Medtronic was founded in 1957 and created the cardiac pacemaker industry. It had over 70% market share in the 1960s but faced increasing competition and quality issues, losing significant market share by 1986. A new rate-responsive pacemaker helped arrest the decline. In 1987, Mike Stevens was appointed VP of R&D and instituted processes to increase speed, reduce costs, and improve quality. These changes helped Medtronic regain market leadership, increasing its share to 51% while reducing product development time by 75% and defects by 90%. Future challenges included maintaining innovation leadership and expanding to new markets and customer groups.
Medtronic was founded in 1957 and created the cardiac pacemaker industry. It had over 70% market share in the 1960s but faced increasing competition and quality issues, losing significant market share by 1986. A new rate-responsive pacemaker helped arrest the decline. In 1987, Mike Stevens was appointed VP of R&D and instituted processes to increase speed, reduce costs, and improve quality. These changes helped Medtronic regain market leadership, increasing its share to 51% while reducing product development time by 75% and defects by 90%. Future challenges included maintaining innovation leadership and expanding to new markets and customer groups.
Medtronic was founded in 1957 and created the cardiac pacemaker industry. It had over 70% market share in the 1960s but faced increasing competition and quality issues, losing significant market share by 1986. A new rate-responsive pacemaker helped arrest the decline. In 1987, Mike Stevens was appointed VP of R&D and instituted processes to increase speed, reduce costs, and improve quality. These changes helped Medtronic regain market leadership, increasing its share to 51% while reducing product development time by 75% and defects by 90%. Future challenges included maintaining innovation leadership and expanding to new markets and customer groups.
Medtronic was founded in 1957 and created the cardiac pacemaker industry. It had over 70% market share in the 1960s but faced increasing competition and quality issues, losing significant market share by 1986. A new rate-responsive pacemaker helped arrest the decline. In 1987, Mike Stevens was appointed VP of R&D and instituted processes to increase speed, reduce costs, and improve quality. These changes helped Medtronic regain market leadership, increasing its share to 51% while reducing product development time by 75% and defects by 90%. Future challenges included maintaining innovation leadership and expanding to new markets and customer groups.
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WEVE GOT RHYTHM!
MEDTRONIC
Submitted by: Group 4
Mukesh Kumar Sahu 27NMP22 Amit Gujjewar 27NMP43
Komal Tagra 27NMP51
INTRODUCTION Founded in 1957 in Minneapolis by Earl Bakken It created the cardiac pacemaker industry and achieved dramatic changes that went on to extend and improve the lives of many Pacemakers for 2 disorders: Bradycardia- When heart not generates enough pulses Tachycardia- When heart generate too many pulses In 1995 they had a operating profit of $300 million on revenues of $1.7 billion Started with a strong technological lead and over 70% of the market share through the 1960s.
ISSUES Key employees left to other competitors or startups Increase of competition Invested large funds into innovation but did not follow through Not efficient in reacting to changes in market demand Quality of products (defects) 4 malfunctioning products, including 2 major recalls Massive loss of share, from 70% in 1970 to 29% in 1986
WHY FAILURE ? Management took on too many projects at once Medtronic turned into a follower & not an innovator No cohesion & communication between departments i.e marketing & R&D Low accountability for management & employees No strategic written guidelines
A HOME RUN SAVES THE DAY
The decline was arrested in 1986 more by good fortune than any change in management practice. Medtronic developed Activitrax a rate responsive pacemaker a device which could sense changes in body activity and accordingly stimulate the heart to beat accordingly
THE TURNAROUND IN MEDTRONIC
R&D 1987 Assignment of Mike Stevens as VP for product development Stevens started career with Medtronic in 1973 when Motorola decided to shut down its hybrid circuit mfg operations & Medtronic financed that Stevens had watched Medtronic struggles in Prod development form suppliers viewpoint
STEVENS NEW PHILOSOPHIES
Commitments are sacred Create a sense of urgency Productiveness means happiness Management means responsibility, not status You only get what you measure Focus on gaining market share
MEASURING PRODUCT DEVELOPMENT PERFORMANCE Speed Time required to get new product into the market Cost Focus on fully allocated costs gets managers thinking about the market share Innovativeness translates into market share, pure & simple Product Quality In this business field failure is unavoidable
PROCESSES & PRACTICES
Speed Reviewed new product ideas according to their potential for meeting business objectives. Platform Strategy many derivative products that could extend their life & market reach Project Documentation Marketing to sign off on Product specification & Engineering to sign off on Product description so that each other understand & agree to the requirements Phase definition Business analysis phase (prod description & financial benefits were estimated), demonstration phase (technological feasibility was probed), Commitment review (commitment by each member of the project), development & commitment phase(chance of 100% success). In the first two phases lot of product ideas falling out
PROCESSES & PRACTICES
Rhythm Management team established a schedule, far into the future, according to which products would be developed & launched. This was like setting a train schedule. It helps people to know when the next projects are scheduled to leave the station. Market Inputs Review physicians board became critical to Medtonicss ability to define the right pacing systems to meet clinical & customer needs
RESULTS TO DATE Time for new platform products was reduced by 75% between 1986 and 1996 Fully allocated product cost per unit fell 30% Manufacturing defects dropped by a factor of 4 No. of field failure over the life of implant dropped by 90% Market share increased from 29% to 51% Became leader in every segment of the market !
PROCESS FOR NEW PRODUCT
CONCEPT DEFINITION
CHALLENGES FOR FUTURE
Success brought new set of challenges to the Medtronic team First When trained people leave every two or three years, the understanding of what we are doing & why, it has a very short half-life Second weve always measured the performance of our products in terms of their therapeutic benefits, but we need to change the rules of the game. We have to figure out how to add value in different ways Third Challenge was to stay ahead of competitors at least a generation ahead Fourth Expansion to other markets bringing pacing to less developed countries our culture wont allow us to bring them substandard therapy just to make it affordable price reduction was a challenge
DIFFERENTIATING FACTOR TO CREATE We have to work much more closely with our customers to understand how to make them more successful & profitable by using our products Customers not only physician, cardiologist, surgeons but also hospital management, payors & buying groups
