David Novak 0:04 

Hey everybody, welcome to how leaders lead where every week you get to listen in while I interview some of the very best leaders in the world, I break down the key learning so that by the end of the episode, you'll have something simple you can apply as you develop into a better leader. That's what this podcast is all about. And today's guest is Dave Cody, the former CEO of Honeywell. Now, let me tell you something, Dave led an incredible turnaround at Honeywell, when he took charge in 2002, the company was in absolute dire straits, Dave was in charge for 16 years. And in that time, Honeywell is market cap grew from $20 billion to a whopping $120 billion. And at every point along the way, Dave fought the misconception that leaders have to choose between two seemingly conflicting things. Like for example, you can either have short term results, or long term growth, but you sure can't have both? Well, for Dave, you can't have both. But it takes a lot of creative thinking. And you've got to be able to think for yourself, he can't fall into the trap of agreeing with the prevailing opinion, or what you quote unquote, should be doing. When you listen to Dave, it comes through loud and clear that great leaders know how to think for themselves. And when they do, they get beyond the surface level answers, and truly uncover creative Win Win solutions. So here's my conversation with my good friend, and soon to be yours, Dave, Cody.

Dave, thanks so much for taking the time to chat with me. I'm really looking forward to catching up with you.

Dave Cote 1:50 

I'm glad to be with you again. You were always fun. I'm sure this is going to be fun.

David Novak 1:55 

Absolutely. Well, you know, I try to get at the heart of the leader. And one of the best ways to do that Dave is to is to go back and really just talk about your your upbringing. Tell me about to, you know, how you grew up?

Dave Cote 2:07 

Okay. Well, I would say it was a little different than most, I guess, because, you know, some like to talk about the first in their family to graduate from college. Well, I was the first in my family to graduate from high school. My dad had about six months of high school, my mom had two days in high school and had gotten a secretarial degree at a local business school. And we grew up in this kind of little old French Canadian mill town in Suncook, New Hampshire, where you can write had to say there weren't a lot of role models. And one of the things that kind of happened to me over time is I had pretty low expectations of myself. In the beginning, I had no idea what I was capable of. And there was nothing to indicate that I ever did. You know, I spoke French before I spoke English as a kid, I didn't speak English till I was three. Don't test me My French is minimal now. So my parents moved us to English speaking neighborhood because my mom had noticed that people who spoke English with a French accent didn't do all that, well, they tended to have the lower end jobs, and she wanted something better for all of us. So I always kind of felt like in that upbringing, I didn't have a lot of role models. There wasn't a lot of educational knowledge, if you will. But the values were pretty significant. You know, both my mom and dad had really good values, and they worked hard to impart those to us. My dad worked constantly, he was at 1.7 days a week, 12 hours a day. And then he finally cut back to six days a week, 12 hours a day, he was a mechanic eventually owned his own garage. My mom was always working at home, I had five kids grandmother lives with a six room house. So it was pretty crowded. But they were always imparting the right kind of values about you know, the just basic stuff like honesty. My dad always saying Be a leader, not a follower. My mom always saying think for yourself, if your friends are going to jump off a bridge, are you going to jump off a bridge to pretty irritating when you hear at the 27th time, but nonetheless, still pretty insightful. And that's why I oftentimes say that when it comes to who were the people that I looked to who were really my role models for leadership, it was really my parents, they had really good values and they worked hard to make sure that we understood those values.

David Novak 4:38 

You know, Dave, I remember you talking about your father giving you some advice on how to how to wash windshields. I remember that conversation. I thought that was great.

Dave Cote 4:48 

Well, I was 12 years old and working in my dad's garage, and it was my job to wash windshields. And this is the in the days when you had a little squirt bottle and you had napkins that you use. So one wasn't the easiest. And I mean, it was like this bug filled windshield and I had to spend all my time just really getting this thing sparkling clean. And I can remember asking him, why did we spend the time to so much time on windshields when they were there to buy gas. And his comment to me, which I always thought was pretty good is he said, My customers can buy gas anywhere. If I want them to buy gas here, I need to do something special for them, and washing their windshield in a way that's going to keep it clean. And they'll remember is what we do. Wow, okay, well made sense to me. After that I actually felt like what I was doing was important. Before that time, I was just a 12 year old doing the dog job of washing windshields now all of a sudden, it was important.

David Novak 5:48 

Yeah, that's a great lifelong lesson it there's dignity in every job. And what you do is really important, you need to do it. Well,

Dave Cote 5:54 

I'd have to say, he always he said the same thing about cleaning the men's room and the ladies room. And while I did it, and did it, well, I can't say I felt the same mark of respect doing that as I did.

David Novak 6:08 

I got that. Well, you know, you retire from Honeywell, April 2018. And you know, I thought you probably are going to go off and you know, just really enjoy yourself at some great place like Montana or whatever it is the fly fishing. Out of the blue. I get to this new book shows up winning now winning later. And you know, by Dave Cody, this famous CEO from from Honeywell, is absolutely, by the way, I have to tell you, you did a fantastic book, if I had to pick one. One way to describe the book, I would say it's substantive. There's some real substance that I think every reader could can pick up. So what compelled you to write the book Dave?

Dave Cote 6:52 

Yeah, I guess it was a confluence of things. I got input from various people like Hank Paulson, and Barack Obama, saying You really ought to write a book about leadership and what you did at Honeywell based on everything they knew that had been going on. And I gotta admit, I was a little intrigued because I, my first thought was to write something on about leadership, because I felt like leadership was really being denigrated. In terms of people outside the business community, as in business leadership was no big deal, were just a bunch of light bulbs, you change one put in another, you get the same amount of light, because the institution performs like the institution will perform. And I felt like that was just extraordinarily wrong. And I kind of wanted to correct the impression. So I wrote my own book, and then was told by an agent, hey, this is a lot of great stuff, but it's not going to sell because there's it's a kind of a memoir, and you're not famous enough, David. Okay. Well, I know I'm not famous enough. But it's not about what I did in sixth grade. It's about what I did at Honeywell. And he said, you know, pick a theme of something that bothers you out there. And we'll reorganize the content in a way that gets that point across. And I said, Well, you know, the thing that kind of bugs me right now, is I read all this stuff about short termism. And everybody makes it sound like you choose, you pick either to be short term oriented, or long term oriented. And I said, that's wrong. This is inconsistent with how I looked at the world or how I ran Honeywell, which was that success was always about achieving two seemingly conflicting things at the same time. Like, did you want low inventory? Or did you want great product delivery? Did you want people closest to the action empowered for quick decisions? Or do you want? Did you want good control? So nothing bad happens? Did you want good short term results? Or did you want good long term results? The answer in every case was you wanted both. They're not mutually exclusive. They're mutually reinforcing. And we follow that principle at Honeywell with everything really, but also on the short term long term. And decided that was the point that we wanted to make was for people to recognize out there. You don't have to tell your boss or your investor, hey, wait for three years, and then everything's going to be terrific. Rather, there are things you can be doing that allow you to perform better in the short term, so that your boss and investor are satisfied, but also does all the seed planting that's needed for the long term.

David Novak 9:46 

That's really interesting, because, you know, I remember reading Good to Great, which is another great business book by Jim Collins, and he basically talked about the magic of the hand. Yeah, which is you know, you can do both you know, you can make you know, You can win in the short term. And he didn't say exactly like you, but he talked about, you know, people think you have to give up profit for sales or whatever. But he talked about the magic of the end. Can you tell us a story, Dave about the biggest temptation or where you really, really had to look really hard at it sacrificing the long term for the for the short term and, and how you overcame it? Sure.

Dave Cote 10:23 

If I could go back, though, on the two seemingly conflicting things. So I felt like it was an original discovery, let's say 30 years ago when I first came across it because I had to run a inventory reduction Task Force. And we decided to focus on availability, at the same time, the two seemingly conflicting things. And as a result, we focused on reducing cycle time, and the results are astronomical. And I used to call it my any mini theory, because of course, I had discovered it. Over time, I ended up realizing that mine was not an original discovery, he was a bit like discovering the sun was the center of the solar system again. However, one of the things I didn't learn was that even though I wasn't the first person to notice it, hardly anyone practiced it. And everybody was susceptible to this idea. Hey, Boss, what's the one thing you want me to do? And every boss gets sucked into that they start feeling like it's you know, city slickers, Billy Crystal, and Jack plants all over again, just figure out that one thing, when in reality, it's not that simple. It's always these two seemingly conflicting things. So I would say, yeah, it is not an original discovery. And I do not claim that it is. I would say, though, hardly anybody does it. It's really surprising. And you can even see it with COVID. When it's a question of, Do you reopen the economy? Or do you keep people at home? When the point is, how do you reopen the economy? As best you can? And keep people as safe as you can? How do you achieve both? Don't make this one or the other?

David Novak 12:13 

I gotta ask you, though, what is this? Any anything? What did you call it? Any anything? What was that? No.

Dave Cote 12:19 

I used to say, in any nanny, what

David Novak 12:20 

the hell is any now I

Dave Cote 12:21 

used to say any Mini can do just one thing. If you're going to really accomplish something, you really need to figure out how do you accomplish the two seemingly conflicting things at the same time,

David Novak 12:34 

that said, New England accent? I gotta get that so. So when you look at it, look back at Honeywell, give us an example of where you did both?

Dave Cote 12:45 

Well, we constantly did both. So I always worked on creating this income flexibility in the short term. If you can hold your fixed costs constant, and just get a little bit of sales volume. It's remarkable what that does for your bottom line and gives you just an incredible amount of flexibility. Now, if you do the math, you'll do it like we do in the book use look at it and go, Wow, okay, with this a great principle, this is really we got to just go do this. Well, then you start to run into the reality of how do you do that. And that's where you find out, okay, 60 to 90% of fixed cost is people, they all want 3% or so raises every year on average between salaries and benefits. So I need to grow sales 3%, just the whole my margin rates consistent. And if I want to keep my fixed costs constant, it means I need 3% Less people every year to get the job done. Now you get into a whole new level of consternation with people. And that's where the focus on process comes in. And I always say we've got a whole chapter devoted to process because I always say every business is just a collection of processes, all processes can be made more efficient and more effective. So the trick is figuring out do you really understand your processes? And can you make them more efficient and more effective. And as a result of that you don't need as many people. And as a result of that your fixed costs stay constant, your margins fall through at that variable margin rate. Now you have all the flexibility you need to generate numbers in the short term that satisfy investors or bosses, but also allow you to do the seed plant that you need to for the future. You know,

David Novak 14:36 

Hank Paulson called your book, the best best business book that he'd ever read. And, you know, I think one of the things it's so impressive about the book is that it's clear it took you a long time to write it. No, because because because I say that because you don't have to at the end of every chapter you were you asked the reader to really think about it Not one question, but a lot of questions that really sum up at that chapter. And you know, that's big praise from Hank Paulson now that you've done one of these books, are you are you going to do another one? What's the second one,

Dave Cote 15:12 

I would say it is so arduous David writing a book, and then getting people to notice it, because there's so darn many books out there. As you know, I don't know that I've got the energy to do another one of those versus continuing to do the business stuff I do. If I did write another one, it would probably be along the lines of my university in New Hampshire commencement speech back in 2011, which I kind of sat at my kitchen counter and wrote, and I was pretty pleased by the whole thing NPR picked it is one of the 350 bests in 1774. So I was pretty pleased with that. But it was all geared towards advice that I'd given my two sons as they were growing up, and just kind of encapsulating it into 10 or 15 minutes. But I always thought that might be an interesting premise for a book,

David Novak 16:11 

What's the best advice you think he gave your sons, the single one? Yeah, I'm gonna get to pick one, it would be

Dave Cote 16:16 

the same one that I got from my parents. And that was to think independently. And I heard this a bunch from my dad, when I was a kid. And I remember I was first wanting to graduate from high school, my dad had six months, my mom had two days, and then a one year secretarial degree so she could get a job. So as they would say, they weren't able to provide a lot of advice or career, guidance, education, guidance of any kind. However, they were tremendous in that they really gave us the values that I think were going to be important, and that I'd like to think of passed on to the two boys. And the biggest one that I think they impressed upon all of us, my dad would always say, be a leader, not a follower. And I can't think of how many times my mom said, Think for yourself whenever I wanted to do some dumb thing with my friends, too. And it's irritating as a kid to hear this. But as you get older, the line I've used a lot is the ability to think independently is a lot more rare than being smart. There's a lot of smart people who with a lot of words can explain to you why things are the way they are. But to be able to look at the data, be able to listen to the opinions and come to a conclusion independently, even if it goes against the grain, that is much tougher for people to do. So my advice to both sons was always the same thing is Think for yourself, think independently.

David Novak 17:54 

That's great. I love that, you know, so now but you know, besides being an author, you're the executive chairman of vertiv. holdings. Tell us a little bit about that company. And what's an executive chairman do?

Dave Cote 18:09 

Well, I ended up learning, it's a lot more than a non executive chairman. So I spend, I'd say on average, a day a week with a team, although most of it virtual. Now. We're a global data center products and services business. So you think about these, everybody talks about the cloud, for example. And the the kind of feeling is the cloud is just out there on everybody's servers. Well, the reality of it is, the cloud is these huge buildings that are anywhere from 20 to 100,000 square feet, perfectly temperature controlled, perfect in terms of its the electricity that comes in reliability and consistency. And it's just filled with rows and rows of servers. And that's the cloud. So these really just big data farms, if you will, well, our business is the thermal management. So think of it as the air conditioners, that you've got to have to make sure that there's a constant cool temperature in there. Then also the what we call the uninterruptible power supplies, where you make sure you get that consistent reliable power, the server racks that are in the building, and there's just rows and rows of these things with servers plugged into them. And then the service because you got to make sure this stuff has like five nines kind of reliability. So I love the business because data is continuing to grow at 20% plus a year that data has to go somewhere. And these data farms data storage places are where they're gonna go data centers and There's going to be more and more development of the edge. And the thing I find exciting about this is that everybody tends to think of all the data centers of the future are going to be built in cold places. Because then you don't need as much thermal management, electricity, that sort of thing. There is room for that. And there's a segment of the market that will want that. However, one of the big things that you run into with distance is latency. Because electrons travel at a fixed speed, it's very fast, but it's fixed. And if it has to travel all the way from Louisville, to Finland, get processed and come back, and you're sitting there in a Walmart store in the coffee aisle, and Walmart wants to send you a coupon to 50 cents off Maxwell House coffee. But by the time it goes to Finland and back, you're in the fish aisle, you don't go back and buy coffee, as you know, I mean, you're in the retail game much more than me, you've got to, you've got to catch people in the moment when they're interested in buying or when they're when they're in the process of it. That means you need computing power much closer to the action. So you're going to find stores like Walmart, Home Depot, others, they're going to have many data centers that may only be two square feet, 10 square feet, and it'd be totally self contained so that you get that speed of response. So those two things have me are really psyched about this whole business. And yes, you can probably tell that I am.

David Novak 21:29 

Yeah, absolutely. And as an executive chairman, you you, you get paid as an executive chairman, you're really on the team, right?

Dave Cote 21:36 

Yeah, I would say I am definitely on the team, I get paid better than a regular director, I do not get paid as well as I did when I was at Honeywell.

David Novak 21:49 

That would be very, very hard. You know, it's interesting to hear you talk about this business and how you lead you know, here, this business is not something that's simple. I mean, it's, it's a complex business, you got to really dig in the details. How do you do that? Dave? I mean, how do you go about leading a business? That's that complex

Dave Cote 22:11 

that your vertiv? In particular? Are you talking about honey? Yeah, I'm talking about verta to new business. Yeah, well, first of all, my wife thinks it's pathetic, but I like working. So I enjoy it. I don't want to do it as much as I did it, Honeywell, but I still want to be able to work because I find it I just very fulfilling so pathetically, maybe I enjoy it. And there's a couple of things I like to do. The first one is just kind of get the normal reports everybody does and the presentation so that you start to understand things better. But the thing that's always worked well, for me, I think it has for you. Also, David is just talking to people. And I find if I talked to Rob Johnson, our CEO, if I talked to the guys on his staff, when I listen to the presentations and just interact with people and ask them, what about this? What about that? Why wouldn't this work? Would this be a better idea? Is this a worse idea? Is the thing you're describing analogy wise is it like this, I just end up learning an incredible amount by just talking to people and listening, listening to what they have to say, and then kind of balancing a bumping that up against what I think I already know, or what I did here once before. And I find that's a pretty effective process for me, and I'm sure other people learn differently. But that works pretty well for me.

David Novak 23:36 

Yeah, absolutely. Jumping back to Honeywell for a second, I can see why vertiv would want you to bring those processes that way of thinking to him, because during your tenure, the market cap went from like 20 billion, I think 120 billion and your returns were up on 800%. But you know, I'm sure Dave, when you look back, it wasn't all smooth sailing. You had some challenges. You know, right now we're in the midst of this COVID 19 crisis, what was the biggest crisis that you had to manage through?

Dave Cote 24:08 

I guess I'd probably tick to David, because the first one was when I first got there, and I described as you know, the book, what that situation was like, and man that was just miserable, because I couldn't trust anybody. And the place was a mess. And people externally thought it was a mess. And then when you actually understood it internally, you realize it was even worse. And it's not like you can say that externally. You got to keep it to yourself, and then I ended up realizing, I can't trust my board. I can't trust my staff. And I'm trying to figure my way out of this thing. And you can't just I didn't feel like running away with an option. If it's one of those were okay, not what I counted on but not a lot you can do at this point. Just feel Hear it out. And that was a pretty lonely time because I had to try to figure this all out. And it wasn't clear to me what I wanted to do, it didn't, there wasn't an epiphany, where one weekend I said, Okay, I got it, here's how we're going to do things that happened with some things, but not all. Then the second big one was the Great Recession, which was just, as you recall, extraordinarily painful, was totally unpleasant. And that's one of the things I used to tell people, oftentimes when they complain about working harder than they ever had for less than this wasn't fair. And I'd say, Well, you know, that's why they call it a recession, and they don't call it a party. It's not fun. And it's not fun for any of us. So we just got to kind of buckle up and figure out, how do we work our way through this, so that we come out of it better than any of our competitors. And we were able to do that.

David Novak 25:59 

What did you learn about yourself? It during those crisis periods? I mean, you know, how did how did it grow you as a leader,

Dave Cote 26:08 

I guess I realized that you really need being a leader, it was kind of reinforcement of that dealing in that first crisis, that you really are alone, when it comes to figuring out what the right thing is to do. And how you're going to work your way through this. Now, I'm not looking for sympathy or, you know, oh, God, you know, it's lonely at the top and all that kind of stuff. But it is important, I think, for a leader to recognize that when you're going through a tough time, with the decisions you make, don't expect the applause, don't expect consensus. Don't expect, boy, what a good guy you are. Just expect everybody is going to be unhappy. And you still within that have to be comfortable, that what you're doing is right, that you can explain it, and that it's going to work workout for you over time. So I wouldn't say learned anything different in the second crisis than I did in the first one. But it sure was a reinforcement of what what it's like in the middle of a crisis and how you have to be as a leader.

David Novak 27:29 

You know, right now, every leader in the country, and you as an executive chairman, you're going through right now, you have to deal with COVID-19 at a major crisis, you know, how do you think leaders should adapt to the learnings of that? Or were you're going through right now and COVID-19? Going forward? What kind of future impact is this going to have on the way how people lead?

Dave Cote 27:53 

One of the points that I've made about recessions is that when you look at any of them, everybody, always whatever recession you're in, everybody wants to say, this is totally unique. This is different than any recession we've ever had before. And I think that's true of every recession, we said that about the 2001 recession, when it was caused by planes hitting a building. We said that in 2008, with a nine with a mortgages, and now we say now with a health crisis. But 80% of what you do in a crisis is the same, in my view is especially in a recession, where you still need to make the same kinds of decisions, how do you take out costs? How do you make sure the energy survives, the thing gets different this time is you want to make sure people are protected. And you want to make sure that you're still doing the right things for the long term. So all those things are still true, you still want to be able to do all that, in terms of how it changes, things going forward. I don't think it changes things a lot. I know there's a big belief right now that working from home is going to become the news that guys that that's that's what we all do. Because it's more efficient, more effective works just fine. People can be at home. I think that's way overblown. And what we're gonna end up learning and I felt this way very much at Honeywell, where, as you may know, I was not a fan of working from home, we used it as an exception. If you had like a new mom and dad, if somebody had a medical issue or a family issue of some kind, we would do it. But I did not support it on an ongoing basis because I don't think that's how human beings are. Human beings, in my view, need to interact. And all you have to do is be on a Zoom meeting with 10 or 20 others. Somebody tells a joke that totally falls flat because you can't get that interaction. You can't get that sense that twinkle. in somebody's eye when they say something, and it's just not how human beings are. So I think that's one that everybody points to and says it's going to be important that I think two years from now they're going to be writing wow, you know, how come that never really worked out that way that was never that that big a deal, I think we are going to have to do a better job of being able to respond to pandemics in the future. And that's going to be a lot of that's going to have to come from government, government is going to have to think about that one. The last one I would point to is supply chains. And this is going to be an interesting one to watch develop, because one of the things that we all ended up learning in this crisis was the fragility of supply chains that appeared robust when everything was working just fine. And you end up learning that if you have a single source, or if you have two sources, but they're in the same country, and that country has some kind of disaster, could be a natural disaster could be a pandemic, then your whole company falls apart, and you're scrambling trying to figure out how to get that one component or that one product. So there's going to have to be a reexamination of supply chains, by every company to start to understand how do we create something that's more robust that for every component, whatever it is, you're buying anywhere in the world, you have two sources for it, preferably in two different countries, so that you've got some kind of robustness. Now I do worry that the government is going to take that to an extreme. And that government will start to label everything national security. And you know, when the only tool you have is a hammer, everything looks like a nail. So everything will look like national security. The argument will be everything has to be produced domestically in the US. And if we start to go down that road, well, you just have to look up Smoot Hawley and what happened in the Great Depression and how that exacerbated a bad situation. And because everybody else does the same thing. And before you know it, you're not taking advantage of the productivity of other countries, and you just end up worse off. So I'm really hoping that we don't go down that path and that, but the companies end up relocating their supply chains without the help of government.

David Novak 32:24 

Good points, you know, and they've we've, we've also seen so much social unrest with the tragic death of George Floyd, we were just talking about what's going on in Louisville just a second ago. And there's so many other incidents, you know, how did you build diversity and inclusion in a win now win later fashion?

Dave Cote 32:48 

Yeah, I think addressing systemic racism is another good place also for short term, long term thinking. And, yeah, I try to couch anything I say when it comes to dealing with racism and diversity with the fact that yes, I am a 68 year old white former CEO who grew up in New Hampshire. So I'm not trying to say I understand it, or anything along those lines, because I obviously don't. The thing I can do, though, is analyze things, as we talked about before, and perhaps have some recommendations. And at Honeywell, we actually had a pretty good success rate. And interestingly, in the first six years, we did all the conventional stuff. So we encourage people to have people of color or women on the slate. There were kind of independent forums, depending upon the group. And one of the things that bothered me is we'd be happy one year because our statistics were up. And then the next year they were down, and I looked at and said, after being there for six years, we were in the exact same place we were when I started. There's got to be a better way. But you know, what the hell is it? So again, trying to think independently about things set. Okay, we're going to do a couple of things differently here. The first one is given that hiring tends to be a local game. And but we have a tendency to always look at things nationally. What I wanted to do is a by plant location, identify which were the schools where you had, say, a more diverse output of students, or were with the schools that you did use, the diversity of the graduates might be greater than what it is we were hiring. So for example, if 10% of our new hires in a plant were black, but 15% of graduates From the local college were black. Well, that plant ought to be have at least 15%. So we gave people a sense for where are the opportunities to be better in terms of how do you fill your pipeline. The second big thing we did is if you just take a look at where you are, and we'll say that you've got 1000 people, well, in that 1000 people, if you've got, we'll say, 5%, attrition and replacement, that's 50 people a year, if you're trying to move the statistics on the 1000. All in one year, it's just not going to happen. It's just not going to work. So what we started doing is saying, Okay, we're just going to focus on the opportunities you had to improve in the during the course of the year. So we're going to break down hiring, how many people did you hire? And how many were diverse? And how does that percentage compare with the percentage you had and the 1000. And then we're going to look at attrition, all the people that go out and do the same thing. And the attrition rate for people, diverse people ought to be less than what your overall is. And if you just keep doing that, over the course of time, you'll improve. And we met twice a year as a staff. So in my staff meeting, we would devote two to four hours where each member of my staff had to go through their statistics on that basis, with everybody there. And I told people, Look, I'm not dictating how you do this, I don't want to get into that. I don't want to get into this have to have a diverse member of every slate you do, what's going to work and what works for you. But I still expect the best people in the world. We're never giving on that. Because I don't want anyone to ever look at a position and say, Well, we know my son still got that job. That's part of their diversity statistics. I want everybody to look at him and say, that is the best person for the job. And they are terrific, regardless of what color or gender they are. So that's your first priority. The second one then, is improving your diversity statistics every single year. Well, as a result of that, I mean, it sounds pretty simple and straightforward. But over 10 years, we improved every single year. So that over the course of 10 years, we were in a much better place. And my successor has continued to doing the same thing. So I know it works.

David Novak 37:36 

Great. You know, it's interesting, when I was listening to talk about when you first came to Honeywell, how you felt almost alone, couldn't trust anybody. There had to be a lot of eye in that leadership back then, you know, when you first come in, you know, it's like you're you're kind of the person and you're lonely. It sounds like and when did you move from me to we was there? You know, how long did it take you to where you really had that team where it was no longer what you were thinking and what you knew you had to do? Where you went from meat away?

Dave Cote 38:08 

Yeah, I'd say two observations I've made is first, that loneliness in the beginning actually made me a better leader. Because and this is where I talk about ended up learning that as a leader, your job is to be right at the end of the meeting, not at the beginning of the meeting. And we all grew up as leaders and kind of have this vision of leaders of kind of stridently standing for something, and this is what we're going to do. And this is where we're going. And that you always have to be that way. And I early on came to the conclusion that no, you know, what I need to do is make really good decisions. And if I want to make really good decisions, given that I can't really trust anybody around here, if they know where I'm coming from or what I think needs to be done, I'm going to immediately alienate a bunch. There's some that will agree with me just to agree. And then there's some that are just wanting a decision, they're not really participating. And I don't know anything about how this place is run or how all these businesses work. So it taught me to be a lot more cautious about ever saying, Hey, here's what I think we ought to do. And instead, I'd express the problem and then get everybody's unvarnished input, including taking perspectives from various people that say might disagree with where I thought things were going to end up. But I found myself making better decisions and said, Oh, my God, you know, this is a much better way to do this. And it's one of the things that I recommend to everyone in terms of getting to that point where I'll take the WWE as saying When did I feel like I had a team I could Trust truly was engaged with me. And we were all on the same team. In total, it probably took about five years before, got all the right placements in position. And wasn't overnight, it happened a little bit over time, I did want to do kind of a wholesale change, because I thought that would be a mess for the system. But it took about five years. Before we got to that point,

David Novak 40:24 

it sounds like you said you had such a mess. And yet, there's lots of people on your management team that you had to deal with. Yes, I mean, and and you had to get their input. So before that you're going to trust them I'm gonna use Did you extend trust to them first? Or how did that work? I mean, you know, you know, that's a very adversarial kind of environment that you're talking

Dave Cote 40:50 

about? Yeah, I'm very interested in Yeah, it depends dependent on the person. And it's one of those where I don't think anyone can go in and say, day one, when they don't know somebody. Look, I trust you completely. You can say that. I don't think that the person hearing it is going to believe you completely. Nor do I think you believe it yourself when you say and if you do, you're probably being completely naive about how the world works. So I don't think it's possible in the beginning, but rather, this is one of those things that has to get built up over time. And I've always felt like that bill, building up of trust comes from people doing what they say, or as the old saying goes, you know, walks the talk. And if the people you're working with on your staff, see you do exactly what you say you would. And you see them doing exactly what they said they would or what they committed to. That's what builds trust over time. And I found Okay, there were some people that were on the staff that I could trust that way that over time absolutely was able to trust them. There were others who was very clear, I was not. And I was going to have to do something about it. And I did. I mean, like I said, over five years, we changed over almost everybody. But to me, it's a it's a maturation process. It's not an epiphany. It's something that happens over time.

David Novak 42:20 

Did you have a big moment that helps you get noticed and start to take off

Dave Cote 42:25 

the story that probably really helped ignite my career once I was kind of in that lower middle management, let's say. And what really ignited it was this horrible conversation I had with Jack Welch at one point, at the time, I was this lower level guy. And it was one of my jobs that month was going to be to do his presentation for the board to do the whole thing. So I worked on it. And I separately, I was responsible for sending out the financial plan request for the strategic plan. Interestingly, I had recommended to all my peers and to my boss that we not do it, that we not send out this request. They all voted me down. And I told him, Look, we never use this stuff. It sits in my my bureau drawer. And they said, No, we're going to use it this year. That's, we got to do it. So it's okay, I'm you know, I'm voted down. My boss had to do it. I'll do it. So I'm walking around the building at one point and working on Jack's pitch, and I get this call from my executive assistant saying, Dave, Jack Welch is looking for you. I thought, Oh, okay. He must want to understand what the status of his pitches, some kind of going through my mind. So I get on a phone call his office. And all I hear is Dave is Yep. Is it true? We ask medical systems for what ROI will be in the ultrasound business in 1989? And I'm looking around like, what the hell where did this come from? So I think a think and is it ah, oh, it could be it could be part of the strategic plan. request that we send out the business development guys piggyback on our financial request. And then he just starts screaming at me at all over the phone and very, let's say unpleasantly, and says I want to see that request, and you in my office in the next five minutes. So, okay, so I raced back to the office, I get the package, I go running up to his place. His system was a woman named Gallagher at the time and she said, Okay, Dave, I think this will do and I said, No, I think he wants to see me. And she said, Okay, you know, suit yourself. She walks into him and all of a sudden I hear Dave, Dave, get in here. So I walk in and he's sitting there with the human relations chief whose name is also jack at the time. And Jack Welch is just flipping through these pages, irritating himself, you know, just looking at it and just really getting himself cranky reading it. And he just starts swearing at me and yelling at me and telling me how could I, how can I do such a stupid thing? And why? What's the thought process behind this? And why would I do this? And I'm sitting there, and I'm just standing there. And I'm just answering all the, you know, every one of his questions, and I didn't let it ruffle man, we just answer his question. So at this point, Jack is just a Jack Welch is just unbelievably cranked up. And he tells me says, I'm going to have Dan mermans asked for this. And DAMMANN was the CFO at the time. And come to find out the way he had gotten to me is he tried to find the CFO who wasn't there. He tried to find the comptroller who wasn't there, he tried to find the Financial Planning and Analysis guy who wasn't there. So I was fourth in line, and I was the guy who sent out the request. So I take this beating for about 15 or 20 minutes, and I walk out, I leave a note with Dennis's assistant saying check with me before you know he goes in to see him he needs to know what he's facing. And, uh, Dennis was recalled me and it was, yeah, David Dameron. Yep. Just you know, Jack's really, really angry. He said, Look, Dave, I've known him for a long time. And he may look that way. But he's not really. I don't know. No, I said, I kind of know angry. He's pretty angry. He kind of swats me away again. I said, let me put it this way. He said he was going to have your ask for this, Dennis. And he said, hesitated a moment in the phone said, Oh, he's like that, huh? I said, Yeah, that's what I've been trying to tell. He's really angry. So I actually went to my office, talk to some of the guys and said, You do remember me saying that? I didn't even want to do this in the first place. Right? And interestingly, they said, Oh, yeah, we remember, you didn't throw us in, did you? I said, No, I didn't, as I did. It was painful. But you know, I'm fine. And then I call my wife and said, I think I've been fired. I'm not sure how, but I don't know how this works. But I think I've been fired. So about two months go by, and I had been part of the RCA acquisition team, and I ended up at the RCA victory party. And all sudden, I hear this booming voice again, saying, Dave, Dave, get over here. And it's Jack, and I think to myself, he's gonna fire me here at a celebration party, because I'd heard the stories and Okay, so you know, I go walking over, and he's clearly in a good mood. And he tells me says, you know, I was never so testing anybody since I was in plastics. I said, Well, I do appreciate you sharing it with me then so that I could be part of the event. So he thought that was pretty funny. And then he was obviously in a good mood. And my buddy who had walked over to me over with me, he looked at Jack and said, you know, Jack, Dave never even wanted to send out that request. He made a suggestion to the staff, and to our boss that we not send out the request. And we voted him down. And I still remember Jack turned to me with this kind of puzzled look on his face. And he made this gesture with his hand, we put it into his ribs and said, so you just took the knife for those guys. And I said, Well, I didn't think of it that way. You just don't throw in your friends on something like that. And I still remember he was just kind of like shaking his head like wow, okay, well, you know, that's something and we go on another couple hours, you know, everybody drifts off and the CFO, Dennis Dammam and gets a hold of me and says, you know, come on over Dave, we want to talk. So I go over and sit, sit down with him. And he says, You have no idea how much good you have done yourself with the way you've handled everything here. And I looked at him and said, well, Dennis, I am hard pressed to understand how because it doesn't feel very good. hasn't felt very good for two months. And he said, well, that first altercation that you had with him, the fact that you never melted, and you just kind of stayed very consistent, very calm. He's made vice president's cry with the way when he treats him like that and you didn't. I said, Oh, okay. And he said the second one is tonight when he found out that you never threw in your bodies when you could have. He just has now immense respect for you. So why was this significant? Because in G as you were rising upward, it was pretty typical if you were rising upward to get a one level jump. If you were a superstar, you got a two level jump. All of a sudden Jack pinpointed me and said I want him interviewing for three and four level jump jobs. So all of a sudden I was like on the radar screen for everybody because he had taken an interest in me and And I would say that clearly was a jumpstart. Because in a big company, if the CEO takes an interest in you like that,

David Novak 50:07 

it can help. You've been the CEO there for 15 years and in a job that, you know, the average tenure I think is less than three,

Dave Cote 50:16 

you know? Yeah, exactly. It's like three, three and a half, something like that.

David Novak 50:20 

How do you? What do you think is critical to have such a successful run? In addition to just getting getting the results? Obviously, you got the results? There's no question about that. But how did you do it? How do you think you were able to, you know, keep it going and keep raising the bar and be a CEO in the same company for so long?

Dave Cote 50:38 

Well, I'm going to point to our business model first. And say that focus on portfolio process and culture was important. And an important part of the culture is the ability to evolve, and to constantly be recognizing the world around you is changing at a rapid rate. Your competition is changing, how do you make sure you change faster than that. So we talk a lot about evolution. I would say also, when it came to prompting that evolution, I focused a lot early on with making sure that we did a lot of seed planting for the future. And my point always was, I'm doing well this year, not because of what I'm doing this year, but more because of what I did three and four years ago to set this up so that we could continue to perform well. I would say those were the those were the big ones. And I had this one little thing I used to do myself. And I was concerned because this was the first job I was ever going to have, where I didn't have a natural stimulant every two to three years to think differently. And you think about if you're growing up in a big company, every two to three years, if you're doing well, you get a new job. And that's an immediate reason to start thinking differently, because it's all brand new. Well, if you're in the CEO job, and I was 49, when I got it, I thought okay, if I do this, right, I could be here for 15 years, how do I keep myself fresh. I know I keep myself attune to new things and keep us moving forward. So I grabbed this little blue tablet. And what I would do periodically, especially in the beginning, is every four to seven months or so I would take the time just to free think about the company. And I would think about financials, people, businesses, business climate, and just kind of like free think for half half a day or, or a day. And then I would go back and look at what I had written four to seven months earlier to see was it still it was something still a good idea. And I just forgotten to do it. Was there something new that I'd thought of and I came up with actually quite a few things by doing that just by forcing myself to sit there and just think about things and I would do it by myself. But that became pretty effective in the beginning, I'd have to say in the last five or six years, I didn't need to do it quite so much because it became a kind of a natural way of how I did the business. But in the beginning, I was pretty worried about that because I didn't want to be somebody who you know, lit the world on fire in the first three years and then completely petered out because I just wasn't paying attention anymore the way I used to.

David Novak 53:27 

This has been a lot of fun catching up with you, Dave and you know, I want to have a little bit more with the lightning round of q&a. Okay, are you ready for this? Okay.

Dave Cote 53:36 

I'm ready for it. I'll certainly give it a try. All right.

David Novak 53:38 

How would you fill in the blank with one word, Dave Cody leads with x. What would x be?

Dave Cote 53:47 

personal accountability. It's not one word, but

David Novak 53:53 

I thought you were a math man. Business. Okay. Too high. All right. Okay. What would be the three words that would best describe you? Hmm. Passion. Driven. Independent. And what would be your biggest pet peeve?

Dave Cote 54:14 

Oh, people not doing what they say they're going to drives me crazy.

David Novak 54:20 

If you could trade places with one person for a day, who would it be and why?

Dave Cote 54:25 

Oh, you. I want to play pool and golf like you do.

David Novak 54:31 

That's good. That's a very good answer. Okay. So do you. Do you have any hidden talents?

Dave Cote 54:38 

Oh, hidden talents. I'm a pretty good fly fisherman.

David Novak 54:44 

And as you think about the future, what's the one thing you haven't done that you got to do?

Dave Cote 54:50 

Oh, create my own company.

David Novak 54:53 

So when's that gonna happen?

Dave Cote 54:55 

In process? As I like Sad, but I'm only 68. God, there's still so much left to do.

David Novak 55:05 

Well, you know, Colonel Sanders started KFC with a when he was 65 with his first social security, is it a great

Dave Cote 55:11 

story? Oh, well, you know the story even better than I do. But I always love that for the same reason. It's just, it just shows that a life isn't over until you decide it is.

David Novak 55:23 

That's absolutely right. And, Dave, I appreciate you so much for taking the time to be with me today and appreciate your insights. And thank you for writing that book. I mean, it was a lot of hard work, and, but I think leaders who want to lead can get a lot out of it. So thank you very much. For the example you said,

Dave Cote 55:41 

Well, glad to do it. And I knew this hour would be fun, David, and it fulfilled all my expectations, nice to catch up with you again.

David Novak 55:58 

You know, unfortunately, a lot of leaders buy into that false way of thinking that things have to be done one way or the other way. But not Dave Cody. He's not afraid to think for himself. He knows how to consider the facts independently. So he's not just making decisions based on the prevailing opinion, or easy answers, or the last person in his office. And hey, did you notice independent thinking was actually a part of his work routine, every six months or so they would sit down and block out some time, get out his notebook, and just free think about the company. Let me tell you something, that is such a great idea. So this week, as part of your weekly personal development plan, I want you to do the same thing. Schedule a few hours to just think it doesn't have to be this week. It can be sometimes in the next few weeks, but the important thing is to block it on your calendar now. And when the time comes, grab your notebook and explore all those thoughts and look at your financials, your people, your competitors, the market as a whole your products, your services, everything and see what comes to the surface. When you give yourself the freedom to think independently. Develop that discipline of thinking for yourself. And I know it's going to make you an even better leader. So do you want to know how leaders lead? What we learned today is the great leaders find Win Win solutions by thinking independently. Thanks again for tuning in to another episode of how leaders lead where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be