Name: Stryker CEO: The 40-year revenue growth engine is still revving up
Uploaded: 2022-02-03
Duration: 8 min 21 s
Description: CEO Kevin Lobo says AI and digital technologies are the future of med-tech.

CEO Kevin Lobo says AI and digital technologies are the future of med-tech.

Stryker CEO: The 40-year revenue growth engine is still revving up

Leadership

Stryker CEO: The 40-year revenue growth is still going

Kevin, thank you so much for joining us to talk about striker and there's lots to talk about starting with the remarkable growth track record at your company. Sales rose for just about every year for the past 40 years, including 2021 where revenues jumped 19%, what is the most special thing that you're doing at striker? That you're delivering these kinds of numbers? Susie, first of all, thanks for having me. And yes, striker is a growth company. We went public in 1979, had 40 consecutive years of growing revenue before the pandemic hit us in 2020. And now we're back to our growth trajectory. It's really been wired into the organization with very, very decentralized, very autonomous businesses. We say that the businesses of striker are the center of gravity of our company and that everybody else works for the businesses. It has intense customer focus, we see what issues they need to solve and then we go and match those issues. We have this drive for performance that's really unique. And I've worked at other large multinationals, I've never seen this kind of drive for performance, Not hierarchical, no nonsense, you know, sales reps have no trouble texting me and telling me they have a problem with a product that's on back order. And so we have this kind of transparent driven organization, it was there before the I joined striker 10 years ago and it's still present today. Now we know that striker is a big med tech company. But tell our viewers a little bit more about the products that your company makes and why they're in such great demand. Well we're a very diversified company, $17 billion 46,000 employees. And we operate in three different segments. We have a med search segment that includes hospital beds and stretchers and cameras in the operating room and tools that surgeons use to do surgeries such as cutting bone tools. And then we have a section called neurotechnology which includes product for stroke and vascular treatments that remove clots in the brain as well as doing all types of brain surgery. And then we have an orthopedics and spine segment which is very very large. So any kind of implant, you can imagine any kind of broken bone from your skull all the way to your toes. We repair those with with prosthesis. And the reason that we're growing so much is There's an aging population, there's high demand for these procedures. We have really advanced technologies such as robotics and three d. Printing and we've really taken the lead in many of our markets and we have leading positions in every market that we played well, as you say that there's such demand for having hip replacements, knee replacements and and that sort of thing. But most of these procedures have been postponed during this covid era that we're in to what extent has affected your business and your momentum. It has been difficult. 2020 was the first year in 40 years that we didn't grow our revenue. And as you commented on 2021, we bounced back. But it was really on the backs of our med surge area as well as our eurotech area and also trauma because traumatic injuries continue to happen. But those three businesses have been affected. They didn't have terrific years the last two years, but we're quite excited about the pandemic receding in those businesses returning to its normal growth. Are you seeing some signs of a return to post Covid normalcy so that you can get back into operating rooms and get back into hospitals? Well, I don't want to get too excited. We've seen a couple of false starts before, but clearly, oh Macron has peaked and is declining in many parts of the United States. We're seeing hospitals that had postponed surgeries, resumed surgeries. I don't think it's going to go right to 100, but it's certainly moving in the right direction. So I'm feeling very optimistic now that we're on a good trajectory but we've been fooled before. So hopefully this will continue and endure looking beyond Covid. Um, what's your vision for a striker? You've done more than 50 acquisitions in your 10 years as Ceo, which is highly unusual. What do you want the company to be known for? 10 years from now. So 10 years from now I expect to continue that growth trajectory that you've seen. And when I started about 9, 10 years ago, we were about 78 billion in revenue. We've done 17 billion. I expect us to get to 30 billion before too long. And it's really doing the same formula, keeping those business units decentralized, adding new business units, continuing to do acquisitions are first use of cash is going to do acquisitions. We consider ourselves a serial acquirer and the reality is the more deals you do, the better you get at doing deals, the better is your integration and it's been a huge value creator for us and it makes us more relevant with our customers. Do you see any new trends or new technologies, whether it's an Ai or robotics that will shape the direction of your future? Absolutely, digital robotics and enabling technologies is the future of MedTech. If you look at the last two deals we've done, we did an acquisition of an Ai company that quantifies blood loss in measures that the sponges and the canisters and actually using Ai figures out how much hemoglobin is in the sponges and the canisters. And today it's really haphazard how they estimate blood loss. And more recently we announced both Sierra communications, which is a digital company that automates workflow and makes it much easier for nurses to do their jobs. Those are the kind of companies I couldn't even have imagined 10 years ago acquiring and I think digital is going to take on even more importance in the future? Well, kevin as you plan for the future, how are you dealing with some of the economic pressures that are going on right now, that could be distracting you from the future plans, whether we're talking about inflation or rising interest rates, supply disruptions and the volatile markets, how do you stay focused on the future too? It's a real challenge right now in the supply chain. I've never had this kind of challenge in all my career and really for us, the most acute area is electronics. So getting chips, there are a lot of computer chips I mentioned digital within our med surge of portfolio and the good news is our competitors are also facing the same challenges. So we're faring as well as could be expected, but we're having a challenge. Meeting the demand of our customers on on both, making sure that we can make the products, but as well, making sure that the prices that we're using to acquire these are not really destroying our margins. Certainly we're going to be pressured on our margins at least for the first half of this year. And then we do see it getting better as more chip manufacturing comes online. So how optimistic pessimistic are you? And we get mixed reports on the anxiety level from business leaders. I am optimistic. We've already had contracts in place for the back half of the year. It's going to be acute pressure in the first six months and then it will get progressively better for our business Well, you know, what does it take to be a successful leader in this environment, especially with so much uncertainty. It's a real challenge. I think, staying true to your mission and values. That's one thing. We've doubled down on our sense of purpose as an organization. When the pandemic hit, I had three clear priorities, keep our employees safe, serve our customers and have strong financial discipline. And those three tenants have stayed in effect throughout the pandemic and even till today. And that's really put us in good stead because more than half of our employees are going to work every day, making our products are going into hospitals every day, servicing our customers. So we are an essential business and as such, we are business has really continued through this pandemic and we're optimistic, we'll it will continue into the future. I hear from many ceos that Covid tested their leadership and the crisis made them rethink that the way they lied. I mean, how has that been for you, kevin in terms of your personal take on leadership. What leadership lessons did you learn during Covid? Well, I've learned a lot of lessons the first, as I learned that we need to be more flexible at work. This taught us that we don't have to go to work five days a week and and have sort of a rigid work schedule which striker was pretty rigid historically and we were making strides towards being more flexible. But now it's it's clear that we can deliver terrific results and we don't need to be in the office every day. We can give our employees a lot more flexibility. I've also learned to be more empathetic and have more compassion. The subject of mental health was not something I even thought about really in any deep way four or five years ago, and now that's come to the forefront. So I spent a lot more time listening to our employees, engaging our employees, talking about our mission and our values and sharing more customer stories and the human side of management has really been amplified through this pandemic and I think it's going to make us better leaders going forward.