Carrier Chairman and CEO Dave Gitlin capitalizes on his company’s agility to quadruple its value.
Carrier Global completed its spinoff from United Technologies in April 2020, just three weeks after the World Health Organization declared COVID-19 a pandemic. In the ensuing 18 months, the company’s stock more than quadrupled in value.
The spinoff was designed to give Carrier greater agility. To Chairman and CEO Dave Gitlin, that meant immediately doubling down on innovation to attack urgent global problems such as climate change, vaccine distribution and indoor air quality. “We were very purposeful about shifting from being a traditional equipment manufacturer to providing solutions to some of the world’s most important challenges,” Gitlin says. “To make that shift, we first had to make the culture much more externally focused—on customers, innovation and on winning in the marketplace.”
Gitlin capitalized on Carrier’s new nimbleness to deliver groundbreaking solutions almost immediately. “Innovation is the fundamental underpinning of not only survival, but also positioning growth and shareholder value. Carrier has demonstrated a relentless focus on innovation,” says Randall Miller, EY’s Global Manufacturing and Mobility Leader.
“They’ve launched more than 80 new products and services this past year alone,” he continues. “The vision that Dave and the team have put together, the aggressive targeting that they’ve put in place, and the product suites that have come out of that are game changers.”
“People often think of innovation as something that has a long payback period,” says Marna Ricker, vice chair of tax at EY Americas. “Carrier is proving how powerful rapid innovation can be.”
That kind of responsiveness isn’t limited to products; it permeates the newly independent company. “Innovation is a big part of our culture,” Gitlin says. “It takes many forms, from innovation in a factory—for example, using automation to provide better and more predictable results—to innovation in the finance department.”
Such creativity requires a culture that rewards risk-taking and concrete investments. That’s why Carrier has increased its research and development investment by about $75 million over the last two years. “We’re saying that we trust our engineering and the rest of our workforce to really lean into innovation,” Gitlin says.
Innovation is a big part of our culture. It takes many forms, from innovation in a factory to innovation in the finance department.
For Ricker, this increase in investment is the mark of a great CEO. “All too often the reaction to an uncertain environment is to scale back investments,” Ricker says. “Reducing R&D expense too heavily for too long allows more nimble competitors to get ahead. The Carrier team had a clear vision for what they wanted to be. They invested responsibly toward that vision, and they did that during the pandemic. Today, they are incredibly well positioned because of those investments and those innovations.”
Meanwhile, Gitlin has parlayed the company’s agility and innovation into leadership in sustainability. Carrier’s mission: Provide solutions that matter to the people and to the planet. In November 2020, Carrier announced not only that it would be carbon neutral by 2030, but also its commitment to helping its customers do so as well. The company innovates rapidly toward sustainability objectives in its business and products, and actively reaches out to partners to help them achieve their own sustainability goals. Gitlin notes that where customers have made very aggressive ESG commitments, Carrier is dedicated to helping them develop the road map to reach those targets. In this way, leading in sustainability reinforces leadership in the marketplace.
“This is a unique part of Carrier’s strategy,” Miller says. “I think we should see more companies and more CEOs taking this approach. You can point directly to the linkage between Carrier’s sustainability strategy and their performance, which is extraordinarily strong, and therefore point to optimized shareholder value.”
EY has been Carrier’s journey partner since before the spinoff, and Gitlin considers the firm’s contributions essential to the company’s successes. “What EY has done very effectively is to proactively come up with solutions that help us achieve our objectives,” he says. “And they don’t think about it in a transactional way. They really want to partner with Carrier in a multifaceted way that helps us achieve an objective.”
In the middle of rapid innovation, Gitlin keeps his eye on the big picture. “Healthy and safe indoor environments, sustainability and effective cold-chain distribution—those trends are here to stay,” Gitlin says. “Our job is to differentiate ourselves and to make sure that we have innovative, digitally enabled offerings that are better than our peers’. That’s how we maximize value.”
This is part of Leadership in Action — a master class series featuring prominent CEOs highlighting the decisive moment where bold decision-making has made a material impact on their company and career.