New Medtronic CEO Maps Out Strategy to Accelerate Innovation
Medtronic’s board of directors gave Geoff Martha the luxury and burden of eight months of time to think about how he would succeed Omar Ishrak as CEO of the medical technology giant.
When Medtronic announced its leadership succession in August 2019, the board praised Ishrak for doubling company revenue during his tenure and expressed confidence in Martha’s “ability to take Medtronic into its next chapter of growth.”
Martha took the reins from Ishrak in April 2020, when Medtronic’s health care customers were in the early stages of battling the Covid-19 pandemic. A month earlier, Medtronic had announced it would give manufacturers access to the company’s proprietary design specifications for ventilators, which hospitals badly needed.
Yet the pandemic didn’t interfere with Martha’s change-agenda timetable. He unveiled a new organizational structure last year. It divides Medtronic’s work into 20 operating units such as cardiac rhythm management and respiratory interventions. Martha contends Medtronic had become too bureaucratic, which had slowed its introduction of products into the market.
He’s pushing profit-and-loss accountability and product development decision-making down to the operating unit level. He argues this new structure will allow Medtronic to grow more rapidly and compete more intensely with other medical-technology businesses.
He’s also excited about a wide range of new Medtronic products and procedures. He points to renal denervation as a procedure that can revolutionize treatment of high blood pressure.
Martha had a 19-year run with GE Healthcare and GE Capital before he joined Medtronic in 2011. Most recently, he led Medtronic’s Restorative Therapies Group, and in 2014 he had a key role in Medtronic’s acquisition of Dublin-based Covidien, the largest acquisition in the company’s history. He became Medtronic’s board chairman in December.
Martha, who grew up in a Pittsburgh suburb, honed his competitive drive when he was captain of the Penn State hockey team. While he was earning a bachelor’s degree in finance, Martha says his hockey experience taught him about team dynamics, humility, and work ethic.
Now Martha, 51, leads a workforce of more than 90,000 employees, including 11,000 based in Minnesota. On May 27, Medtronic reported $30.1 billion in total revenue for fiscal 2021, up from $28.9 billion for fiscal 2020. Martha noted a strong finish for the 2021 fiscal year that ended on April 30. He said Medtronic is now poised for “accelerated revenue growth.”
In a recent interview with Twin Cities Business, Martha discussed how he plans to grow Medtronic, which new products hold the most promise, how he’s addressing diversity issues, and why Medtronic is the subject of high-profile litigation. The following are edited excerpts of the interview.
Q: You recently spoke at a Medical Alley virtual meeting that focused on diversity, equity, and inclusion. During a 45-minute conversation with the moderator, you brought up the importance of humility three times. Why is it important for a CEO to try to maintain some level of humility?
Humility is one of the core things that I look for in people and try to emulate myself. Humble people tend to listen more and learn more. The people who have the highest impact are active learners. My predecessor, Omar Ishrak, is a very humble guy and also a lifelong active learner. How do I try to get the rest of the organization to think that way? One is to lead by example, and look, I’m not perfect at this.
I don’t really like arrogance. In high-performing people who don’t display a level of humility, we’ve moved them out of [Medtronic]. People don’t like to work with arrogant people.
Q: It can be difficult to succeed a longtime CEO. About a year into your CEO tenure, what would you say is the biggest change to the Medtronic business that you’ve led?
A: We’re a biomedical engineering company, but we don’t just invent products for technology’s sake. Our products are designed to have a measurable impact on patients and health systems around the world. The [business] environment has progressed, becoming much more global, fast moving, and competitive. We decided to make some changes to the operating model of the company. The goal was to decentralize a lot of the decision-making—around innovation and our go-to-market—into our operating units.
These operating units are set up around specific therapies, like diabetes or spine surgery. We’ve tried to empower them to move faster, to make decisions and also to be accountable for their performance. We eliminated some layers of bureaucracy within the company. We’ve added some new cultural traits around competitiveness, being bold with our plans, and creating a sense of urgency.
Read more from this issue
Q: You’ve aligned 19 operating units under three portfolios—cardiovascular, neuroscience, medical-surgical—and diabetes is a free-standing unit. By granting more decision-making to these 20 operating units, what is the No. 1 problem you are trying to solve?
A: Speed. We need to move faster in everything we do. We’ve got smaller, very focused [competitor] companies. These companies are well funded and able to move faster. They are very focused, [sometimes on just one product or therapy]. At Medtronic, we’re trying to get at the speed of decision-making, speed of innovation. If it took us four years to create a new product, under the new organizational model, I want that to be two and a half years or so. Also, we can measure the [financial performance of] Medtronic operating units against their business competitors much easier when we look at the company this way.
Q: As people get Covid-19 vaccinations, how does that affect Medtronic’s business going forward? In a less-restrictive health care environment, what do you expect will happen within your cardiovascular portfolio?
A: We are very optimistic, bullish that in the U.S., in particular, we’re going to see a pretty rapid snapback of elective procedures. We’re going to get back to a normal, prepandemic level of procedures we anticipate here in the next several months.
We innovated during Covid, along with our hospital partners, to manage many of our patients remotely. Pacemaker patients regularly go into the hospital to get their pacemaker checked out to make sure it’s working properly. [During] Covid, hospitals started to really utilize the full extent of the Medtronic cardiovascular technology to manage devices remotely. Doctors were hesitant to do that, but because of Covid they had to use it, and patients liked it better.
Q: Many people live their daily lives with high blood pressure or diabetes, and others deal with irregular heartbeats. If we look at these three common areas, what types of innovative products has Medtronic put on the market relatively recently? And do you have any new products in late-stage development to treat these three ailments?
A: Let me take high blood pressure first. Over the last decade, we invested more than a billion dollars in a therapy that is called renal denervation. [The procedure delivers energy to overactive nerves near the kidneys.] We have a mountain of evidence here that shows that it safely and effectively lowers your blood pressure without the side effects that the drugs have.
And it’s permanent. We have one big pivotal trial that we should get the results back from this calendar year, in the fall. If those results are positive, where we expect them to be, then soon after that we should get FDA and other approvals. We will be launching this commercially in the next two years. This could be the biggest thing in the medical technology industry, because hypertension is the No. 1 contributor to death around the world. This could be a real big disruptor and game changer that could really reposition Medtronic.
In addition to the growth—the number of patients we would serve and the resulting growth of the company— it would move us more in a big way to marketing to consumers. We’ve got to do that, get that word out to cardiologists, to primary care physicians and directly to the consumer that this therapy is out there and what it does.
Q: What about treating irregular heartbeats and diabetes?
A: An atrial fibrillation is another big condition that is primarily served by pharmacological products first. We have a product that’s an ablation therapy that freezes the tissue in your heart. It’s called cryoablation. The New England Journal of Medicine just published data that shows that for a large segment of patients, you should use cryoablation first instead of drugs. It’s that effective.
In diabetes, we’ve got a number of new products coming to market. Today we focus on insulin-dependent diabetes, so this is severe Type II and Type I patients. And we’ve got a whole new system that we launched in Europe first, because the European regulators approved it faster. It is sitting in the FDA right now, and it’s our next-generation diabetes pump system, with new algorithms. And it is getting just fantastic results on patients in Europe and in Latin America.
We also bought a company in August that serves more insulin-dependent patients, and it’s a smart pen that delivers insulin vs. the pump. So it’s a much cheaper solution. You don’t have a pump tied to you, and it does replace the multidaily injection shot. It works with glucose sensing, so we can have a closed loop between your body and the insulin delivery device, which is this pen. You see a theme here—where our therapies in many cases are not only better than the prior version, but it opens us up to a whole new set of patients.
Q: At the core of Medtronic’s mission statement is producing products and therapies that alleviate pain, restore health, and extend life. Within that fundamental context of doing good, how does Medtronic end up in a fair number of high-profile lawsuits and Department of Justice investigations?
A: As a company, our intentions are pure. It’s very mission-driven, and for those who have worked here and partners of ours such as health care systems and physicians, if you surveyed them, you would get that feedback.
We’re creating new therapies, new standards of care, things that have not been done before. That’s what really separates Medtronic from the competition. We are pioneers, and then people tend to follow us.
From time to time, we find out, unfortunately after the fact, that there was some sort of design flaw or some sort of mistake that was made, which results in a product that doesn’t work quite the way, over the long term, that we expected it to. It’s something that we strive so hard to avoid, but when [these circumstances] happen, we are very transparent about that. We move quickly. Sometimes you get caught up in lawsuits and around your product liability.
Regarding the Department of Justice, look, we have over 90,000 Medtronic employees all over the place. Unfortunately, there is somebody somewhere doing something that they shouldn’t. Sometimes we find it and self-report, sometimes other employees find these things and tell us about it, and again we suffer for it. Or they call the government themselves. These things pop up. We work very hard on our culture to prevent these things. When they happen, we act decisively and swiftly.
“People don’t like to work with arrogant people.”
Q: In 2019, Medtronic agreed to create a $35 million fund to compensate those who said they were harmed by the SynchroMed II, an implantable drug pump. What were the lessons from that particular case?
A: It gets back to simplifying our organizational structure. Information flow from the patient through the health care provider and to our senior leadership could have been faster when there were product issues.
Sometimes this information was filtered [by layers of management at Medtronic], and we didn’t act decisively enough to address those issues. You’ve got to make sure that you have very good systems in place to pick up what we call “signals in the field” that the products aren’t working right. It may appear to be innocuous things in these reports you are getting back from physicians. But when you look at patterns, they turn out to be problems that are brewing. We’ve gotten more sophisticated in recording these signals, proactively asking the right questions, analyzing these signals and predicting problems, not just discovering problems.
When you hear these things, you’ve got to be decisive and move quickly, even when there are unknowns. But I’ll tell you that [SynchroMed II] context. That’s an implantable drug pump that provides tiny dosages of the drug directly to where it’s needed inside the body vs. the patient having to take that through pills with all kinds of side effects. It’s a super-complicated medical device, maybe the most complicated one out there. And guess who’s the only one that does it? It’s us. Others have tried it and failed.
There’s a huge need out there. When we got into issues and created that fund and we got in trouble with the FDA and got a consent decree, the easy thing to do would have been to shut that business down. Keeping that business alive and continuing to innovate that business has cost more money. If you look at it strictly from a return on investment, it doesn’t provide nearly the returns that we would normally get. But because we are the only ones, we stayed with it and we serve those patients. It’s part of our mission. If we had shut the business down, we would have stranded a lot of patients, and that’s just not who we are.
Q: Medtronic has achieved diversity by race, ethnicity, and gender in its top corporate leadership and on its board of directors. You were an executive leader of the Medtronic African Descent Network, yet the Wall Street Journal reported in October that Medtronic had paid settlements to several Black employees who alleged racial discrimination in the company’s promotion process. What actions are you taking as CEO to make the Medtronic culture and promotion environment more hospitable for Black employees?
A: We’re going to keep going on the journey that we’ve been on. If you would have said in 2013 or 2015 that we would have as many vice presidents and senior vice presidents of African descent that we have today, people would have thought that to be a pipe dream.
We’ve made tremendous progress, but that doesn’t mean that we’re good enough. There are individuals who feel like it’s still not inclusive for them at Medtronic. We’re continuing to get better and work on that.
This story appears in the June/July 2021 issue with the title “Q&A: Geoff Martha.”