HIGHLIGHTS: Judy Marks - CEO of Otis

0:01Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi, everybody. I'm Nikolaj Tangen, the CEO of Norwegian Sovereign Wealth Fund. And today I'm in really good company with Judy Marks, who is the CEO and president of Otis. Now, Otis is an incredible company. It lifts an elevator company. And they move 2.4 billion people every day across 200 countries. Now, I think Judy's leadership is just like a standout example of innovation and people-first culture. And so, big welcome. Thanks, Nikolai. Great to be here in Oslo with you.

0:41So, the first thing is, so now, Judy, we go into an elevator, right? You and I together, and you press, you know, fifth floor. How do you know that you're in a good elevator? Well, the first thing is actually as technology develops, hopefully you're going to press that floor before you ever get to the unit and the car itself. But to me, it's about ride quality. It's about safety. And it's about just the general passenger experience. And I think that passenger experience is going to be one of the many things that changes in the near future. What is a ride quality? What is that? Oh, it's something you feel.

1:19Yeah, you feel. But how do you feel? What do you feel? Oh, I think every person has a reaction. Is it smooth? Does it bother my ears? How does it feel? It's just a very personal experience. Should it like accelerate a lot? Should it be, I mean, just what? Should it like start with a bang? Should it start smoothly? What should you do? Well, you know, the goal, and Nikolai, you know, I'm an engineer. So the goal is the faster you can get to acceleration, the more people you can move safely and move quickly. Now, you are in a lot of iconic buildings around the world. What are you most proud of? Well, I'd have to go back to some of the buildings we've been in since the day they were built.

2:04We were the only US or non-French company to be in the Eiffel Tower from day one. We're still modernizing and maintaining. We have full service on the Eiffel Tower, and it's truly iconic. Same with the Empire State Building. As that building went up in 13 months. It was the highest building in the world at the time, and it really stretched us technologically. We still are working for Tony Malkin and the Empire State Building. So you went up in 13 months? The whole Empire State Building was... How long time do you think it would have taken them today? A lot longer. Why? Labor was plentiful, regulations were not.

2:42Okay, so lots of people, no regulations. I think about as recent as last month, I was transiting through Incheon, through the Incheon Terminal to the new terminal. And we've got our largest moving walkway there. It's over 130 meters long, one unit. So we do moving walkways, we do escalators. But iconic buildings, we have the Burj. We have the tallest building in the world. Now, that'll change over time as buildings continue to rise. But, you know, it only matters to you for the building you use. So I can talk iconic, but it kind of only matters where you live and what you use. And as long as that's reliable and gets you where you need to be, you don't even think about the elevator.

3:26Now, you are a very important service business. What's the best service you have seen anywhere? What's the best service experience you have had? I would tell you our best service is in Japan. And it's an expectation there. It's an expectation of excellence. The code is higher. The requirements are higher from the customers. And it's not even in the sophistication of, of course, we have to have an earthquake sensor in every elevator due to the nature of the country and the needs. But there is an expectation of quality in Japan, not unique to our industry, but certainly in our industry. If we have an elevator breakdown in Japan and they have to call our Otis line, our helpline, for a request for a mechanic because our elevator stopped, our branch manager actually goes physically to see that customer to explain what happened, to apologize, and to make sure it doesn't happen again.

4:26That doesn't happen anywhere else in the world. Well, you know, it's so interesting because if you had asked me what's the best service experience I ever had, I would say it was in a Rio Can in Kyoto. A Rio Can is a guest house. And it was just unbelievable. And I remember in the guest book, it was signed by, I think it was one of the first Hiltons, you know. She said, this epitomizes what service should be all about. And it made such an impression on me, just the personality, you know, the way they handle you personally. So why, tell me, why is this specific to Japan? I think it's cultural expectation.

5:00I would tell you the other part of it, which... And, you know, they stood outside the guest house, and they waited until they couldn't see us anymore. You know, and it took us five minutes to walk down the street, and they were just standing there. Unbelievable. Yeah. The other part, though, is there's also a recognition in Japan of they are the largest, the most rapidly aging society. So there's planning in place, and how I would correlate that to our business is it's probably the most mature business we have in dealing with obsolescence of parts and of equipment. So there's just this mental mindset of thinking of everything in advance and then being extremely customer focused.

5:39It's nice to hear you talk about your 44 ,000 mechanics because you nearly get tears in your eyes. It's just clear to me that you love your mechanics. I do. And I hope they know that. Tell me about them. So it's an interesting business. It's a people business. And these mechanics are professionals. And I try to show them the respect they deserve. I don't use the word employees in our company. I use the word colleagues because I think it's respectful. But we have no business without our mechanics. And these 44 ,000 are dedicated. I call it a humble pride. They care about Otis. Many of them, their fathers worked for us as mechanics.

6:19It's very much a trade that gets passed down. The trades change quite a bit. It's not as mechanical. It's not as much lube and oil anymore. It's a lot more troubleshooting and digital. But there's still that mechanical need for people. And so we're calling on 44 ,000 mechanics who don't typically show up at an office ever or very rare. We'll do safety huddles. We'll do those at job sites. But these are people who work fairly independently but are part of our company. And as they succeed, we succeed. Otis came out of a conglomerate called United Technologies, and this happened during COVID. So pretty challenging, right?

7:02What did you learn from this? Yeah, so we were preparing the United Technologies board in November of 2018, decided that we were going to do a three-way spin. United Technologies would remain at that time. We would spin off as Otis and Carrier, the HVAC company, would spin off as well. And we had a 16-month window to complete this simultaneous to that, Nikolai. We were also, from an Otis perspective, returning to earnings growth. And that was our time to prove that we knew not just how to prepare to be an independent company, but to show that to the world. So we took 2019 to prove that, to prepare.

7:40And then we were at our investor day in February at the New York Stock Exchange and all excited for our equity roadshow at the end of March. and all of a sudden the world changed pretty drastically. So we did the Equity Roadshow remote. And then we launched the company midnight on April 3rd, right in the middle of COVID. New York Stock Exchange was remote. Everything was remote. And we knew we had to go. We knew we were going to spin. We knew it was the right thing to do. We knew we were prepared. But as you think about April 3rd, closing the books for the first time, getting ready for your first earnings call, all of this first board meeting being everything being remote.

8:23It took a tremendous amount of agility, resilience, and we were an essential service. So construction continued in parts of the world. And as COVID oscillated through parts of the world. And what we did is we took the lessons from China, which had already gone through that first burst in February and March, and quickly moved it around the world and said, here's how you get to customers. We had customers who absolutely needed us, hospitals, transit. And again, back to my respect for our field, they were out there every day in the middle of this coronavirus, going to hospitals to make sure that people could be taken care of.

9:04And that's kind of where you see this resonance with our mission. Tell me about the importance of being an optimist. I mean, don't you think it's important to point out the bad stuff? Oh, yeah. Bad stuff's easy. I mean, as any leader, not just a CEO, but anybody listening to this, most days you're dealing with exceptions. Most people aren't dealing with routine as a leader. You're dealing with either the top end of things going right or the bottom end of things going wrong. So you come in every day and you forget about that 80%. You don't even deal with the 80 % in the middle, right? That's what process takes care of.

9:40That's what discipline takes care of. That's what organizations below you take care of. You're dealing with the top and the bottom. I think too many people focus on the problems of the day, which they're real. Too many people focus on, oh, we had this issue, so you're going to do issue resolution. You need to pull back and look at that top 10, too. It's not just the top 10 % of the people, but what's going right. And you have to paint the picture. And it's a valid picture. It's not like Monk. you have to paint that picture of what's possible. Because if you're a good leader, you have followership and people will trust you.

10:20But you have to build that trust, Nikolai, and that takes time and takes proof.