Chris Oleksy , Next Life Medical06.09.16
A few years ago, I ran into a college professor of mine and asked him how his teaching supply chain courses have changed over the past 30 years. He smiled, looked at me, and said, “The tests are exactly the same but the answers have changed multiple times, so you always need to remember what year it is to grade the tests right.” How fascinating is that comment? I told my professor that I had reached a similar conclusion in the more than 30 years of configuring care, value, and supply chains (chain of chains) in the medical device ecosystem. I explained that finding the right supply chain solution is nearly impossible without knowledge of the proper year and the right kind of glasses. And by right kind I don’t mean brand names (e.g., Oakley, Ray-Bans) or practicality (which in my case is bifocals).
My column in last month’s issue of Medical Product Outsourcing introduced readers to the OE-Tier5 model for aligning value chains with an organization’s business direction. But what I did not discuss in that piece is what must be done when an organization needs to change its business direction—possibly multiple times—due to an environmental catalyst such as Obamacare.
In this article, I will provide a helpful tip (AOE multi-lens glasses) to company leaders or chain of chain architects and present a model to help medtech executives assess or change their organization’s business direction. And, in keeping with my movie-themed guidance (remember “Jurassic Park” from my first column?), there just might be a lesson or two from revered Jedi Master Yoda.
Business Direction
Let’s review the basics for a moment. First, I generally describe business direction as a business value proposition. Determining an organization’s business direction takes a lot of work and soul searching within an organization. Companies that have solid business value propositions tend to be tops in their industry because it drives the balance of their chain of chains alignment. Simply put, if you don’t understand where you are trying to go, you will never be able to map out (align) your chain of chains. Organizations that want to be successful must first figure out where they are headed. Thus, when a company changes its business direction, it may have to change or incorporate a new chain of chains architecture as well.
Many models exist to help an organization determine or change its business direction. I’ve used many. One of my favorites is the concept developed by Michael Treacy and Fred Wiersema in “The Discipline of Market Leaders.” For the past 15 years, I have required any employee that works for me to read that book because I refer to it often. I also re-read this book every year because it is a simple, common sense, but powerful guide toward achieving market leadership. To me, market leadership is nothing more than knowing where you are going, drawing an architectural blueprint (chain of chains configuration) for getting there, and then executing that plan.
To clarify what I mean by needing a new blue print or architecture once a business direction changes, let’s examine some of the concepts Treacy and Wiersema discuss in their book. They hone in on three value disciplines: operational excellence, customer intimacy, and product leadership. Briefly stated, an operationally excellent company focuses on the best price with the least inconvenience to the customer. A customer intimate organization wants to cultivate relationships with its customers. These companies partner with customers to help them accomplish their mission. Finally, a product leadership organization continually develops its products and the services that support it. Product leaders continually improve their products and take them to the next level. Treacy and Wiersema do not suggest that decision makers ignore one for the other, but rather possess a minimal competency in all three to excel. The pair does suggest, however, that organizations cannot be all things to all people; therefore, one of these disciplines must ultimately define a company.
I like Treacy and Wiersema’s concept a lot, and the reason is simple—their logic applies regardless of title or job description. It certainly helped me, whether I was driving strategic sourcing at Medtronic plc, serving as president of ATEK Medical, or helping organizations through my consulting firms. It’s an ideal business strategy for medical device organizations and their chain of chain architectures that have had to change course (business direction) due to dramatic changes over the past two decades.
As I have emphasized in previous articles, the tug-of-war that has been created across the chain of chains has not always been good for our industry or society. In an upcoming column, I’ll detail some of the historical changes that have occurred in the medical device industry over the past 30-plus years and the many transformations chain of chain architects and leadership teams have had to endure. Or, to reference my college professor—how many times the test answers have changed. For now, I’ll only site one example to illustrate the relationship between an architect’s lens and business direction.
Lens: (AOE)
Creating an architectural chain of chain blueprint for developing or changing business direction under the Treacy Wieserma model requires a glasses or lens mentality. At Oleksy Enterprises, I developed a lens model called AOE (Approach, Offering, Environment). Approach is how an organization conducts business in the portion of the ecosystem it serves and establishes a plan to get to where it ultimately wants to be. Offering is what the organization has to offer the industry in the way of products, services, and capabilities. It is synonymous with the chain of chain configuration and determines precisely what is needed for a company to change course. The environment is the grand-daddy of them all and can change dramatically. Organizations must always be on their toes and be prepared to respond. For “Star Wars” fans, environment is the Force. And, as Yoda always preaches, those allied with the Force will know when changes are about to occur.
Obamacare is a perfect example of a major environmental item. Obamacare actually started under President Bill Clinton. I remember it well; no sooner had Hillary Clinton begun to talk about healthcare reform than some noticed a “disturbance” in the Force. Advocates called the reform efforts long overdue. Regardless of your political affiliation, or your stance on Clinton’s healthcare reform attempts or Obamacare, the shift in American attitudes on healthcare was an environmental change that started the ball rolling.
TIP: Chain of chain architects need to be agnostic to political affiliation in order to respond to current events. Taking a political stand and sticking your head in the sand only leads to failure. As a seasoned chain of chains architect wearing an environmental lens, I knew that vast changes could be coming to the medical device world and needed to put on my AOE lens so I could see it to believe it. Little did I know that not only would we be changing course, but everyone would be for the next 20 years and counting, as the Force was changing in a big way.
Let me better highlight this seismic industry change in Treacy Wiersema terms. More than 20 years ago, the business direction of most medical device companies was that of product leaders. They would continually innovate their product lines every year, creating some of the most advanced therapies in the world. Though they cultivated customer intimate relationships with surgeons and practitioners, and tried minimizing costs, their driving focus was on medical therapies and products. And society greatly benefited from those advancements.
In light of impending Obamacare changes, many OEMs decided it was time to eat or be eaten. Thus, they changed their business direction to that of operational excellence. Their offering had to change from product leaders to lowest cost. And to reduce cost, it no longer made sense to spend money internalizing manufacturing, allowing an organization to continually tweak and invent new products. Long story short, the medical device outsourcing era boomed which continues at a brisk pace today.
The environment changed and the business direction changed. Consequently, so did most medical device companies’ approaches and commercial offerings. Read this last paragraph again—it has a multi trillion-dollar impact on our economy annually, with healthcare comprising roughly 20 percent of U.S. gross domestic product. This was no subtle change, as it has had both positive and negative impacts, with many repercussions still to be felt.
Remember the AOE Glasses
Business directions often need to change due to shifting environmental factors. Therefore, chain of chain architects must always be wearing environmental lenses in order to spot changes. When these changes occur, organizations need to assess their business directions to determine whether they should change their approach or offering. Companies that do change course would be greatly served by following the Treacy Wiersema model and wearing their approach and offering lens. Or, put more simply—when the Force begins to move, quickly don your AOE glasses and deploy Treacy Wiersema’s “Discipline of Market Leaders” philosophy.
A Commanding Cliffhanger
Regardless of the winner in November’s presidential election, environmental changes will certainly be coming. Is there another disturbance in the Force by a different player? Only time will tell. But I’ll definitely re-read the “Discipline of Market Leaders,” polish the lenses of my glasses, see “Star Wars” again, and prepare for another change to the test answers.
May the Force be with you.
Chris Oleksy is the founder and CEO of Oleksy Enterprises and Next Life Medical. He can be reached at chris@oleksyenterprises.com or chris@nextlifemedical.com.
My column in last month’s issue of Medical Product Outsourcing introduced readers to the OE-Tier5 model for aligning value chains with an organization’s business direction. But what I did not discuss in that piece is what must be done when an organization needs to change its business direction—possibly multiple times—due to an environmental catalyst such as Obamacare.
In this article, I will provide a helpful tip (AOE multi-lens glasses) to company leaders or chain of chain architects and present a model to help medtech executives assess or change their organization’s business direction. And, in keeping with my movie-themed guidance (remember “Jurassic Park” from my first column?), there just might be a lesson or two from revered Jedi Master Yoda.
Business Direction
Let’s review the basics for a moment. First, I generally describe business direction as a business value proposition. Determining an organization’s business direction takes a lot of work and soul searching within an organization. Companies that have solid business value propositions tend to be tops in their industry because it drives the balance of their chain of chains alignment. Simply put, if you don’t understand where you are trying to go, you will never be able to map out (align) your chain of chains. Organizations that want to be successful must first figure out where they are headed. Thus, when a company changes its business direction, it may have to change or incorporate a new chain of chains architecture as well.
Many models exist to help an organization determine or change its business direction. I’ve used many. One of my favorites is the concept developed by Michael Treacy and Fred Wiersema in “The Discipline of Market Leaders.” For the past 15 years, I have required any employee that works for me to read that book because I refer to it often. I also re-read this book every year because it is a simple, common sense, but powerful guide toward achieving market leadership. To me, market leadership is nothing more than knowing where you are going, drawing an architectural blueprint (chain of chains configuration) for getting there, and then executing that plan.
To clarify what I mean by needing a new blue print or architecture once a business direction changes, let’s examine some of the concepts Treacy and Wiersema discuss in their book. They hone in on three value disciplines: operational excellence, customer intimacy, and product leadership. Briefly stated, an operationally excellent company focuses on the best price with the least inconvenience to the customer. A customer intimate organization wants to cultivate relationships with its customers. These companies partner with customers to help them accomplish their mission. Finally, a product leadership organization continually develops its products and the services that support it. Product leaders continually improve their products and take them to the next level. Treacy and Wiersema do not suggest that decision makers ignore one for the other, but rather possess a minimal competency in all three to excel. The pair does suggest, however, that organizations cannot be all things to all people; therefore, one of these disciplines must ultimately define a company.
I like Treacy and Wiersema’s concept a lot, and the reason is simple—their logic applies regardless of title or job description. It certainly helped me, whether I was driving strategic sourcing at Medtronic plc, serving as president of ATEK Medical, or helping organizations through my consulting firms. It’s an ideal business strategy for medical device organizations and their chain of chain architectures that have had to change course (business direction) due to dramatic changes over the past two decades.
As I have emphasized in previous articles, the tug-of-war that has been created across the chain of chains has not always been good for our industry or society. In an upcoming column, I’ll detail some of the historical changes that have occurred in the medical device industry over the past 30-plus years and the many transformations chain of chain architects and leadership teams have had to endure. Or, to reference my college professor—how many times the test answers have changed. For now, I’ll only site one example to illustrate the relationship between an architect’s lens and business direction.
Lens: (AOE)
Creating an architectural chain of chain blueprint for developing or changing business direction under the Treacy Wieserma model requires a glasses or lens mentality. At Oleksy Enterprises, I developed a lens model called AOE (Approach, Offering, Environment). Approach is how an organization conducts business in the portion of the ecosystem it serves and establishes a plan to get to where it ultimately wants to be. Offering is what the organization has to offer the industry in the way of products, services, and capabilities. It is synonymous with the chain of chain configuration and determines precisely what is needed for a company to change course. The environment is the grand-daddy of them all and can change dramatically. Organizations must always be on their toes and be prepared to respond. For “Star Wars” fans, environment is the Force. And, as Yoda always preaches, those allied with the Force will know when changes are about to occur.
Obamacare is a perfect example of a major environmental item. Obamacare actually started under President Bill Clinton. I remember it well; no sooner had Hillary Clinton begun to talk about healthcare reform than some noticed a “disturbance” in the Force. Advocates called the reform efforts long overdue. Regardless of your political affiliation, or your stance on Clinton’s healthcare reform attempts or Obamacare, the shift in American attitudes on healthcare was an environmental change that started the ball rolling.
TIP: Chain of chain architects need to be agnostic to political affiliation in order to respond to current events. Taking a political stand and sticking your head in the sand only leads to failure. As a seasoned chain of chains architect wearing an environmental lens, I knew that vast changes could be coming to the medical device world and needed to put on my AOE lens so I could see it to believe it. Little did I know that not only would we be changing course, but everyone would be for the next 20 years and counting, as the Force was changing in a big way.
Let me better highlight this seismic industry change in Treacy Wiersema terms. More than 20 years ago, the business direction of most medical device companies was that of product leaders. They would continually innovate their product lines every year, creating some of the most advanced therapies in the world. Though they cultivated customer intimate relationships with surgeons and practitioners, and tried minimizing costs, their driving focus was on medical therapies and products. And society greatly benefited from those advancements.
In light of impending Obamacare changes, many OEMs decided it was time to eat or be eaten. Thus, they changed their business direction to that of operational excellence. Their offering had to change from product leaders to lowest cost. And to reduce cost, it no longer made sense to spend money internalizing manufacturing, allowing an organization to continually tweak and invent new products. Long story short, the medical device outsourcing era boomed which continues at a brisk pace today.
The environment changed and the business direction changed. Consequently, so did most medical device companies’ approaches and commercial offerings. Read this last paragraph again—it has a multi trillion-dollar impact on our economy annually, with healthcare comprising roughly 20 percent of U.S. gross domestic product. This was no subtle change, as it has had both positive and negative impacts, with many repercussions still to be felt.
Remember the AOE Glasses
Business directions often need to change due to shifting environmental factors. Therefore, chain of chain architects must always be wearing environmental lenses in order to spot changes. When these changes occur, organizations need to assess their business directions to determine whether they should change their approach or offering. Companies that do change course would be greatly served by following the Treacy Wiersema model and wearing their approach and offering lens. Or, put more simply—when the Force begins to move, quickly don your AOE glasses and deploy Treacy Wiersema’s “Discipline of Market Leaders” philosophy.
A Commanding Cliffhanger
Regardless of the winner in November’s presidential election, environmental changes will certainly be coming. Is there another disturbance in the Force by a different player? Only time will tell. But I’ll definitely re-read the “Discipline of Market Leaders,” polish the lenses of my glasses, see “Star Wars” again, and prepare for another change to the test answers.
May the Force be with you.
Chris Oleksy is the founder and CEO of Oleksy Enterprises and Next Life Medical. He can be reached at chris@oleksyenterprises.com or chris@nextlifemedical.com.