George Barrett and Cardinal Health stay ahead of health care’s pace of change

 

George Barrett, chairman and CEO of Cardinal Health, wants to be challenged and face the hard truths. For him, that’s how you can be the most effective leader.

He’s been known to wander around the office and encourage people to talk.

In town hall meetings, Barrett will sometimes intentionally try to draw out organizational observations that are uncomfortable — he wants to hear examples of where the company has failed to deliver.

“I think as you obtain a certain level of leadership in any organization, whether that’s a business, a church or government, there’s a tendency for a system to form around you to make you feel good, to basically deliver the good news,” Barrett says.

Good news flows easily in most organizations, so the challenge is getting bad news, which is how you learn and adapt.

“I’ve certainly been in organizations in my life where it was very, very difficult to hear the difficult truths, and those difficult truths are the ones that help you compete — those are the ones that really tell you whether or not you’re serving a customer well or creating the right environment for your employees,” he says. “And if you’re insulated from that reality then you’ll never be a great organization.”

Facing the hard truths has never been more important than in the health care field where the pace of change has picked up dramatically. For example, Cardinal Health’s ability to manage quick changes and industry ups and downs helped the company weather the steep challenge of replacing $17 billion of business when it lost its Walgreens contract in 2013.

Here’s how Barrett and his more than 34,000 employees are positioning the $91 billion company so it remains a solution provider to the health system.

Betting on the future

In an industry like health care where there is a lot of turbulence and it’s not completely clear what all those changes will mean, it can be difficult to determine what strategy to take and what resources to develop.

“There has been probably more dramatic change in the last couple of years than we’ve seen in the decades prior, and I would expect it to continue to happen,” Barrett says.

Instead of focusing on the implementation of the Affordable Care Act that continues to go through modifications, Cardinal Health has realigned itself around what it does know.

“So rather than obsess about (the ACA), what we have really focused on is, what are those major trends in health care? And how do we see them unfolding?” he says.

It is completely clear that there is an aging population that will need increased care, and public health problems will continue to challenge us as a society, Barrett says.

If, as a nation, we’re spending 18 or 19 percent of gross domestic product on health care, there will be pressures to manage per capita spending, and health care institutions need to be part of that solution. Health care is going to need to be delivered in multiple settings that will be more coordinated over time, and consumers will be more involved in their own care, he says.

Some of the experimentation in the health system will stick and others won’t. That’s why Barrett says the company has systematically identified areas that are extremely important and made investments — from generic pharmaceuticals and biopharmaceuticals, to alternative sites of care.

Cardinal Health also seeks to keep a balance in both its customer and product portfolio mix. In order to stay clear on the larger issues, Barrett says the company has a strategy council that meets about every six weeks.

“That group really wrestles with the hard issues of our time, that’s what we do internally,” he says. “I say to the group, ‘Look, we’re not going to solve every question at every meeting. We’re not going to be able to tie a bow on some of these issues. We’re going to surface the important issues and we’re going to start to assess our capacity to provide solutions, given those dynamics and given those forces, and make some strategic bets around them.’”

Leading the way

In a time of enormous change, whether that’s in the organization, industry or both, a leader needs to stay active and in the forefront.

“You need to do more than mobilize people’s brains. You have to mobilize their hearts to have a receptivity to change,” Barrett says. “That requires very active leadership. And that’s not just from a single leader; it’s all the leadership of the organization.”

You also don’t have the time to be indirect, he says. You don’t have time to have a million meetings to confirm your own instincts. You need to address issues quickly, while debating them fully.

And when things are going well, encourage your employees to challenge themselves to understand why they are succeeding.

“The answers can be illuminating,” Barrett says. “The answer could be, ‘Wow, we actually had some enormously important insights that we’d like to scale more quickly and transfer to some other parts of our organization.’”

Or one success may be covering up some challenges.

In either scenario, it’s important to not get insolated and have people who will tell you the truth.

“You’ve got to create an environment in which the people can thrive, and I think that goes back to this issue of culture,” he says. “The word ‘culture’ sometimes gets a bad rap because it’s sort of warm and fuzzy as opposed to hard science.

“But the reality is that a great strategy with an organization that’s not ready to execute, or that’s not aligned, or not inspired by the challenges in front of them, will not be able to bring success to that strategy.”

Incubating ideas

With swift industry changes, Cardinal Health needs to be nimble and adaptive, in spite of the fact that a large organization naturally tends to be a little slower moving.

To change this, it requires a careful look at the culture of the organization to ensure the company is actively promoting innovation, diversity and debate about how to compete in the marketplace, Barrett says.

One way Cardinal Health has encouraged its employees to think differently — to innovate and be able to run with ideas — is through Fuse, the commercial technologies team within Cardinal Health that focuses on the design, development and delivery of commercial software to improve the safety and efficiency of patient care.

By creating a separate facility with unique organization, layout and talent management approaches, Barrett says Fuse runs more like a typical startup, while applying knowledge from touch points across the health system.

“It is sometimes hard to get small things running in a large enterprise because the large enterprise is always looking for something that can operate at scale,” Barrett says. “But sometimes you have to incubate ideas.

“And this allowed us to incubate ideas with some protection around them, and I think that’s allowed us to accelerate the work being done at Cardinal Health.”

A magnet for talent

The need for organizational speed and adaptability carries over into how Cardinal Health approaches talent management, as the company measures its own people on it.

“When you think about setting priorities for an organization, one often thinks of the classic strategic priorities, which, of course, we do, but we also prioritize capabilities that we need to have and behaviors that we need to reinforce,” Barrett says.

In order to have the right capabilities and behaviors, it’s important to attract diverse talent, especially in a service business where it brings a competitive advantage, he says.

You want a workforce that isn’t just ethnically and gender diverse but also with a diversity of opinion and experience. One way to develop that is by building career paths for people internally.
Barrett says if you identify those with capacity and ambitions and give them a sense that they can work to the fullest extent of their capacity, they’ve found at Cardinal Health that people from around the world will come.

The profile of Cardinal Health also has been elevated in recent years, which aids in recruitment.

As the health care system becomes more patient-centric and consumer oriented, the company has followed the same path, becoming more consumer facing. Cardinal Health also has worked to be more assertive in the communities it operates in, outside of Columbus and Dublin, to articulate who it is and what role it serves.

The last piece is to make sure that your organization is fun.

“I want people to wake up in the morning wanting to be here every morning, and wanting to be here every day, and bringing in some joy to their work,” Barrett says.

 

Takeaways:

  • Build your strategic planning from what you know.
  • Be an active leader and seek the truth, even if it’s unpleasant.
  • New ideas may need protection to grow.

 

The Barrett File:

Name: George Barrett
Title: Chairman and CEO
Company: Cardinal Health

Born: Westport, Connecticut
Education: Undergraduate degree in history and music from Brown University, and a master’s degree in business administration from New York University.

What was your first job and what did you learn from it? I can’t remember the exact sequence — I had a set of spectacular jobs as a dishwasher and in the summers I coached and did a lot of camp counselor jobs.

The day after I turned 16 and was eligible to work, two of my friends and I saw that there were openings at a restaurant. I drew the short straw. There were two bus boys and one dishwasher.

I learned to do my job. I tried to do whatever I was asked to do as well as I could. As uninspiring as that may sound, it’s just the way I was hard-wired. Just focus on what I was doing, and if I did my job well, perhaps, other opportunities would come from there.

I tell that to people all the time, by the way. In their professional life, it’s wonderful to have a great career design, but what really inspires people is when you are dedicated to what you are doing, you’re passionate about what you’re doing and you’re really, really good at what you’re doing — and then other people will notice you.

I’m not sure that a lot of people took notice of me as a dishwasher, but maybe a little later in my professional life there were other things that allowed people to take note.

Your background is a little unusual for business. What has sports and the arts taught you? I won’t go into excruciating detail about all the clichés about sports and business, but they are largely true. Those experiences of being part of team, of learning it’s not about you, having to overcome adversity, injury and setbacks, and competing as hard as you can and occasionally coming up short, those are experiences in sports that are hard to reproduce in other ways.

Music has had a profound impact on my life. I performed professionally for a while out of college, but it also influenced, I think, who I am as a person and the way I approach my work.

I’m used to being on stage a little bit and so it’s helped me be more comfortable when I have to be in front of a group over the years because it’s familiar turf; sports did the same.

How does your background still influence you? I try to recognize that there’s always some story behind that person that I don’t know.

When people look at me and they look at my title and my responsibilities, they probably make certain assumptions about me. Those may or may not be correct, but it’s a natural human tendency to fill in the blanks.

I think maybe because my background is a little different I am a little less quick to judge. I probably keep those blanks open a bit longer. I can draw on that experience knowing that mine was a less common path, and recognize that each person has their own path to what they’re doing.