Thank you very much and welcome. It's wonderful to see such an engaged and huge room. One of the things that brings us together in this room is really an innovation ecosystem of clinicians, investors, industry leaders, and entrepreneurs. Kevin Lobo and I come at it from different perspectives, but have one mission: to help our patients and make health care better. I'm a practicing orthopedic surgeon at the Mayo Clinic and privileged to serve as chief of surgery there. Kevin's leading one of the world's largest and most respected medtech companies in the world. Together, I hope we can explore how those two perspectives come together.
I'll start by sharing a little bit about Kevin. Few CEOs transform a company. Even fewer transform an entire industry. Kevin made a defining bet over a decade ago on robotics and surgery. A winning and defining bet. His portfolio includes 60-plus acquisitions, and his revenue growth has went from 8 billion to 25 billion under his tenure. In addition, as we heard in the last keynote, Kevin has focused on diversification actually outside of orthopedics. While I know orthopedics well, one of the things I've respected about him is how he's diversified outside of orthopedics.
And importantly, between Mayo Clinic and Stryker, we share a mission and vision that's very similar. And this is remarkable. I noticed this about 12 years ago, and I've put them both up here. When you look at the mission statements at Mayo Clinic, the needs of the patient come first. And if you look at Stryker and a combination of these two giant organizations together, you see: together with our customers, we are driven to make health care better. Remarkable alignment between the two organizations. And that leads me to my final slide and comments before I welcome Kevin on the stage.
If you look at the partnership and relationship between Mayo and Stryker over the past 30 years, it's been remarkable. Truly a category of one, an N of one relationship that's allowed us to push healthcare in ways we never thought before. You'll notice in that 30 years, 60-plus licensing and innovation agreements. 20-plus innovators have participated, truly revolutionizing not only orthopedic surgical care with know-how, design, development, and products to the market, but also with strategic thinking, value, and culture alignment.
Today I'd like to move beyond the headline and talk about how we can push forward together. How to recognize inflection points between Stryker and Mayo Clinic and our industries. How industry and clinicians can collaborate together to make health care better, and what it takes to build innovation that will transform the future. So with that, I'd like to welcome a remarkable leader, Kevin Lobo, to the stage, CEO and chairman of Stryker. Kevin, welcome.
Matt, look forward to it. Thank you.
We got to do the photo part here. All right. Great. One more. Great. Kevin, thanks for joining.
Well, thanks for having me.
Yeah, such a privilege to be with you here in Barcelona. So, Kevin, I've learned a lot from you over the decades: orthopedics, outside of orthopedics, leadership, and frankly, how you treat other people. And I know your career didn't start initially in medtech. In fact, it started outside of medtech. What drew you into medtech? And you and I have briefly discussed it, and what ultimately kept you in it, and you found your home at Stryker. Why Stryker?
Yeah, it's a great question. I have a really unconventional career path to being CEO of Stryker, of a medtech company. So, I grew up in Canada. I started my career in finance. I was in consumer products industry, then chemicals, and then about 20 years ago I was moved into medtech by Johnson & Johnson. I started initially in their pharmaceutical area. So, this is my fourth industry, and when I found medtech, it was just like a marvel for me. You can make meaningful innovation between one to three years, maybe four years if you have a PMA device. Very meaningful. Pharma takes 10 years to have a new molecular entity. So it's like a casino bet with your stage trials and everything.
And then consumer products, you make these innovations, but I used to joke sometimes, you know, they get all excited about cherry-flavored Tylenol. It's like, okay, we already have grape, we already have strawberry. It's like not that meaningful, but yes, it's a new product. Whereas in medtech, you have meaningful innovations in a kind of a short time frame. So, it's kind of the sweet spot of something very innovative that makes a huge difference. And Johnson & Johnson is the one that sort of — I knew nothing about medtech before I got into the medtech industry.
And I found my home at Stryker just culturally, it just fit with me. It's kind of a no-nonsense, humble, hardworking, driven people. Very similar actually to parts of the Ethicon Endo culture that I had in Cincinnati with Johnson & Johnson. We used to partner with them on cameras for training. And so I liked Stryker people even before I got the phone call to join as the head of orthopedics, and the last 14 years as CEO.
Yeah. Kevin, one of the things I noticed every time I walked the hallways of Stryker is how that culture is really mission-driven, all with that shared purpose, that mission that you put together. Do you want to share with the audience kind of how you came up with that and how you start every meeting like that?
Yeah, this 'together with our customers, we're driven to make healthcare better' was something we launched about a year after I became CEO. We had a mission, a vision, a promise. We had too much information. I'm a simplifier. I like to keep things simple. We had about 20,000 employees at the time. We now have about 60,000 employees. And as you get big, you want to keep things simple. So, we came up with those 11 words, those three ideas just by iteration. We didn't even use a consulting company. We just did it ourselves. And then we tested it with customers. And it really resonated very well with customers because nowadays you can have internal communications and external communications. There's only communications. And anything you say internally gets broadcast everywhere.
And so we landed on those words and it felt like every part of the company could connect to it. Whether you're making a bed or whether you're making a neurovascular coil for the brain, we're all about making healthcare better and solving problems for our customers, and we can't do anything without our customers. So it resonated. We came up with those words. We haven't changed any of those words in the past 13 years since we launched the mission statement. It resonates around the world and people can remember it. So I stop people and ask them the mission statement and they would tell me, and every single person at Stryker starts every presentation with the mission statement.
It also has the values on the bottom, and then they talk about one part of it, tell a story, something with a customer, and it becomes self-reinforcing. And when you have such a vast organization that's very decentralized, this is our unifying sort of calling point. Why you go to work is for this. So we're a very purpose-driven company.
Medtech — I think all the medtech people you heard from Bernard just before me were all focused on this kind of mission, but writing it down is really important, being clear with the words. We spent a lot of time on it as a team coming up with those words, tested it with our group. The initial version was 'together with our customers, we strive for excellence to enhance and save lives,' which sounded pretty good too, but then the bed person said, 'Well, we don't save lives. It's a bit too much of a stretch for us.' And so then we simplified the wording so that everybody could feel when they look at that, like, that fits for me.
Yeah. Now, Kevin, you alluded to it when you took over. You were 8 billion. Now you're 25 billion, right? And as organizations grow, I think about Mayo Clinic now at 88,000 employees for our own organization. One of the risks is growing and growing too fast. And we heard a little bit about that in the previous keynote. How has your leadership philosophy changed, or maybe not changed, as you've had this massive expansion at Stryker under your leadership?
Yeah, I mean, the company was always decentralized. In fact, I doubled down on decentralization. So, we now have 22 business units. So, 25 billion of sales, 22 business units. So, just over a billion dollars per business unit on average. When I started as CEO, we had 14 business units. So, for me, there's no limit to how much we can grow. We just have to keep splitting and splitting into separate business units.
If we have a sales rep calling on two different call points, I don't like that. I'd much rather them have one call point, and we fill the bag of products with internal innovation. Or a lot of those acquisitions enabled us to create separate business units because we were calling on two different call points, and then through acquisition we were able to give enough products for a sales rep to call on only one call point and then split the bag. So that's been our formula: keep on decentralizing, keep on creating new business units, and then you can continue to grow.
And you've leaned in on that decentralized business units, but also trusting the teams and giving them autonomy. Do you want to speak to that?
Yeah, that's a huge part of our leadership formula: hiring great general managers and giving them the autonomy to actually run their business. So they can pay their people whatever they want. There isn't any corporate approvals. They have a tremendous amount of freedom to run their P&L. They have to abide by the mission and values. They have to follow our process around talent and engaging people, and we do standard engagement surveys, the way they hire people, business review processes. There's a number of processes that are very standardized, but it's pretty light. They have a lot of freedom.
Like when I go to visit one of my 22 business units, I have to call ahead to ask them how to dress because they all have their own dress codes. They can dress however they want. So I have to call ahead. And so they all have different personalities, but it does feel like Stryker every time I go, whether I go to Japan, whether I go to our ENT business or our hip and knee business, it all feels like Stryker, but there's slightly different personalities just based on the surgeon type or the clinicians that they deal with. They just can be a little bit different. But we do love to give them autonomy and let them make decisions.
And those acquisitions, there's a few of them that were initiated by me, like Mako, but most are initiated by the divisions. They have their own BD people sitting in their divisions, which is frustrating for this audience because, like, who do I call at Stryker? It's not — we're not easy to work with because of that decentralization, but it absolutely works because they're closest to the customer. We see ideas really early and we take them out early.
I don't mind paying a high multiple on a low sales value because then it's not a lot of dollars that you're expending, and tucking them into existing business units really works very, very well.
I'm smiling because the business units remind me of my three children. They all have different personalities, but they're all mine. So...
That's right. They're all your babies.
Yeah, that's right. You know, Kevin, early in your tenure as CEO, outside the decentralized business units, you made a really defining bet. You said, 'I believe in robotic-assisted surgery,' probably before anybody in the world thought that. And you made a huge bet really young into your CEOship, right? That was a defining bet for you. Walk us through maybe your mindset on how you made such an early decision and how you managed that across the organization.
Yeah. Well, I was the head of orthopedics before I became CEO, luckily, and that's when I learned about Mako, and I was very intrigued. So whenever I see something that sounds crazy, I get interested because most of the great inventions that have occurred start off with people thinking it's crazy. The idea of doing laparoscopic surgery seemed crazy in 1990. Now to get a gallbladder, you can't imagine someone cutting you open.
So I heard about this robotic — people said it's crazy. All our surgeon consultants, no offense, you weren't one of those at the time, totally against it. They didn't like the idea of it. And so what I said is, well, who loves it? There are some people that love it. And let me go talk to those people. I don't want to talk to the people who don't like it. Anything disruptive, what you need to do is talk to the people that love it and ask them why they love it.
And then there was a percentage of the people that loved it that were the same people that would line up in front of the Apple store three days before the new phones launched. They just like technology. So you kind of dismiss that feedback. And then I listened to other feedback about how it was making surgery easier for the surgeon, how it was less invasive to the patient, and on and on. I listened to all this feedback and I said, 'Okay, this could work for the total knee application,'
where 25% of knee patients were dissatisfied with the outcome even though the knee was working. It didn't feel natural. It didn't feel great. It wasn't well balanced. And I watched enough procedures to know there was a lot of variation, and robotics could bring that kind of precision. And Mako had gained 20% market share in partial knee in four years, which is not something any of the big orthopedic players had ever done before. So I knew there was something to it. And it just felt like a risk worth taking for a company. We had the financial resources, it wasn't going to kill the company,
and this had asymmetric upside. So if we were right — I told the board when we were pitching the deal, because you can imagine the board wasn't overly excited about 1.6 billion for a company losing money that only had 100 million of revenue. But I thought if we're right, we'll be right for a decade. Turns out I was wrong. We're going to be right for probably two decades. We're now 13 years into this deal and it's still — we're just launching new applications on it and we still have a huge runway ahead of us.
And the two of our competitors were coming out with new knees and we didn't have a new knee in development at the time. So we had to do something. This felt like the right move, and we still have the same knee design, Triathlon, we had 20 years ago. So it's the first time in orthopedic history that the oldest knee is the fastest-growing knee in the market because we've shifted our innovation towards robotics and enabling technologies more broadly.
But I just felt like if you want to win, you have to be willing to take risks. It was my first deal. One of the directors actually said, 'You know, I wouldn't do this if it was my first deal.' And I said, 'Well, it's not going to be any less risky if this is my 10th deal. It's a risky deal by definition, but it was a deal worth doing.' And the board finally backed me, and turned out to be pretty good.
Yeah, it's been remarkable. And in my intro slides, I talked about transforming a company, but transforming an industry. I can't imagine orthopedic hip and knee replacement — specifically doing hip and knee replacement, doing a total knee in 2026 without doing it robotically, and others have followed suit in that. Something you mentioned there, Kevin, is asymmetric risk. People often talk about the risk if we do it, but there's a risk if you don't do it. So maybe your thoughts on that.
Yeah, look, the board said, 'Well, what happens if you're wrong?' I said, 'Well, first of all, I don't think we're going to be wrong, but if we're wrong, we'll write off a billion dollars of goodwill and it'll be a niche like navigation. Some surgeons will like it and it won't take off. We can afford to have a billion-dollar write-off. It's not going to kill the company.' Now, some board members didn't like that comment too much, and some were like, 'A billion-dollar write-off? We've never done that before.' So some got more agitated than others.
But I said, 'That's if we're wrong.' I said, 'If we're right, we're going to take hundreds of basis points of market share, which the implants make a tremendous amount of revenue for us, and it'll be for such a long period of time. We'll have a huge head start in this industry.' And everywhere robotics has entered, it's stayed. It's never gone into an industry and then left.
In any industry, when you think about, you know, autopilot — imagine getting on a plane without autopilot. But when it first was launched, people thought it was insane. 'I'm not going to get on a plane and have a computer actually fly the plane.' That sounded crazy back then. Now you can't imagine it. Nowadays they kind of joke that there's going to be a pilot and a dog on a plane in the future, and they say, 'Why is the dog there?' To make sure the pilot doesn't touch anything.
It's remarkable. If you saw the pictures of the Pope, when he was flying back, he was talking to the two pilots and neither one of them was paying attention to the plane. The picture was from the fighter jets on both sides. So it's changing industry.
Yeah. So it was just one of those — I just felt it had enormous upside and a known downside that we could absorb, but a much higher upside.
Kevin, you took that risk early. Were there one or two pivotal mentors or experiences prior to that that helped shape how you thought about that before you got into that decision?
Yeah, look, I've always had this go-for-it mentality. You know, the famous Canadian philosopher Wayne Gretzky, you may have heard of him, once said that you miss 100% of the shots that you don't take. And that's kind of my favorite quote. I've always had a bit of a — I grew up, my parents didn't go to college. I never thought I'd be the CEO of anything. So this is all house money, so you might as well just try to win.
I've just always had that kind of mentality. And I had one mentor and then one experience that really changed my career. I would say my first boss at Johnson & Johnson kept giving me more responsibilities, and he said, like, 'You don't know how good you are.' He kind of made me think I could do this. It never was really in my mind. So having a — he was more of a sponsor or a champion for me, and pushing me beyond what I thought I could do really just opened my eyes to the possibilities because it wasn't even in my brain.
The experience that was just completely foundational was when I moved to Paris to work for Rhône-Poulenc Chemicals as a corporate controller before I moved out of finance. And that was really amazing because I got to Paris and realized none of my staff spoke English. They didn't tell me that it was a global job. I thought I'm still going to speak English in the office, and no, I had to speak only French.
After my first day, I went to my boss and said, 'Pierre, is this a joke? Nobody here speaks any English.' He said, 'You speak French?' I said I had to speak French at dinner. Like, I've never spoken French in an office in my life. I've never written a memo in French. So it was a complete nightmare. And so I never worked so hard.
But being able to be successful — first time in my life being in the head office of a company because I was always in remote locations — to be in the head office, to be in a different language and a different culture, and be able to have success. And then they moved me into general management to run a phosphate chemicals business, and that set me on the general management path. But being able to overcome that, being the foreigner, having to learn the work in a different language was super challenging. But after that, it's like this kind of stuff's not as hard.
And, you know, like me, I suspect many come to you for advice. As you think about the leaders in your organization, what do you mentor them on, or what do you recommend to them as they take risks and think about their futures?
Yeah, look, I get asked a lot of — obviously you can imagine business advice questions, but career advice questions. And I always say the first thing I start with is: look, you have a job. Believe you belong in that job. You have this job for a reason. We believe you can do that job. So trust your judgment. I have a bias to support your decisions. And I will ask them questions to make sure they're fully thinking about it, but I'm going to let them make the decision and not decide for them.
So as you get more senior, the questions you ask are more important than the answers that you give people. When you're a manager, people come to you for answers. When you're the CEO of a company and you have a division president, they're not coming to me for answers. They're coming to me for validation or what else I should be thinking about to make sure I make an informed decision. But my goal is just to really give them the self-confidence and the belief that they can go for it and trust their judgment and make the decisions and take risks.
And if the risk doesn't work out, I don't take their head off. Deals aren't always going to work out. They don't always work. As long as we have a good batting average overall and we make good informed decisions, that's the most important thing.
I love that bias of supporting the yes or the decision, similar to asymmetric risk, is empowering them to take that asymmetric risk with that.
Now, Kevin, and we alluded to this a little bit earlier, but I want to dive deep into culture. As Stryker has grown and you've had strong performance year after year, how do you maintain that culture, that mission, those values that you've outlined?
Well, I think the first thing, talking about them — the consistency of talking about the mission and values is self-reinforcing. So I'm a big believer in repetition. It can almost be to the point of nauseating yourself when you keep saying the same things over and over again. But in a large company, the power of simple communications that are repetitive really matters.
And then what I call sort of having these routines that you actually love. Joyful routines is a term I've heard, which is the sales meeting annual process, the way we give the awards, the standard awards and recognition that you give, my quarterly town halls. I put up all our 22 business units and the regions, and everybody that makes budget has their name on it, and the people that don't make budget don't have their names on it. Right? Even if they — and we don't round up at Stryker. We have this kind of edgy performance thing. So you could be 99.9% to quota, you missed your quota. That's just life. We don't round up.
And so that kind of edginess and that repetition, and that gets cascaded down to the next level, it creates a business process that's very consistent even though it has, like I say, different personalities. And sometimes the targets are higher for a faster-growing business than a lower-growing business. But we celebrate achieving budget. That's what it's about. So if you're growing faster than your market and you're only growing 7%, that's fine.
But if you're in the sports medicine business and you're growing 7%, that's totally unacceptable because that's a much faster-growing growth rate. So we give different targets to different divisions, and they feel like we do a good job of treating them fairly.
