Scott Sagehorn [00:12:11] That's a good question. So, I think, you know, it's maybe a general assumption right now, but I do think that there is a great deal of patience that you have to have in roles that are focused around innovation. It's not a muscle that you build by yourself. It's not something that happens in an office with a couple of individuals. It's a team approach to solving problems because as you know, the larger you get in an organization, you get a little bit more bureaucracy that pulls into the mix and there's more people involved and the decisions are made by single individuals or made by groups. And so, I think that mindset of working on teams, persevering and kind of pushing through your problems is something that manifests itself in the individuals through the innovation that we do here and through teams that are focused on innovation.
You know, I do think that patience is a big part of it, too. And you learn that through athletics, that as you train and as you prepare for a season it's six to eight months’ worth of work that goes into it. And you learn how to work with different people and different backgrounds. I think, you know, my mind is just moving through things here. And, you know, as I think about the types of people that you have to work with. I mean, I went to a school through athletics, right? That is ... I wouldn't say Miami of Ohio is the most diverse university in the country. They tend to, you know, bring folks and they're getting better. It's a big strategic initiative there is to drive more diversity on campus. And I think you're doing a great job over there. But my opportunity ... when you go into athletics, it's not the same type of demographics, the same kid from the same school, from the same family, from the same background. We get suburban kids and inner-city kids and kids from wealthy families and we get kids from poor families. And the lowest common denominator of a great team is chemistry, hard work, and talent.
[00:14:39] And with that comes an incredible amount of diversity in the types of people that you interact with. And I think my experience playing college athletics is learning how to work with people that come from very different backgrounds and the roles that I've transitioned to, especially in the new product development side of our business, you have a very, very diverse set of people that you work with. Very specifically, your engineers and your marketers. I mean, you couldn't get more polar-opposite people in an organization than engineers and marketing folks. I mean, you've got this very black-and-white, no gray area, hates autonomy or ambiguity in these engineers. And you've got this marketing crew that's just super-connected to the customer. They love ambiguity. They work well in gray spaces. They're pulled down on the commercial side of the business all the time. So, I think understanding how to bring a team together and force a marriage between two very different sets of employees is, I think, something that your better athletes, your leaders on athletic teams have to do in bringing these very diverse groups of people together to go win games. So, there's a really good connection there, I think.
Stefanie Norvaisas [00:16:06] That is a great point. I hadn't really even thought about it that way. I think well-articulated the differences between mechanical engineering and the marketing teams. I know it's something that it will always be a struggle, but to win games, as you say, it's the combination.
Scott Sagehorn [00:16:24] And there's this really amazingly unique and special individual that lives right in the middle of those two groups. We call them technical engineers or technical marketers here. And it's that individual that has technical competency that can solve technical problems on the R&D side. And then -- hopefully this doesn't offend any of the engineers either on the call or that are listening -- they can also walk, talk, and chew gum at the same time. So, they're hard to find. And they're actually an amazingly valuable part of the innovation on the strategic side of a business, because they tend to be stable in their role. They stick around for a long time.
Our marketers are in and out of here all the time. Our marketing team is a channel to push people into leadership positions out of the sales force that these tactical marketers tend to have a really good grasp on strategic direction. They're connected to the customer, which is most important. And so as we move people in and out of the organization, these technical marketers tend to be the stabilizer of a portfolio so that, as you all know, as you get focused on your competence, the innovation, if you've got people in and out of the business all the time, there's no stability on the direction you're taking the business. One, you slow down your process a lot. You tend to get very iterative when you start getting, you know, all these kinds of random, all-over-the-place people that come in that shake up what you're trying to do. It's just a really good stabilizing factor that we have at Stryker that's making sure that we have good technical marketers in place.
Stefanie Norvaisas [00:18:09] Just an operational question ... these technical engineers and technical marketers, where do they live in the organization?
Scott Sagehorn [00:18:17] You mean from an org perspective?
Stefanie Norvaisas [00:18:20] One of the things I find is that when companies get these unicorns that can talk both languages, they have a hard time figuring out where to put them.
Scott Sagehorn [00:18:34] Over at Stryker they're either in the marketing department or the R&D department. And that's seems like the easy answer. It is. But for the most part here, and where I would prefer them to stay, is in the R&D. I like them in R&D. And I think part of it is, if you think about structure and Stryker does a really good job and we have over time, of you an drive focus and you can gain control through organizational structure or you can drive focus and gain control through forcing collaboration and being good at it. Organizational leaders tend to want to organize a structure so they can gain control and focus. And it's kind of the easy answer. "I need control over here. So, I'm going to put them on my team so I can set direction" versus like really having a good strategy around collaboration.
[00:19:32] And the most important thing when placing people is that they're underneath a leader that can coach, develop, and grow them. And I think that for the most part, these tactical marketers, their competency and their real value lies in in R&D. And so, I think if you have a really good R&D leader that can that can coach, develop, and shape the career and the competencies of these people, their best fit in R&D unless you have a really special and unique marketing leader that has a tactical mindset as well, which within our organization we tend not to.
Dave Franchino [00:20:13] That's interesting. You said something earlier that I wanted to ask you maybe to build upon. You talked about the tremendous brand equity that you have, particularly in the stretcher market. That's one area where I know that Stryker is a dominant market leader. And I'm curious if you might be able to expand for our listeners on both the advantages and the challenges of innovating in a marketplace where you have a dominant market position. I could imagine that there are some situations where it's hard to find opportunities for growth, but in other situations, you have some permission from your customers to try things that maybe your competitors don't. What would you say to people who in a similar situation are looking for that type of advice?
Scott Sagehorn [00:21:00] So I'll take a shot at that and if I'm not giving you what you want, just stop me and redirect me. So right now, when I say our stretcher, so that's our emergency care division. That's our cot division. We do the cots. And there's, you know, depending on where you go, in the continent of Australia, can’t find one cot on that entire country or continent that's not Stryker. We have 100 percent market share down there. You know, when you get into the beds in the continental United States, you're looking at 45 to 50 percent. If you move over to the power tool division where I came from, we're about 91 percent market share. And I think that, you know, a couple of the challenges I think that you have when you have that much market share in a publicly traded organization that owes profit to a shareholder, which we can't forget about, is that it's difficult to find ways to continue to grow. And I think that you can innovate and put new lines of products out but at a certain point, you know, the power tool gets as small as you can get it. It's got enough power. You can make a power tool with too much torque so there's only so much you can do from a feature benefit set.
[00:22:29] So it's finding ways to, you know, in a strategic marketing quarter of retention and stimulate demand, like how do you retain customers and drive demand for more products and offerings and solutions within your portfolio? So, I think it’s been a challenge for us over time. I think we're getting a lot better at how do you continue to grow something at 91 percent market share at double digits, you know, effectively? And the organization gets used to the revenue, and the customers, and the shareholders get used to it and it forces you to think a little bit different. But it certainly is a challenge. I think the other challenge that you have when you're sitting at that type of share ... One, you've got a big target on your back. So, shareholders and on our investor calls and our competitor when you hear things in the news, like we're the target. Somebody is always, always, always, always, always chasing us. We're the standard in the market. We're the benchmark in the market. So, there's a benefit to that, too. But it certainly is a challenge.
And I think on the innovation side, you know, you can get a little comfortable when you have that type of market share. And I've mentioned this before and I'm going to probably again throughout the course of the conversation, is that if you're not careful, you know, you get so good at what you do and you build so much competency in, especially on the tactical side, you have these engineers that a building power tools or beds and structures for 25 or 30 years that you tend to drift away from the customer. And when you're doing voice of customer and you're getting insights for the next generation product, you want to solve the problems that you think you need to solve and you think you know the answers. Does that wheel need to be smaller? "I've been doing this for 30 years. Yes, the wheel needs to be smaller. I know the product. I'm the best in the entire world at it. Let's make the wheels smaller" risks like really going out and getting good, good voice of customer. And that can, one, you can start to deliver products to the customer that over time don't work for them if you're not listening to them. And you can also find yourself being really iterative, because if you're not really engaging and connecting with a customer and you're going out to the sales force for everything and asking the sales force, we tend to be really in our own little circle and our own little bubble. We tend to be very myopic and selfish in the things that we want. And you get iterative, right?
[00:25:15] If your customer doesn't like the bed because the wheel is too big, then the next generation product, you make the wheels smaller. And that customer is certainly important, and that sales rep is important. But it's not a statistically relevant sample size to make an impact on a long-term innovation. Before you know it, you look back 10 years later and your whole portfolio hasn't really gone anywhere. It's just been a series of really small, little, iterative changes and you haven't really shifted the market. And by that time, either somebody else has or the market has changed so much that you're playing catch up.
[00:25:53] I think on the benefit of it, in a really well-run organization with a good marketing and NPD strategy when you have that kind of market share the most important thing that you have in the most critical asset there is your intimacy with your customer. And that is something that if I were to ever leave Stryker and I was going to take something with me, it would be our customer intimacy. We have a connection with and a broad base of customers that we can go to for anything. And getting that insight and that VOC is certainly, you know, a really valuable resource for us.
And I think the other piece of a benefit of the share that we have when it comes to innovation is that we've got mistakes in the past. I mean, we've got 30 years’ worth of mistakes that we've made that companies that are competing against us or startups haven't made yet. And I think about our quality system here, which I think is a certainly a core competence of ours and the design controls that we have around our processes that just deliver an amazing product every time that works when you use it and is reliable. It performs. It's everything from a brand equity perspective that our customers expect from us delivered. And we've done that just through time and experience and making mistakes and building processes within our organization that helped deliver, you know, on the expectations that our customers have.
Stefanie Norvaisas [00:27:37] So you mentioned 30 years of mistakes. Can you talk a little bit about maybe some of the mistakes or some of the lessons learned in trying to build that NPD strategy and introduce design thinking and innovation organization? What have been some of the challenges that you face?
Scott Sagehorn [00:28:05] Gosh, that's a that's a big loaded question. I could start that thing anywhere, but I'll try to get really specific and just hit a couple of things. I mean, I when I first started as a regional manager, I got involved a lot internally in projects and things like that. And we had what we call product managers and product managers were a single person that had upstream. So really, they were setting direction for where new product development was going. And they also had downstream responsibility, which was, you know, making sure that when we launch products that were launched effectively, they were priced right, we were taking care of the sales force. And I think when we were organized that way, there was a couple of problems. One, the commercial organization, especially at Stryker, sales is a core competency of ours. It always will be.
We've made a deliberate decision as a marketing department that we will always support sales. And the pull to sales is intense and it tends to take your focus away from the portfolio side of the product, of the portfolio side of the business. And so I think we learned that over time that when you aren't specialized and segmented and you're not hiring people to do a specific job, something tends to get either forgotten or let go or doesn't get the focus or the competency that it needs. And it tended to be the portfolio side. And, you know, I'll continue to reiterate this, and it will come up and up again. And when you don't have the competency and you don't have the tools that you need, especially -- we call it here, it's the CCD, customer-centered design. There are elements of design thinking in that. Especially at Stryker, we're activators. We like to go, go, go, go, go, go. A lot of people here that have been doing things for a long time as you tend to recognize problems and then everybody's got a solution. And if you aren't following a good process or you don't have the competency or you don't have the specialization in portfolio or the tools that you need you tend to go from problem to solution overnight. And we certainly were. We have failed there,
[00:30:30] When we decided to split our marketing departments up and we drove specialization and portfolio, The types of products that we're coming out with, the innovations that we're delivering to the market, both on the business side and the product side. I mean, there is a major, very clear delineation between the two over time as we started to focus. And I also think from again, I'm not ... I love engineers, they're like my favorite people in the whole company. I'm a geek myself. I love to get technical. But when you've got a marketer that's not focused in portfolio, they're getting pulled into downstream. You tend to do all of the problems that you're solving for your customers, tend to be generated through R&D and when that's the case, unless you have a very unique and special individual and a technical marketer, these engineers tend to solve ... I call it separating church and state.
[00:31:29] You've got to have a separation of church and state. The problems that we're solving can't be identified by the people that are solving them. They have to be identified by a separate group of individuals that have specialization and focus and are closer to the customer. And we were, you know, we had very large parts of Stryker that were organized in a way where R&D was running everything from the ideation in the problem to be solved all the way to getting products through planning and development and out the door. And it just, without the help of somebody that was really specialized and focused on the customer that just had a really different scope of responsibility. So I think, you know, those are the two things from an innovation perspective, as we've grown as an innovative company that we've learned over time, is that specialization in marketing and R&D is such a critical part of delivering the right product to the customer.
Stefanie Norvaisas [00:32:26] I know that you guys have been building up your design core competency. Can you talk a little bit about how that's gone and how that's affected some things you just talked about?
Scott Sagehorn [00:32:37] So I would say it depends on where you go at Stryker. You know, a lot of it has to do with culture. And I don't know if we'll get it. I'm not going to go down the cultural rabbit hole right now unless you all take me there. But depending on where you are within the organization ... when I was over at Surgical, you know, we've got a gentleman over there that's really good, good at industrial design. Industrial design has always been a really big part of Stryker. And it's -- when I say always, probably for the last like five to seven years -- which has really helped us on a product design side get better and get more focused on the customer. And no matter where you go within the organization, I feel like we've got at least some competency in industrial design over here at Medical with Tom Granzow and Bill Fluharty and team. I mean, it is a robust and flourishing part of our business that we've invested heavily in.
So, a lot of it is, honestly, just depends on the leadership in place and if you've got your leaders bought into it. And at some parts of the organization, our leaders aren't bought into it. They feel like at times it can slow the process down a little bit, and we don't move fast enough. And that is very much tied to that, "We are Stryker. We have a problem. We know what the solution is. Let's go." And when you bring industrial design and you get very non-linear in your approach to problem solving, there is an appearance that it can slow things down. And sometimes that's because we pull too many people into the process and they get to see the mess that happens in that, you know, that non-linear kind of circle process that we go through and sometimes they just don't understand it enough. And it's like we've been doing this forever and we didn't need you 10 years ago, why do we need you now?
[00:34:34] In Surgical, where I was, just made tremendous strides in the last five to seven years of building out the competency over there and our leaders over in that part of the organization are bought into it. There are bigger fans of it now. They're more involved. We did a project last year with a strap plan, typically your strap plan was done in a, you know, oval office with five people. Then it was rolled out to some people and you didn't really execute to it. It wasn't collaborative in nature. And we took a very non-linear design thinking approach to strap planning last year and pulled our leaders into the process and I think that really helped over there to get a comfort level with the process and how industrial design and design thinking is really just a tool to help pull people together and collaborate. And so, we've made great strides over there. At Medical, our leaders over here bought into the process. We've got a great team. They're involved in everything over here. They do strap planning with us. They do customer-centered design workshops.
[00:35:35] We have good association partnerships with EMA and ANA out in the market right now. And we bring our industrial design team in to organize and plan our events with them and how we engage with them. It's just such a great core competency and a value add that we have, one, for us internally and also for our external customers. So, it is certainly a challenge, especially when it's just a new way of doing something. But it's just like anything. If you say something enough and you do something enough, you know, human nature is if you hear something 500 times then all of a sudden, it's a fact and you start talking about it. So you just litter this thing in front of the organization and you get that shiny lure in front of your leaders and you keep pulling it and have them chase it, eventually it just becomes part of how we do business.
[00:36:27] And I think we've made great strides over the last five to seven years of getting there. It's certainly been a challenge, though, because it's not a linear approach to problem solving, which is just how we've done things around here.
Dave Franchino [00:36:40] So, Scott, this has been fantastic and fascinating. We maybe have time for a couple more questions. One of the things I want to drill back on is you've commented a couple of times this conversation on how important an intimate connection to your customer is. In fact, you mentioned, I think, your exact words, the most critical asset is the intimate connection with the customer. And sometimes you talk to firms who think they're engaged with their customer. And what they really mean is they're focused on distributors or buyers or regional salespeople.
Three things kind of strike me as being a challenge to that intimate connection with the customer in your particular industry that I was hoping maybe you could expand upon. One is obviously Stryker's very large and complicated company, and the larger and more complicated you are, the harder it is for the people in your company to become connected. The other is you're in a highly regulated space. The medical and healthcare industry can sometimes create barriers to developing that strong connection. And perhaps the third is that in your industry, when you talk about who the users of your products are, of course it could be so many different people ranging from the patient to the nurse to the doctor, buying staff, those sorts of things. So I'm hoping that for other listeners who might have similarly complicated or larger unwieldy organizations or might have just lost that connection to the customer, what have you learned or what advice would you have in terms of developing that connection and then using that to drive innovation?
Scott Sagehorn [00:38:12] Yeah, your three bullets there were spot on. Did you just come up with those words? My gosh.
Dave Franchino [00:38:22] Well, we spent a lot of time thinking about this in your talk is inspiring me.
Scott Sagehorn [00:38:26] That was very insightful. I mean, you basically just listed our three biggest challenges with connecting with the customer.
[00:38:35] So, you know, I could probably spend some time talking about how to connect with customers within the regulatory bodies and how to not break the rules and how to force your leaders out to see people. And I do think that as the organization grows, it is more difficult. Our general managers and our presidents, it becomes more and more difficult for them to get in front of customers. I think one of our biggest challenges at Stryker and depending on where you go and the mindset that folks have, your marketers for the most part and your sales reps and those that are really close to the commercial side of the business, just a natural thing to be connected to the customer. And it's not difficult to get, you know, force people to get connected and out in front of the customer. Where the big challenge comes in a really big organization that has grown and scaled over time into adjacent areas of the business and you get into your regulatory bodies, and customer care, and our service department, and quality and advanced operations, and GQ and open sourcing, it's those folks that are really hard to get connected to the customer. because it's either they don't see it as their job or they don't have time for it or like, hey, that's marketing's job to do that.
[00:39:56] But the challenge becomes when marketing is trying to do something or set direction because of a customer request or because of input from the customers. If your enabling partner that's working with you doesn't know what you're talking about or doesn't have some sort of intimacy with the customer, doesn't know what the customer's going through, the empathy is nonexistent. So, it's a challenge. And getting those folks out -- there is a handful folks at Stryker that, you know, once a quarter they'll get out to a customer. They just need a couple of visits with the customer to really be able to put themselves in their shoes or the sales force. But I do think that where you can really make big shifts, really big impactful dynamic shifts in how we perceive our customer and how we connect with them is just through driving, systemically shaping the culture of customer connectedness at an organization.
[00:41:04] I am a big believer in, and I believe it's fact that culture can be systemically shaped, and that culture walks out the door every day at 5:00. It's our people. You don't have a choice whether you have a culture of customer-connectedness or not. Culture just happens and you can either let it happen to you or you can force the change and you can shape it. And I think if you as an organization, and it just takes a person -- it doesn't take your GM, it doesn't take a president, but it takes a single individual with some level of influence within the organization to recognize that there is a disconnect between the organization and the customer to force change. And it can all be done through systemically shaping your culture. And I think, one, like recognizing the diagnosis that you've got a culture issue within customer connection that is step number one to fixing it. If you don't know you have it or if the organization doesn't believe in it and your leaders don't believe that you have a problem, nothing is ever going to change. So, if you're going to shape a culture of customer connectedness, you have to recognize that you have a problem.
[00:42:21] And then when you recognize that you've got a problem, like you've -- I call it unfreezing -- you have to drive interventions and insights into the organization, into the people so that they know that there is a customer- connected issue culturally. And I think that is very much about how people think. If they don't think that they need to be connected to the customer. If they don't think that they are disconnected from the customer, they're never going to change. You think about like thought habits that we have. I remember as a child and I'm sure Dave and everybody else on the call, I'm sure that your parents told you the same thing, that if you don't have anything nice to say, then you don't say anything at all, right? So, one of the most critical parts of, in my opinion, of corporate culture and really growth and development and in getting people into the roles that they want to be in, being their best self at work, is feedback and coaching. Like being open and transparent with people. And we have these thought habits that are just ingrained in us from a young age that if you don't have anything nice to say, anything at all, don't say anything. So, what do you do? You don't say anything to anybody. You don't give them the feedback. You feel like it's going to hurt their feelings and how you think drives your behaviors and your behaviors drive your results.
[00:43:49] And so the result of not giving good feedback to people because you don't want to hurt their feelings is that they don't know what to fix. You know, they don't they don't know they've got a problem. They don't know that they're engaging people the wrong way. They don't know that, you know, that every time they send a memo up to the president that all their spelling is wrong because you're not telling them anything. So, from a customer-connected place, it's your thought habits, right? Thinking about why it's important to engage in customer. Thinking about the impact that being connected to the customer. If your thought habits are driving your behaviors of not connecting to the customer, you're going to get results that are not customer centric.
[00:44:34] You get if you want to change your results in an organization, if you want to be more connected to the customer. If you want innovation that's driven and shaped through the lens of the customer, you have to change how you behave. If you want to change how you behave, you have to change how you think. And in order to change how you think, you have to have insights, specific insights, that give people interventions and aha moments that like, "You're right, we're not connected to the customer." And I think that's really as an organization that's trying to be more customer centric. that's trying to drive innovation through the lens of the customer. You have to create the opportunity and you have to give people the ecosystem or the time or the interventions where they can change how they think. And if you can't change how people think about the customer and their connectedness to the customer and the importance of being connected to the customer, they'll never change their behaviors. And the results that you get will always be the same. So that's my like culture side of it.
[00:45:35] I could go into detail on your other three questions, but it all starts with culture. It all starts within insights. It all starts with changing how people think.
Dave Franchino [00:45:45] This has been fantastic, and when I look at my notes, I have written down and put an asterisk next to systematically shaping a culture of connecting with the customer. I think that's a wonderful way of putting an attribute on what's been an important part of Stryker's success. I was also really inspired by your comments that it can be done with a single individual. I hope our users can take, our listeners rather, can take that as inspiration.
[00:46:13] Good. I have really tremendously enjoyed this. Stef, anything you wanted to share or add?
Stefanie Norvaisas [00:46:19] No. Scott, this has been really great. I think your summary about what it takes to change a culture and the idea that people have to think differently, it was really well spoken.
Scott Sagehorn [00:46:31] Good. I appreciate it. I enjoyed my time with you. I love getting together with your group. It feels like family now, which is awesome. So, you're a fun crew to hang out with -- you feel like Stryker people. You're good at what you do. You're all smart, but you're also amazingly fun to hang out with. And it's always informal, which is such like a breath of fresh air in the corporate world. So, I appreciate and am grateful for all of you.
Dave Franchino [00:46:59] Thank you. Fantastic. Thank you very much. Once again, this is Dave Franchino. And I've been joined by Stefanie Norvaisas and we have really enjoyed today's conversation with our guest, Scott Sagehorn, Director of Marketing for Stryker, who's really exhibited some amazing growth and yet a real focus on innovation and the customer. Scott, thank you so very much for your time. Really appreciate it. I know our listeners are really going to enjoy this.
