Miclot has taken on the role as president and CEO of Respironics Inc., a company with a stellar record of performance over the long haul and an enviable balance sheet, but he’s doing anything but approaching his role as that of custodian.
“I’ve had the opportunity to be in a lot of different businesses,” says Miclot, “and they all have their sets of opportunities and their sets of challenges. The benefit of taking over a company that’s performing well is you have the opportunity to take some financial strength and leverage it.”
Miclot joined Respironics as part of its HealthDyne Inc. acquisition in 1999. Before taking the top job, he spent a year as chief strategic officer, developing a plan to map out the company’s future path. By the time he was named CEO in 2003, his efforts had turned out a plan that challenged the company expected to reach $1 billion in revenue in fiscal 2006 to substantially change the way it views itself, its structure and its markets.
From a company that traditionally has made products primarily focused on treating obstructive sleep apnea, Respironics is making the transition to one that takes a much broader view of market opportunities in the sleep and respiratory markets and that is willing to take a more entrepreneurial approach.
“We ultimately concluded that we were a market-needs company, and that we’re very focused on marketplaces and meeting needs of markets and meeting needs of new segments,” Miclot says. “And then it’s about competencies, what kinds of skills and talents do you need to execute on a strategy built upon those kinds of planning processes.”
Through the planning process, Miclot determined that Respironics should strive to continue to grow consistently and predictably, to deliver on whatever promises it made in the marketplace and to broaden its business beyond its traditional core. To do that, Miclot says, means taking some risks, but he says that not sticking his neck out is perhaps a bigger gamble for Respironics and its 4,100 employees.
“Probably one of the biggest risks I saw was to rest on our laurels and let our financial strength ultimately go through its natural life cycle and not have taken advantage of it,” says Miclot. “It’s hard to create a sense of urgency in an organization that’s performing well, but what I think has been central to our success is that we’ve really created a bunch of little businesses underneath the broader organization, and that allows you to create entrepreneurship around the organization, even when you’re performing well.
“One of the early discoveries we had was some of our core businesses had to be managed, nurtured and continued to grow, and underneath them it was very difficult to get a new initiative done because that team was so focused on the opportunity in front of them,” Miclot says. “So by creating additional business units, you create entrepreneurship.”
And while Respironics has carved out a lucrative chunk of the obstructive sleep apnea market and built much of its financial success on it, Miclot sees developing other business lines such as those that focus on therapeutic and monitoring products for infants and children, as well as those that treat other sleep disorders as a hedge for the company’s long-term performance.
“If you’ve got one part of your business in a quarter that’s not performing, you’ve got five or six others that can,” says Miclot. “That allows you to make very good long-term business decisions.”
The nature of its strategy, as Miclot describes it, embodies an approach that encourages more risk-taking and expresses confidence in the people who are in charge of its execution on a day-to-day basis.
Miclot cites an example of the way the process has worked at Respironics. One of its divisions discovered that there were opportunities that stretched far beyond its traditional business footprint in the marketplace.
“We had a business that was focused in on what historically we called our asthma and allergy division, and they were focused very much on the low end, commodity nature of delivering drugs to asthmatic patients that was very product-focused,” Miclot says. “The leader of that group, as they developed their business plan and their strategy under the larger strategic plan, really discovered that they were in the respiratory drug delivery space, and that’s a much bigger space, very consistent with the strategy, and there are all kinds of emerging opportunities in delivery of drugs via the respiratory pathway.”
The division made an acquisition, which brought in some needed technology and now, Miclot says, the business is much larger, with the potential of adding millions to Respironics’ revenue. Those kinds of successes have come about, he says, because the business unit leaders have been given the strategy without specific instructions about what to do or not do.
“It’s been my experience that people overthink strategy,” says Miclot. “It’s also been my experience that it’s often delivered in a book. Ours is a message and it’s about the nature and direction of the company. It’s not about the how, and a lot of people try to do the how. To me, the how is handled in the organization through its normal operating plans.”
The how, of course, is delivered by people. And Miclot says the strategic plan highlighted the key competencies the company would need and how critical having the right individuals in the right slots would be if the business plans were going to be successful.
“The biggest thing our strategic plan pointed out in terms of execution was we did have some bench strength issues, so we’ve brought some people in from outside the organization as well as promoted from within,” says Miclot. “When you’re growing at 15 percent to 20 percent a year at $1 billion, you’re at $200 million a year you’ve got to hire talented people to get that job done.”
The planning process, says Miclot, identified three key competencies that Respironics would need to execute its chosen strategy.
“The first is market foresight. If you think about a market-needs company, that’s a company that’s got to be able to look in the marketplace and sense and feel markets. The second is learning agility. It says if you create a learning organization and put people in stretch positions and allow them to learn by doing and create an agile organization that changes quickly when your environment changes, you’ll beat your competition every time, even in hard times, because you’ll see it first.
“The last one in a decentralized organization is teaming. It’s been my experience that nothing good happens until a team of people comes together to try to make it happen.”
The next critical step, says Miclot, is to match the talent pool to the competencies. To develop its talent, Respironics has put in place a structure that brings leaders along and helps them develop those key competencies necessary to carry out its strategy.
“It’s a very formal process,” says Miclot. “We have a leadership development process. We look at every single key position in the organization and we do three things. One, we look at ... what are the key criteria in that position. And then, we look at the person in that job and we match them to those criteria, and then we look for development things we can do to help that individual be more successful. Finally, we look at who’s behind them, in terms of succession planning.”
Having the right individuals matched with the competencies you need to succeed, says Miclot, assures that you end up with people who understand the strategy, can run the business units effectively and recognize growth opportunities. Once that’s in place, it’s almost on automatic pilot.
“And then, you get out of the way,” Miclot says. “Let them run.”
How to reach: Respironics Inc., www.respironics.com or (724) 387-5200