Sramana: What types of companies are part of your supplier ecosystem?
Bruce Johnson: It includes manufacturers as well as wholesalers or distributors. Manufacturers will sell some of their products direct and others will go through distributors. We can automate that process in either case.
Sramana: I imagine that since this is coming out of GE, you also do equipment and instruments as well, correct?
Bruce Johnson: We actually focus more on the medical and surgical space. Capital equipment is not an area that gets as much automation as we would like. The medical and surgical products get most of the activity in this space. We are moving into the implantable space now, which includes things like hips and pacemakers.
Sramana: What was it like to build this company from within GE? Right now 1M/1M is working with a bunch of corporations as partners. We have a partnership with Oracle Application Labs where we are their incubator. That is an “intrapreneurship” partnership where they are soliciting ideas from employees who want to be intrapreneurs, and we are incubating their ideas. I’m curious as to how this project came about inside of GE.
Bruce Johnson: The actual beginnings of GHX was GE as well as Johnson and Johnson, Abbott, Baxter, and Medtronic. Internally at GE and J&J, there were employees trying to find ways to work with the new economy of the Internet. They thought of a business to business marketplace. After talking to customers, it was clear that hospitals were not willing to go to 50 different manufacturer websites to buy 50 different products.
Ultimately there were separate initiatives underway at several companies. Ralph Larsen from J&J and Jack Welch from GE ended up meeting in New York and realized that their companies were working on a similar path. They had received similar feedback from customers. This idea of creating an industry solution, similar to your intrapreneur example, resulted in opportunities for a handful of us within GE and J&J to startup a new company, GHX. The focus was to remove cost from the health care supply chain by creating a B2B healthcare hub.
Sramana: How was this company structured? How were employees compensated? Was GE the owner of the intellectual property?
Bruce Johnson: From a GHX perspective you had 5 companies that pooled their intellectual property to create a new entity. They hand-picked individuals to be on loan for this project. Me and a few other GE people were loaned to GHX to get it started. We basically went through a process of evaluating make versus buy decisions on some of the technology we were going to use. That is when we set the company up from scratch.
We were announced by the CEOs of the participating companies on March 31, 2000. When they announced GHX, there really was not any infrastructure or people. We had to rapidly bring that together. At the individual companies that required the organizations to flex from what they were used to. There was a new entity created that did not fit the business model of any of its original owners.