Former Apple CEO John Sculley on How to Beat a Big Gorilla
John Sculley fought the cola wars as president of Pepsi and helped transform the computer industry with Steve Jobs. At 79, he’s sharing his tips for taking on huge challenges
PHOTO CREDIT: Getty Images
You probably have at least one big gorilla problem in your life or business; that seemingly impossible task, competitor, or challenge.
John Sculley, former Apple CEO and President of Pepsi, has deliberately taken on health care reform as his big gorilla battle. I asked him why, at the age of 79, he chose to invest in and sign-on as CMO of RxAdvance, a start-up that's disrupting the pharmacy benefit management (PBM) industry.
According to Sculley, the $3.2 trillion U.S. health care industry is one that needs to be tackled, with an estimated $1 trillion in waste due to fraud, abuse, misuse, and avoidable medical costs. The industry spends the largest amount on lobbying in the U.S. Both Microsoft and Google attempted to provide technology solutions to streamline the industry but retreated, according to Sculley.
Sculley says his passion for fighting this big battles goes all the way back to 1983. He recalls, "I was sitting in the Macintosh Engineering Lab with Bill Gates and Steve Jobs. I had only been there about three months and had never heard the terms 'noble cause.' That term stuck with me for decades. Fast forward...Bob Metcalfe (co-inventor of Ethernet) brought together a lot of his friends to meet on an island in Maine. He said 'People like us need to reinvent ourselves every 10 years.'"
That triggered Sculley's interest in reinventing the healthcare industry. Simply put, his noble cause is to "go into the prescription drug sector and upgrade the technology, which hasn't changed much since 1982." He argues this will ultimately result in cost reductions and better patient care.
Among his words of wisdom for any business looking to disrupt an industry are:
- If you can, don't take on institutional capital. The RxAdvance founders put in $35 million themselves. They are, therefore, less subject to pressures by special interest groups.
- Engage an experienced team; one that has the right relationships to make change. Sculley's role at the company is using his network to open doors and build awareness. "I have invited the CEOs of major health plans to my home to discuss our technology."
- Take complex concepts and distill them into something inspirational and simple, so as not to waste time. The basic idea behind his new venture is that RxAdvance's technology helps "everyday people afford what matters to them most." This is the noble cause.
- Role clarity is key. "You can't have two CEOs," Sculley asserts. Sculley and CEO Ravi Ika are both early risers and spent a lot of time together, collaborating -- face-to-face. "We talk. We have real conversations."
- Pick a board that trusts management to make the best decisions.
- Don't be afraid to hire people from outside your industry. Sometimes they have the best creative solutions. Give air cover to people who think differently. RxAdvance has adopted Google's hiring methodology and relies on interviews rather than algorithms to find talent. Sculley believes that tenacity (a quality needed in disruptive organizations) is hard-wired.
- Learn to fit into other companies' processes, if you need to do that in order to sell. When RxAdvance responds to RFPs, they start with the business need rather than the technology. "If a company hires an organization that fails, the damage can be incredible," says Sculley. Listening, responding, and building trust are all essential. RxAdvance will have secured $10 billion in contracted revenue by the end of 2018 and is estimating that it will hit $10 billion in contracted revenue by 2020.
- Culture is important. The company now has 40+ employees and will have 300+ by year-end 2017. By 2020 they plan to have more than 2,000. Says Sculley, "We have no politics. If you compromise on culture when you're young and growing fast, the outcome can be disastrous."
Other companies like Express Scripts, CVS Health, and United Health have also entered the prescription ecosystem. Sculley believes that Microsoft and Google will also come back into the space. The barrier is high for new entrants because the process for awarding contracts is very complex and detailed, so expertise in the health tech field is critical.
Although Sculley has spent most of his career around technology, he is a firm believer in humanity. "You can't build a company just on technology alone because it has become commoditized. It's always about the people," he says. "You can't do anything transformative without exceptional people." Sculley references CEO Ravi Ika. "He has been in health tech for 15 years and people love working with and for him. I have never had more fun in my whole life," Sculley proclaims.
BY Thomas Koulopoulos