Michael “Mick” Farrell, LGO ’98 and CEO of ResMed, joins Christopher Reichert, MOT ’04, to share his journey to MIT Sloan and how he has led the transformation of ResMed from a medical device manufacturer to a digital health leader.
Sloanies Talking with Sloanies is a conversational podcast with alumni and faculty about the MIT Sloan experience and how it influences what they're doing today. Subscribe and listen on Apple Podcasts, Google, and Spotify.
Christopher Reichert: Welcome to Sloanies Talking with Sloanies, a candid conversation with alumni and faculty about the MIT Sloan experience and how it influences what they're doing today.
So, what does it mean to be a Sloanie? Over the course of this podcast, you'll hear from guests who are making a difference in their community, including our own very important one here at MIT Sloan.
Hi. I'm your host, Christopher Reichert, and welcome to Sloanies Talking with Sloanies. My guest today is Michael Farrell, also known as Mick. He is a 1998 graduate of Sloan's MBA program and also has a Master of Science in chemical engineering from MIT. So, double barrel coming out of there.
Hi, Mick. Welcome to Sloanies Talking with Sloanies.
Mick Farrell: Yes. Great, Chris. Great to be on your program. Thanks for having me.
Christopher Reichert: Before we start, I wanted to mention that the song we heard as we started was GANGgajang's “Sounds of Then (This Is Australia).” Mick is from Australia, a place near and dear to my heart. He naturalized as a U.S. citizen. I assume I'm right on that?
Mick Farrell: You are right. Actually, I was born in Seattle, Washington, so I was born a U.S. citizen, but I have two parents who are Australians. So, I quickly got Australian citizenship by descent from my two Australian parents. I think they did that when I was age six months or so, but certainly before I went back to Australia, when I was maybe one or two.
Christopher Reichert: I'll be doing that for my daughters, as well. By the way, thanks for sending us a care package of some of your awesome San Diego weather. It's gorgeous here in Boston today, or as you might say, "Just another day in San Diego."
Mick Farrell: That's true. We've been spoiled. I survived five winters in Boston. Maybe six winters. I think it was the start of my sixth winter in Boston when I got the call to move back to California and get more of my sort of Australian youth weather. but still be part of the U.S. economy. Be part of MedTech, and healthcare, and biotech in this sort of most competitive world economy.
Christopher Reichert: You spent a lot of time growing up in Australia, and you left when? In ’89, you said?
Mick Farrell: I left Australia in ’96. I did my undergraduate in ’89 at the University of New South Wales in Australia in chemical engineering, and I worked for a while in the steel industry.
I was actually looking for a next career path and thinking that a good career path would be sort of in the clean tech industry, cleaning up the industrial pollution from steelworks and chemical factories that I had worked in after my undergraduate, and wrote a letter to a professor at MIT called Professor Charles Cooney. This was in the days you actually wrote letters, Chris.
Christopher Reichert: Right. Yes. My hand cramps up at the thought.
Mick Farrell: And he actually wrote a letter back and said, "If you're interested in coming to MIT, you talk about fixing the world in terms of these chemicals plants and steel plants. But you talk about starting a business, and we have this new program called Leaders for Manufacturing," which is now called the Leaders of Global Operations Group, where you get a master's of engineering and an MBA at the same time. I thought to myself, that sounds pretty interesting. And he included in the letter, the application form. So, I filled it out by hand and did an interview by telephone in 1994 or ’95, or whatever that was. Came to the U.S. in ’96, to Boston.
Christopher Reichert: I do remember, when I applied to graduate schools, I would go to the main post office there in North Sydney and kind of go in, had a PO box there. I'd go in every day and check to see if there was a thick envelope. I have to say, I got a lot of thin envelopes. But I did get enough thick ones, and I ended up at Sloan, too.
Mick Farrell: It's good. It's funny, because when you look at MIT from afar, you think about this faraway institution. But the fact is, there are great professors there who reach out and look to recruit students, even in those days, through letters. But now, I look at MIT, I think doing a pretty good job, like this podcast, you know? Going out digitally and engaging not just the alumni, but future students, as well.
Christopher Reichert: We hadn't mentioned it, but I'll just mention it now, Mick has served as CEO of ResMed since 2013, and prior to that, he was President of Americas and he ran ResMed's commercial operations in the U.S., Canada, and Latin America. And Mick already mentioned that he had worked for BHP Billiton, a huge Australia conglomerate, as well as Arthur D. Little, Sanofi Genzyme.
Let's talk about the journey to where you are at ResMed. It wasn't preordained. Your father founded it in 1989 in Australia. But you joined long after graduate school. So, tell us about that journey, about ResMed, and also, your journey getting into ResMed.
Mick Farrell: ResMed started as a management buyout of technology from Baxter Healthcare, a large U.S. healthcare organization. My dad was, in the mid-’80s, was the vice president of research and development for Baxter in Asia Pacific, both in Tokyo, Japan, and then, Sydney, Australia. They moved the headquarters from Tokyo to Sydney.
Baxter, in all its wisdom, some Harvard MBA joined Baxter and said, "You know what? We shouldn't have this dispersed R&D all around the world. We've got to bring it all back." That was the trend in the ’80s. Bring all the R&Ds back to the midwestern United States and shut down all the satellite research and development.
My dad said, "That's fine. I see you guys are getting out of R&D in Asia Pacific. I'm going to stay here, and I'd like to buy some of the technology that you want to leave behind." And one of those technologies was this new machine that could prevent snoring, but more importantly, could prevent suffocation at night. What was known as sleep apnea. Apnea is Greek for “without breath,” and so, I don't say sleep apnea, I say sleep suffocation, because people understand that better. But if you stop breathing at night, it's not really good for you. You wake up and go through surges of norepinephrine and adrenaline, which is why you don't die from it. But then, all that exacerbation of your cardiovascular system leads to early onset of heart attacks, strokes, and not just bad quality of life, but bad quantity of life and an, also, leaving of the earth.
Anyway, he bought that technology from, Jim Tobin who was the head of the division there, at Baxter, at the time, for 1.2 million Aussie dollars, which as you know Chris, are only about 70 cents on the dollar.
Christopher Reichert: 73 cents. [laughing]
Mick Farrell: Yeah. So, I think you're south of a million U.S. dollars he bought that technology for, and today, I haven't checked the market cap today, but it's going to be around $22 billion, which is not a bad return from one million.
Christopher Reichert: Not a bad return at all. But that's a huge credit to where you took it, which, when you started, was what, 50 million, right? In sales?
Mick Farrell: Yes. When I joined ResMed, the revenues were around 50 million in the year 2000, and our market cap was around 200 million. We just have grown so much in these last 20 years. I joined, I had my MIT Sloan MBA, and I worked in biotech at Genzyme, Sanofi now, as you said, and then, I worked at Arthur D. Little, doing technology consulting for life sciences companies, and also business consulting. But when I joined ResMed, I was the second person with an MBA to join the whole company. There was one other Kellogg MBA and then me. So, we sort of had marketing and technologies MBAs coming in.
And what we really tried to do was turn this great team of engineers into a team of business people who could change the world, who could help hundreds of millions of people breathe if they were suffocating at night. And, for us, really importantly, what our job was to do was to go into these new comorbid markets of heart failure, stroke, atrial fibrillation. All the comorbidities that associate themselves with a breathing disorder.
Before COVID-19, people did not think so much about breathing disorders, and respiratory systems, and their lungs. People would think about cancer, heart attacks, and strokes. And so, we showed how the two were related. But now these days, everybody realizes the importance of respiratory medicine. But, yeah, back in 2000, I joined as the New Business Development Manager, and our job was to just grow the market by showing how this awful thing of suffocating at night has sequelae that impact your whole life. I did that, as you said, ran a couple of division sales teams and others. I've been CEO for the last seven years.
What's been interesting is the journey, the last seven years, is we have switched from a medical device manufacturer to a digital health leader. And we completely, we did we called “reverse Amazon,” where Amazon is a software company that got into the hardware of the Kindle to sell their electronic books, and got into the logistics of moving things around to grow their digital marketplace.
We were a hardware company that got into the software to drive both the software side and the hardware side of our business. We put a 5G, well, at the time, it was, I think, pager or 2G tech, but we put a communications chip inside every sleep apnea device that we sold before it was cool to do the internet of medical things. Before it was cool to even talk about the internet. We're talking 2012.
Christopher Reichert: The internet of things, right?
Mick Farrell: Yes. We're talking 2012, we put a comms chip in every single device we made. Now, we've got over six billion nodes of data over 13 million patients. 11 million 100% cloud-connectable devices on our hardware system. And over 100 million patients on our out- of-hospital care software system.
Christopher Reichert: Are you called upon by researchers to help with statistical analyses of a project that they've been working on specifically related to that?
Mick Farrell: Yes. The breadth and depth, everyone's talking about big data. It's what you do with the big data, and you turn it into actual information for customers. Our first simple step was just use the data to provide value for our customers. We lowered the labor cost of setting a patient up on our sleep apnea therapy by 50% versus our competitors. We improved the adherence rate to our therapy, which is so important that people use the device every night like they're taking a pill for medicine. The average adherence rate to a medicine post heart attack is around 50%. This is traumatic, isn't it?
Christopher Reichert: Yes.
Mick Farrell: New England Journal of Medicine published a study. Free medicine, so, there's no copayment, you just have to go to the pharmacy, fill the prescription, and take the medicine. And 50% of people don't. So, the average adherence rate, if you don't do anything, in our device is 50% or 60%. Because it has some symptomatic benefits, it's a little better. We were able to get that up to 87%. The six billion nodes a day, we have so many researchers wanting to work with us, we actually created a group called the MedexCloud. We invite these key opinion leader, pulmonary and critical care physicians in the respiratory field, to come into our sandpit, if you like, and work with our chief medical officer, Dr. Carlos Nunez, and say, "Okay. Here's a problem I'd like to solve in sleep apnea medicine, or here's a problem I'd like to solve in chronic obstructive pulmonary disease medicine. What can you do with it?"
And then, we get the artificial intelligence, machine learning, deep neural network bots in the room, and we get the humans who do the coding, because, well, that was coined at MIT. Is it artificial intelligence? It's not really artificial.
Christopher Reichert: It's not. It's brute force.
Mick Farrell: Somebody has got to write that code. So, we get those coders in the room, and then, they do amazing research on it. We publish 20, 30 studies a quarter in clinical research into peer reviewed journals. Now peer reviewed journals are accepting digital medicine data. And in the respiratory field, ResMed is leading on that. I think with six billion nodes of medical data, we're actually not just leading respiratory medicine, but we're leading across all of MedTech and healthcare, and partnering with pharmaceutical industries on our inhaled medicine for COPD to see what we can do to lower costs, improve outcomes, and bend the cost curve, and bend the trajectory of chronic disease.
Christopher Reichert: It was interesting, I did a podcast recently with Ed Roberts, who you might recall, over at Sloan. He talked about, I would call him sort of the godfather of entrepreneurship, particularly where it relates to commercializing, at MIT. He's had 50 years of experience there doing it. One of the things he talked about was entrepreneurs versus joiners. You and I spoke about your father. You said, "My father is the entrepreneur and the inventor. I bring other skills." Tell us about that, your opinion, and how does your father factor into standing over your shoulder occasionally? Maybe he doesn't?
Mick Farrell: He is, and always will be, the founder of ResMed. He's the one who paid himself $20,000 a year for the first three years. Although, he told me later, I didn't know, I was young, that he had a consulting agreement with Baxter that was paying him 150K. So, he didn't actually, he just paid himself $20,000 from ResMed. But Baxter didn't want him to compete with them, so they were willing to have him consulting, sort of non-competitive, if you like, consulting agreement for a couple of years.
So, he's the one who risked his whole career. Left his cushy job as a professor at University of New South Wales and started the School of Biomedical Engineering there. He had that and he had his Baxter job. So, he left both of those. Paid himself 20K a year and started ResMed from nothing but a couple of patents, and like five guys in a room with him. And that's gutsy. That's what entrepreneurs do. And it's funny, I always said, "Gosh, dad, you're quite a risk taker." He's like, "It's not risk taking. It's risk minimization. I knew that was going to work from the start." But that's the sort of passion, and the zeal, and the “I can see around corners” that entrepreneurs have.
And it is risky to leave a job as a professor at a university and to quit your Fortune 100 company to go and do that. But that's what an entrepreneur does. And, yes, we studied that at Sloan, and I loved the 50K competition, 100K competition now, and the entrepreneurship. And I joined a couple of these biotech startups, and none of them quite made it.
But then, I went and worked at Genzyme, and I watched how an organized group of people can treat Gaucher's Disease, this debilitating disease that kills people in their very early youth, and how Serazyme, that product, transformed the lives of so many people there at Genzyme. And I got so excited about how you can scale healthcare. Take something like a simple biologic like Serazyme and change tens of thousands of lives. Because that was an orphan drug in a very small population.
When I joined ResMed, I did think of myself, I mean, I never thought of myself as an entrepreneur. We did think of ourselves a little bit like intrapreneurs, where we were bringing the MIT Sloan skillset around entrepreneurship and doing things differently within an organization, as well as with my partner there from Kellogg, the sort of marketing side to get the word out. Because when you suffocate and you're asleep, and therefore, by definition, unconscious, I have to market to you really well when you're conscious to know that, gosh, maybe morning headaches, waking up tired, being irritable, having high blood pressure, and all this, maybe that's not normal. Maybe everybody doesn't have this.
But, I think that idea that myself and a group of cadre, if you like, of new business minded folks coming into ResMed were the next phase for ResMed. I like the term “joiners,” because we would work across sales, marketing, product development. I had a background in chemical engineering. I designed cooling systems for steel plants. I've designed chemicals treatment systems for Dow Chemical, and so on. And so, I could understand the technical part, if you like, the vertical on the T skills part.
And converse, with an engineer, around details of respiratory motor design or respiratory algorithm design. But at the same time, I could talk to the head of Harvard Pilgrim Healthcare System, or Partners Healthcare System in Boston, or I could talk to Mayo Clinic and understand both sides. The clinical, but also then, the business part of it. We've got a portfolio of patients we have to take care of, keep out of hospital and make them feel better, because they're coming to stay in our health system. But also, make them be better so that we lower the cost of their care and improve the outcomes for.
And I think that idea of a company having incredible entrepreneurs to get it going, but then, incredible capabilities to think broadly about, what role can ResMed play in the world? Are we just a maker of blower devices that keeps the uvula and the back of the upper airway separated? Are we just that, or are we a company that's going to help almost 1 billion people? There's 936 million people worldwide who suffocate. So, we need to get to 250 countries, and we need to get to 250 healthcare systems from the government, and factorial on that, on the private healthcare system, to convince them and show them that this is a major public health problem, and if you don't address it, it's going to address you in cost. And if you do address it, you're going to improve the lives of tens of millions of people in your country.
Christopher Reichert: I can just see the line in a business plan. The addressable market: one billion. That's pretty big.
A lot of companies, when people stand back and look at successful companies, and by any measure, ResMed would be counted in there, you go, well of course. Of course Google is huge and of course Microsoft is huge. But each one of those companies, and specifically, I'm thinking here about Microsoft, has had a point in its growth where it could have gone badly, right? Ford has gone through that and GM has gone through that. So, there's no reason, just because it's large at one point, that it will continue to be large.
So, tell me about how you handle innovation at ResMed on a continuous basis? In particular, you talked about pivoting from a hardware to a software company, as, probably be still hardware. But how do you keep on top of that?
Mick Farrell: I think it's a really good question of how you evolve the biz model and the value proposition of your company, and really understand your purpose, your mission, your vocation. The company's calling. What you do in the world that is better than anyone or different to everyone else. We talked about it a little earlier. An alternate path we could have gone in 2012 was to become a commoditized industry like the PC industry, like the semiconductor chip industry.
And we actually looked at the business case studies of the PC industry, what happened to HP, Compaq, and we looked at semiconductors and what happened to most of the semiconductor companies in the world. And we mapped out what that path would look like. It's a path of diminishing returns and where a big company becomes a small company. There's case studies out the wazoo. Actually, Clayton Christensen was a lecturer at MIT Sloan when I was there, may he rest in peace, just an absolute leader in understanding reinvention of companies. And he had just written The Innovator's Dilemma when he was, or he was in the process of writing it when he was lecturing me at MIT Sloan. We applied, absolutely, Clayton Christensen's Innovator's Dilemma innovator solution capabilities in our company, and that's why, we saw all the value we could provide. But the alternative of commoditization gives you a burning platform, to say, "Everybody, we have to take the risk of putting a comm strip in every device, creating this brand new cloud-based system, and reinventing the company to become not a software company, but to become a software-driven medical device company." And I think there's a difference.
A lot of false dichotomies in the world. Do you believe in God or do you believe in science? Well, for me, it's yes and yes. I don't like, "Are you a hardware company or are you a software company?" Yes and yes. ResMed is both. And that's what we've done the last five, seven years. And our competitors had to follow us. A big, Dutch major multinational company had to follow the little 30 year old startup from Australia in going down this field of digital health in sleep apnea.
And now, our next phase, to your question, "What are going to do next?" Because that's where you go with this. Your 20 billion market cap today is only worth that because people have a net present value of future cash flows of you for the next 10, 20 years. What are you going to do for your next act? Our next act is, we're very public about this, is to be the digital health leader in another major respiratory disease called Chronic Obstructive Pulmonary Disease (COPD).
COPD is not as many people as sleep apnea. Sleep apnea is about 936 million people. COPD only affects 400 million people worldwide. But it is also the number three cause of death in the western world after cancer, and cardiovascular disease, lung disease, is number three. And it's the number two cause for hospitalization and rehospitalization.
What we've done as ResMed is we have assembled a portfolio of cloud-connected inhalers of COPD medicine. It's called Propeller Health, and acquisition we made. Actually, just this week Chris, we got FDA approval for our digital inhaler to work with AstraZeneca's product Symbicort. And so, we're treating asthma and other major respiratory medicine disease. And what we do is we have a digital platform that engages people to take their chronic disease medicines. It reminds you, gamifies you the way Clash of Clans or NFL Online does, but it does it around your health. If you think about it, it's almost like a to run out of money to pay for it through the public healthcare system.
So, that's what we're doing next. How we do it inside the company, look, I don't want ResMed to become a Baxter, where we have a great idea that gets lost. So, we have a thing called VentureTHON where we actually have an MIT Sloan colleague of mine, Ricardo dos Santos, who joined us from Qualcomm actually, most recently. And he's helping us create intrapreneurship at scale and empowering 7,500 people to be part of an entrepreneurial program within the company.
Christopher Reichert: How are you doing that with virtual, everything's virtual now, I suppose, with COVID-19? How are you bringing all the different, well two questions here. How do you percolate the ideas, first of all? And then how, once you kind of have culled them, do you bring the various voices together to advance or kill them off?
Mick Farrell: It's a really good question. Even before COVID-19, because we operate in 140 countries and there's many thousands of us across many continents, we've always had to operate this VentureTHON virtually. So, we have some really strong leaders who are able to create these great, almost viral videos, internally to promote the entrepreneurship that can happen within a company, and how an internal Shark Tank competition can be incredibly invigorating. Whether you win or, to your point, whether you lose, you learn every time.
Frankly, when we started this maybe four or five years ago, I thought VentureTHON would be just a way to keep people from leaving to go and do these startups, and keep them entertained, and have sort of a paid professional development or education program versus something that would actually produce results of new inventions.
We're now in what we call VentureTHON 2020, but if we were just numbering them, it would be VentureTHON four, I believe. From the first VentureTHON, we are just now, it's not quite yet public, Chris, but hopefully we can put an addendum to this when we put the podcast out. We're going to have FDA clearance for a brand new device that ResMed is going to make in a brand new vertical. A disease state that we weren't in before that's related to our current disease states, from VentureTHON.
So, these are entrepreneurs who competed in, maybe there were 250 ideas, and then there were 50 teams, and then there were five presentations like this. Like you and I are doing, on a Zoom call like this, to a global group of people. They voted, and then we had an expert panel, including myself and others, sort of like a Shark Tank, interview them. And then, we choose the winners and then we fund them. We take them out of their day jobs and we put them in a warehouse. Wherever they want to be. And have them work on the product.
And to our point earlier, technical skills there, we have engineers and people who can design a product. And then, the business people and the joiners. So, it's the entrepreneurs and the joiners, sort of linking to our prior conversation. So, out of the three years that we've got so far, we've got one product that's going to come to market this year. And the second one is in its clinical trials. I can talk about that. That's in the field of asthma, as well as along the lines of our Propeller business. And I think that one might get to market, as well.
So, not only does it engage people in professional development. For the 50 teams that went there, the 49 that didn't win, they learned something and went back to their jobs with new ideas and new capabilities. The one that did could actually create another ResMed. Because Baxter, if they had this in 1989, would never have let these patents go. Would have said, "Look, it's not for us for now, but why don't you 10 work on it. Here's some money. Get to these milestones and we'll let you go." They would now have another $2.8 billion division and maybe add another 10, 20 billion market cap to theirs.
I hope that at ResMed, through this VentureTHON program, through this intrapreneurship program, we are creating a whole bunch more ResMeds at our company. And at minimum, we're training our people to think differently, to come together as a team across functional boundaries and across geographic boundaries. But I think we will have multiple lines of business that come out of this that help transform the company, and help us have another 30 years of success. Because a 30-year-old startup is great, but I'd like to be a 60-year-old startup.
Christopher Reichert: When you're recruiting for different positions, there's a technical component that people need to know about. You've got to fill those ranks. The business side and innovation side, how do you filter for that, when people are attracted to ResMed for positions?
Mick Farrell: It's interesting. We're going through that right now, as we evolve our software side of our business. We're investing a lot in artificial intelligence, machine learning, and most of these folks are coming from the tech industry. The technical skills, we absolutely still, I go back to my false dichotomy analogy before—are you mechanical and electrical engineering company or are you a software engineering company on the technical? It's like, yes, yes, and yes.
We're going to make medical devices smaller, quieter, and more comfortable, and that requires mechanical engineering, electrical engineering, acoustics engineering.
Christopher Reichert: Broad thinking.
Mick Farrell: Understanding people and how to connect to them. But we are also now adding on this great technical skill in software engineering. If you look at the names you mentioned earlier, look at what Amazon has done. Look at what Google has done for search. Look at what Amazon has done for logistics and being able to get what you want, when you want, how you want.
The way they did it was create small teams, incredibly empowered teams, agile teams that have very defined missions and go do check at recycle and sort of have, I would call it almost an MIT Sloan innovation mindset, but within a team of eight people multiplied by a thousand teams. That's what Amazon has done at scale, and ResMed has started to do that at scale over the last seven years in our sort of digital evolution.
I think, when you ask what do I look for when I'm recruiting? I'm looking for those technical skills. Mechanical, electrical, or software engineering skills. Or, technical skill in quality, or technical skill in manufacturing, or technical skill in supply chain logistics. But then, I look for that innovation in understanding systems, understanding scale, and understanding how to look at things from new technologies. And it is a buzzword coined by MIT, but artificial intelligence, the idea that you can create an algorithm that learns on itself and you can let it loose on six billion nodes of data, and it's going to come up with an idea that was better than you thought of because you let the scope of that algorithm go more broadly.
And I think that idea of ResMed sort of evolving from medical device company, to software driven medical device company, to now AI, ML, algorithm driven company that can say ResMed is going to help a quarter of a billion people in out-of-hospital healthcare. With sleep apnea, COPD, asthma, but also, many other needs in out-of-hospital healthcare. That's the future of where we're going.
When I interview someone, they've got all those technical skills. I'm really looking at, can they work in a team? If you're on a team of eight people, will this person excite seven others to run through walls with them? Technical walls, clinical walls, ignorance walls of healthcare systems or whatever, to change the world? And that skill is somewhat learned, but it's somewhat innate. And that's what I look for. It's that combination, I think, when you think about it, Chris.
Christopher Reichert: I was thinking back on, we look back on hugely successful companies and say, "Well, of course. Steve Jobs and Bill Gates were in the right place at the right time." But I actually think the underlying truth is that they created their future. And I think that that's, you can look back and say, "Well, they landed in the right spot," But who was it? Wayne Gretzky, the hockey player, said you play where the puck is going to be. Not where it is right now.
You mentioned Clayton Christensen as a professor at Sloan. Do you have any other favorite professors or a class that you took that you think back on?
Mick Farrell: Oh, wow. We're going back 22 years now, Chris. You're testing my memory banks here1 Of course, I remember Professor Cooney because he wrote that letter to me to tell me to come. And it's funny, when I think about advice for professors, I think a personal reach-out to a future student can change their world.
I remember one of my professors from undergrad, Professor Rosa Mal, who was in my final year reaction engineer professor. She just invited me back to do a podcast, Chris, like this, for my chemical engineering over there at University of New South Wales. So, I remember those two because of the personal reach out that they made to me.
It's funny. Clayton Christensen, I remember because he wrote books, and then, became this great media personality. But there were just so many professors that were experts in their field. I remember the names like Modigliani. But he gave a great professor presentation to Sloan when he'd talk about macroeconomics, and Latin America, and theories. But I never had a class and a personal relationship with him. So, that's why I remember Charles Cooney from the chemical engineer group more.
I love the negotiations classes. That was one of the classes at Sloan that fundamentally influenced me. And I think about negotiation theory, it happens with my teenage daughter, negotiating on what's happening with the car or where she's thinking of going to college. It happens with a friend, where are we going to go have drinks?
Christopher Reichert: What's my BATNA [best alternative to a negotiated agreement] here?
Mick Farrell: What's my BATNA here? My BATNA is IPA, but I'll go for the single malt scotch, and we'll see where we land. You know what I mean? Everything is in that, and I think one thing that Sloan did was provide that breadth. You can go and get the financial engineer detail skills, or in my case, in LGO or LFM, this technical skill around manufacturing in a global operations. But when you add that breadth of negotiation theory, of understanding the full PNL, and of understanding strategic management.
[Michael] Cusumano was one of my lecturers there. Again, it's having the person whose name is on the front of the book, like a Clayton Christensen, or Charles Cooney, or Michael Cusumano. He was actually a very good professor and could walk you through a strategic management assessment, a case study, and you knew if you weren't prepared in that class, you were going to be drilled.
So, that was one of the ones, I was like, okay, I love the cold calling. I've got to be ready. And the day that I was hungover and stayed out to late at Back Lake Brewing Company, that was the day I'm going to be cold called, so I'm at least going to be ready to go deep when I need to. But I think that breadth was there. The negotiation theory, strategic management, and the capability to then combine that with the technical skills I think, was something that MIT Sloan gave pretty uniquely.
Christopher Reichert: I'm conscious of time here, so I wanted to know if you had any parting advice for prospective Sloanies?
Mick Farrell: Look, I think that prospective Sloanies should think about MIT Sloan as a place where you have the ability to combine the breadth of world class, top five global business school education with the number one, unquestioned number one, engineering and technology school in the world. I think you could look at some of the detailed technical information that comes out of a Cal Tech, or some of the other purely technical institutions. But I go back to why MIT started. Science not applied does nothing. Science applied, for some human need, in our case, people who suffocate or who have lung disease, changes the world. And I think that's what MIT can bring.
I'm not saying, basic science is important, and if you don't, Niels Bohr, if you don't understand the details of an atom, how can you possibly understand how atomic reactions can happen? But applying that to have, in some cases, sustainable energy through nuclear, that's something that was applying that science to something useful.
When I think about why I went to MIT, I went there to apply my idea that the world needed to be cleaned up from some of the stuff we were doing through our industrial manufacturing, and then, to create the ability to cross that. Actually, my path changed, because I went there for clean tech, but I ended up in healthcare, and then, in MedTech.
But I would challenge prospective Sloanies to look for that overlap of altruism, something that they really believe in, that is going to leave the world a better place, with the profit motive. Because that makes it sustainable, and you can have a business that has cash flow and can reinvest in that altruistic cause.
I think that a lot of people just look for either just purely altruistic things, which is great, and I work for a nonprofit here in town on homelessness, Father Joe's Villagers, and it feeds my soul, and it makes me feel so good. And we will, hopefully, have a model that can change homelessness in San Diego, which is a top five city homelessness for the country, and maybe countrywide, or maybe beyond that.
Altruism alone doesn't get you there, when you think about an education at MIT Sloan. You've got to say, for me, how do I make it sustainable with the profit motive? And I think there are so many career paths you can choose where you overlap altruism and the profit motive, and MIT Sloan allows that to happen. I think it's a great institution for that.
Christopher Reichert: That's really the edict of mens et manus, right? Putting it to practical application. Well, that's excellent. Thanks very much for your time today. This has been Mick Ferrell, CEO of ResMed. You talked about, you're giving a podcast for New South Wales, back in, out in Randwick. Did you ever go to the Roundhouse in your day?
Mick Farrell: I did. I lived, I was a chemical engineering student. The last class of every day was Beer 101, and if you didn't show up and have a couple of lagers at the end of the day, you really hadn't completed your work schedule.
I love the Roundhouse. Some great beers at the bar above the Roundhouse there. Did you go to University of New South Wales, or did you teach there, Chris?
Christopher Reichert: No. Well, I started doing my MBA at Graduate School of Management in AGSM. But then, I thought, you know what? I'm going to go to Sloan. I'm going to go back to the U.S., and so, I thought I'd go pick it up back in the U.S., and I thought that had more kind of credibility.
Mick Farrell: AGSM is probably the best business school in Australia, but MIT Sloan is a top five business school in the world, so I think you made the right call.
Christopher Reichert: Exactly. Yeah. We were talking about some of the great wines in Australia, which we miss. How often do you go back?
Mick Farrell: I'm probably back in Australia, because we have quite a large advanced manufacturing facility there, in Sydney, so I'm probably, pre-COVID, I was probably there four or five times a year, flying that beautiful 15 hours each way across the Pacific. 30 hours of flying for a week in town. But, almost every time, I'm able to get some family time in there. My mom lives at Manly Beach, so I'd spend Friday night, maybe, with her before flying out Saturday, and her husband.
And also, catch up with the boys. Not at the Roundhouse. We drink at the Rocks now, but it's the same thing. You've just got less hair. A little more gray. You're talking about the same things in the same way. But there's something about Aussie culture, having a yarn in a pub that, just with old mates, that tell you the truth even if you don't want to hear it. I love that.
Christopher Reichert: Well, on that note, we're going to say thanks very much to Mick Farrell for joining us, and we're going to leave you with another iconic Australian group, Cold Chisel singing “Cheap Wine”
Mick Farrell: I love it. Great one. Chris, thanks a lot. I have a lot of memories from old cultures and stuff. Thanks for having me as part of your program.
Christopher Reichert: Thanks for joining us.
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