MEDTRONIC CORPORATE CULTURE

Group I Agus Wiyono

Dian

Dandalina

Teguh Subarkah

M. Nur Hadi

What is Medtronic ?

Medtronic is best known as a

producer of implantable medical devices, designed primarily to support the human cardiovascular system

History and Background

• Medtronic was founded in 1949 as a medical equipment repair shop by Earl Bakken and his brother-in-law, Palmer Hermundslie

• First Product is life-changing therapy – a wearable, battery-powered cardiac pacemaker

History and Background

• The first Product is External Pacemaker• In 1962 Medtronic nearly bankrupt when the

first year's production costs outstripped the company's cashflow

• By 1969, Medtronic had grown from 50 to 500 employees and up to $15 million in net sales

• In 1970, expanded manifacturing facilities, increased operating capital, and added several staff departements, direct domestic and international distribution

History and Background

• The management changing beginning 1970 until 1985, these changes marked the decreasing role of the founder, Earl Bakken.

• These major changes interfere the Corporate Culture

Medtronic Culture

Medtronic Culture is made from :• A unique set of Behavioral Norms• Approaches to Management• Corporate Objective • Rich collection of stories

Who is behind Medtronic Culture ?

The Owner :Earl Bakken

• He is believed strongly : If you spend your time out in the field, your customer will (make) the strategic plan for you.

What Values did he Implemented?

• Innovative : Technology driven pacemaker

• Care and Trust : Bakken heard what costumer needs, Bakken also building a bond by approach to stay extremely close to customers and to find a way to accomodate their needs

• We are Family : Bakked did personal approach : He made a practice of having lunch with all new employes and talked with them about the company and its mission

And The Culture Changes...

• The Company continued to grow,

Nearing two thousand people and $100 million in sales in the mid 1970s

The culture began to CHANGE

Why Changes??

Because Old Culture was increasingly perceived to be a barrier of insularity and entitlement that prevented adaptation and change.

Competitive Environtment

Earl Bakken's Culture

• Symbolic Leaders• Benevolent• Tolerant• Patient• Tremendous Expectation with self critism• Accountability was Low• Penalties were seldom imposed• Emphasizing on non economic objective

Dale Olseth's Culture

• Higher Accountability • Tougher Approach• Emphasizing on economic objective• Unfortunately Medtronic’s Marketshare

dropped steadily to 40% from 60% of bakken’s period

Win Wallin’s Culture• Worthy goal and a historic strength of the

company reaffirmed the importance of Medtronic’s core value.

• Conflict between “Bakkens old culture’s” with “Olseth’s new culture” arise.

• Reconcile the two cultures (humanistic culture and management culture) as valuable sources of competency to bear objective.

• Successfully the conflict was less important than the mission itself.

• Regained marketshare up to 55%

The Culture and Effectiveness Model• Involvement• during the “old” periode, involvement is held as the very pabric of the organization's

tremendous success. During the reconciliation period, involvement again became focused on the mission and external business environment

• Consistency• Under the old culture, consistency was based on share perception of the needs of

patients and surgeons, which was forged through direct, frequent, and continual contact. Consistency was high during the first stage, lower during the second stage and high again during the third stage

• Adaptability• Medtronic failed to adapt it culture from a leading edge product to an ordinary

product. The internal overemphasized on the internal bureaucracy rather than on the increasingly important needs of the company.

• Mission• Old culture objective was non economic while the new one was economic.

Lesson Learned• Culture and Causality

Culture vs performance: great culture delivers efective performance

• Cultural Inertia

The consistency of a culture and the ability of a culture to change and adapt both contribute to organization’s effectiveness

• TechnologyThe development of the culture can only be understood as a complex set of interactions among the life cycle of the technology and the products, the succession of leaders and the changes within the business environment.