Executive Summary

Leading With Your Values

William George
President & CEO of Medtronic Incorporated

June 1993

I am appalled at corporations that say, "Our mission is to maximize shareholder value." I don't think that is why society chartered us. The real question is "Are we managing only for money or are we leading with our values?"

The challenge for corporations in the 1990s is to determine how to operate ethically, how to lead with our values, and succeed in what are increasingly competitive global markets--markets characterized by increasingly higher levels of regulation, litigation, and a basic lack of trust between the corporation and other elements of society.

Shortly after I came to Medtronic, the head of new ventures came to me and said the executive committee had decided to sell some venture projects, including the drug administration system, which had lost $25 million over a ten-year period. We were going to sell it because we had a lot invested in it, but saw no near-term return. We didn't find a buyer very quickly.

Several months later at the Medtronic holiday party, I met one of the pump patients, an 18-year-old boy named T.J. Flack. T.J. was born with spastic cerebral palsy. There is no real cure for this disease, and he had undergone surgery every year from age three to age 16. He would go to school for nine months, and then he'd spend eight weeks in a body cast. The operation would cut his nerves to relieve the spasticity of his cerebral palsy.

After T.J. denied surgery for about two years, a doctor in Pittsburgh came up with an experimental procedure using a drug called baclofen and our SyncroMed drug pump. T.J. told me how this drug and our device had totally changed his life. He could program the device to administer the drug when he needed it.

He said he formerly awoke in the morning and couldn't get out of bed for an hour because his body and joints were so stiff. Now he can get out of bed in three to four minutes. He even walks up five flights of stairs each day at school.

This was the same drug pump that we were going to sell. Well, we decided not to sell the drug pump, but restructure the business instead. We took out some of the administrative costs, put a little more money in research and development, and devoted more to the sales effort. Now, that business is not only profitable, but is going to be one of our most significant businesses in the future.

A purely economic decision would have said "kill this business." A human decision, on the other hand, said "Here's a device that can save or impact hundreds of thousands of lives."

We have enormous opportunities in our company to confront problems beyond those addressed by our six existing businesses. There are diseases that affect tens of millions of people in our country, and we are making a very sizable investment in addressing them.

Our business priorities should be based first on serving our customers, who are physicians and their patients; empowering our employees; and being good citizens of the communities and the societies in which we live. If we do that well, we also will serve the interests of our long-term shareholders.

The real bottom line of the corporation is not earnings per share, but service to humankind. To achieve sustained success, a corporation that thinks about its long-term best interests must lead with its values -- from top to bottom.

Adapted from a speech delivered at St. Olaf College.

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