The Leadership Challenge: Ron Labrum
By Christine Arrington
The Jon M. Huntsman School trains leaders to be ethical, effective, and entrepreneurial. People in top leadership positions face many challenges, a number of which can be considered under the rubric of “balance.” How much to invest, for example, balanced against how much to harvest. Aggressively seeking short-term growth, balanced against the long-term needs of customers and employees. We spoke to six outstanding leaders, who all have degrees from Utah State—five in business and one in engineering—to find out how they have balanced their leadership challenges and pressures, while creating value.
Bachelor’s Degree in Business Administration from Utah State, President and CEO since 2007, of Fenwal, a global leader in blood transfusion medicine for more than 50 years; previously Ron was Chairman and CEO of Cardinal Health’s $70 billion Healthcare Supply Chain Services segment. Click here for an extended biography.
The Scope on His Position
After 28 years in healthcare and moving his family ten times, Ron Labrum joined with some other investors and the private equity group TPG to buy the Fenwal division of Baxter in 2007. Fenwal now has close to $700 million in annual revenue, and
operates in more than 100 countries on six continents, with 5,000 employees.
Critical Strategic Decisions
When Baxter decided that Fenwal wasn’t core to its strategy, the division was put up for sale and auction. During that two year process, Ron said, “the business lost 50 share points.” His group’s research revealed, though, that the Fenwal name had real value in the marketplace, particularly if they could rejuvenate the business. So they bought it.
Some acquisitions are “lift and shift,” Ron said, but they had to disentangle Fenwal from Baxter, a very integrated business with a number of shared support services. Ron’s team consolidated the number of manufacturing facilities from 16 to five, and the number of offices abroad from 16 down to one in Europe--Brussels, and one in Asia--Beijing.
Then they established a common vision, including putting in place several metrics, such as key promoter scores—how does the customer feel about us? They aligned compensation with those metrics.
The top management group had to tackle some cultural issues; people from different European countries didn’t necessarily get along well. They established a focused communications process to reinforce the necessity and benefits of working together.
He and his team identified the promising projects in research that had been abandoned or starved of resources along the way. “We went through a rigorous process to ensure the current market viability of each potential product,” he said. This resulted in the number of new products in the pipeline tripling.
Ron acknowledged some mistakes that were made in the process of revitalizing Fenwal. “We did two things that were popular but turned out not to be right—outsourcing customer service and financials, both payables and receivables,” he said. The outsourcing became “an absolute disaster,” he said, and those functions were brought back in-house.
He believes that one of the best decisions he ever made was to accept the lowest paying job offer he got when he was about to graduate from Utah State, an offer from American Hospital Supply. He knew they had a strong leadership training program and that if he did well, he would be given a part of a business to run after the training. He got the job, and that’s exactly what happened.