From a start in management more than 30 years ago at a bankrupt medical devices company to the CEO of a Fortune 500 company with 18,000 employees, Dan Starks doesn’t think his job has changed that much. “Same fundamentals,” he said.
Starks, who will step aside at the end of the year as CEO of St. Jude Medical, isn’t arguing that he spends his days now the same way he did in the late 1980s. But he also doesn’t spend his time the way some CEOs of other big companies he’s observed do, being what he called “administrators.”
“I see and I get feedback on other companies,” he said. “It’s where information is being filtered, and [subordinates] only bring good news, and people are focusing on Wall Street, and executives, when you ask a question, they need to bring in the team or they travel with an entourage. That’s not us.”
Starks called his hands-on approach simply “understanding the business.” And if he gets credit for anything, he said, it’s shaping a management culture at St. Jude Medical to reflect that style. That’s how a company with a hands-on CEO can grow to 18,000 people.
When we sat down, Starks acknowledged that talking to media is one of the things he tries to do as little of as possible.
Telling a journalist he doesn’t really like talking to journalists is just the kind of thing Starks appears perfectly comfortable saying. It’s one of his qualities that made a conversation with him so enjoyable.
That also makes him a bit unusual for a Fortune 500 CEO, but from the beginning he was an unlikely big-company executive.
The story begins with Starks as an attorney in Minneapolis, mostly managing business litigation but occasionally helping consumers with bankruptcies.
One day a most interesting bankruptcy case presented itself, that of a medical device engineer and company founder who had personally guaranteed about $8 million of his corporation’s debt. As Starks dryly noted, “it wasn’t a good idea.”
The engineer was John Fleischhacker of Daig Corp., publicly traded over-the-counter. Starks found himself increasingly drawn to Daig’s business and its technology, so he agreed to leave his law practice to dig Daig out of its long-running bankruptcy case. He soon became president of the company.
Daig was a pioneer in products used to diagnose and treat irregular heartbeats. Starks said he didn’t know how else to do the job other than be hands-on. He spent up to half his time observing as many electrophysiology procedures as he could, wearing lead to protect himself from radiation and standing there for hours.
“Senior executives don’t do that,” he said. “I did.”
St. Jude, meanwhile, had branched out from its roots in heart valves to become a leading provider of cardiac rhythm management products. Daig was a good fit, and the deal with St. Jude completed an extraordinary journey out of the abyss for Daig and its shareholders. Stock that could have been bought for as little as a split-adjusted 3¼ cents per share was valued at $44 in the merger.
One of the biggest beneficiaries was Starks. With what he bought in the open market and stock options, he held a more than 18 percent ownership stake in the company.
Now independently wealthy, he only joined St. Jude as an employee to ensure a smooth transition, planning on a quick and gentle glide path to an early retirement.
It didn’t turn out that way. In 1997 Starks was asked to start overseeing St. Jude’s big cardiac rhythm management business, based in Los Angeles. It was largely made up of acquired operations and where three previous presidents had quickly come and gone. In early 1998 the fourth divisional president abruptly quit, and so Starks was asked to move to California. It wasn’t a job he wanted.
What got him to go to California, he said, was the realization that the employees there were working really hard yet were being tagged as losers. They deserved far better.
“The people who should bear the consequences had fled,” he said. “The people who stayed were people who were doing the right things, to try to get it fixed.”
When he got to California he learned the annual budget sent to headquarters had millions of dollars of holes in it, a plan so ungrounded in the facts that the only hope was for a lucky break during the year.
He found out that he had 22 managers reporting directly to him. Even now, when telling the story, it’s clear he’s still baffled anyone could have thought that was a good organizational structure. It was impossible to get enough of these managers in a room at the same time to make any decisions.
He learned also that one of his executives had taken a tape measure to other executives’ offices to bolster a claim for a bigger space. Another had repeatedly warned staffers to never, ever, give any information to anyone outside of their department.
“The good news,” he said of the turnaround, “is that it wasn’t rocket science.”
From when he took over until he came back to the Twin Cities as president and chief operating officer, the business unit each quarter met or exceeded its financial plan.
Since he moved up to CEO in May 2004, the company’s earnings per share have grown at a compound annual rate of about 14 percent, and revenue has grown from $1.9 billion to more than $5.6 billion last year.
“The feedback I get is that as the CEO over that period of time I’ve done OK,” Starks said. “The last thing I have to do to have been a successful CEO in my mind is I have to leave under the right circumstances, in a way that speaks well of my leadership and in a way that leaves the company in great shape.”
Starks turned 61 this year and determined that now is the time to execute that plan, as the company is well positioned to succeed under his replacement, company veteran Michael Rousseau.
Starks said he won’t consider his own tenure as CEO successful until the company is still doing well several years down the road. It’s one reason why he can’t really say what the best work of his career might have been.
“It could be my exit strategy is the best,” he said. “I don’t know.”