August 25, 2008

News & Opinion: How the Wise Decide: Bill George, Part III

By: 800-CEO-READ @ 9:30 PM – Filed under: Leadership & Strategy

Part III of the Bill George story, brought to you by the authors of How the Wise Decide.
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Bill George, Part III

Bill George calls his traumatic experience in the Lenox Hill operating room a "power-of-one" observation. That single catheter failure crystallized in a way that no report ever could the problem confronting Medtronic. But George wasn't basing his decision to overhaul the catheter business on that one experience. Instead, he was considering it in the context of everything else he knew about the business. He was able to see not only the flaws in the catheter, but also the flaws in how Medtronic handled information.
Other power-of-one observations sparked more changes at Medtronic. One day George was watching a surgeon implanting an early version of Medtronic's defibrillator, a device that restores normal rhythm to a wildly beating heart. The device was large and the electrodes were delicate. The surgeon was having difficulty fitting the defibrillator into the patient's chest cavity. Finally he pushed hard and suddenly blood was everywhere. The surgeon had perforated an artery.
"Surgeons are good at cutting, but they're strong, both in personality and in physical strength. He was trying to force the device when what was needed was the refined touch of a cardiologist," George says. The patient survived, but Medtronic's technicians began focusing on making smaller defibrillators that cardiologists could easily implant without having to do deeply invasive surgery.
Bill George knew the tremendous value that derives from making power-of-one observations. In any given year he spent an astounding two thirds of his time in the field gathering first-hand information. Not many CEOs can find a way to do that, but George set up a senior management team that took care of other matters to allow him to get out of the office. As we recount in How the Wise Decide, George had many other similar experiences during his tenure as a result of visiting doctors in their offices and surgeons in their operating rooms all over the world. His observations showed him not only how to fix faulty products, but also a faulty organization and they gave him the insights that spurred the development of new products before competitors saw the potential. He spent so much time with primary sources because he knew he didn't have enough information from other sources to make intelligent decisions.
What George and other leaders who diligently practice the principle of Going to the Source understand is that firsthand information is the best information. It is unfiltered by others, it provides subtle details and nuances that are lost in Power Point presentations and, most important of all, it shows us reality in all its messy details and emotion. Without face-to-face encounters with the people who are driving the future of your business, you will miss out on the power of emotional input.
In case you're wondering about the financial impact of George's ambitious efforts to Go To the Source, during his 12 years of leadership from 1989 to 2001 Medtronic's market capitalization soared from $1.1 billion to $60 billion. That's an average annual growth rate of 35 percent!
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Stay tuned for day two of the blog hosting by Aaron and Bryn, authors of How the Wise Decide. Tomorrow, they'll be talking about Dermot Dunphy, the former CEO of Sealed Air.