Dr. George “Doc” Lopez’s CFO stormed into his ICU Medical office, his face redder than a beet after an employee team had moved both staff and files to another building to maximize space. The first thing Lopez asked him was, “Did you attend the team meeting?” The CFO angrily shouted, “Of course not!” “Well, that’s too bad,” Lopez told him. “You should have attended the team meeting to voice your opinion,” and he let the team’s decision stand. Lopez’s transfer of power to his 1,450 employees has helped him grow his medical supplies company to nearly $200 million in sales. By reserving nearly $1 million in the annual budget to compensate employees who serve on teams, he motivates people to take action to fix problems. Smart Business spoke with this CEO about how he creates a culture of empowerment at ICU Medical.
Get out of your employees’ way. Put good people in, make sure they know how to do their jobs, give them the resources and incentivize them heavily for the direction you want to go. I mean heavily. Put large amounts of stock or money in front of them, and get out of their way.
A lot of things motivate them, but one of the things that motivates is compensation for a job well done and having the freedom to not be second-guessed on everything they do. It’s not like people don’t make mistakes, but if you do 100 things right and two things wrong, I’ll take the 100 things right.
You can try to make it 102 things right, but your process will slow way down.
Change your leadership style. You can make every decision, but then nothing gets done when you’re not there. Nobody makes a decision if they think you’re going to second-guess it and make a different one.
That autocratic method will work until about $10 million in sales. Then you won’t grow anymore. You have to change how you run it, or you’ll be the cause of lack of growth.
It’s being aware of different stages of a company’s evolution. It’s like a life cycle. In the beginning, an entrepreneurial style works well. It’s like an infant it requires constant nurturing from the parent because the baby can’t make decisions on its own.
By the time they’re 4 or 5, they don’t need as much attention as a 2-year-old. You have to change how you focus and manage based on the size of the company.
Give employees authority. We stumbled for a while. We tried to make decisions by consensus, and consensus doesn’t work. It’s like the United Nations it just doesn’t work.
Give them the ability to change things they don’t like. I don’t make decisions other than setting direction. If you’re unhappy with anything in the company, form a team, ask the pertinent members that can contribute or will be affected by the change, and then you change it.
There’s no status on the team there could be a VP sitting next to a janitor. You’re just a team member, and it’s whatever you can contribute. People love to be heard and love to contribute.
Nobody comes into my office and complains, because the first question I’ll ask is, ‘Did you form a team?’
Don’t override team decisions. If they make a mistake, live with the mistake in the early days. Companies like GE tried the team approach before, and what happened is the manager didn’t like the team decisions, so he just overruled it. That takes all the power out of their hands.
Employees do know better than their supervisors. If you can accept that fact, then you have no choice but to get out of their way.
Lose the competition. Throw the business books away. Stop taking a small percentage of an existing market. Go after empty markets.
When you go against an entrenched competitor, all you’ll get is a bloody nose. An incumbent will almost always beat the start-up. Find places to compete where there’s no competition. When there is no competition, you, by definition, are No. 1 in the market because there is no market.
I play ice hockey. I practice shooting.
When there’s an empty net, I’ll get eight of 10 in. Put a goalie in front of the net, I’ll get one out of 20. Put a defensive player and a goalie, I’m lucky to score at all. So I pick up my hockey stick and go to an empty rink and play on an empty net because I’ll score more goals that way.
The CEO’s job is to set the direction in the empty market and then create barriers to entry as fast and as many as you can. Business is defined not by the product, but by the competitors.
Let your employees grow. At some point, your children grow up, and you have to not make their decisions for them. Companies grow up also.
You have to trust that your people will do what’s best for the company and for themselves. Always keep the reward system lined up with the direction you want to go, and be very generous with your people who are you performers.
A lot of companies, when people don’t perform, they spend time with them, work with them and retrain them. It’s a bell-shaped curve, and there are people who will always end up with As, and people who will always end up with F’s. Spend your time with the A’s and B’s, not with the D’s and F’s.
Build a team. When my sons were playing ice hockey, one team had a superstar on it, one team was average nobody was that good.
The team with the superstar, they relied on him and kept trying to give him the puck, and when they’d give him the puck, the other team would maul him, and he wouldn’t score. The team that had average people and played well as a team clobbered the team with the super-star.
The team will always beat the individual. Team IQ points are better than any one person’s IQ points. If I add up the cumulative scores of 10 people, they’re a lot better than mine. A better team will always beat a superstar every day.
HOW TO REACH: ICU Medical, www.icumed.com