CEO Geoff Martha says Medtronic‘s ongoing corporate restructuring will position the company to compete better with medical device rivals, freeing the front-line forces from earlier entanglements. But the change will also create new opportunities for Medtronic employees at the company and elsewhere.
In a far-ranging interview with the DeviceTalks Weekly podcast, Martha reviewed the company’s strong third quarter-results and spoke of the programs giving him the most optimism. (Here are five things that make Martha especially optimistic about Medtronic’s future.)
He also updated listeners on the reorganization plan that created 20 semi-autonomous operating units.
“We took out over two layers of the company, which helps with our agility,” Martha said. “The dust is settling. But this operational model is much broader than structural things. This is like going from mainframe to PC, but we still have to rewrite the software.”
Martha said the next step is developing operational standards and procedures, including in product development. The intent is to streamline the process, empowering individual business units to grab market share from competitors.
With the power comes reward. Martha said Medtronic management is developing a compensation plan that delivers bonuses with increased market share. “We needed a couple of quarters to learn how to measure market share more accurately because in a lot of markets you’re triangulating [with competitors’ reports] to identify market share,” he said.
Medtronic is also examining its mission statement. Martha says the statement’s overall intent isn’t changing, but the new statement will reflect the evolution of the medical device industry over the past half-decade-plus.
“Medtech wasn’t global,” Martha said. “There weren’t all these startup competitors that were well-funded and nibbling at us from all angles. It didn’t really address some of the competitive natures and the speed at which things were happening. Our new culture gets at a more competitive mindset.”
Change begets more change. Medtronic has recently seen a few senior leaders join other companies where they assumed more senior roles. Mike Coyle, the former EVP and president of Cardiovascular at Medtronic, took the CEO role at high-flying iRhythm, maker of wearable heart rhythm monitors. Ellie Humphrey left the company to become SVP and chief transformation officer at Zimmer Biomet. She previously had been VP of enterprise excellence and business transformation at Medtronic.
Asked a general question about management turnover following a reorganization, Martha agreed it’s not unexpected.
“Any time you shift some of the decision-making from one area to another, you are going to create some disruption. … You’re going to have people that you don’t necessarily want to leave who are going to leave,” he said. “We had some of that, not a ton, but we had some of that, but it was within our expectations for sure.”
But Martha said the departures reflect well on Medtronic. Before joining the company, Martha built his medical device career at GE Healthcare and recalls GE serving as a management feeder system for the healthcare and medtech industries. (His predecessor, Omar Ishrak, also came to Medtronic from the company; other GE alums include Boston Scientific CEO Mike Mahoney.) Martha wants Medtronic to create the same “talent factory” for medtech managers.
Martha says supplying a stream of executive talent for others in the industry means you’re attracting the right people, but the challenge is keeping them.
“The point is we want to invest in people,” Martha said. “There will be turnover because we’re going to be a talent factory, but we’re also going to be attracting a better talent on the front end. … If you want to be a talent factory, that’s one of the things you’ve got to contend with.”
Martha said company officials were “really pleased” with the company’s Q3 performance, and he sees more positive quarters coming.