November 29, 2017
Case Study on Risk and Innovation
by Gary Morton
The valuable lessons we learned while inventing three breakthrough market categories have direct analogies in insurance.
How can you grow in a market that is flat or shrinking? This is a common problem faced by businesses. whether they are in insurance or manufacturing. It was the challenge my team faced immediately after I was promoted to lead Stryker’s EMS (ambulance) equipment business in 1999. The lessons we learned apply across a broad spectrum of businesses. Stryker EMS had grown aggressively following its 1994 launch by taking share from a monopoly competitor. But, as our slice reached 50% of that market, it was mathematically unfeasible to expect that the pace of expansion could continue meeting our parent company’s 20% growth requirement. We had to find other avenues to expand. The first prong of our approach was to extend globally. Nothing particularly original in that approach, but the second prong would challenge every bit of our ingenuity as we created three new market categories.
The situation we faced is similar to that of many insurance companies. Industry experts believed that there was little opportunity for innovation in the EMS patient handling equipment space—resembling what many believe about parts of the insurance space. We proved the skeptics wrong; you can, too. The valuable lessons we learned while inventing three breakthrough market categories have direct analogies in insurance, where finding game-changing innovations brings unique challenges.
First, we took a broad, strategic view of the issues facing our customer and partnered with industry leaders to uncover significant costs that were hidden in their financial statements. Simply put, we did our research. Insurance companies seeking to innovate could leverage their financial experts and actuaries in similar endeavors. Second, we focused on the root causes of those hidden costs, constantly asking what could be done to reduce or eliminate those causes. This is a mindset that the best insurance companies follow. Third, we invented technologies that enabled several of the breakthroughs; gaining patent protection and exclusivity in the process. In many of these inventions, we brought to bear crucial technologies that were being developed in unrelated markets but had application to what we were attempting to accomplish. This is similar to those in insurance looking to enhance quoting, claims processing, risk management and a host of other functions by applying burgeoning innovations in augmented reality and machine learning that are taking place in the computer, smartphone, and tablet markets.
See also: 4 Hot Spots for Innovation in Insurance
This extract from the new book Commanding Excellence: Inspiring Purpose, Passion, and Ingenuity through Leadership that Matters tells the EMS story. While the challenges in insurance are distinct, applying similar thought processes and fundamental approaches from this innovative leader in medical devices could be the secret sauce to innovative breakthroughs.
From Chapter 22: Purpose-Drive Creativity at Stryker
The second prong was focused on solving significant problems facing EMS providers around the globe. Over the next decade, we developed three new product categories that dramatically improved patient handling in prehospital treatment. After several years in the business, my team realized that an emerging employee-injury crisis was facing our customer base. As patients were getting heavier, and the average EMTs lifting the patients were aging and included a higher number of females, on-the-job back injuries were soaring. In addition, the many safety issues that arose in the event of an ambulance crash were gaining awareness. Stryker EMS set off on a determined mission to provide technological solutions to these challenging issues. We worked closely with internationally recognized EMS services to identify the sources of injury, developed strong partnerships with ambulance manufacturers and regulatory bodies working on crash-worthiness, and dared our engineering and marketing talent to devise breakthrough answers to these difficult problems.
First we launched the category of tracked EMS stair chairs. These were foldable/storable wheeled chairs that had an innovative friction-based track system that users could deploy to provide considerable assistance when transporting people down the stairs. The StairPRO was a game-changing product. Smaller EMTs gained the capability to safely transport patients down the stairs, dramatically reducing the risks of back injury to themselves while also improving safety for the patient. As we developed the product, many focus groups loved demonstrations of the prototypes but thought such a product would be far too expensive. To do it right, the chair would end up being three to five times more costly than the seldom-used, simple folding chairs most ambulances carried at the time. We knew the injury-reduction benefits were real, and the costs of such injuries far exceeded the cost of a fleet of tracked chairs. As it turned out, the StairPRO chair saw the fastest market uptake rate of any new product Medical Division had ever launched, even at the high price.
Our second major breakthrough was a viable powered ambulance cot. Lifting patients from the ground to the upright position for moving the cot and then loading the cot into the ambulance was another source of heavy back strain driving high rates of injury. Stryker launched an innovative battery-powered, hydromechanical cot that allowed EMTs to lift patients with great ease with the press of a button. The product was a particularly challenging engineering feat, because it had to have the power and strength to assist lifting up to a 700-pound patient yet still be light and maneuverable and have no compromises in the time it took to load and unload from the ambulance. Several patented new technologies allowed all of these requirements to be met, and PowerPRO was another runaway success.
The final major breakthrough was, perhaps, the most demanding and complex product Stryker Medical ever developed. We found it odd that in most of the developed world, the process of loading garbage from a customer’s curbside into a truck had converted from a physically intensive, back-injury-prone, manual operation to one where the sanitation companies issued customers customized wheeled containers that could be rolled out to the curbside and then picked up and hydraulically dumped into the garbage truck. This conversion involved a multimillion-dollar infrastructure investment all over the globe. Yet critically ill patients were still being loaded into the backs of ambulances by skilled EMTs and paramedics using simply their own brute force. It was an operation riddled with significant injury risks for the providers and patients. Not infrequently, patients were dropped or tipped over during loading or unloading, resulting in injuries and lawsuits. The situation begged for a technology solution.
As with the PowerPRO, there could be no compromises. Load and unload times had to be equal to current methods; a complete and seamless manual back-up had to work in the event of power loss; battery management had to be automatic; crash-worthiness had to be best in class; operation had to be simple; and the device needed to be easily cleaned. In the process of addressing all these often competing requirements, the team invented and patented multiple technologies for the loading and unloading method, near-field communication techniques between the stretcher and the loading system, inductive charging between the trolley and the cot (to recharge the batteries) and a host of other mechanisms. At launch, the PowerLoad system was well received, and it is still in the process of transforming the industry’s infrastructure today. We look forward to the day when no patient has to be loaded by brute force.
With the international expansion and three breakthrough new-product categories, the EMS business was a significant growth engine, delivering a combined annual growth rate of over 25% during the years through 2012, when I retired. There was nothing more rewarding than to have seasoned paramedics come into our booth at trade shows and ask to hug the engineers, thanking them for creating technologies that allowed them to do their jobs without injuring themselves or patients.
The purpose-driven atmosphere unleashed creative energies to go after these game-changing innovations. Success continues in EMS. In 2016, Stryker acquired the world’s leading manufacturer of EMS defibrillation for over $1.2 billion to complement the company’s global market position in the prehospital market.