Posted on September 3, 2020
Dale Spencer, Founder and Chairman, Paul Buckman, CEO and Stacy Enxing Seng, President formed ev3 in 2001 with the goal of building a middle-market alternative to its multi-billion dollar competitors in the $10B endovascular device market. Funded by Warburg Pincus and The Vertical Group, the team closed six acquisitions, established operations in the US, Europe and Japan, and reached $100M revenue by 2003.
Jim Corbett, ev3’s President of International, was promoted to CEO in 2004 and successfully guided the company through an IPO in 2005. Sales continued to grow exponentially under the charismatic Corbett, exceeding $400M in 2008. In late 2007, the company made a huge bet acquiring FoxHollow Technologies, Inc. for $780M. This acquisition proved difficult for Corbett and his team to integrate, resulting in significant operating losses and a 40% drop in the device maker’s stock by April 2008. Around this time the board decided that a change in leadership was necessary to solve for the opportunity presented by the FoxHollow acquisition and to regain credibility with shareholders.
The company’s new CEO, Bob Palmisano, came to ev3 with a background of successfully turning companies around leveraging his High Performance Management System (HPMS). In his initial “current state” analysis, Palmisano noted the presence of strong people across all functions, excellent customer relationships and innovative products. On the other hand, he noted the company was in a reactive “fire-fighting” mode and lacked a system for setting and sticking to priorities.
In his first weeks on the job, Palmisano recognized the strong leadership of Stacy Enxing Seng, President of Peripheral Vasular, and Dave Mowry, Vice President of Operations. They were sold on the value of a system and formed an enthusiastic and committed “#2” to help Palmisano implement the system and begin the needed process and cultural changes. HPMS spoke to Dave’s background in quality and, as a result, he asked to own the system adding “HPMS” to his job title. Dave noted the pre-HPMS culture was focused on results whereas HPMS focused on process and results, which they branded as their “Journey”. The system helped break down barriers and got people to start working together. In Dave’s words, it became “contagious”.
While the financial pressure to perform was immense, Palmisano believed strongly in the need to focus on improving leading customer and employee satisfaction metrics. With the help of Haffey&Co., he developed and deployed satisfaction surveys to these key stakeholders. The data and facts from these surveys allowed the company to focus on a “Vital Few” set of priorities aimed at dramatically improving satisfaction as measured by “willingness to recommend” in these groups.
The “Vital Few” along with a new Vision, Mission and set of Shared Values were developed in the company’s first HPMS Workshop in May 2008. I was extremely fortunate to have facilitated this meeting, which resulted in the following Vision statement:
“To be the best at identifying and treating lower extremity arterial and neurovascular
disease, leading with breakthrough technologies and process.”
This simple, concise and memorable Vision statement helped the company make decisions and guided certain actions. Notable was the absence of coronary disease, the “3” in ev3, which put a major strategic issue behind the company allowing more focus on the peripheral and neurovascular businesses. It further guided actions and investments, allowing the full organization to lead with breakthrough technologies – namely focusing the commercial organization to re-establish the Fox Hollow acquisition to positive revenue growth, and ensuring the necessary R&D and clinical investment to support the breakthrough programs.
All of these elements were condensed into a one-page strategic plan, or “Tree”. Leaders were urged to visibly display their Tree and use it as a starting point for internal and external meetings. No one leaned into this aspect of the system more than Stacy Enxing Seng. Following one of her fist customer presentations, in which she emphasized her Vision to be the market leader in lower extremity arterial disease, she was asked to be a Key Note speaker at a medical conference focused on lower extremity disease. With this role model behavior, which she describes as “Live the Tree”, she invited and included others to join her on the “Journey”. Stacy, now a successful med-tech VC, felt the principles of HPMS put her in “5th gear in my own leadership.”
Brett Wall, currently EVP and President of Medtronic’s Restorative Therapy Group, was another role model leader in ev3’s adoption and success with HPMS. Prior to establishing the system and its processes, it was very difficult to make decisions and, in his words, the company failed the “transparency test.” Among other elements, Brett fully embraced the new Candor Value, through which is was considered best practice to allow the “Current State to be ugly and therefore have a real conversation about what is going on.”
Brett also fully embraced the “Vital Few” framework and, for his neurovascular business, focused on generated the clinical evidence necessary to move the standard of care in acute ischemic stroke from t-PA injection to the company’s SolitaireTM stent-retriever thrombectomy device. This was accomplished through a $30M investment in the multi-center, prospective, randomized SWIFT PRIME clinical trial. Brett fiercely defended this investment through ev3’s acquisition by COVIDIEN (and later Medtronic) culminating in new AHA/ASA clinical guidelines and explosive double-digit SolitaireTM sales growth.
Palmisano, and his leading coalition of Mowry, Enxing Seng and Wall, practiced all elements of HPMS with enthusiasm and total commitment and rapidly achieved world-class results. On the leading indicator side, employee willingness to recommend increased from low 70’s to mid 80’s; and customers who would enthusiastically recommend the company increased from 10% to over 40%. On the lagging indicator side, ev3 recognized dramatic improvements in gross margins, profitability and balance sheet metrics. Perhaps most telling was the 300% increase in shareholder value recognized in their acquisition by COVIDIEN in July 2008.