Interview with Drs. Leonard Berry and Kent Seltman
Authors of Management Lessons from Mayo Clinic
Leaders Speak Series
Mayo Clinic, founded in 1864, is a global leader in health care delivery, research, and education. With its four main hospitals and additional affiliated hospitals and clinics, Mayo serves more than a million patients annually with revenue of over $8 billion. For over twenty years, Mayo hospitals have earned top rankings from U.S. News & World Report. The Clinic has placed on Fortune’s prestigious “100 Best Companies to Work For” list for the past nine years.
Drs. Leonard Berry and Kent Seltman wrote Management Lessons from Mayo Clinic: Inside One of the World’s Most Admired Service Organizations.
Dr. Berry is Distinguished Professor of Marketing in the Mays Business School, at Texas A&M University. He is also Professor of Humanities in Medicine in the College of Medicine at The Texas A&M University System Health Science Center. He is the founder of Texas A&M’s Center for Retailing Studies and a former president of the American Marketing Association. He is the author numerous books, including Discovering the Soul of Service. Dr. Berry has been recognized on three occasions with the highest honor Texas A&M bestows on a faculty member.Dr. Leonard Berry
Dr. Seltman is the Marketing Division Chair Emeritus for Mayo Clinic, having served as its director of marketing from 1992-2006. He retired from Mayo in 2008. Before entering healthcare marketing in 1984, Dr. Seltman, who holds a PhD in English Literature, was an English professor for 19 years. Currently, he is a services management consultant and international speaker.Dr. Kent Seltman
Mayo Clinic exemplifies “triple crown leadership”: building an excellent, ethical, and enduring organization. Here are excerpts of our interview with Drs. Berry and Seltman.
How would you describe Mayo’s leadership approach?
Dr. Berry: It’s physician-led, always has been and always will be. The CEO is always a physician, which is not characteristic of most health care organizations, at least big ones. It’s been crucial to Mayo’s leadership and to its success.
Its leadership approach is also consensus-driven, and it’s cautious. Mayo is one of the most careful organizations that I have studied in my entire career. Its consensus-driven in that they take their time and get a lot of input before they make a big decision, but then, when they make it, they move quickly.
Dr. Seltman, how did you personally approach leadership during your tenure at Mayo?
Dr. Seltman: From my perspective, the most important part of leadership is being very careful whom you hire. When I came, there was one other person in marketing. That person left, and then I worked nine months alone until I could hire my first person. It was a long search to find the right person. But when I found that person, I had someone who was going to be able to work with me in a collaborative way. Someone who was very competent, who didn’t require a great deal of day-to-day oversight. They got the picture; they did their job.
From my perspective, the most important thing in managing is to hire the right people.
Dr. Berry, how would you describe Mayo’s culture?
Dr. Berry: It’s patient-centered and collaborative.
The core value of the Mayo Clinic for the last 140 years has been “the needs of the patient come first.”
By core value, I mean it’s what the organization cherishes, its foundational principle, its ideal. The second core value of the Mayo Clinic is “team-based or collaborative medicine.” The principle way that the Mayo Clinic puts the needs of the patient first is with a team-based approach to helping the patient. It’s a collaborative care model, and it’s the key competitive advantage of Mayo Clinic. You don’t just get a doctor at the Mayo Clinic, you get the whole company. You get the people, the specialists, the experts working together collaboratively, that you really need. Those are the key cultural touchstones of the Mayo Clinic.
How was that culture built and by whom?
Dr. Seltman: The Mayo brothers, obviously, were very remarkable individuals. The older brother, William Mayo, was a strong executive. He demanded a great deal of himself and others. His brother, Charles Mayo, was more of a friendly, human individual. And the two brothers had an unusual relationship in that neither one of them would ever take credit for anything that was done. It was always my brother and I did such and such. So, they lived this collaborative model in which the two were greater than the sum of the parts. They had a vision for how this could work out. I don’t know if they began with the vision as much as they understood it as it began to unfold.
The idea of collaboration in medicine was a unique idea in the early 20th century, because most physicians had the sense that they really knew everything. And they were very upset with the Mayo brothers when they talked about the importance of collaboration and people working together, that no one could know everything in medicine. It was a very strategic insight that they had.
Dr. Berry: Mayo is absolutely adamant about promoting from within. It would be a total shock to me if it ever brought in a CEO from the outside. It’s been my experience in studying excellent, high-performance service organizations in my career that it’s common practice among excellent organizations to promote from within. But at Mayo it’s deep religion.
Most physicians are either not interested in leadership positions, or not cut out to actually run a big business, which Mayo is. But there are physicians who are identified, usually early in their career at Mayo, as having leadership potential. These aspiring physician-leaders are put on a conscious track of leadership development in which they take various committee and leadership roles to learn their ways and develop some experience. Those who thrive in those roles get bigger roles. Eventually, they wind up running some big part of the organization.
The Human Resources function may be even more important to Mayo and the sustaining of its culture than it is to most organizations because Mayo is really good at hiring.
They’re really good at hiring for values, not just talent.
There will be open positions, sometimes for months, before someone will be hired at Mayo Clinic.
Dr. Berry, what are the most important things leaders can do to create the conditions for high performance with integrity in an organization?
Dr. Berry: Hiring for values is certainly key; and promotion from within, because when you promote from within, you’re promoting people whose values you know, as opposed to promoting from outside, where you’re putting somebody in charge and you’re not sure about their values. When you’re promoting from within, you’ve been able to observe them over time and you know the real person.
The organization needs to be transparent with their stakeholders, and particularly their own employees, of how they make money and how they spend money. If you really want to build a culture of integrity, these are the two areas where companies run into troubles: either in the ways they make money, or the ways they spend money. Transparency in those areas is really a good antidote to bad behavior.
How does Mayo determine whether it is high-performing, excellent, and acting with integrity?
Dr. Seltman: There are several ways. One of them certainly is financial performance, although that isn’t the most important one. But, even though it’s non-profit, you have to make money, or you’re not going to be in business. No money, no mission. So, yes, it is important, but it’s not the most important thing.
Certainly, scholarly productivity. Mayo is an academic institution, and so the output of the physicians with regard to papers, presentations, and the kinds of medical discoveries that are present there.
In terms of values, certainly collegiality is extremely important, and I’ve seen some cases where Mayo works in a very gentle but firm way to address those issues.
Measurement inside of Mayo is quite intuitive, relying on intuitive judgment a great deal as they’re looking at individuals.
How important in hiring is a healthy personal core in an individual?
Dr. Berry: Really crucial. We use the analogy in our book when it comes to hiring of casting a Broadway show, because if candidates for a position get past the initial screenings and become serious candidates, then Mayo actually convenes a panel that interviews the candidate as a group. One of the primary purposes of the group interview is to use behavioral interviewing techniques to unearth the true values of the candidate.
Mayo makes a great investment upfront in trying to hire the right person the first time.
It doesn’t always succeed, but it has a pretty good batting average. Mayo has very low employee turnover compared to the national standards in healthcare.
Mayo is not for everyone. They need a particular kind of person to flourish at Mayo Clinic, and if you want to maximize your income, then you probably don’t want to go to work for Mayo Clinic, although staff is well paid. Physicians are well paid. It’s an all-salary system. If you’re a star surgeon, you most likely can make more on the outside than at Mayo Clinic.
If you want to be a star, stand apart, and get a lot of personal accolades, then Mayo Clinic is probably not the right place for you, because it emphasizes collaboration and teamwork. Mayo looks askance at anybody who is seeking the limelight.
Mayo is an organization that has so many world-renowned individuals, and it is run by people who actually are world-renowned themselves, so they know that the organization would turn into chaos if it started catering to the demands of a specific individual, because then you’d have to do it for a multitude.
Mayo has more than 50,000 employees, but their more than 2,500 physicians are first of all scientists. It’s a challenging leadership post to be the physician leader of an organization with so many who are so accomplished in their respective professions.
Dr. Seltman: Few organizations have such a highly educated workforce. The line employees in healthcare, most of them are going to have 20 or more years of education and training. It is a sophisticated group of people that one needs to keep happy and motivated.
When you operate this way, what does it mean to the various stakeholders?
Dr. Berry: Let me tell you one of many stories to illustrate how this core value, “the needs of the patient come first,” manifests itself. It’s a story told to us by a former CEO of Mayo Clinic, Dr. Bob Waller. He was having a conversation with one of the staff cardiologists, who wanted his opinion. He had a patient who needed a pacemaker, and the Medicare-approved pacemaker for which Mayo Clinic would receive reimbursement involved a relatively complex and invasive procedure and a couple of days of hospitalization. But a new pacemaker had come on the market that the cardiologist liked that was less invasive and involved less hospitalization. The problem was it was not approved by Medicare, and if Mayo Clinic used the new pacemaker, it would not get reimbursed.
The cardiologist wanted to know Dr. Waller’s opinion. Should he use the Medicare-approved pacemaker? Or should he use the one that would be better for the patient?
Waller said, “That’s a no-brainer. We are going to use the one that is best for the patient.” And that kind of story happens every single day at the Mayo Clinic.
How does the organization handle breaches in the values?
Dr. Seltman: It is a hard question because I actually don’t think there are that many breaches in the values. I do think, however, that in health care, one of the things that has been happening in recent years is a great deal of attention has been given to what we call disruptive behavior.
This is recognition that some of the behaviors, often by people in leadership positions, frustrate the collaborative model that is essential for the organization to work. The typical way that it’s done is to say, “We want you to go home and think about this for a few days.”
It might be a few weeks depending on what the offense has been, and during this period of time the person needs to consider whether or not they really want to be a Mayo Clinic employee. It is a self-determination model and is proving to be quite effective.
Do Mayo leaders flex their leadership style between what we call the hard and soft edges of leadership?
Dr. Berry: Yes. The hard edge, if used exclusively, will never work at Mayo because it will result in no followers over time. Let me tell you a story to illustrate.
In the early 1990s, the head of orthopedics learned that the department was losing money. He just couldn’t reconcile how hard everybody was working, how many surgeries they were doing every day, and yet they were losing money. His investigation led him to believe that one of the reasons they were losing money was because each physician was using his or her own preferred implant for knee and hip replacements. He had the task of trying to convince the doctors to use the best available medical evidence to get down to a couple of different implants.
Dr. Seltman: He was dealing with very accomplished physicians, who each said, “I’m not worried about the price of the implant. The needs of the patient come first, and this is the one I think is best.”
He was able to show to the group that each surgeon had his or her own favorite, which couldn’t be in the best interests of the patients. But the doctors didn’t buy it. He described that as one of the rocks they tried to hide behind, insisting the data were wrong.
Dr. Berry: Ultimately, he said, “Okay, let’s proceed like this. I’m willing to have you look at the data and see if you can find any errors. But until you find something in this data that is wrong, we’re going to operate as if it is correct.” It was a very clever leadership tactic that he used to move this practice of highly educated individuals, independent and strong-minded, to work together toward an end.
Eventually, the physicians agreed. In two years, the practice went from losing $2 million a year to making $6 million. He had to use both hard- and soft-edge leadership to get the physicians to make the change. Otherwise, it would have blown up in his face.
Is leadership at Mayo is widely distributed or concentrated in the hands of a few key people?
Dr. Berry: It’s definitely widely distributed. The CEO of Mayo Clinic has about as much power as the president of a university, which is maybe a tenth of the power of a CEO of a corporation. It’s widely distributed, and that’s the only way it really can be to have the level of effectiveness that you have at a Mayo Clinic with the high-level professionals as your staff.
What else should we know about leadership at Mayo?
Dr. Seltman: One important thing that we haven’t talked about yet has to do with “refreshing the leadership.” It has a number of benefits that I think are really strong. No one, almost no one, is in a position for very many years at Mayo Clinic. To remove a barrier from having people move out of positions, when they leave a position, they get to keep whatever salary they had, even if it is incrementally a little bit higher than what they might end up doing once their leadership term is done.
It makes change common, so it’s unremarkable. If there is someone who is not performing the way the organization feels is needed, they’re just gently moved to another position. It isn’t a big deal.
A culture of having people rotate in positions is one that enables the organization to make those corrections. This is a very gentle and humane way that the organization is able to make those adjustments.
Did Mayo lose its high-performance edge at any time?
Dr. Seltman: To the best of our knowledge, I can’t identify at any time when Mayo lost it. That’s a pretty remarkable thing in and of itself. They’ve had tough times. The Great Depression, for instance, was a very challenging time. One of the last things that William Mayo did in his role as the CEO was talk to the medical staff, I think it was in 1931, and his message was pretty simple, “We have looked at our patients’ bills, and we recognize that most of the patients are not going to be able to ever pay them. So, we’ve reduced all of those bills, and in order for us to survive for the next few years, it’s going to be important that everyone in the organization, all of the physicians, all the rest of us, take a cut in pay.”
It was a very powerful leadership moment, but it’s that kind of thinking, the kind of discipline, that enabled the organization to survive.
How would you define great leadership?
Dr. Berry: Two things I’ll stress: one is controlling the destiny of the organization. What that means is making hard decisions today to strengthen the organization tomorrow.
Point number two is great leadership is serving others; serving others by teaching, by role modeling, by encouraging, by inspiring, by setting high standards; serving others.
Dr. Seltman: Great leaders are people who listen extremely well to the organization, to the people, to the market–and who then respond with honesty and candor for the organization and help bring it into alignment with what needs to be done.
Leaders need to be able to make some of those tough calls like we’ve talked about, but the successful leaders I have worked with would best be called gentle people rather than harsh, demanding leaders who, certainly in the healthcare business, would not be successful.
What does it feel like to work at Mayo?
Dr. Seltman: For me, and I think for most people, it’s a humbling experience. Relatively few of us in our lifetime get to work for a world-renowned, highly respected institution such as Mayo. It’s just a wonderful honor, and I think a humbling one to feel that “Yes, I’m working for this organization, and I want to try to make it better because there are some people who believe that I can do that.”
One of the things we learned in our study* is that most people who work at Mayo Clinic feel that they are a better employee at Mayo Clinic than other places they have worked. Part of that is that they don’t want to be the person who lets Mayo Clinic down.
Mayo inspires people to do the best. You’re working with this crew of people that’s the smartest collection of persons that you’ve ever had a chance to work with in your life. It is something that motivates people a great deal. So, it’s a wonderful thing to work at Mayo. It’s just one of those wonderful things to say, “I work in this place that is very solid, very successful, and it’s an organization that calls out the best and celebrates it.”
How do we get this philosophy to Wall Street, gentlemen?
Dr. Berry: Interesting you should raise that question because one of the ways I like to end a presentation on Mayo Clinic is with the statement, “When generosity dominates an organization’s culture anything is possible. When greed dominates an organization’s culture, failure is inevitable.”
Mayo, more than anything else, is a story of generosity.
* Their study is described in Chapter 1 of their book. The research included two phases, with about 1,000 interviews and hundreds of observations on multiple sites.
Bob and Gregg Vanourek are authors of Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (a 2012 USA Best Business Book Awards finalist), based on interviews with 61 organizations in 11 countries.