Monday is a momentous day at medical device maker Medtronic.
New CEO Syed Omar Ishrak starts at the company today. It’s only the second time in the Fridley, Minnesota company’s 62-year history that a complete outsider will take over the reins at the world’s largest medical device company.
The last time around was in 1985, when Win Wallin was brought over from Minneapolis grain company Pillsbury to turn around Medtronic. At the time, Medtronic was suffering from a low stock price, flagging sales and a loss of market share, not unlike the situation it finds itself in today. And Wallin’s tenure at Medtronic was more than successful: In his six years as CEO, revenue increased from $370 million to $1 billion, net income more than tripled from $38 million to $133 million, market capitalization skyrocketed from $345 million to $3.5 billion, and the number of employees nearly doubled from 4,500 to 8,500.
But the 21st century, with its global challenges and opportunities, is different. While the Wallin pick must have been out-of-the-box back then — in his own words, Wallin’s responsibilities changed “from hamburgers to high-tech” — he was still very much a Minnesotan.
Ishrak, 55, was born in a place as far away from Minnesota in culture and climate as is humanly conceivable: Bangladesh. With the ascension to the Medtronic top job, he becomes the only non-Caucasian CEO among his counterparts at 19 other Fortune 500 companies that call Minnesota home.
Skin color aside, who is Ishrak the man? Medtronic wouldn’t grant access to Ishrak on his first day, but thanks to his online footprint, a pattern emerges.
Ishrak is deeply interested in global markets. While some believe that medical devices for developing markets like China and India will likely be low-end products to address basic needs of access and affordability, Ishrak appears to believe that price considerations will not compromise innovation. As an Economist article published earlier this year about medical devices in Asia put it:
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Omar Ishrak of GE argues that the term “frugal innovation” understates the revolution under way, in which price is only one element. In designing new products, firms in emerging markets are leapfrogging to the latest technologies, such as miniaturisation, mobile communications and advanced materials. That enables them to build devices that are both cheaper and better than rich-country models. He cites the example of Brivo, a locally developed line of MRI and CT scanners.
GE showcased its Brivo line of imaging technologies in late 2009 in New York City, which incorporated digital technology found in its higher-end systems into a smaller device sans all the automation not required in basic imaging. The Brivo line of scanners was launched in China in March 2010.
Aside from providing access to healthcare in China, Ishrak has been involved with trying to improve healthcare in his country of origin. He has worked with Nobel Peace Prize winner Mohammed Yunus, the founder of Grameen Bank, to bring ultrasound technology for obstetric care to Bangladesh. As evidenced by this short clip, Ishrak is comfortable in front of the camera.
(A selection of videos featuring Ishrak are available here.)
This global perspective is likely one of the primary reasons Ishrak was picked by Medtronic’s board. It’s no secret that as growth has slowed in the U.S., large and small medical device firms have been focusing on emerging markets in Asia to tap into the vast opportunity the region holds in terms of healthcare consumption.
But simply having vision is not enough. Implementation and execution are key, and Ishrak gets kudos on both of those from one of the best in the business. In his book “Jack: Straight from the Gut,” Jack Welch, the former GE CEO describes his involvement in the ultrasound business like this:
After the project manager retired, we decided to go outside GE to the ultrasound industry for a replacement. I interviewed the candidates selling them on our commitment to ultrasound, which many industry pros questioned because of our false starts.We found Omar Ishrak, a Bangladesh native, and a guy you could feel had ultrasound running through his veins. He had worked for a major competitor. All of us thought he had just what we needed and hired him.
We were off to the races. I made sure he got lots of funding and attention. Every time I went to Milwaukee to visit our medical systems division, I’d make a big deal over Omar and ultrasound even though it was a small part of the total business.
I became his biggest cheerleader. He hired great people, many from the industry, and the rest is history. We went from nowhere in 1996 to number one in 2000, creating a highly profitable business growing 20 percent to 30 percent a year to more than $500 million in annual revenues today. Omar became a corporate officer, and I got as much out of his success as he did.
Investors, Wall Street analysts and Medtronic’s board are undoubtedly hoping for this same Midas touch from Ishrak.
