The Bregman Leadership Podcast
Episode 220

David Cote

Winning Now, Winning Later, Part I

This is part one of two of my conversation with David Cote.

Would you take the blame for your colleagues? This week I’m joined by David Cote, former CEO of Honeywell and author of Winning Now, Winning Later. David tells us how standing up for his colleagues—even when he openly voiced his disapproval with their business decisions—lead him to being promoted.

About

Get the book, Winning Now, Winning Later from Amazon here:

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Bio: As Chairman and CEO of the industrial giant Honeywell over 16 years, David Cote grew the company’s market capitalization from around $20 billion to nearly $120 billion, delivering returns of 800 percent and beating the S&P by nearly two and a half times. Currently, David is Executive Chairman of Vertiv Holdings Co, a global data center products and services provider. He is a member of the Aspen Economic Strategy Group and on the Boards of the Council on Foreign Relations and the Conference of Montreal.

Transcript

This transcript is unedited.

 

Peter:

I’m delighted to be joined today at the Bregman leadership podcast by David Cote, who is currently the executive chairman of Vertiv holdings previously, he was CEO of the industrial giant Honeywell. He grew the company’s market cap from around 20 billion to almost 120 billion delivering returns of 800% beating the S and P by nearly two and a half times. He has just written the book winning now, winning later how companies can win in the short term while investing in the longterm, a fortune just named it the best business book ever, or something pretty close to that. Hank Paulson just said that it was his favorite business book of all time. So, you know, too, and I liked it. So that’s three really important endorsements to have Dave with us, Dave, welcome to the Bregman leadership podcast.

David:

Nice to be here. Thanks for the invitation.

Peter:

It’s so nice to have you, and I can tell you, one of the criteria for being on the podcast is not only do you have to be smart and have value to add and have done interesting things in the world and to be a leader yourself, and also have thought leadership, but you actually have to be a good person also. And that’s really, really important. And I can tell already from the, you know, from the conversations that we’ve had, that you’re really a delightful, you know, stellar, human being. And I, and I really appreciate that.

David:

It’s appreciated. I think we all try to be… Very nice of you to say that.

Peter:

Well, I think it actually makes a difference in how we lead too. So it’s, it’s nice to get to know you a little bit. Okay. So I’d love to sort of take a little bit of a walk through your career to the point. Certainly where to the point of Honeywell, right? Where the, you know, the book focuses mostly on, on your, you know, it’s kind of like a, both the case study and teachings and learnings from Honeywell. So you, and then, and then we’ll do a deep dive in the book and mostly I’ll set the cliff hanger up here. One of the things you said in your, in your 2017 investor letter, and you said it, when you first took the role is you are going to, you know, a lot of your comp comes in stock. You’re going to hold your stock for 10 years after you leave the company. And that’s a real Testament to say, I’m going to, I’m going to lead in a way that when I leave the company is set up for success and I trust the, and I trust the processes and I trust the leadership and I trust the structures that we’ve been able to develop together, but that I’ve led so that when I leave, I am not necessary for the success of the organization. And that’s really, really powerful and probably a little scary for leaders to do. So I really want to get to the point of what makes that happen. Sure. Let’s start with general electric. So you joined full time in 1976.

David:

Well, actually a 74. I was an hourly employee running a punch press for two and a half years nights while I went to school during the day.

Peter:

And I’ll kind of want to ask you what a punch presses, just to show you that I’m not that old, but I know what a punch press is. So, so, you know, still exists. And, and so, so I kind of want to, I want to ask this question of like, how, which I know is a huge question, but I kind of want you to hone in on what you think made the difference. There’s probably a, you know, thousands of people who work punch presses, not all of them who end up advancing the way you did within GE, right before you became CEO of GE appliances in 96. So 20 years later, you really stepped into a very, very high level leadership role at GE. What do you attribute that rise?

David:

Oh, well, I guess that’s a an interesting and complicated question, I guess, cause I always say there’s a couple of things I say about advancement. One you have to have, you’ve got to perform the second one is it’s gotta be visible. So you gotta put yourself into positions where it’s going to be visible. And sometimes you have a choice there, sometimes you don’t, but in every case you need to perform, you’ve got to just do an outstanding job with whatever it is you’ve been you’ve been asked to do. I’d like to think that every job that I had I did perform well and the visibility was there on a small basis in the beginning. Cause not that many people can see it, but then as I started to go up a little higher in the organization I managed to had an incident where Jack Welch ended up noticing me, who was the famous, still famous CEO of GE at the time he might be gone, but he’s still still pretty famous. And that incident, which I thought was career killing at the time, actually boosted my career and ended up being an accelerant. So I would always say that it’s those two things. You gotta have performance and you gotta have visibility.

Peter:

I kind of want to hone in on this for a second because you know, you sort of talk about short term and long term winning now, winning later. And I’m curious, even at that stage, whether when you talk about performance, you you’re talking about performing in your current job, meaning I am, I’m doing a punch press and I’m going to be the best punch presser there is. Or whether you still have an eye towards saying, I’m going to be the best punch presser there is. And I’m going to find ways to show people that I can also do what will be expected of me. If they move me to be a manager of punch press people, you know, like just like, are you, are you, are you just talking about being excellent at what you’re doing? Or are you talking about showing that you can do more?

David:

Say I was nowhere near that sophisticated in my thought process at the time, right? And while I was running a punch press and I still deal with the hearing loss from bang and that thing three to 7,000 times a night all I wanted to do was get the hell out of there and find myself in a position that paid more. Once I graduated from school and I had to say, I was a lot less concerned about thinking about what’s next as I was about what’s next, that’ll pay me more than what I’m making now. Cause I can’t afford to support my family with what I’m making now. So my level of sophistication in terms of career thinking was nowhere near any of that. It was just, what can I do next? That will pay me more than this and that was it.

Peter:

And what was the interaction with Jack Welch? It, it, it, it sent you, well, it’s promoted you three levels. You did a skip jump there. What, what was that incident that you thought would get you fired?

David:

Well it was pretty interesting cause it made it into his book. The one that he wrote at the time I guess 20 years ago now I was responsible in this new job that I’d gotten at corporate for sending out the requests for all the financial data, for the strategic plan to the, I don’t know, 16 or 17 businesses that existed at the time, I had made a recommendation to my boss and to all my associates on the staff to say, we shouldn’t send this out anymore. It’s a lot of work. It’s a lot of detail and we don’t do anything with it. So we shouldn’t do this any longer. I was voted down a hundred percent by my boss and all my associates, two months later, I get a call from my assistant and she says that Jack’s trying to reach you.

David:

So I get on the phone and I’ve never talked to him. One-On-One before this is 1986. And out of nowhere he says date, is it true? We ask medical systems for what the ROI will be in the ultrasound business in 1989. And man, my mind is scrambling. I’m trying to figure where the hell is this coming from? And it finally dawns on me. Oh, it must be associated with that strategic plan request. I sent out a couple months ago. So I said, yeah, I believe we do. As part of the strategic plan request, he literally came through the phone at me, cursing the yelling, telling me to get back up to his office right away with the request. So I went and got it, went up to his office. He yells at me to come in. I do. And he’s just flipping through and a noise.

Peter:

Are you feeling by the way, I’m kind of curious, what were you feeling in this moment? So you’ve just been yelled at, by Jack Welch. Who’d never had spoken to directly beforehand and the screaming and cursing at you to come up to his office. What’s going on for you?

David:

Pretty much thinking this isn’t good for Dave, but I’d better do what I’ve been asked to do here. Okay.

Peter:

Are you sweating? Do you think you’re going to lose your job? Are you like I’m screwed here?

David:

Not at that point, but I did feel that way 15 minutes later because he calls me into his office and just starts yelling at me and flipping through this presentation, annoying himself or this request annoying himself and just yelling and cursing at me with constantly saying, why would you do such a stupid thing? And why did you do this? And me just explaining it. And it did feel like I was having an out of body experience where I was looking down at myself saying, do you remember Dave? You didn’t actually even want to send this thing out. So I kinda just took my took my beating and he said, okay, you’ve done your job now. I’m going to do mine. And I walked out, walked down to my office, called my wife at the time. It said, I’m not sure how this works, but I think I’ve been fired. And this is just really unpleasant. I don’t know what we’re going to do. I going to have to figure out how to get a job and you know, I’m just sitting there trying to figure out, okay, how do you respond to being fired? I assume I’ll get some sovereigns and ha how’s this work

Peter:

I liked that your takeaway was, this is really unpleasant.

David:

Yeah, it really was. It’s about I don’t hear anything. No repercussions from it. And two months later, I take it back about a month later, I’m I’m invited to an RCA acquisition party cause we had just acquired RCA.

Peter:

And by the way, hold on. Let me just, I want to backtrack one second. So you didn’t in that moment because I think so many people would have followed this. This instinct is to say, hold on, I’ve been against it for, for months. I told everybody, but I got knocked down. I think this was a terrible idea. This was not coming for me. I fought it. I just lost. So that’s the instinct that a lot of people would have. You didn’t do that? No, I didn’t.

David:

I guess that’s not me. I just felt like that wouldn’t be right. So I didn’t do that. So I went well it ends up being important to the story later on because a month later we go to this RCA potty and all of a sudden I walk in cause I was there were only two finance guys on that team and I was the junior one. So I had really, not much exposure to Jack in that one, but I worked on the finance side and I walked into the party with my buddy. And all of a sudden I hear Jack Jack’s yell. Dave, Dave, get over here. And I think to myself, I can’t believe it. I’ve heard all the stories he’s gonna fire me at this party. I can’t believe it. So I go walking over and I’m a little trepidation and my buddy comes along with me when we get there.

David:

And Jack fortunately is smiling, use a few sieve and says I was never so pissed at anybody since I was in plastics. And I can be a little, I could be a little mouthy sometimes. And I, I looked at him and said, well, I really appreciated you sharing it with me. And he thought that was pretty funny. So he started laughing and we were kind of talking. Then my buddy looked at him and said, you know, Jack Dave never wanted to send out that request. And he actually recommended against it and our boss at the time and all of us voted against them and said, no, you need to do it. And I’ll always, remember, Jack just looked surprised and he turned and looked at me and then he took his fist and with the inside of it put it into his ribs and said, see, you just took the knife for those guys.

David:

And I said, wow, I didn’t really think of it that way. You don’t, you don’t rat your friends out. You know, it wasn’t like they were, it was anything illegal or anything. And he just kept shaking his head and saying, wow, wow, God, you know, that’s something. So, you know, the kind of conversation kind of drifts off my buddy and I walk off and I turned to my buddy and said, that was really nice for you to do. I really appreciate you doing that. And he said, well, Dave just so we’re clear if he hadn’t been in a good mood, I wouldn’t have said anything,

Peter:

But isn’t that amazing. And I think it goes to your other point, cause you said performance and visibility. And I think one of the mistakes that a lot of people make when they hear that is alright, I’ve got to do well. And then I’ve got to shout from the rooftops. So everybody notices how well I did and, and what you’re saying, which is super important. So I want to underscore it is you have to be excellent and you have to let other people shout about you from the rooftops because, you know, have you been the one going no, no, no, no. That way it would have had the exact opposite. He’s like, here’s a guy he was looking at. Here’s a guy who’s not taking accountability. Who’s shirking blame. Who’s trying to avoid. Like, and, and, and when Jack promoted you three levels up in management, in one fell swoop, it was because of your character. I mean, yes, because of your performance, for sure. But because of your character in relation to that performance is what I’m hearing.

David:

Well you are correct. The character did matter because or his view of it, the CFO pulled me aside later that night for a one-on-one and said, ah, that party night and said, you have no idea how much good you have done yourself with everything that’s happened here. And I told them, well, I am hard pressed to see how, cause it sure as hell hasn’t felt that way for the last couple months. And he said, no he already was impressed because he said the way he yelled at you in his office, he had made vice-presidents cry. And here you are this lower mid level finance employee. And you never really said anything. You just kind of stuck to your guns, explain why you did it, why it was important. And then when he found out tonight that you didn’t want to do it in the first place, but you wouldn’t throw in your friends, he just thinks the world of you. So good things are going to happen to you from here. And it did. Okay.

Peter:

Now let me ask you a question. Is that where you lucky, like w were you lucky because had you, not because you weren’t self-promoting and so had someone not promoted you, you know, or, or not promoted you, but, but promoted your virtues that you, you never would’ve gotten that opportunity. He never would’ve seen you or are you, are, is it a faith based thing? In a sense, I’m not talking about faith based in a, in a big word, but, but having faith that if I show up, if I take accountability, if I perform well and you know, if I treat other people around me, well, if I don’t throw people under the bus, if I, that I believe that even if this wasn’t the opportunity, there would have been other opportunities that the recipe for success is absolutely not a self promotion, but it’s great performance in a way that other people can see, but you don’t have to talk.

David:

Yeah. It gives it’s, you know, it’s tough to know how things are ever going to evolve. I’m not completely against self promotion. Cause I think it’s very easy to hide your light under a bushel basket and go too far the other way. And some people never get noticed because they never say anything about what they’ve done or what they’ve accomplished. So it’s not that that’s any kind of self promotion is wrong. After all I’m out here promoting this book. So it’s not like I’m completely against it. But by the same token, I think you have to make a decision early on, on what do you stand for? Who do you want to be? And how do you want people to think about you? And I think back to my dad all the time saying, treat everyone with respect, no matter where they are or where they’re from until they prove otherwise they deserve your respect. And just kind of the way you grow up as a kid. And I mean, do you want to be known as the guy who wimps out right away or the one who throws in his buddies right away? Cause he’s scared. That’s just not how I want to think about myself. So I think some of this it’s less about, okay, what do I think is going to drive success than it is about, well, who do I want to be?

Peter:

I love that. Yeah. I want to think about myself. Yeah. was it, I’m just one more question about this and then we’ll jump ahead. Was it, was that a hard moment for you to hold back, defending yourself? It’s hard to do. Were you holding back?

David:

I wouldn’t say, I wouldn’t say it was difficult, but it was painful because you don’t have to save time. You’re listening to yourself, be berated. You’re thinking how, you know, it’s like that. I think it’s talking heads song. How did I get here? Right. Is that what you’re saying is you weren’t here to do this and now I’m having to defend it,

Peter:

Fighting an urge to tell him, Hey, I wasn’t into this and it’s not my fault. And like you weren’t fighting that urge. You were clear that it was painful because yelled at, and how did I get here? But it also sounds like you weren’t quelling an instinct to defend yourself in that moment. Is that right?

David:

I think so. I mean, it’s tough to remember exactly. It was 30 years ago, right before I guess.

Peter:

The research shows that painful experiences stay in our memories for much longer.

David:

Well, it was, I guess it’s one of those where early on in the process you decide which way you’re going. Right. And to say, okay, I’m going to I’m not going to throw in anybody. As the beading continues, I guess I, maybe I could have faltered, but that was a path that I was already on and I wasn’t gonna give up.

Peter:

Okay. And maybe just a sentence on on the visibility piece, I get the performance piece. How do we get visibility without being too self promoted? Like how do people get visibility?

David:

Well, I think there’s a ways to do your job that make you more visible. And again, I can’t say that I ever did things in order to be more visible and it was more just how I looked at the job. So for example somebody that you know, a little bit, or you’ve just met in the organization, comes to you and asked you for some help on something. It’s very easy to just say, no, I’ve got all this other stuff to do. Well, that’s how I was. I would always try to help help them just because they seem like a nice person. And it’s just, just the way I was. So I would work whatever I had to in order to help them out. Well, it’s really kind of interesting how, if you, and I ended up realizing this later on, the more you do this the more people you have saying, gee, you know, Dave’s actually a pretty good guy and does a good job, right?

David:

And I ended up losing a job at one point. The first one I got leaving a different corporate position because they reorganized and this was in the early eighties and there were really no jobs at the time. Jack was a downsizing, the headcount of the company, there was a lot of kind of recession recovery going just beginning, but there were really no jobs for me anywhere in the company. And it was this one HR finance guy or a finance guy for it HR guy for the finance function. And he gave me a call and said, there’s one job opening the company in the entire company at your level. And I’m going to put you on the slate and suggest you get the job. And I thanked him for it and said you know, I appreciate that. But Y it was very nice, but I haven’t heard from you in years. And he said, well, do you remember you audited me like four years ago. And this was when I was a corporate auditor running around the world, auditing people. And he said, you know, most corporate auditors are not that nice. And you wrote me up more than any auditor ever had, but you were always nice about it. You weren’t nasty, you weren’t no power plays and you were nice about it. So I remembered that

Peter:

It was right the way I introduced this a podcast, because if you’re nice enough to have people who you audit like you and want to promote you, that’s like you know, that’s, that’s no small bar that’s no,

David:

I would, I don’t know that I would say it particularly nice, but I would say that it is possible to get your job done right. And be courteous about it. There’s a common courtesy sometimes not so common. Right,

Peter:

Right. It’s great. I sometimes think we’re all moving so fast nowadays that we lose that piece. That we’re, I know for myself, I could feel that sometimes, like I’m moving so fast, I’m trying to do so much that I lose some degree of the connection that I would normally engage with people on because I’m trying to do so much of the transactional piece. And it’s such a good reminder that says that that is not in anybody’s interest to move that fast and to do that much.

David:

Well, I think you see that a fair amount on social media nowadays, right? To your point where common courtesy just seems to have gone out the window. It’s got it. It’s it’s really bothersome, right?

Peter:

Hi there. Thanks for listening. Just wanted to let you know that this episode is part one of two. If you enjoyed the episode, stay tuned for next week for the conclusion of the conversation. Thanks and have a great week.

 

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