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How Medical Device Companies Can Shape Their Business Culture to Improve Results

Ignoring your informal business culture could hamper your medical device company's ability to take advantage on opportunities in the market.

June 10, 2013

5 Min Read
How Medical Device Companies Can Shape Their Business Culture to Improve Results

In a recent meeting, we asked a CEO to describe the characteristics of his company’s culture. His answer: “I haven’t put one in yet.”

While this entrepreneur hadn’t consciously been shaping his company’s culture, it certainly existed. Even if no one realizes it, every business has a culture that’s been evolving since the company was founded.

It’s no secret that cultural issues have a substantial impact on any business’s success, especially in the medical device space. This includes everything from entering new markets to mergers and acquisitions, outsourcing, and introducing new technology. However, medical device companies are often blindsided by the impact their cultures have had on strategic commitments they’ve made.

The earlier and more consistently companies evaluate their business cultures, the more they can evaluate the fit of strategies or initiatives and shape their cultures to get the business results they need, even in a turbulent economy. The following can be used as a guide.

Stay Attuned to Both of Your Cultures

Culture consists of all of the values, beliefs, and practices that exist in a business, and it is the primary force shaping key strategic decisions and how things get done.

Many business leaders talk about the great effort they’ve put into designing their culture. Yet despite policies, edicts, speeches, and process diagrams, they too often say things still aren’t working the way they want. This may be because they’ve focused on aspects of the formal culture, while elements of the informal culture resist their efforts.

Formal culture reflects everything that’s official—a company’s mission and values statement, the style of its business cards, its operating procedures, performance reviews, and so on. This is how leadership ideally sees the company.

Informal culture, however, is not written down or presented in speeches. It reflects what really happens on a daily basis. From who sits where at lunch to how information is shared and how important decisions get made, the informal culture is just as prominent as the formal culture—perhaps even more so.

Overlooking or underestimating the duality of cultures can cause unexpected problems. For example, a medical device company decided to enter a new market that required fast turnaround of orders. While its policies and procedures (formal culture) made it seem that the organization could easily perform at this level, the reality was that the informal culture resisted moving at a faster pace, and orders took significantly longer than new customers expected. The moral of the story: When formal and informal cultures clash, the informal culture wins every time.

Regularly evaluating the degree to which formal and informal cultures are aligned puts companies in a better position to more quickly and realistically assess potential business opportunities.

Weigh Cultural Fit with Organizational Performance

As companies identify new opportunities, it’s essential that they first answer a deceptively simple question: “What would the organization specifically need to do to pull this off?”

At this point in strategic thinking, companies should focus more on identifying specific organizational competencies rather than on individual performance. In some cases, this ability is already in place, but in other cases organizations may need to do things differently.

One of the best ways to identify what would be needed to take advantage of an opportunity is to look into the competencies that would be required. For example, “Can we currently turn orders around in 24 hours?” If the answer is “no,” the next question is “What would we need to do to perform at that level?” The question gets repeated until the company can answer with confidence that the organization already has the specific competency needed.

After the company has identified the organizational competencies that would be required to deliver on its objectives, consider is how the objective fits with the organization’s formal and informal cultures. While written procedures can change overnight, ingrained values and beliefs take much longer to change.

Adjust as Necessary to Shape Business Results

Once a company has decided to tackle an opportunity, it needs to decide which factors in its formal and informal cultures will help it accelerate progress and which ones will block progress.

For example, an entrepreneurial organization—let’s call it the Med Device Partnership (MDP)—with ambitious plans for growth had a number of formal elements in place that reinforced the value of teamwork. There were even “teamwork” posters stuck on the walls. However, its informal culture actually rewarded independent decision-making and a Lone Ranger mentality by giving praise and career advancement to individuals who stood out.

While action orientation and risk taking were organizational strengths for MDP in many respects, the tendency to single out individuals for rewards and recognition provided a strong motivation for employees to horde information and grandstand. In several respects, MDP’s informal values and beliefs did not support its formal values and beliefs of information sharing and teamwork.

By asking questions about how the company could build cultural reinforcement for the performance it needed, the MDP leadership may have gained feedback that could have led it to make adjustments in both its formal and informal cultures. For instance, the company might have modified its compensation system to tie career advancement more strongly to tangible demonstrations of teamwork rather than individual contributions. It may also have looked at ways to leverage the action oriented, competitive nature of its informal culture by giving praise and celebrating when team goals are met.

When a company is clear about the organizational performance it needs to reinforce, it can better adjust the practices that reflect these values and beliefs.

Shaping entrenched values, beliefs, and practices does not happen overnight. However, the effort is well worthwhile. Addressing these issues on a consistent basis can minimize problems and prevent others form occurring in the first place. It can also help companies maximize both top- and bottom-line results, regardless of the economy.

Pamela S. Harper is founding partner and CEO of Business Advancement Inc. (http://www.businessadvance.com), where she specializes in helping executives take advantage of unexpected opportunities for top- and bottom-line growth. Harper is an internationally known business performance advisor, author, and professional speaker. She can be reached at [email protected]

D. Scott Harper, a senior partner at BAI, is an internationally recognized innovation expert who specializes in blending technical and business insights to achieve outstanding business results. He has extensive experience in moving products to market from concept generation through development and release. He can be reached at [email protected]

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