Medtronics Product Development and Human Resource Management - Case Study Example

A CASE STUDY ON MEDTRONICS’ CARDIAC PACEMAKER BUSINESS [your teacher’s of the What`s the marketplace in which this company functions? Medtronics was a company that has been producing cardiac pacemakers. It had started in 1950s as a company that manufactured the early pacemakers, which had been one of the most innovative products, as well as one of the products that had the greatest help and impact on mankind, due to the product’s benefits of helping heart disorders. As Medtronics’ products had been pioneer in the industry, they created the market for pacemakers which were developed to aid in heart disorders. They were the original player in this market for cardiac pacemakers. What areas of the business are, were causing concern and why? Product development and human resource management Product development had been the major concern for Medtronics at the period when its market share had been cut by more than half. The major reason for this cut was the company’s inability to gain the first-player advantage because many of its smaller competitors were faster to respond to the preferences of the customers, while it lagged behind, for several years before it could come up with a competing line. Product development in Medtronics had been plagued by informalities that had been the norm for the organization during the days when it was still small and developing. These informal processes had been effective for a smaller organization—the functional managers had less to worry about their own functions that they could coordinate well on the operational level. However, as Medtronics grew and its functions had increased in sizes, coordination had been a major problem in terms of product development. As the company grew, communication and coordination among functions in order to finish a project had become impaired as functional managers became more focused on their functions. This was a human resource management issue, as it regarded issues on team structures and implications on the line of communication which impacted the coordination between groups. Problems regarding coordination among functions had been tried to address by appointing project managers who would serve as staff to projects. However, project managers were not given enough authority in order to be accountable for the projects as their primary task was to make the functional managers come up with a decision in a shorter time for the project to continue. Apart from the integration and coordination among the various functions of the company in order to come up with a good line of products, with the fastest time to get into the market, the usual conflicts between engineering and marketing people had been one of the major issues in product development. The conflict lay in the non-accountability for delays of products, which led to engineering people and marketing people blaming each other for the cause of delay, according to Mike Stevens as mentioned in the case (1997, 3). On one hand, engineering people argued that marketing people continued to revise the description of the product every time they got a good idea from the competition or market, which could be included in the product features. On the other hand, marketing people argued that engineering people were very slow in creating the product that was why they had to add every new idea, or else by the time engineering people could create the product, they would be obsolete in the market. This very little, or virtually lack of integration and coordination among the functions had been the major concern for the company. Why did the company decline and can you state whose fault it was? Lag in launching products; no systematic processes for product development approach The launch of new products to the market was very vital in the pacemaker business, where there were plenty of ideas from customers and competitors. The major challenge was to come up with the most suited products to the demands of the players given the level of technology in the market. As Medtronics started to lose its focus on the market, and instead started to create products that are independent by nature of manufacture without being strategically determined, its market share began to decline. As no systematic processes had been designed to continually improve the products on a consistent basis given a time period, the company had been slow to respond to market which its competitors had started to dominate. Their competitors, gaining the first-mover advantages, had wrested the market share from Medtronics by being fast in meeting customer demands. Medtronics had not been able to meet these preferences in time which was the major reason for the company’s decline. As what hadpreviously been discussed, the problem in product development led to lag in launching new products. This lag had led the company to a sharp decrease in terms of market share. Product failures and recalls Apart from the lags in launching new products to keep with the changing customer preferences and the technological lead of competitors, Medtronics had faced several recalls due to product failure. The Xytron line, as mentioned in the case had failed, as the leads of the pacemakers had later been found out to be disintegrated. As Medtronics had been forced to come up with product advisories to warn that certain units might malfunction, the company faced a massive loss of market share over the sixteen-year period, from 1970 to 1986, from 29% to 70% (1997, 4). Discuss Knowledge management issues and would better management of both explicit and tacit knowledge have helped Medtronic manage the decline better? Knowledge of the true state of the company in terms of market share Medtronic would have better managed its decline if knowledge had been conveyed well to the people who were responsible for them. For one, because of the growth of the market which supported the profitability of the company, the true state of the company had not given the shock its people should have received in order to redirect their efforts in addressing the decline. As Don Deyo, the company’s director for product development noted in the case, Medtronics had enjoyed its market dominance and profitability well for some time that it lost its focus in improving its business (4). As the company’s market share declined, the people within the company were not in the least alarmed because Medtronics continued to enjoy constant profitability due to the increasing market for pacemakers, let alone the need to change the management practice to address the incident had been given any notice. When this incident could have triggered an alarm for the people to act on it, the gravity of the incident had not been conveyed and passed through better knowledge management, which was why there was no subsequent action as regards changing management practices even after the incident. Conflicts due to cluttered independent projects; competition for budgets As people within the company did not know the state of happenings within, as soon as a new idea was accepted by an upper-level manager, teams that would form this idea into products were organized independent of other projects. As this happens, people constantly created more projects which led to competition for the company’s limited budget. Proper knowledge management could have addressed this conflict—when the knowledge of profitable projects had been brought to the right people who could decide on the projects, they could have decided on which projects could be given with enough resources in order to leverage profitability. Constant communication, coordination and transfer of knowledge among people could have also lowered down the costs of doing the projects. What caused the turn-around? Introduction of Activitrax As the market share of Medtronics continued to decline, the turnaround in the company’s situation was caused by the introduction of Activitrax, a project, which as mentioned in the case, was championed by Ken Anderson, a project leader where the device could sense the changes in the body activity, thus changing the paces of beats that were required of the heart for the activities. As the idea had been developed when the project leader had won the support of the general manager, despite the opposition of the staff, this incident had caused the company to regain its position in the market. While this did not prompt the company to change its management practices immediately, it had at least saved the company from further decline and major overhauls were made by some key people. Appointment of Mike Stevens as VP for Product Development Mike Stevens had served a major supplier to Medtronics, which allowed him to look at the company from a third-party perspective. By the time he joined Medtronics as the vice president for product development, he knew what was needed in order to put the company into an overhaul. This was the real point for the company’s turnaround. As Mike Stevens took over as the VP for product development, his management philosophy had created a major change in how things were done within the company and helped the company regain its position in the market. Highlight the management techniques employed and applied to turn this company around. Strategic management The first thing that Mike Stevens did, along with the other members of the team that took charge of overhauling the system of product development of Medtronics was to put the company into focus and start being strategic. By employing strategic management, Stevens first determined business objectives of the company. These business objectives would serve as the benchmark for acceptance of various projects in order to limit the projects to a number which are both technologically and commercially feasible. Balanced-score card The practice of employing a balanced-score card as the basis for elaborating the objectives into where the company should focus on (speed, cost, innovativeness, product quality) had helped the company establish an integrative approach to reaching its objectives through the various measures (6). The balanced-score card of Stevens had pointed four areas that were keys to the company’s success in gaining a larger market share. By ensuring that all these objectives were met in support to the larger business objectives, the company’s integrated approach to both measuring performance was proven to be effective in establishing a new system. Process reengineering In order to accomplish those objectives, Stevens decided to change the processes in coming up with new products in order to make success more achievable and sustainable. By employing process reengineering, the system for coming up with a new product was constructed. Process reengineering within the company included the establishment of three phases for product development: the business analysis phase, the demonstration phase and the commitment phase (8). The business analysis phase ensured that all ideas will be given equal opportunities in order to display their feasibility and potential contribution to the company. The product description, as drafted by marketing people in order to give all the features of the product would be developed in this phase. After the business development phase, the technological feasibility of the ideas would be tested for the demonstration phase. The product specification, in line with the product description will be created by engineering people, which would then lead to the creation of prototypes in order to test the product for potential failures and improvement. After certain ideas were selected as technologically and commercially feasible, they would go to commitment phase where they would be manufactured. The reengineering of the processes for the product development function had enabled the company to channel its resources to the most profitable projects that were in line with its business objectives. By doing this, ideas were encouraged for constant improvement of the products. Also, the reengineering of processes had set a constant rhythm for the company to follow when launching products, which had helped address the delays. Job re-classification/organizational restructuring and compensation Job re-classification was necessary as project managers were given more authority in coming up with new products, and holding them accountable for the delays and failures. This had been part of Steven’s management philosophy of making people committed by giving them responsibility (5). By doing this, integration was more crucial within the company, which led to restructuring of teams in order to make them more accountable for their own projects. Project managers from other functions no longer had to wait for functional managers to make decisions, and this had enabled the company to respond to the changing preferences of the customers more rapidly. In line with this, compensation was tied to the objectives of the company in order to make sure that performance had been measured in order for the people to gain incentives as part of their compensation. This was to ensure that people’s compensation would be tied to how they perform in order for the company to meet its objectives (5). Comment specifically upon the management issues associated with new product development. Phases of beginning a new product are not defined The new product development was plagued with issues that concerned the lag in creating products that would serve the demands of the customers in the fastest way. As these lags had been previously been discussed due to conflicts between marketing people and engineering people, these conflicts were results of no concrete deadlines and rhythms for product launches. Independent projects which are not strategically determined contributed to higher costs Prior to the turnaround, people within the company had been responding to the ideas in the market by winning the support of an upper-level executive, then started forming those ideas into products. While these ideas were independent from each other in terms of major manufacturing considerations, the projects did not allow the company to achieve greater efficiency through economies of scale. Because projects were independent, costs were not allocated in such a way that the company could gain efficiency from operations. Unsynchronized engineering and marketing decisions: cause of delays and failures As previously noted, the conflicts between engineering and marketing decisions had been the major cause of failures and delay in coming up with a new product to be introduced to the market. Discuss the management decision making to introduce specialist technology and was this successful? Rate-responsive cardiac pacemaker introduction The rate-responsive cardiac pacemaker had enabled the company to regain its market position. However, the decision making to introduce this technology had been the same prior to the major changes within the company—the idea being championed by a project leader after being approved by an upper-level manager, which was the general manager then. The specialist technology was successful as the innovation had proved to be very useful to the customers, as well as being the first in the market. This made the company regain its position as the leader in the cardiac pacemaker market, only by good fortune. This had not been caused by the change in management decision-making in developing new products. What`s next for Medtronic? Redefining the competition as a market leader: focus on customers As Medtronic had regained its market position as the leader in the pacemaker market, it was faced with greater challenges in the marketplace. This included the pressure to be constant in terms of leading through technological advancements as well as more focus for customers in order to provide more value. Being a market leader, Medtronic had to balance its efforts in defending its market share as well as leading the industry to other activities that would expand the market as well as add more value to the customers. These values included educating customers like surgeons and physicians in line with its products and advantages, as well as putting their interests in line with those of Medtronics by ensuring their profitability of these customers as well. By constantly adding value to the already satisfied group of the customers and providing them more benefits, the playing field would be redefined to further expand the market. Works Cited Christensen, Clayton M. “We’ve Got a Rhythm! Medtronic Corporations’ Cardiac Pacemaker Business.” Harvard Business School. 8 July, 1997. 23 November, 2008 Read More