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