Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio. So he is well known to
Speaker 1: our listeners in the global business community. Named ce of
Speaker 1: Honeywell in O to stay there until early former CEO
Speaker 1: of tr W, senior exec at GE and today his
Speaker 1: chairman Avertive Holdings. Also a senior adviser at the private
Speaker 1: equity firm kk Are. He is out with a new book.
Speaker 1: It's called Winning Now, Winning Later, How companies can succeed
Speaker 1: in the short term while investing for the long term.
Speaker 1: We're delighted to have with us David Cote, he joins
Speaker 1: us on the phone from Atlanta. Dave, nice to have
Speaker 1: you here with Jason and myself. How are you and
Speaker 1: how is Atlanta? Oh, things are going pretty well and
Speaker 1: we just tasked the short range stormage beautiful right now. Well,
Speaker 1: I was talking to my folks down there day. They
Speaker 1: live there in the Atlanta area, right in Buckhead, and
Speaker 1: you know, they were saying, it's just it's kind of
Speaker 1: a strange time because obviously the cases are arising a
Speaker 1: little bit, but Atlanta it feels a little bit open.
Speaker 1: I mean, I wonder as someone who understands so much
Speaker 1: of this, especially from an economic and a business perspective.
Speaker 1: You know, what's your short term and we're gonna talk
Speaker 1: about short term and long term, but what's your short
Speaker 1: term outlook for the local economy there? Well, I mean,
Speaker 1: you're right, things are a little more subdued here as
Speaker 1: they are everywhere. But when it comes to how do
Speaker 1: we manage our way through this, it comes back to
Speaker 1: me that same principle short term, long term, and that's
Speaker 1: you have to figure out how do you accomplish two
Speaker 1: seemingly conflicting things at the same time. And that's always
Speaker 1: true in business, and I'd argue in life it's true
Speaker 1: whether it's how do you accomplish short term and long
Speaker 1: term but not mutually exclusive. The same is true with
Speaker 1: how do you open the economy but keep everybody safe?
Speaker 1: And everybody seems to human nature tends to want one thing.
Speaker 1: You either keep everybody safe and stay at home, or
Speaker 1: you just completely reopened. And we just need to be
Speaker 1: thoughtful about how we how we do this. And you're
Speaker 1: seeing different experiences everywhere because I don't think everybody is
Speaker 1: always as careful as they ought to be, because they
Speaker 1: start thinking, oh, well, everything's fine now, it's not something
Speaker 1: that's a binary choice out of way to accomplish those Yeah,
Speaker 1: and that's not tricky certainly, this as we've seen in
Speaker 1: terms of how it plays out. You know, it's interesting though,
Speaker 1: you know, this whole short term long term Jason and
Speaker 1: I Dave have a lot of conversations, um about the
Speaker 1: lack of long term planning. Certainly maybe on a government level, uh,
Speaker 1: in terms of some of the needed programs around the country,
Speaker 1: but even it's difficult, I think if you're a publicly
Speaker 1: held company to think long term, um, tell us when
Speaker 1: you were, you know, running your company's whether it was honeywell,
Speaker 1: whether it's t r W, you know, constantly thinking about
Speaker 1: that quarter to quarter, and I know we report on it. Um,
Speaker 1: how that kind of ties your hands? Well, this is
Speaker 1: where uh, my view is different, and it's not so
Speaker 1: much that it ties your hands. It's that you need
Speaker 1: to just think differently about how you run the company.
Speaker 1: And that's why the title of the first chapter is
Speaker 1: banishing intellectual laziness, because it's too easy to just say, well,
Speaker 1: you know, markets demand it, you got to make the quarter,
Speaker 1: so we have no money to do this stuff. But
Speaker 1: instead if you look at start to look at your
Speaker 1: business differently and say, all right, I have to accomplish both.
Speaker 1: How do I make sure I start thinking about both
Speaker 1: an accomplishing boat at the same time. So you start
Speaker 1: planning differently, and instead of we'll say long range planning
Speaker 1: or strategic planning, be an annual event. You start to
Speaker 1: figure out, how do I make this more short term
Speaker 1: so that I got these milestones or even better inch
Speaker 1: stones to make sure I'm making progress. How do I
Speaker 1: run my operations so that I generate enough money so
Speaker 1: that I have the flexibility to provide the return and
Speaker 1: my investors are looking for, but at the same time
Speaker 1: invest in the future. If you take a look at Honeywall,
Speaker 1: for example, we had an empty pipeline of everything in
Speaker 1: the beginning, and we slightly outperformed the S and P
Speaker 1: five dred the first four or five years, and I
Speaker 1: used to get questions from investors about it. Why isn't
Speaker 1: it better, And I'd say, well, I've got an empty pipeline.
Speaker 1: I gotta put money into this stuff. And if you
Speaker 1: take a look at the subsequent ten years, we just
Speaker 1: blew away the S and P five hundred, so that
Speaker 1: over sixteen years, we generated eight return two and a
Speaker 1: half times the SNP five. Because all that long term
Speaker 1: stuff pays off. So why don't more people do that?
Speaker 1: David Um I think it's it. First of all, it
Speaker 1: takes a lot of work, and you do have to
Speaker 1: really think about your business differently, and it's not an
Speaker 1: easy mindset for people to grasp having to do the
Speaker 1: two conflicting things at the same time. Right, human nation
Speaker 1: always wants one, you know, tell me, boss, what's the
Speaker 1: one thing you want? It's it's too easy to gravitate
Speaker 1: to that. Whether you've got ten people, thousand people, a
Speaker 1: hundred thousand people, it's an easy refuge. Do you think
Speaker 1: the companies that ultimately do well, like and I think about,
Speaker 1: you know, are those that really do manage it well
Speaker 1: and maybe give up some quarterly growth perhaps, but they
Speaker 1: understand and they communicate it well to their investors about
Speaker 1: what they're doing. Those are the companies that potentially and
Speaker 1: ultimately survived. Like I think about a company like Ge.
Speaker 1: You spend time at Ge. You know, they spent a
Speaker 1: lot of money and a lot of different things, and
Speaker 1: then you know they really got into a really rough spot. Yeah,
Speaker 1: not all long term spending makes sense. Just because it's
Speaker 1: long term doesn't mean it's gonna work. And this is
Speaker 1: where I get to You've gotta have some kind of
Speaker 1: short term milestone of inch stones, if you will, to
Speaker 1: say okay, is this working? And I often say there's
Speaker 1: three aspects of leadership. The first is mobilizing a large group,
Speaker 1: which is the most visible, but it's five pc of
Speaker 1: the job. The second one is picking the right direction,
Speaker 1: and then the third one is making sure that the
Speaker 1: entire organization moves in that direction. And I think we
Speaker 1: get a pretty good job at Honeywell and saying, Okay,
Speaker 1: what are these long term seeds that were planting and
Speaker 1: are they going to pay? And if they've stopped paying
Speaker 1: while we stopped working on it, my successor is doing
Speaker 1: the same thing. So it makes you feel pretty good
Speaker 1: about where that's going. And that's what we're doing Invertive
Speaker 1: Holes were executive chairman. I gotta ask you about leadership
Speaker 1: because we have gone through the last few months it
Speaker 1: feels like waxing and waning as a society as a culture.
Speaker 1: Um so many crises that we're facing. And you know,
Speaker 1: you served at the top of number of companies you
Speaker 1: also served on the board of the Federal Reserve Bank
Speaker 1: of New York. I believe so you understand the workings
Speaker 1: of government, UH and companies in the corporate world, what
Speaker 1: do you make of leadership of the Let's just start
Speaker 1: with the first crisis, the coronavirus crisis that we've seen
Speaker 1: from both the government level and and maybe the state
Speaker 1: and local level. Well, I think there's gonna be a
Speaker 1: lot to learn when we do the post mortem of
Speaker 1: how could we have handled this differently? The if we
Speaker 1: take a look at the economic cost of how we
Speaker 1: went about it, it's absolutely huge and we need to
Speaker 1: be a lot more thoughsible about how we handle these
Speaker 1: things in the future. UH. Supply chains for key medical
Speaker 1: equipment is something that's gonna need to get revisited, making
Speaker 1: sure we've got the capacity to handle issues that comp
Speaker 1: in the future, and just getting better compliance across the country.
Speaker 1: When it comes to what exactly everybody ought to be
Speaker 1: doing this is we just weren't that prepared for it,
Speaker 1: and nobody was. I mean there was no country that was.
Speaker 1: So I don't fault anybody for this, but we sure
Speaker 1: ought to learn from this on how to make sure
Speaker 1: we have better early warning systems. UH, more money going
Speaker 1: into some of the national organizations that understand what to
Speaker 1: do with these crises and for forecast them a little better.
Speaker 1: When you see a smidge of something happening, how do
Speaker 1: you respond to it? So I think it's gonna be
Speaker 1: hopefully a really good post mortem analysis done here on
Speaker 1: after action report on what do we do, what do
Speaker 1: we do with the next time it happens, Because we've
Speaker 1: got to assume that was especially the population of the
Speaker 1: planet going a ten billion people over the next thirty
Speaker 1: five years according to the u N report, and it's
Speaker 1: more expensive travel. This is gonna happen again. We need
Speaker 1: to be a lot better prepared, flexible and responsive. We're
Speaker 1: never going to be able to predict exactly what it is,
Speaker 1: but we can sure make ourselves a lot more flexible
Speaker 1: in terms of response. Yeah, exactly, And I do wonder
Speaker 1: you know, it's interesting leadership this time around. You know,
Speaker 1: if it wasn't coming necessarily on the federal level, we
Speaker 1: certainly saw it on the local level. We also saw Dave,
Speaker 1: you know, C E O S I feel like, step
Speaker 1: up and whether it was taking care of their workers,
Speaker 1: you know, when they needed to and I do wonder
Speaker 1: you know how that you know if that change is
Speaker 1: going forward, that you know companies understand that in some
Speaker 1: cases they may be on their own with this. Yeah,
Speaker 1: I'd say that's probably going to be pretty typical, just
Speaker 1: because companies are smaller than governments, so you can respond faster.
Speaker 1: You don't have to convince a lot of people to
Speaker 1: do something, you can just go ahead and do it,
Speaker 1: So you are going to be able to respond faster.
Speaker 1: And yeah, I think everybody should be pretty proud of
Speaker 1: how companies responded overall here, whether it's trying to get
Speaker 1: the key uh supply things that were needed, the how
Speaker 1: do they protect their workers. I think companies have been
Speaker 1: a pretty good job. But everybody's gonna need to up
Speaker 1: their game going forward because it's been a huge learning
Speaker 1: experience for companies, state governments, federal governments, UH, medical uh,
Speaker 1: whether they're hospitals, doctors, agencies, everybody is going to have
Speaker 1: to up their game here we'll speak of upping their game, David.
Speaker 1: There seems to be consensus that companies need to do
Speaker 1: more and need to be more methodical and more proactive
Speaker 1: and make real decisions and maybe some hard choices around
Speaker 1: diversity and equality. Uh, you know you're there in Atlanta
Speaker 1: where so many things have happened historically and of late
Speaker 1: around questions of civil rights and and the gross in
Speaker 1: equal all these that exists in our system, so much
Speaker 1: of it is economic. As a leader, how do you
Speaker 1: think about this, how do you think about it at
Speaker 1: your company? And what are some of the conversations you're having. Well,
Speaker 1: I'd say, uh, I have to preface all of this
Speaker 1: a cars with I'm a sixty seven year old, white
Speaker 1: male former CEO who grew up in New Hampshire, So
Speaker 1: it's not Uh. The last thing I ever want to
Speaker 1: pretend to is that I'm an expert in this area
Speaker 1: or I've got it right, I would say, though, I
Speaker 1: do think this is another area where both a short
Speaker 1: term and a long term approach can make a difference.
Speaker 1: On the short term side, there's all the stuff that
Speaker 1: we need to just do better than we do today,
Speaker 1: the hiring side of it, well, and I was pretty
Speaker 1: proud of our track record at uh Honeywell, criminal justice reform,
Speaker 1: policing tactics, those are all things we ought to address. However,
Speaker 1: there's a big long term aspect to this that I
Speaker 1: don't think gets talked about all that much. And that's okay.
Speaker 1: What are some of the root causes for why minority
Speaker 1: UH populations are overrepresented in the lower socioeconomic classes? And
Speaker 1: if we take a look at one, I'd say education
Speaker 1: and the way we fund education based on property taxes largely,
Speaker 1: which means wealthy school districts have more money, better schools,
Speaker 1: whole ones don't. And if unless we do something to
Speaker 1: address that, we just perpetuate these class distinctions, which yes
Speaker 1: sex minorities, but also affects UH white families that are
Speaker 1: in the same boat. Now, I mus be more discussion
Speaker 1: about some of those What are some of the longer
Speaker 1: term things we need to do? All right, David Cody,
Speaker 1: gotta leave it there, Thank you so much. Come back.
Speaker 1: We would love to talk to war David Cody, of course,
Speaker 1: former Honeywell CEO. Check out his book Winning Now, Winning Later.