Art Collins, WG’73, Medtronic – Called to Lead
12 January, 2019
category: Joseph Wharton Dinner, Tech.
Art Collins, WG’73, surrounded himself with leaders from a young age—his parents, coaches, fellow Naval officers, and business mentors. He sought to learn responsibility, the relevant skills for the task at hand, and how to motivate others. These lessons served him well as his leadership responsibilities grew.
Where did your initial interest in medicine come from?
I come from a medical family. My father was a Penn undergraduate and attended medical school before serving as an Army doctor in World War II. After the war, he pursued the practice of ophthalmology. My mother was a registered nurse and also served in World War II. As a child, I tagged along with my father as he made hospital rounds. When I began college, I took courses that held open the option of a pre-med degree. However, my father told me, “As much as I love being a physician, if you don’t have the calling to be a doctor, pursue your own dream, whatever it may be.”
Somehow, my dream involved leading people. When I graduated college, it was 1969. The Vietnam War was raging, and I chose to enter Naval Officer Candidate School (OCS) in Newport, Rhode Island. I initially served on a destroyer, but my last assignment was as an assistant professor teaching courses in naval science at Penn. That was fortuitous because I was then accepted into Wharton’s graduate program.
What were your first few jobs after Wharton, and how did you choose them?
I received a first-rate education at Wharton, but most of what I learned was somewhat theoretical in nature. At the time that I graduated with an MBA, the most sought-after jobs were in consulting and investment banking. I chose the consulting route and joined the Chicago office of Booz Allen Hamilton to put some of that theoretical knowledge into real-world practice.
After four years, I had the option to become a partner with the firm, but I told my mentor there that I was itching to get out and run a business rather than just advise clients. He took me seriously and made several key introductions. I ultimately had three options about the person I would work for: Jack Welch who had recently arrived as one of three Group Presidents at GE’s corporate headquarters; Bob Stuart, the Chairman and CEO of Quaker Oats; or Ted Ledder, the Chairman and CEO of Abbott Laboratories.
I chose to go to Abbott as Manager of Corporate Planning and Development. After 18 months in that staff position, I finally got my opportunity for a European line position, first in Brussels, Belgium and then in Frankfurt, Germany. I returned to the States after four years in Europe, and then moved through several general management positions before becoming Corporate Vice President with responsibility for all the worldwide business units that comprised Abbott’s diagnostics franchise.
Why did you leave Abbott for Medtronic in 1992?
By then, I knew that I wanted a chance to become the CEO of a large, multinational corporation. I had been offered a few COO positions at smaller firms that I declined, and Abbott had just made a change at the top that blocked any opportunity for me to be CEO there for a number of years. So, when Medtronic contacted me with an offer to join as the President of an international division with a shot at becoming the next COO and, ultimately, CEO, I said, “Yes.”
Why were you given so many great opportunities?
Some people might say that I was at the right place at the right time, or that I was just lucky. However, as my career unfolded, I found that the harder I worked, the luckier I became. It’s true that I worked for some great mentors who opened a few doors for me, but once a door was opened, I had to walk through it and then perform. I recognized early on that careers are built one job at a time, and I was willing to take on any assignment that offered me experience and a chance to show my capabilities.
I also can’t discount the value of what I learned during my service in the Navy. In fact, I wouldn’t trade anything for the experience I had as a 22-year-old, wet-behind-the-ears college graduate entering Naval OCS, and then as an officer with responsibility for a division of over 30 men whose ages ranged between 18 and the mid-50s. During my time in the Navy, I learned a critical lesson that would play out time and time again: the better and more motivated the team I assembled was, the easier my job became.
In a recent interview with Wharton professor Mike Useem, you discussed the importance of leaders being prepared and acting decisively. Can you recount a real-life example while you were in the Navy?
Sure. I believe that decisive leaders don’t always act before they need to, but they always act when they have to. This lesson played out for me one night during my deployment in the Mediterranean.
It was a few minutes after midnight, and I had just relieved the previous officer of the deck and had assumed the “con” (taking control of the ship) on the bridge of the destroyer. We were participating in a dangerous nighttime exercise with an aircraft carrier group, and our assignment was to take the role of an enemy ship and to try to penetrate the shield of other destroyers protecting the carrier.
My destroyer was cruising at about 20 knots in silent mode without the radar or sonar activated, and visibility was poor since there was little moonlight that night. I suddenly was terrified to see the carrier appear out of the darkness about 45 degrees off the port bow, heading directly into the vector of our current course.
Previous training instinctively overcame fear, and I immediately shouted out the commands, “Left full rudder! Port engine back full! Starboard engine ahead full!” Our bow slowly started to drift to the left moments later, and then the port turn began to pick up momentum, finally passing by the starboard stern of the carrier with about 150 yards to spare, which was just inside the margin of safety. Later, when my heartbeat returned to normal, I reflected on the benefits of many long hours of training, being prepared and acting decisively when it was needed.
What other leadership skills did you seek to hone early in your career?
Someone once told me that to effectively lead, you have to understand both your organization’s objectives and what specific capabilities are required to succeed. First in the Navy, then with Abbott and finally at Medtronic, those capabilities included technology. I’m not formally trained as an engineer or scientist. However, as a Naval officer in charge of an anti-submarine warfare division, I needed to rapidly learn the ins and outs of how sonars work, including Doppler technology. We also carried air-launched torpedoes with nuclear warheads onboard my destroyer, so I had to understand that technology as well.
Then, as a consultant, I needed to quickly come up to speed on each client’s unique set of skills, whether they were highly technical or not, including associated acronyms and other jargon.
At Abbott, I developed an understanding of the technology supporting sophisticated diagnostic instruments and reagents we manufactured and marketed in the fields of immunochemistry, clinical chemistry and microbiology. And as I led Medtronic, I required good working knowledge of the human physiology and technology that underpinned medical devices treating heart disease, spinal disorders, diabetes and other medical problems.
Coming in at a very senior level from the outside, how did you earn trust at Medtronic? Do you have any general advice in this regard?
I’m glad you used “earn” in asking that question. I’ve always believed that trust doesn’t automatically accrue to a leader simply because of his or her position. Rather, trust needs to be earned — day in, day out. I’m sure that some at Medtronic were skeptical as to why I was hired from the outside, and I’m sure many other employees withheld judgment on me until they had a chance to see how I performed. You earn trust in a number of ways, but I think that the most important factor is consistently acting with integrity.
So, what does that mean? It means being honest, displaying good judgment, putting the well-being of the organization above any personal interest, being willing to admit mistakes, and never asking the people who work for you to do something you aren’t prepared to do. No one is perfect. Everyone will make a mistake from time to time, and I’ve made my share of mistakes along the way. However, I’ve learned over time that people are really quite savvy. They can tell when someone is trying to do the right thing and is telling the truth, and when they aren’t. With that said, my simple advice for all leaders and aspiring leaders is to do their best and to treat people the way they in turn would want to be treated.
How would you describe the pace of change in the medical technology industry while you were at Medtronic? How did you stay ahead of competition?
Medical technology evolved quickly when I was at Medtronic, and that trend continues today. For example, during my tenure as Chairman and CEO, about two-thirds of our revenues were generated by products introduced within the previous three years.
To keep up, each year, we budgeted about 10% of revenues for R&D. More importantly, we spent a great deal of time listening to our customers, staying close to cutting-edge technology being developed in academic medical institutions and other high-tech industries, and continually re-evaluating our product portfolio. I also came to believe that two major criteria needed to be met for a new medical device to be successful: the product needed to provide better patient outcomes and be less costly to the medical system than existing alternatives — one without the other wouldn’t cut it.
During your 15 years as COO and later CEO of Medtronic, revenues and earnings per share grew in excess of 15% per year. How much of that growth was organic versus through acquisition? Also, what advice do you have about acquisitions?
Calculating the exact split in revenue and profit growth that was generated organically versus through acquisition is a complicated exercise. However, I can safely say that, while I was at Medtronic, the vast majority of the growth was organic — perhaps well in excess of 70%. With that said, we made a number of very important acquisitions, and we learned a number of lessons in the process. First of all, remember that most acquisitions are not successful and do not end up meeting the original acquisition economics. To maximize the chances of success, do your homework, and
complete the necessary due diligence. Continually put yourself in the seller’s shoes and understand why it is selling. Be disciplined during negotiations, and don’t be afraid to walk away if necessary. Plan for and adequately staff acquisition integration efforts, and carefully identify and make sure you keep the key resources you are acquiring. Finally, while well-executed acquisitions can be a key component in sustained corporate growth, they should never take focus off of organically growing the business.
Over the past 20 years, you have served on the boards of some of America’s most iconic companies: Alcoa, Boeing, Cargill and U.S. Bancorp. How did you choose those boards?
I’d start by saying that the director selection process for any board should be a two-way street. In other words, the fit needs to be right for the company and for the individual director. I purposely chose boards outside the medical field because I wanted to be in a perpetual learning mode. As you’ll note, each of the companies you mentioned is in a completely different industry. In addition, I purposely gravitated toward companies that were leaders in their given industry segment. Board dynamics also were very important to me, as was the quality of other directors and the CEO.
Board diversity in its broadest definition was another key consideration. I am firmly convinced that a diverse group of directors who are engaged, willing to check their egos at the door, and committed to the success of the company they serve is an important ingredient to any corporation’s long-term success. Finally, it was very important for me to convince myself that my experience and skill set could add real value to the board I was considering.
Finally, are there any other lifetime leadership lessons? If so, how did you learn them?
I was a good student while growing up, but I would have to say that I learned much more about leadership from sports than in the classroom. Whether it was on the football field, baseball diamond or basketball court, useful lessons were continually reinforced about winning and losing the right way, about never giving up, and about the importance of teamwork.
Fortunately, I had two great parents who were role models in many ways. Each of my grandfathers died at an early age, so my father and mother ended up being raised by my two grandmothers. Coming from relatively humble backgrounds, both of my parents worked their way through college.
In addition to my parents, there were coaches, teachers, friends and other mentors along the way who provided encouragement and who were willing to call me out when that was necessary.
During my career, I had the good fortune to work for and with some terrific people — many of whom were successful leaders in their own right. Without all of them, I wouldn’t have achieved what success has come my way, and I certainly wouldn’t have had as much fun along the way.
Finally, I would be remiss if I didn’t mention my two daughters and wonderful wife. When I retired from Medtronic, some thought that I would write a book on leadership. Since I didn’t think the world needed another ex-CEO penning a treatise on that subject, I declined. However, with encouragement from my two daughters, I wrote the nine-book series of adventure stories for kids, The Adventures of Archibald and Jockabeb. My wife, who was the former President and CEO of the Chicago Botanic Garden and currently is an adjunct professor at the Kellogg School of Northwestern University, has provided me great support. As an aside, we recently started a small consulting firm, Acorn Advisors, to provide governance advice to nonprofit institutions and large family offices.
ART COLLINS retired from Medtronic in 2008 after serving at the highest levels over 15 years, first as President and COO, and then Chairman and CEO. Medtronic is the world’s largest medical technology company, with annual revenues of $30 billion and 98,000 employees in over 160 countries.
Art joined Medtronic from Abbott Laboratories where he was Corporate Vice President with responsibility for Abbott’s diagnostic products and worldwide business units. Before joining Abbott, Art worked as a consultant with Booz Allen Hamilton. Before coming to Wharton, Art served as an officer in the United States Navy and was honorably discharged with the rank of Full Lieutenant.
He currently is a member of the boards of directors of Arconic, Boeing and U.S. Bancorp, and he previously was a director of the boards of Alcoa, Cargill and Tennant. He also serves as a Senior Advisor at Oak Hill Capital Partners and a Managing Partner at Acorn Advisors. In addition, Art authored The Adventures of Archibald and Jockabeb, a nine-book series of adventure stories for children. He received a B.S. and a Doctor of Laws honorary degree from Miami University. He also has an MBA from Wharton, where he was a member of the undergraduate faculty, and has subsequently served on the School’s Board of Overseers for 15 years.
By Kent Trabing