Experience on the CEO transition

Moving fast, infusing the right culture and values, and targeting performance and skills—these were among the early priorities for the former CEOs of Aetna and Covidien. In a pair of video interviews with McKinsey’s Simon London, former Aetna CEO Ron Williams speaks to the importance of building a leadership team with the right values, and former Covidien CEO Jose Almedia (currently the CEO of Baxter International) reflects on divestitures and acquisitions and the moves he and his team made to reallocate capital. What follows are edited transcripts of their conversations.

Our pace of change always had to be rapid but measured. Our business is truly a technology business, and one of the things you learn is to never take apart anything you do not fully understand. Because when you snip the wires, you may never get them back together, and our customers will suffer. So we have to be in control of the inputs and outputs and customer-service levels. We often made very dramatic changes and important strategic moves, such as when we built our own pharmacy-benefits-management company up from nothing and later sold part of it, but we made sure it was extremely controlled so that we didn’t end up with a mess on our hands.

A decision I always look back on was the failure to pursue the strategic advantage when we had it. We had committed a lot of resources to develop an important, innovative product that made us recognized as an industry leader. One of the mistakes we made was we let our competitors get into that space. If we had made acquisitions and taken other approaches, we would have had a very strong lock on a very important and growing product category. We had a lot of debate about it, and the notion was, “Well, we have the capability, why spend scarce capital on acquiring more?” Often, the fact that you keep a property out of another entity’s hands is a poor rationale for an acquisition. In this case, it would have been a good rationale in retrospect.

Moving on values

I spent a lot of time on culture and values. Our senior team would go offsite and really talk about what kind of company we wanted to be. What was our vision? What kind of culture do we want?  What kind of values? How did we align our strategy, our culture, our technology, our executional capabilities, and our financial aspirations to really set the standard in the industry? The CEO has to infuse the culture and the values into the organization, and that means you must select a leadership team that believes in, articulates, and lives by those values. The technical skills and competencies—you can find those in lots of people, but your team has to have leadership skills as well.