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

Thank You!!