Managing Scale in the Medical Device Industry

By: Gregory A. Janicik

The Challenge

Most medical device entrepreneurs and leaders of startup medical device companies know the common pitfalls that occur on the path to commercialization. Some startups struggle with funding, especially if regulatory approval takes longer than expected. Other startups fail because adoption doesn’t materialize as anticipated due to strategic miscalculations. Even if those hurdles are overcome, assembling the right team composed of the appropriate mix of skills and experience can be an impediment to success. Unfortunately, the “right” team members often disagree on strategic decisions or have different risk appetites, which hinders aligned, actionable progress.

When medical device startups manage to avoid the above pitfalls and achieve commercial success, scaling the organization presents a new problem. Scaling any organization is difficult, but the medical device industry presents unique challenges that must be managed effectively. Some of these challenges include:

  • Dealing with compliance and regulatory governance

Building compliance systems and regulatory processes is a resource-heavy endeavor that requires intense scrutiny and supervision. Changes occur rapidly, and even one misstep during the growth phase can slow progress down considerably. Leaders in the company must shift from having a laser focus on regulatory approval to having a systemic lens on the regulatory function and how it operates.

  • Achieving consistency in operations

Handling orders and overseeing manufacturing operations while maintaining quality is critical. To manage orders and monitor quality, there is a need to implement effective ERP and CRM systems. This shift can be difficult, as there is a need for discipline and consistency in usage yet bad habits or norms may already exist. Filling early orders is often an all-hands-on-deck endeavor, and getting employees to be more disciplined and planning oriented while focusing on the appropriate quality metrics takes effort and patience (which are often in short supply during commercial growth).

  • Staying ahead of the competition

The continued specialization of therapeutic modalities results in an accelerated diffusion of innovations as doctors, providers, and developers in the same space are exposed to new products rapidly. The first-mover advantages for startups are short-lived, with big companies chasing the same niche markets. The R&D function in startups typically pays attention to initial product challenges and often does not plan for the next phase of new product development. With competitors only slightly behind, it is important for leaders charged with growing the company to plan next-generation products earlier than expected.

Leadership Can Be the Difference

All of the above challenges require enhanced planning and foresight to simultaneously manage the day-to-day activities in a startup while preparing for the future. The increase in the scale and complexity of organizational activities during early commercial growth suggests that leaders need to broaden the scope of their impact within the startup environment. This can be particularly difficult as the startup mentality that takes hold in small, growing organizations limits the ability to shift leadership behavior over time. What shifts need to occur? Based on our experience working with fast-growing companies in the medical device industry, we believe the following behavioral changes are necessary to manage scale effectively:

FROM TO
  • Function-specific problem solver (e.g., regulatory, compliance, manufacturing, etc.)
  • Agenda setter who plans the expansion of his/her function while coordinating with others
  • Reactive, tactical manager of execution
  • Proactive architect of processes and systems that support the strategy
  • Hero-oriented overseer of binary outcomes (e.g., regulatory approval, clinical trial acceptance, first sale, etc.)
  • Leader who delegates and establishes role clarity as he or she aligns resources across a range of deliverables

Readiness for Scale

What does it take for leaders to adapt and lead effectively when scaling the organization? Can startup leaders make the transition or not? RHR has an approach to assessing leaders to determine their “readiness for scale.” Our model is based on research and grounded in the essential few behaviors that differentiate effective leadership in roles with wider responsibility. With respect to startups in the medical device industry, the level of wider responsibility comes from the transition from focusing on the abundance of tasks on one’s plate—learning about the market, regulations, manufacturing, development, financing, and so much more—to focusing on leading and building organizational capabilities for the company.

The Readiness for Scale model facilitates RHR partnership with startups to help prepare them for scale and growth. Through a proprietary assessment approach, RHR can ascertain whether your leaders are prepared to lead the business (through seeing the whole, making systems decisions, and preparing for the future), lead people (through focusing the organization, influencing with power, and creating shared values), and lead oneself (through reasoning with agility, thriving in high stakes, and knowing oneself). More importantly, we can help develop your leadership team to make the transition needed both individually and as a team to scale the organization effectively. Leveraging the results of the assessments, we can engage you and your leaders on a path toward individual and team development that results in broader leadership that will position the organization for success in the future.

Do your leaders have what it takes? Call us today, and let us bring our industry experience and leadership development skills to help your team scale its leadership quickly and effectively.

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