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    Columns

    Five Steps for Succeeding Globally in Medtech

    World views can differ considerably, so it is important to understand, appreciate, and respect cultural realities and differences.

    Five Steps for Succeeding Globally in Medtech
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    Florence Joffroy-Black and Dave Sheppard, MedWorld Advisors11.04.19
    Is your medtech business global? The answer isn’t so simple or straightforward.

    Companies that conduct business in Canada and Mexico, for example, might consider themselves global, but they truly don’t fit the definition if they are based in North America. Similarly, a French company cannot be considered global simply by working in tandem with a German firm. To be global, a company must get outside its comfort zone (and region).

    It is currently reported that the world’s major medtech headquarters are concentrated mostly in “Western developed markets.” Among the top 100, approximately 80 percent are located in the United States and Europe, and 20 percent are in the rest of the world. But this proportion is rapidly changing. Twenty years ago, China had no major medtech headquarters within its borders and now it has at least one. A decade from now it likely will claim 10 (or more).

    Paying attention to global dynamics is very important because of fundamental shifts such as industry consolidation. New “disruptive” players are coming into the picture (not necessarily originating in the medtech industry, some from the outside—i.e., consumer tech). Disruption of traditional value chains is taking place and changing the way business is conducted. While low costs are important, new innovations and therapies are highlighting the possibilities of value-based care in a manner that is radically different today than it was 10 or 20 years ago.

    To be successful in the global medtech market, companies should: 1.) Have a plan; 2.) Be flexible to that plan; 3.) Respect all stakeholders (worldwide); 4.) Communicate; and 5.) Have a sense of humor.

    Medical technology truly is an international industry. Whether it is embodied through market opportunities, the supply chain, or manufacturing, becoming a global organization is necessary for long-term success. World views can differ considerably (especially in today’s environment of nationalistic trade policies), so it is important to understand, appreciate, and respect cultural realities and differences. To grow dynamically on an international scale, medtech firms must incorporate the five-point strategy mentioned previously.

    Have a plan: Companies will never reach their destinations without first defining what success looks like (either geographical, market share, product innovation, a combination of these factors, or something different altogether).

    Before starting a plan, however, companies must think about an exit strategy. Why is this important? Consider the real-life example of Brexit. Its developers did not have an exit strategy, which is part of the reason it has been so challenging. This scenario is not uncommon in the medtech sector, where great ideas and plans are a dime a dozen and exit schemes are rare. Long-term global business success is dependent on beginning with the end in mind.

    When drafting a global plan, companies must consider global dynamics. There are several examples to consider.

    The U.S. is one of the world’s more segmented markets, so it’s important to have a clear path down to the channel level. Fundraising efforts for some very bright ideas can easily fall apart due to an entrepreneur’s inability to clearly define his/her “channel to market” to customers.

    Latin America seems to begin in Miami these days (many of the industry’s largest companies have based their Latin American headquarters in that city). There is not one marketing plan for Latin America, as it is comprised of many different countries; thus, it’s critical to understand the opportunities in each country and forge a plan for each one.

    With its 26 different provinces, China is complicated. Each province has its own registration and reimbursement process, and most have unique  distributors to their region. Therefore, it is not unusual to have different distributors for various parts of the country. Naturally, some distributors are better than others, which explains why companies can be a market leader in one region of China and virtually nonexistent in another.

    Japan, on the other hand, is very unique. The country has its own set of rules that are not always so easy to understand. (Some in the industry call it “Planet Japan”). To be successful there, organizations must realize Japan is wrestling with a shrinking workforce that is saddled with funding healthcare for a growing (and aging) population. While this challenge is nearly universal, it is particularly magnified in Japan, thereby forcing the country to operate its healthcare system differently than most other nations.

    In theory, Europe is supposed to be “harmonized.” But from a commercial standpoint, the market is similar to Latin America. The EU is comprised of 28 unique countries. Although a CE mark is essentially a general admission ticket to the market, companies should develop individual plans based on cultural and language differences (a successful strategy in Germany may not work so well in France or Spain, for example).

    Other topics companies should include in their global plans are operational excellence; supply chain; regulatory; reimbursement; and innovation.

    Be flexible to the plan: There are various factors that can impact the global environment. Consequently, organizations should focus on the ideas and issues within their control because they may have to be modified by unforeseen actions/decisions in Washington, Brussels, or Beijing. Companies must be able and willing to adjust their plans (not too radically) as matters develop.

    Another key element of global business plan success is “situational intelligence” (SI) There are countless examples where SI has both helped and hurt companies competing in the worldwide market. SI is not evenly distributed within companies; some employees have it, some don’t. Therefore, it is important for executives to educate themselves and their teams on situational intelligence to ensure all participants are aligned and making good decisions while executing and helping to evolve the global business plan. It takes a high level of SI to consistently get this right.

    Be respectful to all stakeholders globally: While most companies intuitively understand the concept of respect, this basic principle is not universally followed by all industry leaders. Organizations should give all interested parties the opportunity to work with and help the business—whether it be Mexican assembly line workers, Chinese distributors, investors, customers, or anyone else encountered during the regular course of business (even those with different ideas). Much can be learned from regular employees. Key “direct reports” (with good intentions) don’t always tell management what it needs to know, but rather what they think it wants to hear. Conducting one-on-one conversations with employees who are one or two levels below direct reports can reveal information that will help the business, its leadership, and direct reports function better. Similarly, the ideas and creativity from the assembly line floor could help improve the business. Despite cultural differences, most employees want to be successful and they understand they cannot be successful without the business being a success. Therefore, they are more than willing to contribute ideas for continuous improvement—upon request. Of course, it’s important to understand the cultural impacts when pursuing stakeholder inputs. In a “top down” (command and control) culture like China, the average line worker will most likely remain silent and refrain from providing ideas for fear of retribution from their bosses (even if they are good employees and their supervisors treat them well). Speaking outside the perceived “chain of command” (even if it is to contribute ideas to improve the business) is simply not in Chinese employees’ DNA like it is in most other countries.

    Communicate: Effective leaders know communication is key to success in business. But it is even more important when operating in a global environment, as manufacturing may be conducted 5,000 miles away and loyal customers may be based in Brussels or Beijing. Ensuring everyone is aligned to the plan is necessary to guarantee all parties are headed to the same destination (goals). The best business leaders foster harmony and collaboration in their organizations to create the best environment for competitive success. The medical device industry is a highly competitive international market; one misstep is all it really takes for a rival to gain a competitive advantage in a market segment or geographical region. It takes organizational focus and communication to be consistently successful and guard against such slip-ups.

    When conducting negotiations, treat everyone with respect and listen carefully. Listening is a part of communication that is often overlooked. Communication styles vary by country, so keep the following tips in mind when conducting negotiations around the world: The Japanese avoid saying no; a structured approach and courtesy works best in Germany; Israelis usually take a direct, aggressive approach to negotiations; Americans prefer aggressive negotiation tactics too, but within boundaries (most of the time); the Chinese are aggressive (with few boundaries) and say yes to everything most of the time (even if they’re not sure they can deliver); the French like to debate and are more deliberate and relational in their arbitrations; Nordic business folks are conservative and polite but still direct; and entrepreneurs in India are noisy, loud, and aggressive (but it’s ok as they do it to each other too).

    Have humor and enjoy the experiences: Nobody is perfect and neither is the medtech market. The cultural differences that exist among this planet’s various countries require patience, understanding, and most importantly, a sense of humor. Not surprisingly, the most successful global medtech leaders have a great sense of humor and unforgettable stories about their experiences. Humor not only drives success, it also reflects success. Don’t forget to laugh—it’s good for the soul and for business. 


    Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She is currently is CEO at MedWorld Advisors and can be reached at florencejblack@medworldadvisors.com.

    Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now a managing director at MedWorld Advisors. He can be reached at davesheppard@medworldadvisors.com.
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