'Our goal is how do we at Otis disrupt ourselves,' says Otis Worldwide Corp's CEO Judy Marks

Judy Marks, 59, Chair, CEO and President of Otis Worldwide Corporation, has dealt with a host of challenges in her long career. After stints at IBM, Lockheed Martin and Siemens AG, she joined Otis in 2017, where she helped the pioneer of elevator tech become a publicly listed company, following its spin off from United Technologies. In a freewheeling conversation with Business Today’s Krishna Gopalan at the company’s design centre in Hyderabad, Marks outlines how her company is positioned today, the difficult period it faced during the Covid-19 pandemic, and why it is a good time to be in the business. Edited excerpts:

Q: You first dealt with customers at your father’s store. You were really young then…

A: I am the youngest of three children and we all worked in the store. This wasn’t a big chain, but it was meaningful. I started with gift wrapping and still haven’t mastered it! Then, I worked behind the counter and made that connection with customers—listening to what they want, what they are interested in, and then trying to fulfil all of it. Be it that one transaction or leading a [big] company with a global customer base, it’s that same connection and fulfillment that I have tried to instil in our teams. Our customers understand we’re not going to be perfect, but it’s that ability to continue to communicate, to share our progress and really listen to what they need that is important.

Q: You are a big believer in informality, especially within teams. Why is that so important?

A: We’re all in this together. While there may be organisational layers, we’re all serving customers and we’re all driving innovation. At Otis, we try to be the best service company in the world. We have 34,000 of our colleagues providing field service every day without supervision. They wear our brand on their uniform and each of them must feel engaged to be in the business.

Q: After stints at some of the biggest multinationals, what brought you to Otis?

A: I’ve had the privilege of working for great multinationals, all of which were very focussed on a mission—whether it was Lockheed Martin, which has a national security mission, or Siemens, which has more of a global industrial mission in electrification automation.

What attracted me to Otis was the iconic brand that had sustained for 165 years as an industry leader. I believed I could take everything from my previous experiences and apply them to an industrial company that had an incredible impact on the world.

For me, it’s about impact and driving it.

Q: How did you go about tackling the challenges at Otis when you took charge?

A: For Otis, 2017 was the seventh straight year of no earnings growth. The conglomerate had grown but Otis had not. We are in 200 countries with 1,400 branch offices and I travelled extensively to meet our people.

I’ll use two words to describe my feeling after the first trip around the world—humble pride. Here was a group of people that was very proud of what it did while living within the constraints of a conglomerate. Otis had not been invested in to the level it needed, but for our colleagues, they were going to provide the best service. This “no earnings growth” was unacceptable. It was a question of giving that commitment back to our customers and putting together a strategy for the company that would be shared with everyone and articulated.

From a foundational point of view, we have three absolutes in this company—safety, ethics and quality—with no compromise on any of those. We’re in the life-safety business. It’s a hazardous business with people working at heights. We have 2 billion people a day who trust that our products will be safe, effective and reliable. You cannot look at a chart and say, ‘Oh, we did 12 per cent better than last year.’ The only answer is zero—zero fatalities, zero serious incidents. It’s not about improving, but only about getting that zero.

Towards the end of 2018, our former parent’s board of directors made the decision to spin off Otis. 2019 was a year to prove to ourselves that we were ready to turn the company around. For the first time, we held ourselves accountable for each quarter, since we were going to be a public company. A lot was done and we entered 2020 feeling energised and excited. And then I started getting calls in late January [2020] from China on the pandemic. It was a defining moment and also one of great resilience. We were an essential service and our colleagues, whether in manufacturing or service, left their homes every day to keep hospitals running in the depths of Covid-19. The service business is our jewel; it is a recurring business. We cut all discretionary expenses, stopped travel, took pay cuts, etc., so that we could make a commitment to our customers and colleagues that we were going to get through this. We did not lay off a single colleague during Covid-19 and that built trust. Our factories remained open. We didn’t miss a shipment, nor a delivery, even when semiconductors were hardly available.

Q: How did you get back on the growth track?

A: In late 2020, we were really struggling when doing our business reviews. I told the teams that we should be ready to accelerate. They were stunned, but my belief was that the market would come back.

When things started to look up, we hit the ground running and executed almost to perfection. The results speak for themselves—double-digit earnings per share growth, top line taking off and the confidence was back.

Q: You speak of a large organisation where decision-making takes time. In your current position, how or what do you tell your people, so that they think like entrepreneurs?

A: I can’t think of too many companies where 34,000 mechanics and 7,000 installers are on their own every day. They are independent representatives and solving customers’ problems every day. That to me is entrepreneurial. We have 1,400 branch offices and each has a profit & loss. We tell people this when we go to recruit—join us in sales, learn our business and as you move up, there is an opportunity to run one of our branches.

Q: It’s an incredible time across the globe. Don’t you think Europe is in a challenging situation?

A: I’m not an economist. All I can share is our business is doing well. The indicators we’re seeing in Europe are strong. Southern Europe—Spain and Italy—are very strong for us. The Middle-east... is back with a vengeance. It is true northern Europe has some challenges as does eastern Europe because of the [Ukraine] conflict.

We were preparing for a recession last summer and thought energy prices would spike with inflation continuing to grow. In reality, we were up in the mid-teens in terms of orders last year, plus there is a strong backlog in Europe, which will get us through this year. Next year, construction will still be alive.

There’s a lot of potential in the emerging markets. You look at India, and there’s probably no country I’m more optimistic about. The urbanisation rates are in the mid-30s. Our team has strong orders and we’re the No. 1 player. We are pleased about every segment—residential or office or commercial—and that’s why we’ve invested here. In 1996, we opened our factory in Bengaluru and we are really proud to say that, of everything we deliver in India, 95 per cent comes from our factory. So, we are fully in on “Made in India”. As a matter of fact, a few years ago, we moved our commercial and public escalator lines here so that we could support infrastructure and retail growth. India, for me, is a country that has been on the precipice of growth. It’s your turn, and I wouldn’t compare it to any other country. It’s the right time with a country that is now leapfrogging so many others in terms of digital technologies or demand signals.

Q: What makes India so unique?

A: In other countries, while people are doing digital conversions, India is digitally native. And that’s different. I can’t really compare that to anywhere else because it gives us a unique ability to use that digital tech. We pilot things in India and the best example of that is how the team developed, in under six months, a way to configure an elevator—a small or an entry level elevator—where you can choose the aesthetics and order it online. The thinking was, you’d never be able to buy an elevator online because it’s an industrial unit. We can do it now and we did it right here in India.

Q: Where does all this leave the US market for Otis?

A: When people think of American multinationals, there is a skew towards America. If you look at our business revenue base, a third comes from America, a third from Europe and a third from Asia. Of our 69,000 colleagues, 10,000 are in the US. So, we are truly global. We operate that way and understand the local needs. But the American market is a strong one for us. We were up almost in the high teens in terms of orders last year. It’s coming off multiple years of strong constructions.

Probably the biggest demand we’re seeing in the US is multi-family. Residential multi-family is huge and we’re seeing that globally, but especially in the Americas, where offices have slowed down in terms of new construction, [but] multi-family has picked up more than 20 per cent.

Q: How do you look at disruption and digitalisation today?

A: I view them as a competitive advantage. What’s important is for you to disrupt versus waiting for others to enter your market. This is a very consolidated market and the reason for that is life and safety. I don’t know customers who are going to say, ‘Oh, I’ll try a brand new entrant because they want to manufacture an elevator.’ It doesn’t work that way. But that doesn’t mean we can’t be disrupted. So, the goal is, how do we disrupt ourselves before someone comes in and says, ‘I can give you a software-as-a-service solution to do X.’ That means we re-invent and disrupt ourselves. There’s a place for small businesses in this ecosystem and we believe independent service providers will always find small geographies and places to have a role. But as elevators become more digital and as your interactions become more frequent, customers are going to go with the original equipment manufacturers.

Q: This is the first time that Otis has had a woman in the corner office. What is your view on women in top positions today and how do you see the story unfolding?

A: It’s also the first time Otis has had a non-Otis person in the corner office. We have to create an environment where women can thrive. There is an incredible amount of talent available in the world and I don’t know why any company wouldn’t want full access to that.

We are very focussed on that—not just on attracting talent, but retaining it. Our board is 40 per cent women and that’s intentional. If you look at my leadership team, there are a significant amount of women and minorities. We have incredible diversity. But in terms of gender, we need to approach closer to parity, and we’ll do that in the executive ranks. Our goal is by 2030, without increasing the executive ranks, to have 50 per cent women.

 

@krishnagopalan