The pandemic has shone a bright light on inefficiencies across medtech, including at its biggest company.
In an exclusive interview on the DeviceTalks Weekly Podcast, Medtronic (NYSE:MDT) CEO Geoff Martha said the executive team began telling investors at the JP Morgan Healthcare conference in January that a reorganization would be coming. Martha was scheduled to take the senior post in April. But the hardships and demands brought on by the COVID-19 pandemic only underlined the need for a new way of doing business.
Martha said breaking Medtronic into 20 smaller groups wasn’t only about size, but also about smoothing the path toward innovation.
“The pandemic forced us — in particular with the ventilator work that we were doing — to innovate quickly, because literally lives were on the line and it felt like every minute counted,” Martha said.
Medtronic had to ramp up ventilator manufacturing while also trying to improve critical functionality like adding remote monitoring and controls to help maintain distance between patients and healthcare staff. The company set up a SWAT team for the project, a team that included Martha and now-former CEO Omar Ishrak.
“We cut through so much bureaucracy,” Martha said. “Those levels in the organization melted away. Silos melted away… I don’t want to go back to is that kind of environment where there’s too many approvals needed to get something done, too many layers in the organization.”
Medtronic’s response to the demand for ventilators demonstrated that the company could act quickly, Martha said. The success accelerated Martha’s and other senior management’s plans to divide the company into 20 smaller business groups. Medtronic laid out the plans in October’s Analyst meeting.
The reorganization won’t conclude until early next year.
In the podcast, Martha indicated the individual businesses will have far greater autonomy to make the decisions necessary to streamline operations and accelerate innovation. Martha also emphasized the company wouldn’t cede territory or market size easily to competitors.
“If we want to carry out our mission, which is to create these new, wonderful therapies and globalize them, once we do that, we’ve got to be able to hold onto our share,” Martha said. “We create new markets and then historically, we’ve let competition come in behind us and take big chunks of that market too quickly. And we don’t get the full financial return for that we need for our shareholders and for ourselves to keep funding [innovation].
“So the market share is a source of fuel that fuels our, our invention and market development, which is really the mission-driven nature of Medtronic,” he added.
In the interview, Martha also covered:
- How the company’s reorganization will make it easier to work with outside vendors.
- What he considers Medtronic’s most important metric.
- When Martha decided to shift his career into healthcare.
- What he said to convince Ishrak to hire him at GE Healthcare.
- Where institutions like Medtronic fit into the future.
Podcast co-host Chris Newmarker, executive editor of life sciences, also shares his Newmarker’s Newsmakers, drawing from coverage of Medtronic, Vectorious Medical Technologies, GE Healthcare, Stryker and Butterfly Network.