Northfield, MN — It was a conference with the title of many similar conferences — “The Ethical Corporation: Capitalism and Conscience.” I was not expecting too many specifics from the speakers. But I was pleasantly surprised by William W. George, president and chief executive officer of Minnesota-based, Medtronic, Inc. — a medical device manufacturer with 9500 employees worldwide. He started his remarks by talking about companies that “lose their soul” as described in the takeover frenzy bestseller, “Barbarians at the Gate.” George decried the junk bond, LBO and similar deals that produced such disruption and such “relocation of human life and lost careers.” The corporation is chartered by society to have “a lasting value and not just look at the last five minutes. It has a much deeper responsibility to serve its customers, employees and the community.”
He said his company is run to lead “by values instead of management by objectives.”
Then George launched into the specifics. He pointed to “denial” as a recurrent problem for corporations who get into trouble. First example, his own company. Well before he arrived, Medtronic got into trouble in 1976 because it denied the real problem involving its pacemaker failings.
“We can fix any problem we admit to and can’t fix any problem we don’t admit to,” he remarked.
But at least Medtronic did not run away from the problem, unlike Pfizer’s Bjork-Shiley heart valve that has fractured and killed over 300 people and brought deep fright to 50,000 patients who have this device in their chests. Pfizer, said George, sold off this business to an Italian company and violated its duty to stay with and face up to the tragedy.
Facing up to difficult situations saves the company time, litigation, investigations, and assorted depleting agonies from inside and outside the business, he observed. He told of a decision affecting the head of Medtronic’s Italian subsidiary. It seems that the subsidiary was following custom and dutifully sending the money paid to a supplier to a Swiss bank account, at the supplier’s request. The Italian executive was called back to Minneapolis, questioned at length. His answers were unsatisfactory and he was fired.
Even though the Swiss bank account transfer was legal in Europe, according to George, and even though his attorneys told him there was no violation of the U.S. foreign corrupt practices act, Medtronic made the matter public in a press release. Sure, he said, “we probably lost some business, but even though we don’t know what is going to happen, it is best to make it public, take the responsibility at the earliest stage and get it behind us.”
Medtronic has its complaints against the FDA for what it believes is excessive slowness in approving one of its devices. The company is appalled by the health care insurance crisis and has produced a reform plan. But George, who has been head of the company for only 3 1/2 years, pitched a broader measure of success. Looking at his audience of experienced business executives and lawyers at St. Olaf College, he offered them the question they should all ask themselves:
“Ask yourself this question upon your retirement: Have you bettered humankind?