It may have started out as a small outpatient facility, but now, a century later, the Mayo Clinic is one of the top-ranked hospitals in the nation, with annual revenues of nearly $7 billion. How does the hospital balance a 100-year history with cutting-edge research and innovation? In this interview, Leonard L. Berry, a marketing professor at Texas A&M, and Kent D. Seltman, the marketing chair at Mayo Clinic — coauthors of Management Lessons from Mayo Clinic discuss the secrets behind the Mayo Clinic brand.
What makes the Mayo Clinic so successful?
Leonard L. Berry: The Mayo Clinic does something really well that any medium size or larger company can do better: the pooling of talent. You find the right kind of people, and then create a culture in which they work harder than most people work. It’s the power of culture, the power of teamwork, the power of a legacy; it makes people proud. If you are really proud of your organization, you work harder for it. In our interviews, so many people who work at Mayo have told us, “I’m a better employee here than I’ve ever been before.” That’s a really powerful statement.
Kent D. Seltman: It’s also the power of a work force all aligned to a single value. At the Mayo Clinic, the needs of the patient come first. Everyone is working together for the same thing. There are 43,000 employees. You could walk up to any one of them and ask: ‘What’s the mission?’ ‘The needs of the patient come first’ is on the lips of virtually every employee. Another area of alignment is the salary policies at Mayo Clinic. No one is given an incentive; no one is measured by productivity–everyone’s on salary. No supervisor is going to take home more money because he or she can get a little bit more work out of these peons. Everyone is using their energy to meet the needs of the patient.
At Mayo Clinic, after five years a doctor’s salary is capped. How would that model translate to other types of companies — like a software company?
KS: I don’t know I have an answer to that because I haven’t studied those companies, but what’s transferable is that the Mayo Clinic employees are working for a goal beyond themselves. My guess is that there are people who write software who are writing for a reason beyond just making some money. Some other thing drives them, which becomes an asset for companies to draw upon.
LB: For people whose main goal in a job is to maximize their money, the Mayo model would not work. Every company needs a reason for being or they’re not going to last very long, and if a company’s reason for being doesn’t galvanize human spirit, it isn’t going to do well with the Mayo salary model.
Mayo Clinic has never had a CEO with a business degree or background. How does that affect the business?
LB: It’s an interesting model that’s typically not used in business but could be considered, and that is a leadership partnership between a CEO and a COO. Of course those titles are common, but typically those are vertical: The COO reports to the CEO. At the Mayo Clinic, you have in effect a horizontal partnership between the equivalent of the CEO, who is a physician, and the COO, who is an administrative leader. They’re partners and a team, but if they have conflict, the physician leader will win out because that’s the culture of Mayo–to protect the patient. It’s a horizontal partnership but it’s not an equal partnership. It’s an interesting arrangement for companies to think about in our culture.
KS: I think it’s particularly applicable to organizations that might be technical, or highly professional, so maybe an engineering company can consider something like this. An engineer might be at the top of the company because of his or her vision, but then he or she is going to need to have a team that supports them. What happens with this model is you end up with some really strong, committed people who serve in those administrative roles because they know that this organization relies on them, but they don’t have the individual power to do anything. They have to work with the team and the board of governors to make the ultimate decision.
Why do you think the Mayo Clinic model is so rare?
LB: We read about crises in business every day, but the Mayo Clinic’s story contradicts what we teach in business school and what I’ve taught all these years. We teach that a company’s values are stable but its strategies need to change as the market shifts. That’s lesson 101 in the M.B.A. class. But the Mayo Clinic has had the same strategies for a hundred years.
Do you think it’s because the nature of the healthcare industry is different to begin with?
LB: No, I don’t think it’s related strictly to healthcare. I think it’s possible for any industry to come up with a strategy that is so right and so on target there’s no reason to change it. And in the case of Mayo, it’s the strategy of integrated multi-strategy healthcare, but it’s also the strategy of pooling the talent. And the reason that strategy hasn’t changed is because it works as well today as it did 100 years ago. It brings the best expertise from the entire organization to bear on the specific problem of that patient or customer. Why can’t that same basic idea apply to many different kinds of industries and companies?
Mayo Clinic didn’t have a marketing department for years, and now it has one. What function does it serve?
KS: The primary role of brand marketing is still brand defense. The brand extensions that are working today, the health information, the Mayo Heath system and the clinical lab report were all products of what I would call administrative physicians, who had ideas.
When one studies brand management, the focus is usually on brand extensions, on leveraging your brand, but the Mayo Clinic has built one of the strongest bands in the world, arguably one of the strongest especially in the private sector, and they’ve done it by doing brand defense–that means by preserving the essential elements of what the organization is. The brand was built in the late 19th and early 20th centuries based on superb team medical focus care on patients, and that still is the engine that drives the clinic. Mayo has been very, very careful and fastidious over the years about trying to preserve that reputation. So for instance, when a researcher works with another company, like some of the equipment manufacturers, the Mayo Clinic is very careful then about the conflict of interest. The Mayo Clinic has extended its brand into health information with the Mayoclinic.com and with a large number of books that have been produced, like cookbooks and a whole variety of health-related books. But that is a logical extension because a huge amount of healthcare is just an exchange of information. Mayo is convinced that there will be increasing amounts of care delivered without the patient being present in the future. And so, it’s preparing for that eventuality, even as we speak.
In terms of healthcare technology, how cutting-edge is Mayo Clinic?
KS: Mayo’s preparing to be a strong player in virtual medicine–a term that’s frequently used where the patient is not present physically, although there may be a video link, clinical studies with results that have been transferred to Mayo, or an intellectual change between the care provider and wherever the patient is and the Mayo clinic doctor. That’s an important part of what it is people see as the future, but ultimately there’s always going to be a need for patients to come to a doctor, and I don’t think anyone is preparing to have a doctor running a robotic surgical tool and the patient several thousand miles away.
What can other businesses can take away from Mayo Clinic?
LB: Act like a small organization even if you’re a large one. And by acting small, I mean acting resiliently, acting flexibly and acting personally with a customer. Take care of a customer, one customer at a time and in a memorable and appreciated way. The Mayo Clinic is a huge complex organization, but to the individual patient, Mayo at its best becomes a small intimate personal work organization.