How can your organization grow in a market that is itself not growing – or in a market that is in fact shrinking?
That was the challenge my marketing, sales, and research and development (R&D) teams faced with our emergency medical services (EMS) equipment business at the turn of the millennium.
Our parent company, Stryker, launched the RUGGED ambulance cot in 1994. Sales grew nicely, meeting Stryker’s mandatory 20 percent growth requirement, but after five solid years, momentum began to slow. As the senior cofounder of the product line, I was promoted to general manager and given the challenge to grow an independent EMS business at least 20 percent annually in a global market that was actually shrinking in unit volumes. It seemed a daunting task, similar to one faced by many businesses today.
Ultimately, we were able to meet the challenge – and your organization can, too, by creating entirely new market categories.
In its first five years, the EMS product line had grown by exploiting patented, highly differentiated features and factory-direct sales while capturing market share from a monopoly competitor. After gaining about half of the cot market, our chances to continue 20 percent earnings growth through grabbing share were slim. The size of the market would not support such high growth demands. We had to find other ways to expand.
Our expertise and strengths were in a maverick marketing approach supporting a highly creative R&D team. We had also established a reputation as a company that would work diligently to solve customer problems. Capitalizing on these strengths led us into a process that others may find very helpful for their business.
1. Identify Key Customer Problems
We began our search for growth by developing a network of lead EMS services around the world. Then, while conducting deep research into critical problems facing these services, we had an epiphany. The EMS industry faced an emerging employee injury crisis. As patients were getting heavier and the average emergency medical technician (EMT) lifting these patients was aging, the number of on-the-job back injuries was soaring. EMTs needed help.
2. Understand the Financial Impact of These Problems
As we dove in further with leading EMS risk and safety managers, it became evident that in addition to the human costs, the financial costs of these injuries were staggering. First, the identifiable healthcare and workers’ compensation costs were among the highest per employee of any occupation in the United States. Second, devastating hidden expenses lurked in the lost and modified workdays that services were incurring to accommodate injured employees.
Uncovering significant problems facing your customers is step one. Especially in a business-to-business situation, the next crucial step is to identify the financial impact. Will solving the problem drive revenues, reduce costs, or both?
In our situation, we had uncovered a huge problem that was driving significant costs. We realized that developing new-to-the-world patient-handling devices that would reduce EMT injury rates could solve our growth dilemma while we improved the lives of EMS employees. The services would see immediate savings in their operating costs, plus reductions in their healthcare and workers’ compensation costs over time. It could be the ultimate win-win.
3. Get to the Root of the Problem
Next, you have to truly understand the root causes of the problem you’ve discovered. For us, this meant identifying the underlying drivers of work-related injuries for EMS personnel.
Again, it was time to expand our network. Subsequent research included having our team members ride along in the ambulances of influential international and domestic services. We also brought in renowned ergonomic researchers from a local university who were experts in analyzing high-risk physical tasks. Together, we uncovered four common tasks that greatly increased the risk of injury. We dared our engineering and marketing talent to devise breakthrough technology to address these areas.
4. Innovate a Solution – and Don’t Let Price Derail You
Inventing and developing solutions is a process beyond the scope of this article, but our experience with successfully launching three new-to-the-world product categories did yield a powerful practice worth mentioning.
The first injury-prone task we tackled was transporting patients down stairs. Many countries required ambulances to carry devices called “stair chairs,” but these were little more than folding, card-table-like chairs with handles and wheels. They provided little assistance. We saw the chance to put an innovative friction-based track on the chairs. When users deployed the track, it would provide dynamic braking when transporting people down the stairs.
However, a major hitch happened as we developed the chair. To get our new product right, the chair would end up being 3-5 times more costly than the flimsy stair chairs of the day. Focus groups loved demonstrations of the prototypes, but nearly all thought our proposed price would be far too expensive.
Confident that the injury-reduction benefits were real and that the costs of such injuries far exceeded the cost of a fleet of tracked chairs, we decided to push forward anyway. As it turned out, the “StairPRO” saw the fastest market uptake rate of any new product Stryker Medical had ever launched, even at its high price. The category of tracked EMS stair chairs was born.
If you are solving a major customer issue, do not be swayed by concerns that your solution is too expensive. As long as solving the problem drives significantly greater financial benefits than the solution’s cost, it will all work out.
With three breakthrough new-product categories over the next decade, Stryker’s EMS business delivered a combined annual growth rate of more than 25 percent during the years through 2012, when I retired. We also changed the world for our customers.
This case illustrates that there are growth opportunities even in what may seem the most stolid of markets. To realize them, develop powerful networks with your customers and other thought leaders. Identify key customer problems, understand their financial impacts, and dive in to uncover the root causes.
When developing the solution, don’t become too afraid of costs. If you genuinely solve a crucial problem, your solution will be worth it.
Follow this formula, and your organization can see extraordinary success, too.