The View from Baxter's New Boss
Robert L. Parkinson Jr. is back in business. Three-and-a-half years ago, he retired as president and chief operating officer of Abbott Laboratories, cutting short a 25-year career at the pharmaceutical and medical-products company to spend more time with his family. He was 49.
On Apr. 19, Baxter International announced that Parkinson will take over as its chairman and chief executive on Apr. 26. He'll succeed Harry M. Jansen Kraemer Jr., who said in late January he would resign as soon as a replacement was found.
Parkinson will have his work cut out for him. Baxter (BAX ), an $8.9 billion medical-products and biotech company, repeatedly fell short of its own earnings forecasts, suggesting to investors that management didn't have a handle on its operations. In particular, its $1.8 billion renal division, which makes dialysis products for people with kidney failure, faltered as rivals scored with lower-price goods. The division president resigned last November, and Baxter already has warned that renal sales will decline in 2004.
Moreover, it has virtually no credibility left with investors or analysts. Though Kraemer had been Baxter's chief financial officer before getting promoted to CEO in 1999, he had to amend his profit predictions four times in 15 months. The 49-year-old owned up to his missteps in announcing his plans to step aside.
Parkinson may be just what Baxter needs. He headed Abbott's (ABT ) European operations in 1990 and was named president of its entire international business in 1995. He was a finalist for Abbott CEO in 1999, but he lost out to colleague Miles D. White and settled instead for president and COO. After retiring in late 2000, he kicked back for nearly two years and then hired on as dean of Loyola University's business school in Chicago at the start of the 2002-03 school year.
On Apr. 20, Parkinson chatted with BusinessWeek Senior Correspondent Michael Arndt about his new job. Parkinson says he doesn't have a firm strategy yet, although he indicated he'll carry out plans to cut Baxter's payroll by at least 3,000, or 5.5%, to lower overhead. Edited excerpts of their conversation follow:
Q: When you left Abbott, you said you wanted to spend time more with your family. Has your personal situation changed? A:
Q: When you left Abbott, you said you wanted to spend time more with your family. Has your personal situation changed?
A:I left Abbott to do some other things with my life. And now all my kids are raised, and they're out of the house.
Q: When did Baxter first contact you? A:
Q: When did Baxter first contact you?
A:A couple of months ago. It never happens as fast as a lot of people externally -- and probably internally as well -- would like it to, but it was done with a great degree of discipline and thoughtfulness.
Q: Why did you want to go to Baxter? A:
Q: Why did you want to go to Baxter?
A:Sometimes I think you learn the most about a company and its character when you compete against them, and early on in my career at Abbott, I was in businesses that competed with Baxter.
Baxter is very customer-focused. I learned how tough it is to go up against Baxter's sales and marketing organizations. Baxter is No. 1 in over 70% of its markets. It has high brand equity around the world.
I also think my marketing experience and my global experience will serve me well. I know most of Baxter's businesses well. I feel a tremendous advantage being able to come in and hit the ground running.
Q: Your predecessor has acknowledged losing his credibility with Wall Street because of Baxter's frequent earnings misses. How do you plan to win back Baxter's credibility? A:
Q: Your predecessor has acknowledged losing his credibility with Wall Street because of Baxter's frequent earnings misses. How do you plan to win back Baxter's credibility?
A:Through our actions. That is clearly one of the top items I need to get my arms around. Believe me, I will look for all opportunities to engage the investment community.
But I think it's appropriate for me to go around the block a couple of times first, to learn the issues and organization and businesses and people, so when I meet with analysts and investors I can do it in a credible fashion.
Q: Baxter is in the middle of a restructuring. What do you intend to do on that front? A:
Q: Baxter is in the middle of a restructuring. What do you intend to do on that front?
A:It would be premature for me to answer that. One of the first things I'm going to do is meet with the project manager on this whole structural cost-reduction initiative. But strategically it's the right thing to do.
Baxter and Harry already had initiated a plan to lower structural costs, and it's going to continue. Costs have got to be taken out of this company -- whether that's operating costs or product costs or capital investments.
Q: What about Baxter's overall structure? Are there pieces that should go away or pieces that should be added? A:
Q: What about Baxter's overall structure? Are there pieces that should go away or pieces that should be added?
A:Let me take a step back. I believe fundamentally in this notion of being a diversified health-care company, which Baxter is. And stepping back further, I believe that the health-care business is the best business in the world to be in.
First of all, in terms of what we do as a company, we impact people's lives. That's a wonderful rallying point. Then, from a business and an economic point of view, it's also the best business to be in.
Q: Are there skills or perspectives that you gained from Loyola that will be helpful at Baxter? A:
Q: Are there skills or perspectives that you gained from Loyola that will be helpful at Baxter?
A:No. I shouldn't be so flip in my response. From a personal development point of view, it was a very enriching experience. When you do something as different as this, you learn something about yourself. I would hope that would make me a more effective leader. But I don't think I learned anything more about running a business.
Q: Are there particular companies or CEOs that you look to as role models? A:
Q: Are there particular companies or CEOs that you look to as role models?
A:No. If you're observant and blessed to be in situations where you're exposed to strong business leaders, you try to pick the best of what they do and what is also complementary to your own talents and capabilities, and you develop your own style. But I can't say this person or that person influenced me.
Q: So how would you describe your style? A:
Q: So how would you describe your style?
A:It's open. People who worked for me trust me and understand at the end of the day, I'm motivated to do what's in the best interest of the enterprise. I consider my approach to be team-oriented.
There's nothing I find more satisfying than accomplishing something not by oneself, but in conjunction with teammates. By the way, these are all qualities that exist to a large degree in the Baxter organization.
Edited by Patricia O'Connell