How to turn your company in the right direction
By Phil Croxford, CEO and President, Gamma Medica, Inc.
Phil Croxford has had extensive experience turning around medical device companies. After his early career days at J&J, he held the top spots at Arrow International (now Teleflex), Draeger Medical, USA, ArjoHuntleigh NA, and the Lifecell Corporation. He now has turned his expertise to an early commercial stage diagnostic company, Gamma Medica, which has a breakthrough detection device for breast cancer.
Phil is focused on rapidly creating enterprise value from business assets. He believes that one should be disciplined and ask the right questions upfront – something many startups or struggling companies are too busy to do – results in developing sustainable strategies that will make all the difference in leveraging a company’s inherent commercial and organizational strengths.
He has extensive global experience, having worked in P&L leadership roles with Fortune 500-level companies, overseeing operations, R&D, business development, marketing strategy, portfolio management and channel development.
Phil’s specialties include acquisition targeting and assessment, merger and integrations and sales channel optimization. At Draeger Medical, he was the USA CEO and president, responsible for sales, service, marketing and operations for a ~$200 capital equipment business. He filled the same roles at ArjoHuntleigh, and was a member of the Global Executive Management Team. At LifeCell Corporation he was responsible for its global organization. Today at Gamma Medica, he is CEO for its unique molecular breast imaging system, which identifies cancerous tumors in women with dense breast tissue or who have high risk of developing breast cancer, where findings are inconclusive or even negative with film-based and digital mammography.
We interviewed this respected leader on how he approaches the task of taking a new or distressed company – identifying the right questions to ask and the ways to quickly set a positive strategy in motion.
WHAT, WHERE AND HOW —VISION, OBJECTIVES, STRATEGY, TACTICS (VOST)
“The beginning of our journey is gaining an understanding of VOST: Vision, Objectives, Strategy and Tactics,” Phil says. That’s the map of what you want your company or product to do, and how you will get there. “Complete a VOST tree to keep the organization on task.” That must incorporate influences like Political, Economic, Social and Technology (PEST) constraints and opportunities.
What is the unmet need that you are trying to address, and how does it relate to what you offer? What are the key points of differentiation that distinguish you from the competition? Can you say what that means to the buyer in economic terms, usefulness, and efficiency? Once you can clearly understand that, you can then investigate which market/channel you will use to reach the specific demographics (influencers, buyers) you need to target, and factors like reimbursement (who is insuring or buying?).
What are the key points of differentiation that distinguish you from the competition?
These are the critical questions you have to ask before you engage in any major restructuring of the marketing message and/or organizational design. No financial leveraging can be achieved that has a long term impact without addressing these basic questions.
At ArjoHuntleigh, they had dominant US market share of the caregiver lifting space (~35%). However, the sales process was protracted, and they were being commoditized due to inferior low-priced competition. This was also in 2008-9, when hospitals were experiencing the effects of the recession and healthcare changes. Not a good time to sell equipment that many hospitals did not have and did not realize they needed.
The ROI was so good that most investments in equipment would be paid for in the first year
The vision was to reinstate Arjo-Huntleigh as the leading provider and authority to reduce caregiver injuries, which were on the rise. There was legislation being passed in various states to address this risk to caregivers. Additionally, patients were getting heavier and the caregivers older. At the time average nurse was 48 years old.
The objective was to secure double-digit growth in revenue and maintain our market share at a minimum. Also to match our share with each state that was introducing legislation.
The strategy was developed with the goal of securing a consulting program (called Diligent) that provided the hospital administration with the right tools to assess risk. We offered a guarantee that we would reduce injury costs – the ROI was so good that most investments in equipment would be paid for in the first year because of the very high injury related expenses, both direct and indirect. If we did not achieve the savings, we covered the difference.
The tactics: we assembled key account managers to sell the program, employed clinicians to support the implementation, and focused on setting up metrics to report back on the performance. We achieved between 10-12% increase over 2008-2012 growth.
We effectively de-risked the investment and provided sustainable economic and clinical value.
• Political —patient handling legislation—positive
• Economic —recession and capital hard to secure
• Social —elderly and heavier population with a caregiver age rising and at greater risk of injury
• Technical —we used sophisticated assessment tools that were proprietary and helped ArjoHuntleigh determine the amount and type of equipment to place and install
Of note, our gear was the most expensive and had the best designs, but in these times it is hard to sell a Mercedes!
THE DOERS! WHO AND HOW ARE WE GOING TO EXECUTE THE PLAN?
“Then you get to the organizational engineering part of the journey,” he explains. “This involves defining the enabling structure to execute the plan. What skill sets are required? What resources are needed? What is your gap assessment – the difference between the ideal state and where you are currently?”
Then you will have the insight to create the position specifications and recruitment strategy. You can select the appropriate agency, define the hiring process, and build the team you will need to carry out your strategy.
Organizational behavior depends on the culture and history of the organization. But a leader needs to execute, with clarity, a communication strategy that encompasses the vision of the company. Communication frequency is critical. Make it concise and understandable, but do it often: accessible but meaningful, consistent but adaptive. It has to be authentic and above all not staged. Too often the boss needs a stage! In my mind, he needs to engage 24/7 and be real. Employee engagement programs encourage ownership and enable delegation and empowerment. When you feel you belong, you tend to own the task and mission. It is essential you define, design and build a team to execute the plan. So often in distressed organizations the existing team does not have the skills or experience to execute the plan. After all, the distress was likely caused by the current team not being able to detect or assess market force changes, etc.
One company that I was asked to lead was experiencing a rapid declining growth rate. Their heyday was long gone, the rapid growth of the past had deteriorated and the old leadership had not detected the impact of the Affordable Care Act, the pressure to provide proof of health economic value. They were also structured in silos: each head operated independently, coming together at the president. I found I had 12 direct reports. The communication was through me!
Communication frequency is critical. Make it concise and understandable, but do it often: accessible but meaningful, consistent but adaptive.
I had to determine what we were trying to achieve, or could. The skills and the aptitude of the leadership clearly plays a big part. To assess these characteristics, I pulled together a company cross-functional team of 40 people, assigned them specific tasks, and divided them into four teams. Each team has to develop their project charter to address the “problem or the challenge” we were facing. Leaders of each team, nominated by their respective teams, would report back to a steering team that coordinated the definition of the problem, resolution and plan of action. We kept the teams together for 3 months, sprinting to milestones to remain focused. The results were significant: we defined the plans, implemented them, but above all we determined the players we needed to run the company. This was the basis for the initial organizational design. Further work was done to develop a team to deliver the objectives and strategy.
Another benefit of this approach is that you build team rapport, empower people and set up accountability. We developed a competitive spirit with the four teams. This was a stark contrast to the previous leadership approach. In some ways, you have to do something left field to stimulate change and encourage a sense of urgency. No one can hide, and others in the company saw that the teams were achieving and above all having fun. Engagement drives results. The organizational behavioral science of these dynamics needs to be played out.
I also made changes to the sales and marketing team. There were two VP slots: I eliminated the positions and hired a VP S&M with more transitional and stronger leadership experience. I promoted a Director of Sales to a VP Sales, someone who had respect in the organization and the right intelligence and passion to lead the next phase of change. We had to restructure a sales force that had not changed its delivery model for 15 years!
I hired a Health Economist from a biotech company to lead a new department and build a field HE team to support the team in selling to C-suite executives the VP we had for our product.
I changed the R&D, RA and Operations functions to be more in line with the goals for the company with some promotions and terminations. I also invested in business intelligence functions to ensure our commercial execution was on strategy with data focused management tools.
COMMUNICATION, AND HOW TO DELIVER IT AT ALL LEVELS
I have spent the best part of 20 years working with EU and international leadership organizations during my leadership tenure as a M&A leader. I am British and have worked in the US for over 20 years. During that time, I have realized that we tend to believe we communicate but we don’t either listen or observe the reaction to what we say or do. We should invest more intellectual capital in understanding cultural norms before we assume everyone will behave like we do.
In the case of Swedish parent company that I interacted with during my tenure as their NA CEO, it was important for me to spend quality time with not only leaders, but also the middle and lower ranks for the organizations. I invested enormous amounts of time visiting the parent, taking time to develop a regular cadence and interaction. When I asked for help, I always seemed to receive it – compared to my colleague who resided in the EU. Securing more than my fair share of time or focus was something I encourage all my team to do. It is not the frequency so much as your impact that makes the difference in relationships. I preach this all the time with members of my executive team. I also put it in place when I interact with my board, and I coach management for the company for which I am a board member. So often managers do not invest enough or mental energy around the recruiting process. Considering this is the most important task managers have, and the cost is enormous if you get it wrong, it seems counterintuitive to ignore it. When I plan to hire, I spend time drafting a position description, market assessment and hiring plan that will include the essential and the desirable attributes. I like to think defining the candidate pool is like fishing: the pond is only so big and the type of fish you might want to catch are in not in large quantities. The more specialized the search, the harder and the longer it takes. I also consider who I should engage with – I need a firm that has expertise in the space, that is aligned with my values and knows my company. I even provide a presentation to the agency and a package for the candidates. When I meet the candidate I want to know they can do the job, they have the experience. It comes down to cultural fit, growth potential in role, etc.
FINANCIAL ENGINEERING: HOW ARE WE GOING TO MAKE MONEY?
What often defeats implementation of the above is the failure to use Process Excellence principles, including LEAN, as well as Commercial Excellence discipline. Sales deployment and execution needs to be matched against a defined opportunity. This also needs to be finely tuned to the local/regional nuances of the market. One size or approach does fit all in today’s medical device market. Set measures to monitor and manage resources.
We tend to believe we communicate but we don’t either listen or observe the reaction to what we say or do.
First, focus on cash management and turns. You need to collect fast in order to keep the engine running. Focus on value-added, not on value erosion (e.g. pricing discounts and trade-ins etc. for short term revenue gains). Seek to create value and eliminate waste in decision making to operations.
WORDS TO THE WISE: EVERYONE HAS A BOSS!
We are all responsible to others, and observing that responsibility is another tool that tunes up the process. Get buy-in with key stakeholders relating to main objectives. Quantify and confirm metrics that are going to be used to measure your and the company’s performance.
Again, communication is critical to success. Owners, stakeholders and the board must know your plans and progress quickly and in clear terms. The best surprise is no surprise. Use partners and consulting firms you have confidence in. Avoid testing an unknown quantity.
EXAMPLES OF COMMERCIAL EXCELLENCE PRINCIPLES
The whole concept stems from the basic alignment of Strategy and Tactics: you need to focus on the micro vs. the macro. It is easy to stay at a high level, but measuring success is much harder. Starting with the basic principles of maximizing resource – time, money and effort – you can deliver higher levels of outcomes. Most managers claim they do it but how many actually focus on each IDN – account and procedures?
One company was focused on revenue to measure market share or account share. They calculated a rough average of the sales they could make based on a crude algorithm that was deployed across the company, regardless of geography or setting (e.g. university vs. community hospital). I changed this to focus on procedures. We sold our biological tissue for reconstruction purposes, and the cost varied considerably with regard to size. We had no knowledge of what size the surgeon would use to repair a hernia. It was more important to focus on how many procedures we acquired. This was a better measure of success. I could sell a $40K vs. $10K. On the old basis $40k was a good day, but I could have only secured one procedure, not 4, for example. We also focused on procedural volume, not dollars, and managed reps to do this. This helped drive growth in the business and ensured we were thoroughly penetrating markets.
One other example is my current company. We are an early stage company that has limited resources. Our most precious commodity is time, not cash. We have set up the following. A strategic marketing area focus (SMA): which big cities we need to focus on based on procedures, reimbursement, Integrated Deliver Network (IDN) set up, etc. We then identify each IDN, university system and private clinic practice group – who practices, doctors’ listing and the respective volume. We define the largest and most ideal: we work the plan, measuring against the refined target list. Easy to say, but it requires discipline. The good news is that since you have the targets, you can manage the results. We set up a dashboard to measure progress against expectations and actual results.
Philip Croxford President & CEO, Gamma Medica, Inc. A dual citizen of the US and EU, Phil is a medical device turnaround specialist who has extensive international experience with a proven track record of rapidly creating enterprise value from distressed business assets. His experience includes consumer-OTC, medical device and bio-surgical companies both with public and private equity ownership. His specialties include acquisition targeting and assessment, merger and integrations, and sales channel optimization. He has a notable track record in accelerating integration programs, building sustainable economic value, and organizational capability. He also currently serves as a board member of Vital Therapies, and previously was president of LifeCell, CEO and president of ArjoHuntleigh NA, CEO and president of Draeger Medical, Group VP and general manager of Arrow International, and VP of J&J Ethicon.
Gamma Medica, Inc. is a global women’s health company committed to detecting cancer earlier in women with an increased risk of breast cancer through developments in advanced diagnostic technologies. It is focused on offering innovative, science led, diagnostic technologies that overcome the limitations of standard anatomical imaging (which include digital X-Ray mammography, tomography and ultrasound). Gamma’s technology allows for earlier detection of breast cancer in women at greater risk due to having dense breast tissue as well as familial and genetic risk factors.