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Why Omnicell’s CEO Puts Progress Over Politics

Randy Lipps came up with a catchy phrase, “the autonomous pharmacy,” to describe breakthroughs his company was working on. But the Omnicell CEO feared it might upset hospital executives and pharmacy managers he was about to face at an industry conference.




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“I was really scared to talk to customers about it because they would think ‘This is going to take my job away’,” said Lipps, 63, founder, chairman and CEO of Omnicell (OMCL). Omnicell makes robots and software to help distributors process medications. “So I said, ‘let’s not call it the autonomous pharmacy. Let’s call it the highly automated pharmacy or something.’ “

Lipps’ executive team, however, egged him on at the conference three years ago. They urged him to stick with the catchy phrase in his speech. Innovation is disruptive and should be embraced, they said. They convinced him.

Putting progress ahead of politics is just one lesson Lipps picked up while making Omnicell the leader in a key corner of the health care business. His innovations aim for huge strides in storing, tracking and distributing lifesaving drugs in hospitals while lowering costs.

Settling for incremental improvement is the enemy to true innovation.

Find Your Niche Like The Omnicell CEO

Omnicell’s pioneering software and robotics especially rose to the occasion over the past year. Hospitals scrambled to identify and dispense drugs that could help save lives in the battle against the coronavirus.

Omnicell software tracks medicine inventories, accurately dispenses them and ensures the right drugs get to hospital floors where they are needed. Patients benefited.

And so have investors. Shares of Omnicell have rocketed more than 1,300% since the stock’s first day closing price in August 2001. That races past the S&P 500’s 243% gain in that time. Meanwhile, the company’s adjusted profit per share is up 490% in the past 10 years. That’s 19% average annual profit growth. And revenue is up 301%, or nearly 15% annually, in that time.

All this because of Lipps’ courage to solve a problem he saw three decades ago.

Back in the early 1990s, Lipps was a midlevel airline executive. One of his 10 children was born prematurely, so he camped out for days at the bedside of his wife and his just-born daughter. Lipps witnessed chaos and confusion at the hospital. Nurses couldn’t readily find the supplies they needed and were mired in paperwork instead of patient care.

He knew there was a better way.

Don’t Cower From Complexity

The company started with high-tech supply cabinets in 1993. They helped hospital staff track down needed medications and automatically bill patients. Through acquisitions and more brainstorming, though, Lipps saw a much larger opportunity. Omnicell shifted its attention to boosting the efficiency of the massive pharmacies inside hospitals.

Pharmacies serving hospitals are complex. It’s “not just because there are so many drugs, but there are different forms of drugs,” Lipps said. But taking on this complex problem helped Omnicell pull ahead of rivals focusing on simpler issues.

Omnicell CEO: Innovate In Real Time

Staying steps ahead of competitors requires a keen knowledge of what’s needed.

Lipps strives to visit key customers — CEOs and chief pharmacy officers — every 24 months. He visits their offices or catches up with them at industry conferences. The pandemic hasn’t stopped him. He still carries on via online videoconferencing. He dislikes and tracks down inefficiencies and safety issues when it comes to management and dispensing of hundreds of drugs.

“You need them (customers) to describe the problems, not the solution,” Lipps said.

Veteran medical supply chain executive Vance Moore remembers Lipps spending four hours with him on a visit, a move he considered unusual among vendors.

After seeing or hearing what’s not working during their visits, Lipps and his team brainstorm solutions that can lead to new products.

With one customer interview in hand, Lipps then looks to see if the same issue applies to others. On the plane, he’ll say “We’re going to land and talk to the next customer. Here’s the next perfect question to ask them, and see if this is true.” From the discussion, new products evolve.

Hire People Smarter Than Yourself — Then Leave Them Alone

When it comes to big ideas and innovation, count Lipps in. But when it comes to the details, he stands back.

Lipps hires people he believes are smarter than he is — at least in their own area of expertise. That frees him to work more on larger ideas.

“I don’t have to worry about my ego,” Lipps said. “I can just worry about running the company and letting people do what they do best.” Then it’s hands off.

He said he sends only about 10 emails internally a week. If his managers see any longer than three paragraphs, they know those are important.

The same process works in reverse. Team leaders know to be sparing when it comes to trying to email Lipps. Very sparing.

“If I get more than five emails from an executive to me in a week, it’s probably the wrong match,” he said. “They know what they need to be doing.”

The same process works for meetings. Lipps only wants to discuss issues that should be aired by the larger group. If it’s an individual problem that can be solved by a few people huddling later, it’s not brought up. The process used to be enforced with what Lipps calls a “tactical buzzer,” rung anytime the discussion strays into the weeds.

Don’t Fear Risk, But Expect A Few Duds

It’s no coincidence Omnicell has its headquarters in Mountain View, Calif., heart of Silicon Valley. Lipps has made Omnicell, at its core, a technology company.

Lipps is a huge tech fan. He bought seven Tesla (TSLA) electric cars over the years and considers himself an early adopter of many innovative gadgets that come along.

But technology companies are known for risks and some products fizzle. That’s just part of innovation, he says.

At one point, Omnicell developed robotic carts that could wheel themselves around hospitals. They even traveled floor-to-floor delivering medications. Though the idea was impressive, it wasn’t practical. Human workers could deliver the same medications faster and cheaper.

The other problem? “We found out these things were going down staircases and tumbling,” Lipps said.

Then there was the M5000. It was a machine designed to package up to 40 prescriptions an hour onto cardboard and plastic cards. The device could store 300 different medications.

But the M5000 fell short of expectations and is no longer sold, though the company supports those in use. Lipps didn’t go hunting for blame. He said it is important to “congratulate ourselves and the people who did it for doing it because the next thing may be a home run.”

Applaud Your Wins Like The Omnicell CEO

And when you hit home runs, celebrate them.

The company’s subsequent, more sophisticated automated medication storehouse, the XR2, caught on. The machines can robotically dispense everything from vials to syringes of medications. Some models, bigger than an SUV, can hold up to three times more medications than competitors’ machines can.

The XR2 is a key part of Lipps’ “autonomous pharmacy” dream. And despite his initial hesitation in calling it that, health care professionals now see how the idea helps them work smarter, rather than eliminate jobs.

The system frees pharmacists from the drudgery of filling out paperwork and counting pills. And that clears them to do the clinical work that brought them into the profession in the first place.

No wonder he won over converts. “Matching the innovation with the mindset and the willingness to change is so important,” Lipps said.

Omnicell CEO Lipps’ Keys

  • Founder and CEO of Omnicell, a leading maker of robotics and software used to track medicines.
  • Overcame: Perils of high-risk industry where research into innovative products is essential, but failure is a high probability.
  • Lesson: “If I get more than five emails from an executive to me in a week, it’s probably the wrong match. They know what they need to be doing.”

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