I recently interviewed David Cote on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:

Adam: Our guest today spent 15 years leading a fortune 100 company. David Cote was the CEO of Honeywell, which he grew from $20 billion to $120 billion in market cap. David is also the author of the book Winning Now, Winning Later. Hank Paulson, who endorsed the book, has called David the most successful leader of a major industrial manufacturing company of his era. David, thank you for joining us. fun to be here.

David: I'm looking forward to the discussion. 

Adam: You were born and raised in New Hampshire, and you have an honorary degree from your alma mater, the University of New Hampshire. But when you were a student there, you were far from the school's poster child for success. Can you take listeners back to your time in college and share how a guy who was banned from living on campus and earned 1.8 GPA as a junior was able to turn things around and get on track to become a Fortune 500 CEO?

David: Yeah, unfortunately, all true. And I would say, you know, I grew up in an environment where there weren't a lot of role models. And I had no idea what was possible. There was nobody I could look at to say, okay, that's what success looks like. And as my mom has said, I was the first one to graduate from high school, my dad had six months to go in high school, my mom had two days, then picked up a secretarial degree at a school so she could get a job. And they couldn't really guide me because they didn't know why. So I was having to try to figure this out on my own. And I had a lot of ambition. I wanted to accomplish something, but I had no idea what so I was totally directionless. And I didn't like school, I always felt like I was good at it but I always felt like I was wasting my time. And that became true when it came to going to college. Also, I felt like this is just another four years, it's going to cost me a bunch of money, and I don't know what it's going to get me. So I quit twice. The first time right out of high school. I just didn't go. I got accepted to the University of New Hampshire and I just didn't go. Then I realized after trying to be a carpenter's apprentice and a mechanic, that I just wasn't good at anything with my hands. So I decided to go back to school, made it through two years, and then to your point was told by the assistant dean of students that I would no longer be allowed to live on campus. And I remember asking her why. And I'm sitting there, you know, in the time with my jeans, my flannel shirt, my long hair, and she said, well, it's no one big thing you've done. It just seems like wherever you are, there's trouble. You're just a general troublemaker. So I thought, well, I'm getting sick of never having any money anyway. So I went back home and commuted and got a job working nights at a GE plant as an hourly employee. And then my buddy and I used to go out fishing in New York Harbor, Maine, in the Atlantic for Cod, and we said, God, wouldn't it be a great way to earn a living? So we decided that's how we were going to make our fortune. So I pretty much abandoned my second semester my junior year. That's when I got a1.8 because I barely finished, took another year off to become a fisherman and ended up learning. I always say, you know, the early indication of my business activity and the path to riches was commercial fishing, but we had notwithstanding, found out I wasn't that good at that either. And after about six months, we had the same amount of money we did before and well, I looked around and okay, I guess we'll get married. And so he got married to his girlfriend. I got married to mine and my wife and I were living in this third floor, unheated, uninsulated apartment in New Hampshire. So yes, it was cold. And thank God there was heat coming up from the uninsulated apartments below us. And the first month we're married she says, I'm pregnant. And I remember saying, well, that's interesting because you're taking the pill and I'm not sure that's how that was working. I'm not sure that was actually happening. And then the fourth month, she said, I can't work anymore. And I quickly did the math and realized that based on my paycheck, we were spending two bucks a week, more than I was making. And I had $100 in the bank. And I figured, okay, I have 50 weeks to figure out what to do. And that's when I really buckled down, I quit smoking cigarettes, I started working out. I worked nights, went to school days, got a four out that year, and just completely turned my life around. And I always tell my oldest son that he's the reason I'm successful, because he scared the bejesus out of me, and caused me to say, stop worrying about what you're going to accomplish someday, and start making some money right now so that you can support the family. And that completely turned things around for me, because I really just focused and made all the difference.

Adam: I love that. And I think that really ties into so much of the advice you share in your book, which is focused on winning now and winning later- being able to do both. We're gonna dive into that a little bit later in the conversation, but I wanted to ask you about your time at GE, as you mentioned, you started off not in a fast track management trainee program but as an hourly employee. And 20 years later, you're the CEO of GE Appliances. How did you rise within GE  and how can anyone listening rise within their organizations and within their careers?

David: Yeah, it really was a step at a time. And I can say, you know, people have asked me so you know, when did you decide that you thought you could be a CEO? And it wasn't till I was about 40 years old, because up to that point, I was just focused on, I wanted the next job to pay more than the one that I was in because I had, for too many years, lived week to week, just trying to figure out which bills I could afford to pay and which I could let slide and the collection agency would knock on my door ruin my credit rating. And I hated living like that. So I just wanted to make more than I did in the last job. And that kind of and just doing a great job with whatever I did, which is important. And I always tell people, there's two things required for advancement, the first one is you have to really outperform. And you have to outperform versus all your peers. You can't just be in line, it's got to be noticeably different. But then the second thing is somebody has to see it. And visibility matters. And fortunately, early on in particular, I had a boss who saw what I was doing. And I guess realized even more than I did that I had further capability. And he pushed me to do things that maybe I was a little afraid of at the time. But like going on what was G's corporate audit staff, we spent five years traveling around the world, a real eye-opening experience for me. And I just kind of steadily kept building and having the focus on just doing a great job. It's just something that I always wanted to do. And sometimes people noticed it, sometimes they did. And the big opening for me when you talk about someone noticing it was I had a job in Fairfield, Connecticut. And I was going to be responsible for doing Jack Welch's board pitch that month. Separately, I was also responsible for sending out the strategic plan requests with all the financial numbers that go with it. So I sent that out like I normally did. And I had also recommended to my boss and his staff that we no longer send out that request because I said we don't do anything with it. So we have businesses do all this work. And then it just goes in a file drawer that I was roundly for doubt. So I got this call about a month after I've sent that out and I'm working with Jack's board pitch and I hear from my assistant that Jack wants to talk so I get prepared and think okay, he wants to understand the status of the board pitch, so I get myself mentally prepared. This is 1986 and he comes on the phone and says hey, is it true? We asked the Medical Systems business what ROI will be in the ultrasound business in 1989. And I'm just standing there thinking what the hell is he talking about? And all of a sudden it dawned on me, it's the strategic plan request. And I said, yes, I believe we do it and I barely got that out, and the F-bomb started flying with, why would you do that? I want to see this thing. Get yourself up to my office right now with the request. Upstairs, okay. I scrambled and went up to his office, he yelled at me to come in. I did. And he spent the next 20 minutes just absolutely parading me with the HR leader for the company sitting there. Again, F-bombs flying, just yelling at me, asking me why I would do such a stupid thing. And I just kept answering his questions and saying, you know, this is the financial expression strategic plan, we need the numbers, the whole time I’m standing there thinking I can't believe this. I didn't even want to do this. And now I'm stuck having to answer for it. So I go back to my office, call my wife at the time and say I think I've just been fired. I’m not sure how this works but I think I've been fired. So just give you a heads up. And I've talked to one of my buddies. And he said, you didn't tell him that we recommended against it, did you? I mean, that we voted yes and you didn't want to do it. We voted that voted you down. And I said nine insane things that are huge, you know, thanks. So we go two months forward. And there's an RCA acquisition victory party, and I've been on the second finance guy on the team and I show up at the party and I hear Jack yell, Dave, Dave, get over here. And I'd heard all the stories and I thought, oh, my God, I'm going to get fired here in front of everybody. So I kind of tried to put a fake smile on my face. My buddy goes with me. And he was in just a terrific, expansive mood. And he says I was never so pissed at anyone since I was in plastics. And I smiled and said, well, thank you for sharing it with me, I really appreciate it. And he thought that was funny. And then my buddy told him, you know, Jack, Dave never wanted to send out the request, he actually recommended that it not be done. And we all voted it down. And I still remember, you know, Jack looked at me with a surprised look on his face, just shaking his head and he put his fist to his ribs and said, wow, so you just took the knife for those guys? And I said, well, I didn't really look at it that way. You don't turn on your friends like that. He just kept shaking his head saying, wow. You know, wow, that's something. So, you know, we walked away, like, you know, the conversation ended and the CFO pulled me aside that night and said, you have no idea how much good you've done yourself. I said, well, I am hard-pressed to understand how. it sure hasn't felt that way. And he said, no, he already had a high opinion of you because the way he yelled at you in his office, he has made vice presidents cry. And you just kind of stood your ground and kept, you know, making your arguments and never got flustered. And he said he really admired that. And then when he found out tonight that you hadn't thrown in your friends, you have no idea how much good you've done yourself. So I waited to see. And two months later, within the company, if you got a one-level jump for something, you were good. If you've got a two-level jump, it meant you were on fire all-star. And Jack had me interviewing for jobs that were three and four levels above where I was, and I got one. And all of a sudden that increased my visibility like you wouldn't believe between what could have been a horrific experience, which turned out to work very well for me. And then the job afterwards, it just created all kinds of visibility for me so that when I did outperform people were noticing it. And that kind of just kept it going.

Adam: There's so much wisdom there. There's so much to unpack there. But to highlight one important point for listeners; meeting the moment, you never know when your moment is going to come. But being ready, being true to yourself. And whenever that moment does happen, if you meet it in the right way. Dave, to your point, it was a career changer.

David: I'm sorry, Adam, I’ve got to interject there because you were so right. You never know when that moment’s going to come. And it's not something you can really think about ahead of time because who the hell knows what the moments gonna look like. And it's not like I sat there thinking about- or stood there thinking about well, how do I handle this? There was more of a case where that's just not how I viewed myself. I always thought, you know, nobody's going to make me cry. And you don't turn in your friends on something like that, you just kind of take your heads. And it wasn't something I had to think about. And just knowing who you are, does make a difference. So when that moment comes, it's a lot easier.

Adam: And so much of it is everything you've done leading up to that moment, the preparation, and who you are as a person, your character, you can't change that, in that split second. And I wanted to ask you about what you're best known for your time as CEO. At Honeywell, you take over a Fortune 500 company, but you're also taking over a company that's failing. Can you describe for listeners the challenges that you faced early in your tenure? How were you able to overcome them, and ultimately lead a major turnaround?

David: Yeah, to your point, there's a lot to talk about there, too, because I knew the company was in trouble. You know, publicly, everybody knew that. The thing I've told everyone though is that as bad as it looked externally, it was even worse internally. And when you started, when I finally realized how aggressive the bookkeeping had been, with 10 years worth of generating only 69 cents of cash for every dollar of income, the environmental liabilities that hadn't been booked, the asbestos liabilities that hadn't been booked, the underfunded pension plan, the short-termism that was rampant in the company just trying to survive one quarter so you could go on to another. The fact that I couldn't trust my board, and I couldn't trust my staff. And none of this showed up right away. This is stuff that you kind of realized over a five or six-month period. And you end up kind of looking at it saying, well, I got a couple of choices. One is I can just run away and say this is not what I expected. Or two, I can say this is not what I expected, but I'm being paid to fix the place. And it's worse than I thought. And I just have to figure out what I'm going to do in order to do that. And I chose the second path. And just thought, well, this is what I signed up for. You don't run away from something. And I'm going to figure out how to get this done. So it caused me to just think very carefully about what it was I was trying to get done and how I was going to go about doing it. And I can't say that I was able to predict from the very beginning, okay, here are all the things but to do, here's how I'm going to do it. But I had some kind of idea of the general direction that I wanted to go and an idea of how you may want to go about it. You will learn more, you adjust, you learn more, you establish something new, and it's a constant evolution. And I'm a big fan of talking about the need for evolution, whether you're an individual organization, company, a government, evolution has to be constant, you always have to be learning and you always have to be adapting faster than your markets and your competitors. And by doing that it allowed us to stay ahead for a long time. And hopefully, everybody notices that Honeywell has continued to do extremely well even after I've left because people processes were put in place and especially on the people side, my successor Darya is superb. And one of the things that I wanted to establish myself was that they always said 10 years after I left the company, I still wanted to own my shares because it was a good place to be. So that all ended up working out pretty well but just kind of following that. Buckle down and then follow evolutionary paths.

Adam: Can you talk a little bit more about how you are able to build such a winning organizational culture and go a little bit deeper? What did you look for in the people you hired and what are your best tips on the topic of hiring?

David: Yeah, starting with the second one first; I always said to all the leadership classes that I would talk to, that there were two things you had to be able to do yourself in order to get ahead. I mean, I would tell them about performance and visibility. But then I would also say things that you can control. The first one is to get results and get them the right way so that there aren't a pile of dead bodies lying around that you've killed in the future because of what you did to make numbers. But you have to get results and get it in the right way. But I would also say that's the easiest one to do. And that's begun in leadership class, largely, because you were able to do that. The second one, which is much more difficult, is, are you self-aware? And are you a learner? And this is tough to measure. And it's tough to coach people on it because a lot of this is stuff they've got to learn on their own. And you have to end up learning about yourself, and what are the things? Yeah, well, you're good, but what are all the things that maybe you're not so good at, and you have to be able to mitigate those things that you're not so good at. And I know it's popular to talk about focusing on your strengths. And I'm not saying ignore your strengths. But you also have to mitigate your issues. And I would always talk to my own leadership classes and say, you'll get a 360. And you'll look at it, and you'll agree on all the strengths, and then you'll get to the issues. And you'll generally think of one of two things. One: they really don't understand what I'm trying to do; or two: I know who the son of a bitches who said that is. And I said, the problem with the 360 is on the issues, you can put it into a four-block. Good advice, bad advice, I take the advice. I don't take the advice because not everything they say will be correct. You have to maximize the good advice you take and the bad advice you reject. And only you can do that. And I would share with them my own issues that I've had to deal with defensiveness and also the ability to be too decisive sometimes. And what have I done in order to mitigate those so that I make better decisions, because the higher you go as a leader, the more you'll get measured on your decisions. So when it came to the interview process, I would look for those two things. I would want to know about their successes and about their failures, and what they learned. But I also wanted to know, from a personal standpoint, one of the things that you think that you're good at, one of the things that you think are weaknesses for you. And not just that I lacked experience in something, but you know, it’s one of the things you have to be careful of and how do you go about doing that? Because when I was looking for people who were more thoughtful about themselves, about the team that they would have about them, the business that they might end up running, or the organization they might end up running- and that's thoughtfulness, that ability to say, okay, how do I think about myself, my team, my business, my organization, so that I make good decisions? That’s what I was looking for. And I took so long to answer your second question, and then I forgot the first one.

Adam: Well, I think you gave a lot of really good advice in that. I had asked, what did you do to build a winning organizational culture? And what do you look for in the people you hired and tips around the topic of hiring? And it sounds like you answered the first question by answering the second question; by bringing in great people.

David: Yeah, that's definitely having the right people is definitely a part of it. Establishing the culture, though, takes even more than that. Because you first have to explain what's the culture you want. And you have to be absolutely relentless and consistent, whether it's year one or year 12, in saying the exact same thing. Then the second one is they have to see you walk the talk. And a lot of this falls into the do as I say, not as I do. Organizations will do as you do. And if you tell them, look, I want no more of this kind of short-term book and accounting entry in order to make a number. And the first time you run into a tough quarter and the business says, look, I can make my number but I'm going to have to do this action, and you succumb, the organization sees that and they learn and if instead you say no, I'd rather take my hit externally because what we're doing internally and the culture I'm trying to establish is too important, then you'll lose, if you don't act that way, the same sort of thing is if you talk about integrity, and you find somebody who's done something in a country that they shouldn't have, and you try to keep it quiet, because you don't want to be embarrassed, and you kind of try to handle it all quietly. If instead, you make a point of it as we did, and make everybody in the company aware of what's going on, and that how you are not going to tolerate that, and you're going directly to the government to make sure that they are aware of it, you will make sure you prosecute the employee who acted that way. Well, then you get a different dynamic. And that walk the talk is really important.

Adam: Really important, not only in building a winning organizational culture but really important when you think about the key characteristics of an effective leader, which is a great topic. I want to ask you about your book. Winning Now, Winning Later focuses on how leaders can successfully pursue strong short-term results and long-term results simultaneously, which is something that might sound contradictory. How can leaders, to the title of your book, win now and win later?

David: Yeah, this is a really important point for me. And it's about the concept of accomplishing two seemingly conflicting things at the same time. And human nature. And leadership tends to cause people to want to say, what's the one thing you want me to do, and causes leaders to want to respond to that and tell them the one thing they want to do. But the fact is, no matter what it is you're trying to accomplish, there's some offsetting dynamic that you have to accomplish at the same time. So think of it this way: you want low inventory? Or do you want great customer delivery? Do you want high prices and margins? Or do you want high volumes? Do you want people closest to the action empowered for quick decisions? Or do you want to have good controls so nothing bad happens? Do you want open positions filled quickly? Or do you want to make sure that you have only the best people regardless of the time it takes? Do you want great internal customer service? Or do you want low functional costs? Do you want things right or do you want things fast? The same is true when it comes to do you want good short-term results or do you want good long-term results? You always have to figure out what's the root cause that will allow you to accomplish both. It requires much tougher thinking, you have to be much more analytical, you need to maybe take tougher actions that you might have otherwise, to accomplish both. But when you do, the results are just so much better. Now the interesting part is I first stumbled across this idea on an inventory taskforce that I ran 30 years ago and ended up focusing on customer service at the same time. And we cut inventory by 50%, generating 500 million bucks in cash, and creating better customer delivery. And I thought it was an original discussion. I used to call it my mini theory as if any mini theory could do just one thing. Well, I ended up realizing as I read more and talk to more people that it was not an original concept. Others had talked about it in the past. Which gets you to the next question, if it's known and it's obvious, it works. Why isn't it discussed more? Why don't more people do it? And that's when you end up learning because it's hard. It's not easy to do. But the rewards from looking at the world that way, and looking at business that way, are huge. And that's what we did when it came to the short-term long term. And that's how I got to the point of saying, okay, I need money to generate results. And I need money to reinvest in our pipeline of process geography products and services because we've done nothing. How do I do that? And that's when I said, okay, what I'm going to do is grow sales and hold fixed costs constant. And by God, that worked unbelievably well at Honeywell, and we're doing the exact same thing at the company I work with now, Furtive, a New York Stock Exchange-listed company, and it works extraordinarily well. But it's because we took that approach to say, how do you accomplish two seemingly conflicting things at the same time? It's huge concept, not well implemented, if even understood by, I'd say, most business people. And it really starts with being open to changing your mindset, being open to taking on new ideas, being open to exploring what may seem improbable or even impossible.

Adam: Your point is perfect, because the title of the first chapter is “Banishing Intellectual Laziness,” because it's very easy to just fall into, well, this is how I'll think about this. It requires leaders to really think about the situation they're facing.- and I'll guarantee you whatever situation is there are two seemingly conflicting things there that you have to manage. Given our remaining time, I want to ask you some rapid-fire questions.

David: Sure.

Adam: President Obama named you one of the CEOs he admired most and appointed you to the Simpson Bowles Commission. What is the single best lesson you learned either directly from or by virtue of being around President Obama?

David: I am a lifelong Republican. And he was the first Democrat I ever voted for in my life. And one of the things I've liked- if you read The Audacity of Hope, the whole book is his ability to see the two sides of two seemingly conflicting things, which I thought was an extraordinarily valuable thing to look at. I also liked how he really championed, how do we make sure that the people who aren't doing as well in society have an opportunity like I did, because it would have been very easy for me to not do quite so well. And I point to the fact that I was able to get a decent enough education to allow me to be successful. And I thought that was just excellent. And he and I remember having a conversation with him about leadership. And he was one of the reasons- he and Hank Paulson were actually the two big reasons I wrote the book. And him saying that the decision pro when I described how to run a meeting, how to make a decision, it was a lot of what he had done also. So it was nice confirmation that it was on the right path, and that it could be useful.

Adam: We were chatting off the air about football, you're a big New England Patriots fan, you're a big Alabama football fan. And you told me that you had the opportunity to spend a day with Nick Saban. What’s the best leadership lesson you learned from your time with Nick Saban?

David: Oh, I would say the thing that I ended up learning the most was the confirmation of how good leadership, whether it's in business, sports, government, doesn't look a lot different. And interestingly, he asked me to come and talk to his coaches, because I'd forgotten that award. And his focus on things like process, how to make sure that he got all the facts and opinions, his constant learning, his ability to evolve. All of those things were just as true in sports, in fact, maybe even more true and required even more rapidly in the kind of environment he's in where his team is constantly changing, even than it is for me. So I would say it was a wonderful confirmation that all the stuff that I ended up writing about in the book applies everywhere. And he is just a tremendous leader. Just just, you know, I have a high regard for him, just like I do for the Kraft family with the Patriots, they all take that same kind of intense approach to leadership. It's more than just a great speech.

Adam: David, I couldn't agree with you more. Something that I tell audiences over and over and over again; the core principles of effective leadership are universal. What can anyone listening to this conversation do to become a better leader?

David: Well, I would go back to the two things we talked about earlier. First of all, make sure your performance is there. And sometimes yeah, you know, one of the things that I get irritated about is limited by attitude, and feeling like it's just like if you're just going home enough and believe enough, everything's going to be great. Well, it's not. And that's just baloney that I think a bunch of consultants try to sell you that when the reality is you need to really examine, are you performing better than everybody else and doing all the right things? Then the second one gets back to that self-awareness and that ability to learn, and do you really recognize what are the things that maybe you're not quite as good as you'd like to think? And not just on an experience basis, but personal characteristics. And one of those things that you need to be doing in order to become a better leader is to mitigate what those issues are. And those would be the biggest pieces of advice I'd give to anybody that I think applies, regardless of whether you're in sports, entertainment, business, government, it doesn't matter where you are. that's applicable everywhere.

Adam: Thank you for all the great advice and thank you for being a part of Thirty Minute Mentors. 

David: Well, it was fun, Adam. I hope it works for your audience and that it's actually helpful. 

Adam: Very helpful. Thanks again.


Adam Mendler is the CEO of The Veloz Group, where he co-founded and oversees ventures across a wide variety of industries. Adam is also the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one on one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal winning athletes, political and military leaders - for intimate half-hour conversations each week. Adam has written extensively on leadership, management, entrepreneurship, marketing and sales, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities and non-profit organizations.

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