New chief executives typically face plenty of challenges, whether they be turning around a company that has lost its way or maintaining the momentum established by a predecessor. But for Roland Diggelmann the task was all the greater, because just a few months after taking on the top job at medical devices company Smith & Nephew in November 2019, he was confronted by the pandemic. As the company’s annual report makes clear, the impact was immediate — a drop of nearly 30% in second-quarter revenues as lockdowns around the world forced the postponement of the elective procedures in which the company’s products are used. Although there was improvement in the middle of the year as the situation stabilised and hospitals resumed activities in certain parts of the world, the overall effect was still a more than 10% drop in annual revenues, while the virus was a significant factor in the 64% fall in operating profits for the year.
That the company has come out the other side is, Diggelmann believes, testament to its culture. Employees enjoy working for a purpose-led company, giving them focus, he adds. But he cautions that, while “culture is critical,” you have to follow through with initiatives. To begin with, this manifested itself in the decision not to lay off or furlough any of the company’s 18,000 employees. Nor did it take any government aid.
Smith & Nephew had begun a transformation journey before the virus struck. At the centre of this was a new purpose — Life Unlimited — supported by the three “culture pillars” of Care, Collaboration and Courage. Diggelmann and his fellow executives believe that these principles, which had been well received by employees, guided their response to the pandemic. As the company’s annual report says, the “strongly embraced purpose and culture made it much easier to determine how we should respond. They became our compass, and gave us the answers to many questions that we did not have a playbook for.”
But as 2020 progressed Diggelmann and his colleagues knew they had to do more and so carried out an extensive survey in which they asked employees how they wanted to work. The result was that employees would be allowed to work flexibly and remotely provided their role — for instance, on a factory shop floor — did not actually require them to be on company premises. This “flexible mindset” became the basis of Workplace Unlimited, an initiative that aims to redefine “where and how work happens” at the company.
Image Credit: Smith+Nephew