted that we are where we are now?
You just don't know, but rather can you find somebody
who can figure it out? Well, it's interesting I've heard
people say, and I probably more in that camp, as
you actually can't plan for the future. Plans don't come true.
They just reduce your anxiety because you think you can,
you know, just to put it in perspective for people
(25:58):
to you know, before you arrived, Anywell was supposed to
be acquired by GE, and I think the government in
Europe called it off and it seems like Honeywell was
not prepared to continue to run as an independent company.
It was that what you were dealing with in terms
of the back story there to your point, the EU
put conditions on the GE refused to comply with, so
(26:21):
the deal fell apart. Then Honeywell sued GE for failure
to close the deal, and there was a small settlement,
and in the end, by the way, both Ge and
Honeywell took it to the European Court in the Hague
and they agreed that the EU had overstepped in their
(26:42):
compliance request. So it's a little piece of the story
that ends up getting lost. But yeah, there's that definitely
ended up happening. And the Ge folks were pretty much
running the company, and there were whole organizations that had
been told, look, you're gonna be restruct cheered out of
a job, so you ought to be looking now and
(27:03):
if you can find a job, take it. So we
had something like a third of our leadership positions were empty.
Hell of a beginning. It ended well. It was a
lot messier than people ever thought about, and I developed
some of that in the book. Let's talk a second
about company culture. You mentioned it earlier, and we were
talking about this downturn. You know, some people call it
(27:24):
the operating system of a company. If it's not right now,
the programs are going to work. Well, how do you
think about company culture and how do you develop it? Yeah,
I gotta completely agree on how important it is. And
I realized we had warring cultures because we had the legacy,
Allied Signal Legacy, Pitway legacy, honeywell, all the different views
(27:45):
on how the world ought to work. So the first
thing we did is said, okay, we need to focus
on something outside of ourselves. So we chose the customer,
and so let's make all our arguments consistent with what's
best for the customer. If we did that, then maybe
that would take a lot of the emotion out of it.
The second one was to develop twelve behaviors that said, Okay,
(28:10):
here's what we want our culture to be. And I
did that with my staff and I remember one of
my staff members saying, Dave, why are we spending all
this time on behaviors when we have all these strategic
issues we need to address. And my comment to them was, look,
I can make all the strategic decisions you want, but
if nobody does them, it really isn't going to make
(28:31):
a difference. Will feel better because we've made some decisions,
but nothing's going to happen. And what we need is
a culture where after decisions are made, something happens. The
thing that people like is to be part of something
bigger than themselves that's successful, and if we can do that,
people will feel good if they can see that their job,
(28:55):
the thing that they're doing every day, makes a difference.
That's the sort of thing that Bill's morale and I
spent a lot of time talking about it, a lot
of time implementing it. Honey Well operating system, which was
very consistent with our culture, managed to touch half our
people as a way of motivating them creating more fulfilling work,
(29:18):
and that that culture does make a difference. I'm a
very big believer in it. You did something very few
CEOs do. You left at the peak. You couldn't have
been more successful, more powerful, more applauded, and talk a
little bit about how you came to that decision. I
(29:39):
did love my job. I love doing it. It was
a labor love for me, and I loved working at
Honeywell and the people and what we accomplished there. But
I had a couple of things that I thought were important.
The first one was I really wanted ten years after
I left for people to say, wow, that Honeywell is
(30:01):
a great company. It just keeps delivering. Those guys keep performing.
And while I had I thought good people, good process,
good portfolio, I also thought it was gonna be really
important to pick the right CEO, and that's why I
(30:21):
put as much attention into it as I did. If
you have really good potential successors, they're not going to
sit in a job for five years waiting to see
if they're going to get the job or not. Because
recruiters are knocking on their door constantly. You need to
be able to create a tighter timeline so that you're
(30:44):
good people are gonna stick with you to see what
the decision is. The other piece of it was I
knew two thousand sixteen was going to be our toughest
year because we'd want piles of aerospace contracts and it
required a lot of what we call concessions. And I
(31:04):
had changed the bookkeeping, no longer put it on the
balance sheet and instead expense all that stuff, and a
bunch of those expenses were coming in two thousand sixteen,
and then I knew two thousand seventeen onward, we're going
to be better. And I thought, okay, better for me
to take that year so that the tougher year is
on me and my reputation can stand it, and then
(31:28):
for my successor to take it from that point forward,
where there's a little bit more of a tailwind. So
I put all those together and said, Okay, this is
gonna be the right time to go if I really
want ten years from now people to look back and go, man,
that Honeywell is a great company. Well, it looks like
you're on that path and you handled it very well.
(31:50):
You've got a book coming out. Why did you do
a book? What do you want people to take away
from your book? What I really wanted to do is
kind of my joke about business books is that just
about every business book I've read would have made a
great pamphlet that there's ten pages of important concept and
then to fifty pages of stories to support it that
(32:12):
you can fly right through. And I said, I wanted
something where at least every other page had something fought provoking,
where someone would say, oh, that's an idea I could
use that, or I could do this over here are jeez,
maybe I should modify how I'm doing something. So I
wanted to write something that was just very meaty, very substantive.
(32:38):
And one of the things that has bothered me is
all this discussion of short termism. It always comes across
like you're either short term focused or your long term focused.
It's mutually exclusive, and the way we ran hunting well
was that. I always said success comes from a comp
(33:00):
wishing two seemingly conflicting things at the same time. And
it's simplistic when people say I'm either short term focused
or I'm long term focused. You have to find a
way to do both. So how do you accomplish both?
So let's jump to you again. If someone listening to
(33:22):
this episode I would like a career like you've had,
is there one piece of advice you could give them
that puts them on that track. I guess everybody's going
to be different because capability is different. I might have
really wanted to be Hussain Bolt in the hundred meter dash.
I don't care how good my attitude was. I'd have
still been at the fifty meter market when he was finishing.
(33:46):
It wasn't going to happen. So make sure you're working
on the right thing. Hard work doesn't always pay off,
so make sure whatever you're working on is consistent with
your capability. Is the second piece I guess i'd add
is I always said advancement requires two things. Performance You've
(34:09):
got to be able to get results and get them
in the right way, and visibility, and visibility cuts both ways.
If you do a great job and it's visible, then
you'll do great. If you fail, well, that's also going
to be pretty visible. And I can't help. But I
guess I got to add a third piece. If you
(34:30):
are going to get ahead, it's important to be self
aware and to be a learner, and that all of
us have personal characteristics that are issues to our advancement.
Only you can figure out what that is. You'll get
advice from other people and sometimes it will be correct,
sometimes it won't, but you really have to figure it
(34:53):
out for yourself. It took me until I was forty
years old to realize that when everybody said I tended
to be defensive, they were right. And I realized I
had to start thinking differently about how I handle things.
And it made me a better leader because I realized
that that's the kind of person I was, and I
(35:14):
needed to be able to control how I reacted to
things in a way that would yield better decisions. Say
if this has been a great conversation as we wrap up.
We always end every Math and Magic episode with a
shout out to those two key disciplines of marketing and business,
which is the analytics and the sheer creativity. You've seen
(35:37):
a lot of people. If you think about it, who
would you give the shout out to? They can be
a complete unknown, or they can be somebody in history
of the greatest analytical business person. You could think of
Bob Rubin, former Goldman Facts and Secretary of the Treasury.
But he wrote a book called In an Uncertain World,
(35:58):
and it really had an impact on me because he
talked about how we all look at issues and make
a decision and assume that we've made the right decision,
and we just kind of go forward. And his point
was in every decision where maybe maximizing the probability we
(36:19):
made the right decision, but we need to recognize that
there's uncertainty and everything and that there are other outcomes
that are possible. So how do you think about those
that had a real impact on me? The most creative
who would you give the shout out to? For the
magician just comes up with those great ideas out of nowhere.
(36:40):
How about Bernie maydon Oh, Okay, we're gonna give it
to him, but we're gonna put that on a side
in the box and uh not not reward him too.
Much he sold billions without anybody noticing. I has to
talk about a magician. Dave, thank you so much for
being here today, and good luck with the book, and
thank you for sharing these experiences and these insights and on.
(37:02):
It was fun. Bob says, here are a few things
I picked up in my conversation with Dave. One, think
about recovery during recession. Dave was in the driver's seat
at Honeywell during the last two big economic downturns, and
no matter how dire things got, he always thought about
the long term impact of his decisions. As Dave said,
(37:23):
thinking about your growth initiatives, investments, and how to maintain
your customers are crucial to accompany's longevity. To exercise independent thinking.
While it's important to gather everyone's facts and opinions, it's
imperative that leaders make independent decisions during difficult times, even
if it's not among the consensus. As Dave says, independent
(37:44):
thinking is a rare but important commodity. Three. Don't try
to be something you're not. As Dave recounted, he went
back to school because he knew he was good at it,
and that mindset carried with him throughout his career. He
always stuck to the path he felt most called to.
It's a lesson he learned early in life to always
trust what you're good at and for break the rules.
(38:06):
Sometimes enforcing the rules isn't always the right thing to do,
and because Dave dared to do so, he got a
second chance to attend college, which changed the course of
his life. Thanks for listening. I'm Bob Pittman. That's it
(38:58):
for today's episode. Thanks so much for listening to Math
and Magic, a production of I Heart Radio. This show
is hosted by Bob Pittman. Special thanks to Sue Schillinger
for booking and wrangling our wonderful talent, which is no
small feat Nikki Etre for pulling research bill plaques, and
Michael Asar for their recording help, our editor Ryan Murdoch,
and of course Gayle Raoul, Eric Angel, Noel Mango and
(39:21):
everyone who helped bring this show to your ears. Until
next time,
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