To assist or replace? That was the question that Mike Minogue focused on during his first few weeks as the new chief executive officer of Abiomed (NASDAQ: ABMD), a technology company that created the first artificial heart. A student of Sun Tzu and Clausewitz, Mike learned strategy in the U.S. Army and then applied his knowledge to GE before becoming CEO of Abiomed five years ago.
Mike and I met three years ago, and I have been following the company’s story ever since. Recently, I had a chance to catch up with Mike and gleaned a better understanding of what this outthinker has been up to. There were two particularly insightful lessons in what he shared with me, and over the next couple of days, I will share those successful strategies with you.
The Chinese have a saying, “Sometimes running away is the best stratagem.” In the West, we hold a strong aversion to retreating. Our cultural stories and values tend to equate it with weakness and failure.
But if we look through the complexity and ignore our urge for simple answers, we can see evidence that a well-designed retreat can actually be a clever advance.
Throughout my decade-long research into corporate competition, I found that about 30 percent of the 100 most innovative companies (click here for a complete list) triggered breakthrough growth and profitability by first giving up a fight they could not win.
That is pattern number 16 – retreat to advance elsewhere or some other time.
During his first few days as CEO, Mike assessed Abiomed’s competitive environment and found that the company was stuck in a similar situation. He quickly recognized an ancient pattern playing out, and it was one he wanted to avoid.
The company’s original mission focused on building an artificial heart, which meant replacing a human heart with an artificial one. But as company management pursued this valiant mission, they found themselves in a very crowded industry filled with similarly-focused and often larger firms.
So Mike asked himself, “What are our strengths?” and he saw that the company needed to refocus. While they would continue to pursue the artificial replacement heart, they would prioritize an alternative: helping sick hearts rest long enough that they could recover on their own.
Through years and years of study, Abiomed management realized that nothing is better than a person’s original heart. Even a heart replacement has significant risk, so the company decided that an artificial heart should only be an option for people with no other options.
So Abiomed reset its strategy, as Mike likens it, to focus not in the operating room but instead to intercept patients in the catheter lab before their heart condition grew so severe they’d need an artificial heart.
Today Abiomed has a unique technology that could be the leading solution for people suffering heart trauma – the Impella 2.5, a device that can pump a patient’s blood, allowing his heart muscle to rest and recover. By focusing on resting and healing the heart, Abiomed helps patients recover so that they don’t need a transplant or artificial heart.
As Mike says, “after years of trying to build a replacement heart we learned that the best heart you can have is your own.”
There are at least 30 other corporate examples, and several military ones, I can offer of this pattern, but let’s consider one we all now know well. In 1997, when Steve Jobs retook the reins of soon-to-be bankrupt Apple, he significantly pruned the Apple 350 R&D project. He retreated and focused on a few projects that he thought could truly distinguish Apple. It was only then that Apple began growing again.
When a company has invested years of energy and passion into a particular direction, redirecting this momentum can be a heavy task. We often become like a teenager, so engaged in a video game we have been playing that we no longer hear the outside world. We can’t see that we missing dinner.
But a well-planned retreat can truly be the deciding factor between success and failure. In order to open up some new battlefronts, try to shift your thought away from the traditional stance that a retreat equals surrender.
Ask yourself the following questions to see if you can unlock your company’s internal innovative thinking:
1. If I had to run away from a project, where else could I redirect our energy?
2. How could focusing on a different battleground give me a competitive edge?