Sam Liang is a leader who is always looking to the people around him to help make him better. What he expects from himself is what he expects from his company, Medrad Inc. The more than 2,000-employee medical device manufacturer prides itself on its ability to continuously improve upon every aspect of business.
Liang, who became president and CEO in June 2010, was brought in to keep the company pushing forward and to improve upon the success of the business.
“It’s interesting because sometimes CEO transitions, they’re because there’s a turnaround that has to occur,” Liang says. “In Medrad, it’s absolutely the opposite. It really is an opportunity to take Medrad to the next level. My predecessor, John Friel, to whom I owe a tremendous amount of credit, was CEO for over 12 years, and for 12 years, he built this business into a very successful business.”
The more than $500 million company is a market leader in all of the segments it participates in. Since Liang took over his role, he has been driving to further diversify the business through product innovation and improvement across the company’s metrics. Here’s how he reaches for the next level at Medrad Inc.
Never stop improving
Medrad has a culture of continuous improvement and has followed the Baldrige Performance Excellence Program since the late ’90s. The Malcolm Baldrige National Quality Award is the nation’s highest presidential honor for performance excellence and Medrad has won it twice.
“It was 2003 when we were recognized by Baldrige for the first award, primarily for growth,” Liang says. “The second time was 2010 and we were recognized for adaptability and agility through challenging times. The way that we achieved it is you have to invest resources. I would encourage you to find one or two leaders internal to the organization to become very familiar with Baldrige and go visit companies that have seen it. From that perspective, you can start your journey by driving a culture of continuous improvement throughout the organization.”
Continuous improvement cannot be achieved by having a team devoted to it. It must be something the whole company and everyone in it strive to achieve.
“It has to be part of what you do every day,” he says. “It’s not a whole separate group of 30 people that are there to say, ‘Do Baldrige.’ Everybody has to be trained on the methods and the approaches and the tools you can use and then you have to deploy them. Then you have to stick with it. It’s a way of doing business and a way of thinking of being efficient. Start as soon as you can and it will pay itself off.”
Since Medrad started Baldrige, the company has achieved a 14 percent compounded annual growth rate in the last 14 years. To make the principles of continuous improvement work for your company, you must be completely devoted to it.
“It pays off and people think of it as a separate activity,” Liang says. “The No. 1 advice is that it’s not separate. You’re training your employee base to approach things in a certain fashion using tools that are accepted. It’s all about analyzing where you’re at and finding benchmarks out there of who’s doing it best-in-class. You have to put together a plan and execute against it to hit that best-in-class metric and if you don’t, you reiterate until you hit it. The key thing is, once you do hit it, you find the next benchmark to do better. You go through this continuous cycle of improvement.”
Form performance metrics
To know whether your company is improving, you have to measure areas of your business and form metrics around which your company will operate.
“One of the unique aspects about Medrad is that we run the company on what’s called the balanced scorecard, which is based upon the Medrad philosophy,” Liang says. “In 1983, one of our prior CEOs, Tom Witmer, and a group of employees, came up with the reason why Medrad exists. No. 1 is to improve the quality of health care. No. 2 is to create a rewarding and enjoyable work environment for our employees. And No. 3 is to deliver continued growth and profit for our shareholders. If we do all three of those things well, especially if we do the first two … the third aspect of delivering improved profits and sales will just happen. That has manifested itself in how we actually measure and metric the company.”
Medrad has devised five metrics to help measure the success of the company. Three financial metrics and two satisfaction metrics are what the company focuses on.
“What we do is we constantly focus on running the business, making decisions across the impact of those three stakeholders: our shareholders, our customers and our employees,” he says. “You have to keep it simple. Some companies will come up with 40 different metrics and what’s interesting to me is when you’re a small company you say you have to be focused. When you’re a large company, the biggest mistake I think large companies can make is, ‘Hey, because we’re a big company, have more money, have more resources, we can do more things.’ You actually find in large company settings you even have to focus more, because think about the inertia it takes to get a whole organization of people to go in a certain direction.
“My advice is to keep it very simple. Internally you can adjust [metrics] year to year, but from a business perspective, I would keep it simple. Our metrics are aligned with our philosophy. A starting point for other companies is to take a look at the basic operating principles of which the company is founded upon or that people commonly understand. To that extent, you can align your scorecard or your metrics with something that people already get. If people already understand it you want to build off of that foundation as opposed to introducing all new fancy terminology. Just keep it as simple as possible, because the key to Baldrige is making sure everyone from top to bottom understands what you’re trying to do.”
One of the things Liang and Medrad want to improve is the diversification of the company’s products.
“What we are essentially driving to do is to continue to diversify our businesses along three dimensions,” he says. “We have three businesses: radiology, interventional and service. The first level of diversification is within radiology. We want to diversify our revenue stream within radiology, which is the largest of our three businesses. The second piece is to diversify our businesses outside of radiology, which are Medrad interventional and service components. The third is, we have greater than 50 percent of our sales are all in North America. So we are on an effort to globalize and diversify outside of the United States.”
Liang had to take a look at the company and evaluate it to see exactly how he wanted to approach diversifying those areas.
“Using principles of Baldrige, one of our processes that we embrace and take is the strategic planning process. Part of that is looking at your external environment, looking at where you are as a company in terms of how well you’re positioned within that external environment and then coming up with the operating plans to execute against that external environment. If you have a company that’s doing well, you really have to understand the dynamics as to why it’s doing well and build upon that foundation. Don’t change that piece of the formula. The second piece is to put together and stretch plans that are aspirational and visionary but also that are realistic. You have to have very clear lines of roles and responsibilities around how you’re executing.”
In order to diversify the areas of the company that Liang wanted to focus on, he had to put an emphasis on innovation.
“A big part of diversification is innovation and we’ve shifted more dollars to innovation,” he says. “Some companies believe they can sell their way out of situations, ‘Well, let’s just sell more.’ But think about the markets today. It really is about focusing on innovation.”
Look to innovate
When innovation is a focus of your company, you have to get ideas and advice from the people who use your products every day and get their feedback on what to improve.
“We sit in our board rooms and we try to answer specific questions around directions and what should we do, how should we do this and do that,” Liang says. “I’ve always found that the answer always lies with the customer. You have to get close to the customer and you try to understand and gain valuable insights from the customer that no other company can see. The decisions and the directions you take become very clear very quickly around what you should do. You take innovation that is driven by customer needs or customer insights, that’s what I would focus on whether you’re a company that’s doing well or a company that’s in need of a change in strategic direction.”
Customers are your most vital resource for innovating products and can contribute to your company’s quest for continuous improvement.
“We spend a lot of time with our customers both informally as well as in a formal manner,” he says. “You go in and watch everything that they do. Part of the value proposition of Medrad and part of this informatics drive is to streamline the efficiency of how radiologists and technicians do their job throughout a day. Even simple changes in our algorithm of how you fill the syringe can save five or 10 minutes in a certain procedure in terms of set up time and what that translates to is the difference between a hospital being able, in one specific radiology suite, to see 30 patients a day versus 40 patients a day. The only way you get at that is by going in and watching everything that they do.”
Similar to how UPS adjusted its policy on right-turn-only routes to save gas, avoid accidents and decrease delivery time, Medrad uses customers to innovate and improve its products.
“We’ve done the same thing in all of our specific technologies,” Liang says. “In our Medrad Interventional portfolio, we are market leaders in the area of mechanical thrombectomy, which is sucking out blood clots throughout various parts of your body. In working with customers and understanding what their needs are, we’ve introduced a new console that the catheter hooks up to. We have reduced the steps [it takes to set up]. In an emergency, all the doctor has to do is put in a cartridge, push a button and then prime and he’s ready to go. I’m over simplifying it, but before, he had to put in a bunch of cartridges, connect a lot of tubing and then purge and get ready to go. If you’re having a heart attack or if your leg is green, you can’t afford to do all of that. All of the answers lie with the customer.”
While getting customer feedback for innovative ideas sounds simple, it still takes time and resources to develop an innovative culture that helps define your company.
“A lot of people talk about innovation, but the reality is as you look at the amount of money they would dedicate to research and development and innovation, the dollars aren’t necessarily there,” he says. “You have to put resources to it. We have a corporate innovations group, which is the group that looks out at your portfolio and takes the competencies and the technologies that the company has and they are looking out beyond three or five years. They are looking at where our technology can be applied or in the markets we are in right now; what are the longer-term unmet needs. We put money to that for these folks to … dream. We know that a certain percentage of them may not come to fruition, but you have to allow that forward-thinking innovation.”
HOW TO REACH: Medrad Inc., (724) 940-6800 or visit www.medrad.com
The Liang File
Born: Atlanta, Ga.
Education: Bachelor of science degree, mechanical engineering and material science, Duke University; Master’s degree in management, Kellogg Graduate School of Management, Northwestern University
What was your first job and what did you take away from that experience?
My first real job was working in a hospital outside Washington D.C. in a pathology lab. I did everything. I filed pathology reports and logged in specimens coming off the OR. That was where I got my interest in health care and when I knew I wanted to do something health-care related.
What was one of the toughest parts about coming into Medrad as a new president and CEO?
One of the toughest parts personally is that it was a very, very successful company and the former CEO, John Friel, had been here for 12 years. Those were big shoes to fill. For me, it was about trying to learn and connect with the business and connect with the people.
What is your advice to incoming CEOs?
I started in June 2010, but by the three-month mark I did a full 360 and got feedback from anybody I had extended interaction with. It’s a two-way street. I also worked in the field and that’s one thing I think you have to continue to do. You can never do enough of that. You have to keep doing work in the field with the customers because that’s where a lot of the answers are. Spend as much time as you can with customers. Formulate your own impressions.
If you could invite three people to dinner, who would you invite?
I would invite Abraham Linclon. If you look at the issues he had to face and the decisions he had to make as a leader, boy, he had to make them all. You could walk away with so many valuable learnings.
I would want to talk about the topic of innovation, so I would invite Thomas Edison. He was such a leader in that respect.
The third person I would invite is Thomas Jefferson. Anybody that had a say in the founding of this country or writing of the Declaration of Independence is an amazing person. The whole thought process around democracy and the ability for other people to make decisions for what’s right for them takes an amazing amount of forethought.