Health & Medical
The heart of innovation
How Mike Mussallem fosters a culture that drives profitability and growth at Edwards Lifesciences
By Ray Marano
Smart Business Orange County | September 2007
Mike Mussallem has been watching his company move toward
transforming a critical heart valve replacement procedure by offering a much less invasive method that could prove to be safer and
speed recovery.
Mussallem, chairman and CEO of Edwards Lifesciences Corp.,
knows the advancement is a bold step that was driven by innovation, something that wouldn’t have been possible without a corporate culture that encourages risk-taking and avoids the blame
game.
“In the past, we would have been working on making heart
valves more durable or have more blood flow or be easier for the
surgeon to implant but not on such a transforming procedure,”
Mussallem says. “If people felt like they couldn’t take a risk or they
felt like they would be blamed for reaching in a broad way, we
wouldn’t be enjoying the kind of progress and success we’ve
enjoyed so far in this program. I think there’s a direct correlation.”
Since Edwards Lifesciences was spun off of Baxter Healthcare in
2000, Mussallem and his team have fostered a risk-taking orientation that has driven innovation and growth. In 2002, the company
posted $704 million in revenue. By 2006, its annual revenue was
$1.04 billion. Net income increased from $55 million to $130 million in that same time frame.
Operating as part of Baxter Healthcare provided a certain level
of security for employees, but it also watered down the feeling of
ownership and the sense among them that their contributions mattered, thus stifling incentives for innovation.
“We felt like the greatest challenge was to get Edwards really
going again. And to drive that growth in this space, we felt like the
most important thing we could do was to apply technology to
address unmet patient needs, which spelled innovation,”
Mussallem says. “That was going to be the way that we profitably,
positively grow the company for our customers, for our employees,
for our community and, most importantly, for patients. Having said
that, we felt like the culture here had become conservative, and we
had become slow-growing, so we did several things here to generate the internal climate to drive the growth.”
The first step was to create a culture of ownership by giving all
of its employees a share in the company.
“It started out with an ownership culture in which we put stock
in the hands of every employee,” Mussallem says. “We asked
employees to behave like owners, and we impressed on them the
importance they have in the success of the company. Even though
we were 5,000-plus employees here, it’s a lot different than being a
40,000- or 50,000-plus-person company. Each individual had so
much more impact on the company, and driving that message of ownership was key.”
Don’t blame, learn
Mussallem encourages the ownership attitude to go beyond simply a financial stake in the company. For Edwards Lifesciences, taking ownership also means taking on risk and stretching past the
comfort zone.
He says encouraging employees to take risks to achieve big
advances means being not only willing to accept that there will be failures, but being able to handle them in a constructive way so as not to
discourage future risk-taking. Mussallem adopted a slogan, “Don’t blame, learn,” to communicate the way the company should treat its
failures.
“It’s so easy to shoot the messenger,” Mussallem says. “Somebody
delivers the bad news or somebody shares an unpopular message or
somebody doesn’t really believe in what we’re doing or where we’re
going, they have the courage to stand up and be vocal about it. The
way we handle that every single time is going to reinforce the notion
that it’s safe and it’s appropriate to speak up.”
Shooting the messenger can have a severe negative effect on the
culture of a company that is trying to encourage innovation and
open, creative debate.
“Every time you make a misstep, you have to do 12 positive
things to overcome that, so we remind ourselves of it, and we talk
about it,” Mussallem says. “Trust me, we’re not without mistakes.
I’ll make a mistake now and then and say, ‘Aw, shoot, I shouldn’t
have done that,’ and I’ll go through the effort of circling back with
the person and say, ‘You know what? You were really right to bring
that up. Thanks for doing that. I probably overreacted there,’ and
take enough care to try to instill this in the culture and set that
example for the rest of our leadership.”
When initiatives don’t go as intended, Mussallem and his team
retrace the company’s steps to find out how things might have gone
awry. It’s not designed to place blame, but rather emphasizes finding
out where the process failed. The rationale is that the decisions were
made by the team, not by any individual, and so it’s the process that
should be examined and learned from.
“We go through that process in a way that we aren’t pointing the
finger at people but looking at the broad set of assumptions,
because frankly, when we do our planning, we do it with a team, so it’s not just one person who’s right or wrong, it’s the team’s attitude that was right or wrong along the way,” Mussallem says.
A kind of corporate soul-searching, the process is meant to be a learning experience.
“We’ll do a post-mortem or a look back at what we went through,”
Mussallem says. “This is where the learning part comes in. We’ll take
an unemotional, unbiased factual look at all the events that occurred
along the way. What did we think four years ago, what did we think
three years ago, two years ago? What turned out to be the learning
along the way that changed the situation? What was our general
thinking, and why did it go wrong? Was there some leap forward, did
the environment change substantially, or did one of our core
assumptions about how successful we were going to be change?”
Mussallem says making the process objective and avoiding
blame allows employees to continue to be willing to stretch and
take risks.
“If we want people to reach out and be willing to be optimistic,
then we don’t want to discourage them from being positive about
what might have happened or what could happen,” Mussallem
says. “We say, ‘OK, what was wrong with our assumptions, how do
we learn from that and then move on and find new ways to apply
the talent that was in these programs?’”
For example, the company had pursued a repair system for aortic
aneurysms and had put substantial resources into trying to come up
with an innovative approach to address the problem. Mussallem says
the company abandoned it while it was in the final regulatory
approval stage because Edwards Lifesciences judged it to not be substantially better than some technologies already available in the marketplace. It was a painful experience for the company, but had it been
handled in a way that assigned blame for the failure, it would have
been even more damaging to the corporate culture.
“When we went through that process, people looked at how we
behaved as we decided to walk away from that, how we dealt with
failure, whether we blamed people and people were punished for
that or not,” Mussallem says. “We like to think we came out of that
as a stronger company.”
Mussallem says the “Learn, don’t blame” approach affects the
company’s financial performance by not allowing problems to be
papered over because of fear of admitting that a project isn’t going
well or pointing out that it probably won’t be successful.
“One of the things that (is) beneficial about this kind of culture is
that you can find your problems early before they turn into disasters,” Mussallem says. “So you can actually head them off when
they’re smaller problems for the company financially that we can
handle, instead of somebody keeping a problem under wraps, and
it turns into a big issue, and the company is forced to deal with it
in a much more meaningful way with Wall Street, and we haven’t
had those kinds of issues.”
The right traits
Mussallem says that not everyone is cut out to work in an environment like that of Edwards Lifesciences. Even some employees who
came in via the spinoff from Baxter Healthcare didn’t find the culture
that Mussallem was building a comfortable fit.
He says that beyond technical skills, employees need additional
traits to function well in the culture, and the interview process for
both internal and external candidates looks for those traits.
“We find if people are passionate about the job that we’re asking
them to do, and they’re passionate about the company, and they’re
passionate about the impact they’re going to have on saving people’s lives, then it’s going to have a tremendous impact on their
leadership, and we look for that,” Mussallem says. “Even though
someone might be technically the most perfect fit for a job, if we
don’t feel like they have a passion for this, we don’t think they’re
the right person for the job.”
While a culture where employees are encouraged to speak their
minds requires individuals who are strongly self-confident, it also
requires people who possess what he calls an “in-check ego.”
“There are a lot of smart people out there, and you have to be pretty self-confident to be successful, and we love self-confidence,”
Mussallem says. “But if it ever gets to the point where the ego gets
so out of bounds that it turns to arrogance, it doesn’t fit very well in
our culture. Having an in-check ego is one of the things we screen
for.
“We’ll have the candidate describe a particular work success and
how they achieved that success. As an example, if they say, ‘I did this,
I did this, I did this’ and never mention anybody else on the team, you
might get a sense that the in-check ego isn’t there.”
An in-check ego is tied to another trait that the company looks for —
the ability to engage in creative debate, the process that puts the
important issues on the table and allows them to be hashed out in an
open manner.
“We think it’s so important to have debate inside a company to
make whatever ideas and strategies we have robust,” Mussallem
says. “And it means that we need to create a culture where people are willing to speak up, where it’s safe for people to speak up,
where you can have some mavericks that will fit in because
regardless of your level or your function or your expertise, your
voice will be heard. It means that if somebody puts a tough issue
on the table, that the experienced people, as well as the inexperienced people, will speak up and listen, that the experienced
people will make room for the beginners to share their views,
because there’s so much value that comes out of that. We think
it’s all part of creating the innovative culture.”
HOW TO REACH: Edwards Lifesciences Corp., www.edwards.com
