January 4, 2022
Co-founder, Cerner Corporation
Donald Trigg 0:28
Hello, I’m Donald Trigg. I’m incredibly excited to have an opportunity to be a part of the podcast series, Day Zero, where we have a chance to really unpack some of the entrepreneurial forces of change playing out in healthcare IT, and, in the context of doing so, learn from key leaders in the industry who have been driving impact and change on a multi-decade basis, including my guest this afternoon. For myself, I’m a 20-year veteran of healthcare IT. I’ve had the opportunity to do early-stage startup companies as they reach growth scale. I’ve also worked at Fortune 500 companies, including most recently as president of Fortune 500 Cerner Corporation, which is where I had the opportunity to spend extended time with our guests, Cliff Illig, founder of Cerner Corporation. And Cliff, welcome. Thanks so much for being part of the podcast.
Cliff Illig 1:20
It’s my pleasure, Don.
Donald Trigg 1:22
So Cliff not only was the founder of Cerner Corporation, but really the operational force for change behind the company as it sought to build the structure process and tools required to scale to a multi-billion dollar organization. While we know him today for his more high profile activities around Major League Soccer and ownership of Sporting Kansas City, as well as his investments, entrepreneurial activities through his family foundation. Today, the two of us are going to spend a little bit of time talking about some of those early stage stories surrounding Cerner Corporation. And we’re going to try to call out a set of lessons for leaders that we think can be helpful to current entrepreneurs and aspiring entrepreneurs looking to have an impact at the intersection of healthcare and IT. And Cliff, as you know, I like to say entrepreneurs are storytellers, and great entrepreneurs tell great stories. So I’m hoping we can tell a few stories and enjoy it while we go. I remember meeting one of your your friends a long time ago, and they were talking to me about, hey, when did Cliff kind of get the entrepreneurial bug? And I remember one of them told me a story about you starting a t-shirt business at summer camp. But let’s not go all the way back to, you know, Cliff Illig the 10 or 12 year old. But tell us a little bit about your pre-Cerner formative years, including the time at Anderson.
Cliff Illig 2:50
Cerner, it was actually the confluence of several entrepreneurial forces. I happened to be one of those. My partner for many, many years was Neal Patterson. Neal grew up on a farm in south central Kansas. I grew up in a household where my dad ran a relatively large manufacturing company. And our third founder was a guy whose parents ran a family furniture store. So we all kind of grew up around the kitchen table talking about business and talking about, you know, the next thing, talking about the challenges. You know, it always seems like, anytime you get in one of those discussions, you spend a fair amount of time talking about people and the challenges that always represents when you’re growing a business. But Neal and I graduated from college about the same time, late 1972. I had an accounting degree from the University of Kansas. He had an MBA from Oklahoma State University. And we happened to show up at the same place at the same time, at the old Arthur Andersen, in what since has been called Anderson Consulting. And now it’s the very large international consultancy, Accenture. We started there about the time that computer systems were really beginning to be used a lot in the operational side of the enterprises. At that time, computers had been, you know, people do a lot of counting and number crunching stuff with them, but very little operations. So we started at Andersen, we had experience in the public utilities industry, manufacturing, distribution, transportation, half a dozen areas. We just went into client businesses to solve problems using IT. And it was that exposure that really allowed us to kind of see the birth of what now is the software industry. You know, we started early on, there was no software. Everything we did, we had to write from scratch. By the time we decided to move on and start something on our own in late 1979, everything we did had something to do with somebody’s software that can be used to kind of jumpstart a process.
Donald Trigg 4:59
And we’ll come back to this later when we unpack some of the lessons for leaders, but these were some of these really important formative moments for you and design principles. So I always think about you as such a great end to end systems thinker. You have this orientation to go super deep and really understand problems. And then this orientation around creating value for clients. In a lot of ways. I think we could argue that, for you, and Neal Patterson, and for Paul Gorup, these were really lessons learned and incubated during your days at Andersen.
Cliff Illig 5:31
Absolutely no question about it. Large projects for those days, fair amount of investment required by the clients. And the clients were always looking to solve fairly complex problems. So we learned early on that, in order to be successful, we had to understand, we had to parse through the challenges, and the needs, and design something that addressed them. So we started out as and it’s, I think, it started to swell through all the years, we started out as analysts. If nothing else, analysts are really good at making lists. And so we grew up building a lot of lists of things that were necessary to solve fairly complex challenges in the operational environments we were exposed to.
Donald Trigg 6:18
So speaking of lists, let’s fast forward. And now you guys are supposed to be studying for the CPA, theoretically, and the three of you are looking for outside venues. There’s a Kansas City park that’s fairly iconic because of you and because of Cerner, Loose Park, picnic table conversations. In lieu of studying for the CPA, you’re making lists about complex industry environments that would benefit from automation. So talk to us, take us back in time to ’78 and ’79, and those conversations.
Cliff Illig 6:56
Well, I think anybody that’s been around a professional services organization, especially one that is deep as Anderson was on the consulting side, recognizes that you’re either going to grow up and be a partner in that firm, or you’re going to move on and do something else. After six or seven years, we got around to the point where we recognized that the thing we really wanted to do was to go start something. And it made so much sense to us. It didn’t require a lot of thought to go get something started in building software. We liked the macro economics of software. You know, you build it once, you sell it a lot of times. And we also liked the notion that, you know, it’s hard. And we were just confident enough, and maybe some might say arrogant enough, to think we could take a really difficult problem and come up with a solution using IT that nobody had figured out yet. And so, when we walked away from Anderson, as we did the picnic table thing, we made a list of the industries we knew something about, manufacturing, distribution, public utilities, transportation, the like. And then, we made a list of the industries we didn’t know anything about. Candidly, healthcare was on that second list. But we walked away, we threw out our shingle, we started doing some stuff, and it was very, very, very fortunate. And I will certainly attest to the power of luck in everything we were able to do. We very early tumbled into a situation that was healthcare involved. It was for a medical laboratory. Anybody that’s spent time around the hospital knows that the doctors can’t do much without lab information. And labs are very complex operational settings. And interestingly, they actually mimic most of the operational challenges of a manufacturing company. We related to them very easily, but the way we were thinking about it was just significantly different than anybody in healthcare had ever thought about the challenge of automating various areas of operational areas of healthcare. So we tumbled into a situation where there was a potential client. They had pretty acute needs. They were very strongly focused on how to use IT to do things better. So after we started our business, we got started very early in designing a next generation laboratory information system for large, medium, and small hospital settings.
Donald Trigg 9:15
And this really became sort of the, I’ll call it the, entrepreneurial breakthrough opportunity for you to develop a key point solution inside the four walls of the hospital that end up being very strategically relevant to the operations of the organization and really created that foothold for your land and expand strategy as you went from LIS to a broader footprint around core clinicals. And so, you know, one of the things you said, Cliff, is that, when you made that list, you didn’t know a lot about or much at all about healthcare. And I think one observation I would have over the last several decades is there’s a lot of mission driven interest in healthcare, butt people are daunted by the complexities, particularly the complexities at the intersection of healthcare and IT. I want to fast forward a little bit. Getting traction with the LIS path net solution, making progress. And now getting to this really pivotal moment, six or seven years after the decision to jump into the entrepreneurial journey and the decision in the mid-80s to do an IPO roadshow and take the business public. Tell us a little bit about that. And in particular, some of the vision, mission, strategy complexities around what the business was as you started the roadshow, but also what your ambitions were around the business beyond it.
Cliff Illig 10:43
We pretty much ran the entire gauntlet of, how do you build and finance an early stage company. We did the venture capital thing three or four years into our development. We really didn’t do the venture capital thing because we needed the money. We really needed the credibility that went with being financed by credible organizations on the outside. As Don says, We were around for about five or six or seven years, when, you know, we decided to take the company public. Part of that’s just because, once you have your venture capitalists involved, they’re going to be fairly focused at some point on that as a liquidity event. We really wanted to position the company as something quite more than just a laboratory information systems company. And so we came up with a concept that we call health network architecture. The word architecture in IT means a lot. But it basically means it’s just a big design that you use to tie all the pieces to. We came up with an architecture that not only addressed laboratory, but all the other key information producing areas of healthcare, whether it was radiology or pharmacy, the nursing units, the physician’s offices, and that sort of thing. And it was in 1986, as we prepared to go public, that we really kind of formulated that into a vision and a vision in our world has always been defined as a vivid description of a future state. We came up with a vision representation that included most of the areas of modern healthcare, and really focused on the very tight relationships and interrelationships that the information in healthcare has to have to be useful to the clinicians that need the information to treat patients. It is not easy to break it into pieces. And I think it was actually probably harder to take all the pieces and build it into a comprehensive set of solutions over 15 or so years that ended up automating all the key areas, not only of a clinic or a small hospital, but very large hospitals, hospital campuses, you know, very complex environments. So it was never easy. You know, I think we were always struck and maybe weren’t very good at anticipating. But we were always struck by how complex things that we were into had gotten. And that always caused us to kind of stand back and make sure that we had the right fundamental designs, the right frameworks, the right architectures to put everything on. And I think we did, over decades, did a very good job of that. But you know, through all these years, I think we’ve learned not to be afraid of complexity. It’s something that, as I work with other entrepreneurs, probably is one of the things that scares them the most is when they realize that they’re into something complex and they’re not sure how long it’s going to take to get through it, and come through it. And again, this may be the analysts thing, Don. Our belief is that the way you deal with complexity is you just go figure it out. Okay, you just roll up your sleeves, you dig in, you break down all the pieces. Again, the list thing prevails. You get it down into compartmentalized pieces that you can work on. And then after you figure each one of those out, you put it all back together and see how it looks when it’s combined. So regardless of what the challenge has been, whether it was on the IT side, this design side, the client, the operational side, you know, where the complexity, just could absolutely drag you down if you weren’t prepared for it. We always used the same approach. We just slowed down. We said, okay, we’re gonna have to figure this out.
Donald Trigg 14:22
The complexity is, you know, I think people are daunted by it. But you have to go deep. You can’t stay there because, if you stay there, you’ll never actually figure out the path forward and the opportunities for scale. But if you never go deep, you never actually understand the opportunities for differentiation and the competitive moats that you can build out associated with the solution strategies. Kind of unpack a few of those that I think could be formative and impactful for current and aspiring entrepreneurs. And so the first one I kind of wrote down, Cliff, was, for those of us who kind of grew up inside Cerner, like I did, and where you and Neal were so formative for my thinking and development, this concept of vision mission strategy drives structure process tools. So this dogma around always, in your vernacular, starting with the end in mind, So talk about how you kind of came to view that as so critical and your belief around that idea.
Cliff Illig 15:25
As I said earlier, vision is a vivid description of a future state. And you know, it’s not that three line, heavily mediated description of a vision that a lot of people want to spend their time developing. It’s really just a long list of bullets that help describe where we’re trying to get to. The mission side of it is, okay, we can’t do everything at once. We’ve got to focus in the short term. We’ve got to be able to break things down. You know, I think that the use of the word “mission” in our world probably was best represented by the word “mission” in a military sense. There’s a very specific goal that we have and we have a timeframe that goes with that. We have a commitment and resources that will go with that and all that. So vision drives our ability to be able to get focused with missions. And then the strategic side of it is the fundamental approaches that you use to attack the really big pieces of what you’re doing. One of the things that we were always very good at, I think, is recognizing that, before you can do anything else, you get to sell something, okay? Nothing happens until you sell something. And although we grew up as systems people, I think we were pretty good at breaking the problems down and coming up with innovative solutions for them. Eventually, you got to be able to run a business. The vision could not get too far ahead of the need to go make sure that you have a compelling value proposition for a client.
Donald Trigg 16:56
And there’s versioning and iterative benefit that you get by actually watching the solution in use and starting to understand what functional capabilities are adding value, where are we underperforming against the expectation of the client, how do we improve it, you know, as we iterate and version on a go forward basis. Vision mission strategy, really important. You have to go deep to really understand things. That’s where you create sustainable differentiation. The third one I wrote down, and there’s, you know, several versions of it, but you always hammered on having a bias for action. And that probably became more important as Cerner got larger and had tens of thousands of associates. But this bias towards action, and I wrote down a couple of them, you know, and people will have to make some accommodation for point in time vernacular. You guys used to talk in the 90s, about shooting with real bullets. And then there was also this concept of, if you see a snake, kill a snake. So pick one of those and tell us where those came from. I mean, there wouldn’t be a Cerner associate in the 2000s and 2010s who wouldn’t be able to speak to either or both of those.
Cliff Illig 18:07
I think, somewhat out of necessity, Neal was probably the one that not only coined those phrases, but was probably the most biased for action of any of our key leaders. He had an intolerance for things taking too long. He had an intolerance of analyzing things too long. He didn’t really reach out and embrace market surveys and some of the typical tools that they’re used by in large corporate environments. Even though we’ve gotten to be a fairly large corporate environment, one of the things I think we prided ourselves on is not getting bogged down, getting focused on what the action is. And, you know, it’s interesting, as I’ve gotten older and looked at more environments, how many situations you see where the tendency of the management and even the entrepreneurial management is, we need to be careful here, we better study this. Okay, and then let’s look at our all our alternatives before we pick one. And I think our attitude has always been, let’s pick one. Let’s go start working on it. And we’re going to know a lot more about what questions to ask. You know, it wasn’t just the entrepreneurial thing. It became a way of really energizing the organization, not only getting focused on the actions, but staying very focused on results. You know, that’s another one of our fundamental tenets is, we always value the effort that our organization put in things, but what we were really focused on was results.
Donald Trigg 19:38
The precondition for results is decisions and decision velocity. So, I remember Neal said to me, once, you know, the most important thing I do is decide, and you build a big company by making more good decisions than bad decisions over time. And that’s, you know, the concept of shooting with real bullets is all about, hey, we’re gonna go to meetings and we’re not going to sit around talking or studying. We’re going to actually go deep, understand it, and then we’re going to make a decision and go. So this concept of, hey, if you see something wrong and you have a chance to impact it, do something and fix it. And that’s what we want the place to look like culturally.
Cliff Illig 20:16
Up and down, up and down the entire organization, not just at the executive and management level, but if you’re down there amongst it and you see something that’s not working from the top of our organization, you had the proxy and the fiat to go do something, okay. And occasionally, it wouldn’t work out very well. But mostly, the obligation is there.
Donald Trigg 20:41
Yep, for sure. You still preach that. I still hear that in your comments and your thinking today. And then the fourth one I wrote down, which is this concept of creating value for clients or customers. This is the highest order objective in your vernacular and number five is owners mindset. Act like an owner. We’re talking about that right now. I think that’s, I would observe Cliff, one of the really hard things, when you go from, you know, 1,000 associates to 10,000 associates, or 25,000 Associates, really inculcating that owners mindset as you scale. I think, culturally, that’s one of the hardest things to sustain inside the enterprise. Would you agree with that?
Cliff Illig 21:28
Absolutely. And I think, here over the last couple of years, that’s even gotten harder because, when you’re not always in the same place, when you don’t get a chance to sit down and do the whiteboard stuff and really work to make sure everybody’s looking at the challenges the same way, the risk that you run is that you take your eye off of creating the value. The importance of recognizing that the path to value and the path to our success is really tied with clients who recognize they couldn’t have done it by themselves and that they’re going to need us not only today to help them do something, but in the Cerner world, the client relationships were sustaining. The very first Cerner client is still a Cerner client. Okay, from 1982, still a Cerner client. These relationships go on for a very long time. So the focus on value, the focus on the importance of having people recognizing they’re generating a return from the investment, not only of dollars, okay, but their attention and the resources, and are willing to think differently about situations is where we collectively then come up with what can be a better world. And in that world, you know, we end up with long term relationships where the switching costs are incredibly high. And it’s incredibly important that the client feel like we’re there for them, that we’re gonna always be there to help them get to where they’re going to be. And that’s not always easy. Not only do you have to be thinking out into the future, you’ve got to be recognizing that their organizations are going to change too. And you’ve got to kind of reinvest over time to help them get to that point. So the whole notion, Don, of how you create that value, how you sustain that value, and then how do you benefit from that value was absolutely core to Cerner’s success.
Donald Trigg 23:25
Yep. Absolutely. And you and I, as operators, I mean, we have a lot of dogma around, how do you define value with the client? How do you realize that benefit? And then, you know, to your point, from a vision mission perspective, if you’re really looking to change healthcare, it’s a multi decade, sometimes, journey to really have systems level impact across healthcare. And so those durable client relationships become a really pivotal piece of what it looks like to make sustained impact and progress. You know, one of the things that I think people miss about you that I always remind them of is your thinking around culture is so thoughtful, and you’ve spent a lot of time and energy thinking about how you create commonalities of cultural attributes across the organization so that, when you’re interacting with a frontline associate, it doesn’t feel vastly different than somebody who’s doing a back office role or part of a global strategy around approach. But this this concept I pulled in here because I think it’s so important, of oppose propose. You love contrarian thinking. You love a fresh lens on an old idea, or an old issue, or an old problem. And this concept of, hey, it’s easy to say it’s not working, but one, we want to hear that analysis, and two, and more importantly, we want to hear you propose a remedy that makes things better. And you really pushed that aggressively inside Cerner during your tenure there.
Cliff Illig 24:58
It was absolutely a core approach and it started out as just how to have an efficient meeting. Early on, we’d be having a debate around the design of something, or here’s a half dozen different ways to do it, whatever. And you know, as you say, it’s always easier to be against something than it is to necessarily think through and be for something else. We just started very early on saying, if you’re going to oppose, you got to propose. And if you can’t propose don’t bother open your mouth in opposition to something else. As I run into hundreds of Cerner associates and former Cerner associates that were around with us for the very long term. That’s one of the things that they always want to remind us of, is not only how important that was to them, and how much it was just a part of how we dealt with each other at Cerner. And again, Cerner was not a very hierarchical organization. It was very team oriented. We worked very hard to keep it flat. And in keeping it flat, you really wanted everybody to feel empowered. And one of the easiest ways for people to feel empowered is give them a voice, even the smallest of decisions, but also in their perspective on some of the largest decisions. But again, doing it in a positive way, not against something, or I think that’s a dumb idea, or whatever, but always in the context of a better idea and push it out there, let us kick it around. And I can’t imagine the thousands of times that that approach ended up not wasting a lot of time and getting us on the track of a better answer more quickly.
Donald Trigg 26:39
For sure. And I love what you said, you know, how empowering that is to a new associate or a new executive. So this concept of write it down was one I wanted to really, you and I are always gonna say, gosh, we wish we had more time to write. You get very busy and you’re running very fast in multiple directions. But I think for both of us, every time we’ve had a chance to step back and really capture and codify something, the potential for it then to have much broader region impact across the enterprise is so much higher. So just the concept of write it down. The other thing I really associate with you within that concept is this idea that language and intentionality around language is really important. And the story, of course, I couldn’t help but think about as I was, you know, contemplating that clip was your interactions with Mr. Kauffman. And really some of the formative impacts he had for you guys around how you thought about, what do we need to write down and quantify for the enterprise? What language do we want to use? And what cultural messages does it begin to send about Cerner?
Cliff Illig 27:50
Yeah, it’s interesting. And you refer to Mr. K, Ewing Kauffman, famous Kansas City entrepreneur, started a big pharma company, and then eventually turned his fortune into, you know, the founding of the Kansas City Royals baseball team, which is still a very big part of Kansas City’s civic and social culture. He was somebody who really felt the obligation to share with young up and coming entrepreneurs. Neal and I treasured every moment that we were able to get with him. I can distinctly recall maybe half a dozen examples where especially Neal would come back from a meeting with Mr. K and he would change something at that very moment. Mr. K at one time explained to him how, in Mr. K’s world, they never called employees, employees, they called them associates. And Neil came back from that meeting and literally walked in and said, from this moment on, we’re never going to refer to somebody who works at Cerner as an employee. They are now and forever an associate. So it’s that kind of thing that makes such a huge difference. Language is absolutely foundational to culture. So one of the things that we almost invariably would do is, anytime we started something new, a new product, or new market, or something like that, one of the first things we would do is jump in and write down the glossary of terms that might come into play as we did that, and it wasn’t so much about the glossary, the word itself, it was about the definition of the word. And that’s when it gets back to this write it down concept. Just define it once, write it down, and unless somebody opposes it and can propose something better, we’re going to use that as part of our foundation for anything that we do. But I can tell you, there’s hardly anything that you can do that will have a more significant structuring impact on the way you go about decision making and the way you think about things and write it down.
Donald Trigg 29:49
Yeah, yeah. Carl Schramm, the great thinker on entrepreneurship for sure, wrote the burn the business plan, and one of his kind of concepts is, you spend this time developing The business plan that at a moment when in many ways you know very little about the business that you’re seeking to build.
Cliff Illig 30:07
Take that, Don, and just merge that thought with the whole “how do you create value for your clients” thought. Okay, and you know, so almost everything we would write down, you almost always did it in the context of what value we were creating for the clients. Okay, so these are not all discrete, somewhat independent techniques that you can use in a high growth, early stage operation. These are things that actually can create a thought infrastructure that, as you say, makes the challenge of making important decisions as quickly as possible much more straightforward.
Donald Trigg 30:49
Yes. And to keep that decision velocity on a sustained basis so that it looks the same way at a billion dollars, or $5 billion, in top line, that it looks like at 50 or 100. Cerner at its best, as it was really scaling to impact, I think encapsulated that. And to your point, these are absolutely some of the thought architectures or techniques that you and Neal and Paul used to do it. One of the things I always look for when I’m hiring people are that intellectual curiosity, in addition to operational acumen, that intellectual curiosity, that lifelong learning appetite. I think one of the things you have to have associated with that is mentorship as an entrepreneur. And I think in many times, it’s both mentors and associates inside the organization, but I think importantly, outside the organization as well. And I know for me, personally, no one has been a better, greater mentor to me, and more formative for my thinking around approach, than Neal and you. I hope that for our viewers and listeners, they’ve benefited from this wisdom. I think these are what Neal and you would have called true pearls of wisdom that can help every entrepreneur as we go into what I think you and I both agree is going to be this amazing decade in healthcare IT. We’ve digitized the content of the provider supply side for the first time. And we’re just in the very early innings of big second and third order impacts. And you and Cerner were obviously right in the middle of that. So thank you so much for taking a few minutes. This has just been fantastic.
Cliff Illig 32:33
Don, thank you. It’s always a good time. And I tell you, yeah, it’s fun being a mentor. But it’s very rewarding when you have people who want to be mentored that constantly challenge not only the basics, but they’re constantly challenging us to think beyond what we’ve grown up to learn. So it’s a pleasure. It’s been a pleasure doing this and, when I wrap up a session like this, especially when I know that there’s going to be young peopleknow that there’s going to be some great questions. I just wish I could find a way to be in a position to be interacting with people to deal with their questions when they come up. But for those that I can’t be I wish you luck and I hope this has been helpful.
Donald Trigg 33:17
Thanks, Cliff. Thank you so much.