The CEO Playbook: People and Profits in a Changing Era

Diane Brady (00:00):

So let me start with what is different, and I know you said on stage, Tony about spending a lot of time in Capitol Hill. What are the challenges? What feels different to you right now in terms of leading the world's largest hospitality company? 

Anthony Capuano (00:20):

I just think the divisiveness we see in Washington right now, there doesn't appear to be a lot of common ground to cut deals. As you may know, Mitt Romney sat on our board for about 18 years, and that's one of the things that he talks about is the fact that for as long as he's been in government, there was a view that elected officials were there to serve their constituents and their most important responsibility was to get things done. And getting things done in Washington requires some measure of compromise and collaboration, and there does not seem to be a particularly strong spirit of either in Washington today. 

Diane Brady (01:02):

How about for you, Jim? 

Jim Kavanaugh (01:04):

I think it's well said that if I framed it up, I don't know, it can be counterproductive and it can be a little sad at some point that I think in certain situations things have gotten so polarized that if the good idea is your idea, it's a good idea and let's move forward. If the good idea is the other side or someone else's idea, it's no longer a good idea, even though it's good for the collective group. And that's where I think it becomes very challenging to get, I would say companies, groups, the world moving in a direction that is good for everybody because we have too many situations where I think individuals will potentially shoot down a good idea or a good path forward because it's not their idea. And so I'm not sure what the answer is. Things are more polarized today than they've ever been. 

Jim Kavanaugh (02:18):

I am a realist, but I'm also optimistic that we will work through this. And I think leadership is more important than ever to work through these things. So that's kind of the way I look at it, that being realistic about the challenges in front of us and how to deal with it and how it impacts your people and your company. But a lot of times, especially an organization as big as the Marriott, the world is a very large place, but it's also very small now as things have come together, things have been digitized, people are better connected. Mass communication is literally at your fingertips. You pull out your phone and you can see whatever you want to see. So I think working together and trying to make good decisions on behalf of your collective group, your company and the U.S. and the world, I think is a good thing.

Anthony Capuano (03:15):

One of the things I'm, 

Diane Brady (03:16):

Please go ahead 

Anthony Capuano (03:17):

A little optimistic about though the business community is clearly mobilizing. DC for better or worse, is the center of the universe. Now you walk through the house or senate office building, it looks like a board. It's a bunch of business people lined up to go see their congressperson or senator. And I do think they are listening. They understand the importance for the broad goals around job creation and economic growth. They need the business community to be supportive of policy. And so I mean, we're seeing more companies visit Washington certainly than in my time living there. 

Diane Brady (03:58):

Well, and I should first of all also comment on you both for being long time awardees on the great companies to work for list that we do, and Ed Bastian, who of course on the cover, I hope you'll pick up an issue, was talking about how he is starting to see signals from the consumer about a recession. You'd said you're not really seeing that as much, are you? I mean, give us some sense.

Anthony Capuano (04:21):

Yeah, I mean, I got to be a little careful. We got earnings coming up. 

Diane Brady (04:24):

Okay. So yeah, quiet. This is our safe space. Quiet. 

Anthony Capuano (04:28):

Yeah, we're quiet. So the year got off to a great start. Travel and tourism broadly thrive in times of stability and high consumer confidence. Things are less stable and the consumer is less confident than we would see ideally. So we're going to have to see. It can be short term. While our group business looks pretty good and that books much further out for transient, whether it's leisure or business. We have a sub 21 day booking window so things can get really good or really weak very quickly. 

Diane Brady (05:03):

One of the things, Jim, you and I have talked about, and this is something everybody in the room is dealing with in addition to geopolitics and what's happening on the policy front, we're at the beginning stage of this seismic shift in technology, and I know Marriott's been on the forefront of that too. It can be easy to forget. I mean, give us a sense of the urgency that you're seeing with your clients because you’re in there, talking with a lot of them about what they're doing. And this was and is a transformative year for AI. 

Jim Kavanaugh (05:34):

Yeah, well, technology is, it's changing the world. And I kind of frame it up where if you think about a lot of the CEOs, executives in the room today, 20, 25 years ago, IT was basically a back-office function. It was like keep dials tone, dial tone going. At this point you're just actually moving into email and the internet. But it was very much a back office function today, personally, from my view, if every CEO and board is not thinking about how they're digitizing their business, how they're leveraging generative AI to transform their business and how they're thinking about how they're doing that very thoughtfully and very securely from a cyber standpoint, you're missing out on a massive opportunity. And this is not a 12 month shift. From my view, this is a strategic investment and a long-term journey and personally, not just because I'm in the business, but I believe if you're not looking at it that way, you're putting your business at risk. 

Jim Kavanaugh (06:48):

And I think creating a leadership team today, and I've worked with a lot of CEOs at different levels of bringing together from the CEO to their line of business owners and connecting with their internal IT groups to literally map these things together because those groups need to come together. IT and the chief technology leaders, they need to understand the business better and the business needs to understand what AI and digital and cyber means to the organization. So I think from my view, it's going to be a massive differentiator. And if you look at it, you think about you go back 30 years ago and see Fortune companies that were on the Fortune list, they were on there for a long time. Today, that movement is getting faster and faster, and the ones that are going to stay on there are going to be the ones that are leaning in and leveraging technology to train, to change the way they do business, and transform their business and differentiate themselves. So I think along with all the things that are going on that we're talking about just in regards to disruption, political issues going on, we also have that to deal with. So that's a good thing.

Diane Brady (08:05):

Yeah, good luck. Good luck with that. Well, I mean, other than that, yeah, other than that, Mrs. Lincoln, how was the show? So we're talking about Great Place To Work and of course you're in the very essence of a people business, Tony, and of course technology. There's the concern about that. I know we have people in the room, Sonia, I'm looking at you with RoundGlass that are talking about wellness, mental health. How are you messaging this through your own organization? Because it's to me very emblematic that CEOs are here talking about this, not just CHROs. 

Anthony Capuano (08:39):

Yeah, so when I was on stage with Michael this morning, I talked about this a little bit. Decades ago, we created this Take Care platform, which was principally focused on physical wellbeing. We've expanded that with two additional critical pillars, mental health and financial literacy, and on the mental health, the stigma around talking about mental health issues in the workplace is shocking. And it has to go away. Though I wish I could tell you the world was getting simpler and less stressful, but it simply isn't. And particularly coming out of the pandemic that created a new set of issues that I'm not sure we fully understand the impact on kids that were homeschooled for a period of time, we will have to have years passed before we really understand that. We've got to be that place where our associates are comfortable having those conversations, knowing they can access resources, knowing they won't be sort of emblazoned with the Scarlet Letter for having raised these really important issues. So it's a top priority for us. We're expanding resources, we're expanding platforms, we're creating forums, whether it's through associate resource groups or other forums to initiate that conversation. 

Diane Brady (09:56):

Do you find, and Jim, you can weigh in too, and I know this will be part of the table conversation, but do you find you're leading any differently because of that? We talk about the generations and how people show up and employee engagement, and you mentioned mental health. I was just speaking with David Cordani about that, of course at Cigna and the business round table taking this up, and just the power of being vulnerable yourself, frankly. I mean, how are you dealing with that, Jim? 

Jim Kavanaugh (10:24):

Yeah, I think that the whole piece, I mean leadership today I think is more critical than ever. If you think about it, when everything's running smoothly, things are growing, business is good, there's very little disruption. It's like leadership is not as critical today. There's just massive disruption and things you need to think about even cannibalizing portions of your own business in regards to what you're doing today. But I think about this balance of driving the business and how are you really leading the business forward and thinking about doing that in a way that is literally best in class and that is critical today and even today we have individuals and I think in the world I talk about the different generations still from my view, you want people and you need people that have the grit and determination. So you got to figure out how do you balance work-life balance, but also you want to be special, you want to be great. 

Jim Kavanaugh (11:30):

You can't be average in work ethic. You've, you've got to lean in. You've got to put the time and effort in. At least that's my perspective. At the same time, I think it's really important from the leadership and the CEO that you create a level of transparency and trust and that your team understands that you don't have all the answers, but you're doing the best you can to collect those and make the best decisions on behalf of your employees. And part of that is when you look at mental health, it was one, probably five, six years ago, I was getting some insights from some of our employees and literally at a company update literally talked about it, said, we've got to remove this kind of black cloud around mental health and we've got to feel comfortable talking about. It was amazing the feedback that I got from employees in regards to thank you for, and it literally opened up this opportunity for employees to talk about it and bring it to the surface and know that you really care. And I think there is a difference of just saying it, but actually knowing that you really care for your employees and you care for their physical health and their mental health, and it's this fine blend of, but at the same time, I need you to work your butt off. 

Jim Kavanaugh (12:48):

I need you to go out and get stuff done. Because if we're not working hard and we're not producing and competing, we're not going to have, 

Diane Brady (12:57):

By the way, he was on the Olympic team as a soccer player, so the competing, you know how to compete. 

Anthony Capuano (13:02):

But I do think there was a point in time where those two issues were mutually exclusive. I actually think they dovetail perfectly now. All of us in our businesses aspire to build as close to a pure meritocracy as we can, but if you want to prevail in that meritocracy, it's going to put additional pressure on you. And you've got to know that there is a forum for you to talk about some of the tangential issues. 

Diane Brady (13:28):

One of the things that is different, and you're a truly global company, as are many in this room, in this period where we're almost vilifying and walls are going up. That must create from a cultural perspective, some challenges too. I say this as a Canadian, that's probably not going to be the 51st state, but I do think about how are you dealing with just the realities of how the rhetoric in the news may be impacting the conversations of being an American brand? 

Anthony Capuano (14:02):

Yeah. So maybe I'll give you a granular answer and then a little more philosophical question. I mean, from a granular perspective, one of the advantages Marriott has in its business model—we’re an asset light model. We have 9,300 ish hotels. We own 20, and I'd be happy to sell any of those 20 to any of you. We want to be as asset light as we can. We are a very localized business. So I was in Shenzhen a few weeks ago. We opened our 600th Chinese hotel, each of those 600 hotels, and each of the 400 in the pipeline behind that, are Chinese owned, a significant portion of which are state owned, enterprise owned.

Anthony Capuano (14:43):

The workforce that runs those hotels is almost entirely mainland Chinese. And so there is a view that Marriott is a part of the fabric of the business community in China as opposed to an evil U.S. company arriving in a foreign country. And that's true in most of the 144 countries where we operate. With that said, I serve as the chair of the, it's called TTAB, the Travel and Tourism Advisory board that reports up into the Secretary of Commerce. And I was appointed to that role by the prior secretary, Secretary Raimondo. And one of the things she used to always talk about philosophically was governments, countries, they're going to have disagreements and they're going to have friction. What she always thought was most important is that there was a consistent dialogue. Even if they didn't accomplish much, they were always talking. And one of the things she always loved about travel and the arts is it's a relatively, and I use that term deliberately, but relatively frictionless topic. Even if two countries are butting heads on everything, if they talk about a cultural exchange or they talk about promoting travel between the two countries, that's usually a productive conversation. I worry if we get to a place, I mean using your words, if those walls continue to be put up, if that dialogue starts to disappear, then I think we find ourselves in a much tougher environment. 

Diane Brady (16:11):

Before I get to some of that philosophical, take us home leadership philosophy, which I think both of you have very deep-rooted beliefs in how you lead. I want to turn to you, Jim, if there's anything you want to say since obviously tech, China, that's a pretty fraught combination right now. How are you thinking about that? Any advice and what you're hearing? 

Jim Kavanaugh (16:33):

It's definitely a challenge. And every day you think about from generative AI to large language models to DeepSeek. And like I said before, it's amazing how fast in one day, something that comes out can literally set the entire market back on its heels or move it forward.

Jim Kavanaugh (16:58):

So I think where we are today, as I mentioned before, I look at it when you go back when I was playing soccer many, many years ago, but back when it's travel in 1983, 84, grew up son of a bricklayer. We basically modest, very modest family, but great place, great family, but had the benefit back then of traveling to 30 or so, 35 different countries over an 18 month period. And so really never, hardly ever getting out of St. Louis. And then all of a sudden, I'm seeing the world, and I'm seeing Central America, Asia, was in China, was in Korea at the DMZ back there in 83. And it's like, holy cow. It was so eye-opening to see different people around the world and how different people lived. And you would see this hierarchy, which in a lot of places, ultra wealthy and then really, really poor people. And so we came back to the U.S. I was like, wow, I'm middle class here, son of a bricklayer. But I'm like, holy cow, am I so fortunate? And so when I look at it also, you get out and you see people are people at the end of the day, and especially you'll get Marriott where people are people. And I think sometimes we miss that and we think people are numbers or it's a different country and they're not. 

Diane Brady (18:18):

What was the quote you gave me this morning? What's your quote from? 

Anthony Capuano (18:21):

Oh, so all of us, when we were locked down in the early days of Covid, tried to figure out how to fill some time. And everybody knows I'm fascinated with ancient Rome. So they had sent me a hundred books about ancient Rome, and I tried to work my way through them, but I found a quote in one of them, and I was so taken by it actually, I wrote it down and I stuck it in a little piece of paper in my wallet, and it was one of the Roman stoics, Seneca. And he said, “travel and change of place impart vigor to the mind.” Now, initially, I liked that quote because I could convince my daughter, people didn't get interested in travel when Instagram launched.

Anthony Capuano (18:58):

It's been part of the human condition for centuries. But to your point, I mean, Marriott talks about its purpose being connecting people through the power of travel. And the way you said it is perfect, right? You get out there in the world and you realize kids are kids and people are people and they want safety, and they want security, and they want time with their family, and they want fulfilling jobs. They want employers that care about them and appreciate them, and they'd like to make a little extra money on the side to go explore the world. And in some ways, it's not more complicated than that. 

Jim Kavanaugh (19:29):

And that's where I guess where I was going is that now the world is also a very integrated organization now there's how we work together, and I think as a leader, we're making sure how do we bring those different cultures together? And I believe it is based on your values and your values do permeate the world. And I think there's hundreds of religions. So it's not my job. I don't feel to go out and tell somebody whether they should be religious or religion they follow. But I do believe the values and behaviors, I think those do transcend the world and they can move your organization forward. So when you think about technology, I believe that the world is going to change very quick, and companies are, and I think companies that have leadership teams that can adapt and adjust and are very agile, but not also chasing every shining object. So I think it's going to be that art and science of managing your culture and what you're doing and how you're going forward, and ones that can do that and do that in a controlled fashion, I think are the ones that are going to stay on Fortune list for years.

Diane Brady (20:37):

No, I love that. And before we feed these hungry leaders here, any final thoughts? I'd give it each 20 seconds or something in terms of what you're curious about or anything on your radar you'd put on ours for the table conversation? I'll start with you, Tony. 

Anthony Capuano (20:51):

It won't shock you. I'm an optimist and I'm an optimist about the power of travel, and I'm an optimist in humanity, right? You look over decades if not centuries. Political winds blow in all sorts of different directions. People want fulfilling lives, and ultimately, you hope governments understand the will of the people. And so I wish I could tell you this was going to be the last unsettled challenging time we find ourselves in our lives or in our careers. It won't be. But I'm optimistic about our ability to navigate even the choppiest of waters. 

Diane Brady (21:29):

Right? Jim, how about you? 

Jim Kavanaugh (21:30):

Yeah, honestly, very similar. I am optimistic and I think in regards to just the opportunity that's out in front of us, and I'm also on kind of two different, I would say, streams up. One is that technology is going to be a change in an enabler, and it's not something that we can fight, and generative AI is going to be one. But I think it's really important that we also think about the connectivity to our people and humanity. And we've got to figure out how these things work together. And specific to an organization like company, it's employee engagement. Whether can you manage it when you have trust and you have transparency, I think, and there's a lot of different opinions around hybrid work. I think it's here to stay personally. There's all kinds of opinions on that, but I think figuring out how to bring these together and to create really engaged employees that are passionate about what they're doing, and if you can do that from a societal standpoint, I think good things are going to happen. But I'm much more of an optimist than a pessimist when it comes to this. And I think we're all in a better place. Just think about where we are today. 

Jim Kavanaugh (22:46):

It's just we we're in a better place. Sometimes I don't think we realize that. Sometimes I think we don't go back and look at how were you living 200 years ago? Did you even have heating and air conditioning and water and all. I think bringing some of that and making it relative to where we are today, I think we could be in a better space. 

Diane Brady (23:10):

So, well, food for Thought. Please join me in thanking Tony and Jim.