German American Style

One of the Review's Best Managed Companies of 2010.

If you meet Reinhold Schmieding, ask him for a copy of his self-published autobiography.

But don't be misled by the title, Helping Surgeons Treat Their Patients Better. Make no mistake: This is a management book about how Schmieding built Arthrex, one of the best-managed companies on the Gulf Coast.

It should be required reading for every entrepreneur who wants to emulate Schmieding's success. With $690 million in sales in 2008, Naples-based Arthrex has quietly become one of the world's leading manufacturers of arthroscopic surgical equipment.

When Schmieding arrived in Naples from Vermont in July 1991, the assets of the company fit in a U-Haul trailer. Today, it's a global enterprise with dozens of offices around the world.

Schmieding, who rarely grants press interviews and couldn't be reached, writes that the unique corporate culture that blends European and American management styles gives Arthrex an edge over the competition.

Born in the U.S. of German parents, Schmieding launched his venture in Munich, often schmoozing his surgeon clients at the city's famous Biergartens.

From Germany, Schmieding promised employment security, bonuses based on seniority and generous health care benefits to his staff. “Security breeds confidence, loyalty and long-term commitment that are rarely tasted in the U.S.,” he writes.

From the U.S., Schmieding says he instilled the ideas of delegating work, encouraging individual decision-making and rewarding top-producing employees with incentives.

Arthrex attracts the best sales people by supplying them with lots of new medical equipment and paying some of the highest commissions in the business, Schmieding writes. Celebrating individual and company goals is a ritual at Arthrex.

Happy employees lead to happy customers. Schmieding is well known for showering surgeons with attention. His fanatical dedication to surgeons is legendary and associates say he could perform surgery as well as they even though he never trained as a doctor.

Schmieding has built labs in Naples and other desirable destinations where surgeons can fly in and practice using the latest equipment then enjoy a vacation. At one time, Arthrex taught surgeons in an airplane dubbed the “Jet Lab” that shuttled them to Naples.

Schmieding, who first peddled his wares alone at surgeon conferences, is always eager to develop new tools even if they might not be profitable.

In a swipe at publicly held competitors, he writes: “Companies today that are driven by financial investors or public markets are dictated by pressures of compromise in order to provide the maximum financial return for investors. Their primary focus on quarterly earnings and shareholder value instead of customers runs counter to the critical responsibility of product performance and medical education in the better interest of surgeons, their patients and society as a whole.”
—Jean Gruss