Jeff Sturm knows leaders need the answers these questions get. He also knows there’s a better way to ask.
“’When will this get done’ is a legitimate question,” said Sturm, Huntington’s Chief Continuous Improvement Officer, “but if you ask it over and over – and at the wrong time – you’re going to drive the wrong behavior.”
Changing leadership behaviors – starting with how they ask questions of their people – is a key component of a wide-ranging operational excellence transformation rounding out its fourth year at the Columbus-based bank, a stalwart among Midwestern financial institutions with more than $100 billion in assets. Sturm stepped in to lead the bank’s formal effort to build a culture of continuous improvement as it launched in 2014, and he’s appearing as a keynote on Dec. 8 for a seminar hosted by The Ohio State Center for Operational Excellence, where the bank has been a member since 2011. Registration for the event, open exclusively to employees of COE member companies, is open now.
Looking back at the early days of the initiative, Sturm said part of the foundational work was in communicating what the culture change wouldn’t be.
“Most people’s perception of continuous improvement was two things: this very rigorous Six Sigma orientation, and that everything was about expense reduction,” Sturm said. “Really, we wanted to help better equip our employees to have more formality around their problem solving to help in the day-to-day.”
The road map driving Huntington’s continuous improvement efforts is a three-pronged strategy that aligns employees on establishing cultural behaviors, creating capable colleagues and delivering results. That’s operationalized, Sturm said, as “making great, customer-centric, process-focused, data-driven decisions.”
A sustained continuous improvement capability, Sturm said, is critical to what the bank has achieved – and what’s in store.
“Our team has really focused on making sure we’re helping creating a culture where our people are able to identify and take advantage of opportunities because of that growth,” Sturm said.
Learn more about Huntington’s operational excellence journey on Friday, Dec. 8, when Sturm’s 10:30 a.m. keynote will be followed by a presentation on keys to visionary leadership from Tim Judge, the executive director of the Leadership Initiative at Fisher College of Business and a top-ranked researcher in the field.
Billy Taylor wrapped up a three-year stint running Goodyear’s manufacturing plant in Lawton, Oklahoma, with more than a few reasons to be proud.
Under his leadership, safety improved, processes streamlined, and projects racked up millions of dollars in savings. The turnaround job was enough to win the coveted Shingo Prize Silver Medallion for Operational Excellence, what’s been dubbed the “Nobel Prize for operations.”
It was, Taylor thought, his ticket to world headquarters.
The powers that be had other things in mind, dispatching him from one challenge to his next: A plant in Fayetteville, N.C., where demand for tires was outstripping the production pace by nearly 20 percent. In Taylor’s first two weeks walking the floor as plant director, he made it his mission to “seek to understand before I sought to change.”
The diagnosis: “I had great people but they didn’t understand what winning was,” Taylor said.
‘Most leaders struggle with letting go’
The story of the successful Fayetteville turnaround was just the next step in a journey that eventually led Taylor to where he is today, overseeing all North America manufacturing for the iconic, $15 billion-a-year brand and Center for Operational Excellence member. Taylor shared insights from his decades driving transformational change during his keynote address at COE’s 25th anniversary celebration in September, where nearly 200 industry leaders gathered to ring in the center’s quarter-century milestone.
Taylor’s insights on leadership are rooted in a passion for engaging people, a core element of transformational change that’s become the centerpiece of his frequent speaking engagements.
“Great leaders respect their people,” he said. “If you make people visible, they will make you valuable.”
Reflecting on the Oklahoma and North Carolina plant turnarounds, Taylor said the crucial next step after defining winning was in giving his front-line employees a sense of ownership in executing on the plant’s broader strategy. Though essential, it’s not always easy for managers, he said.
“Most leaders struggle with letting go,” Taylor said. “People are not your greatest asset. Engaged, empowered people who own your strategy are your greatest asset.”
By putting that into action, Taylor said, he ultimately oversaw a transformation in Fayetteville that resulted in a 14 percent bump in tire production with a 4 percent drop in hours worked – “no investment, no additional equipment, just ownership.”
Sustaining this culture of continuous improvement, Taylor said, means building a regular cadence around recognizing people as they execute on strategy and “celebrating the process” that’s driving gains. And it’s something he says he still does as one of the highest-ranking leaders in the company.
“Now that I run North America, it’s still simple. I still show up to celebrate the process, and I never miss the opportunity to share best practices.”
The Center for Operational Excellence is ringing in a momentous anniversary with a celebration in September featuring two standout keynotes.
COE’s fall kickoff seminar – a formal celebration of its 25th anniversary – is set for Friday, Sept. 15, where Robert Martichenko, CEO of LeanCor Supply Chain Group, and Billy Taylor, head of North America Manufacturing for Goodyear Tire & Rubber Co., are set to present. The sessions will bookend a tailgate-themed networking lunch … with some to-be-announced special guests.
Both keynote speakers are renowned storytellers who bring a blend of personal and professional experiences to their respective stories of spending decades driving transformational change. Martichenko, set to keynote at 10:30 a.m. on Sept. 15, founded LeanCor with a mission to advance the world’s supply chains through training, consulting and third-party logistics. He’s emerged as a globally recognized thought leader in lean thinking and end-to-end supply chain management, as well as an award-winning non-fiction and fiction author.
Martichenko’s keynote, “Lessons in Lean: Lessons in Leadership,” focuses on what he’s learned while building organizational cultures focused on lean thinking and relentless business improvement.
Taylor of Goodyear, set to speak after lunch at 1 p.m., is a sought-after speaker and self-described “evangelist” for people-inclusion processes in operational excellence. In his keynote, “People-Driven Operational Excellence,” he charts his journey from fledgling plant manager to top leader at an iconic brand, offering insights on keys to building a high-performance, self-sustaining culture that’s the foundation for company-wide success.
Both sessions also will be offered to employees of COE member companies via live webcast, hosted and run by Mills James. Registration for webcast and in-person attendance – expected to reach capacity – will open the week of Aug. 7. Read more about both speakers on our website.
The event comes a full quarter-century after the founding of COE, which started in 1992 at the Center for Excellence in Manufacturing Management. Once narrowly focused on the application of lean in the manufacturing sector – and touting only four members – the center has grown along with the field of operational excellence to encompass the notion that process improvement principles are intrinsic to competitive edge for any industry.
Today, COE has a roster of nearly 40 member companies and engages with thousands of operations leaders across the country in the shared pursuit of building better processes in a culture of continuous learning.
Fisher College of Business’ research and business partnership centers might be individually focused on an eclectic range of themes, but finding common ground is easy when it comes to today’s toughest business challenges.
A group of four Fisher centers teamed up this summer to tackle two of the biggest challenges companies face today: growing and developing talent, and unlocking the power of data and digital disruption. Nearly 150 members and guests of the Center for Innovation and Entrepreneurship, Center for Operational Excellence, National Center for the Middle Market and The Risk Institute gathered in July for a deep dive into winning the “talent war,” with the disruption-focused follow-up set for Wednesday, August 16.
The big picture
The July “Winning the Talent War” session turned a spotlight on some of the key issues employers are facing as they match the supply in the talent pool with their hiring needs. A region’s talent pool, keynote and Brookings Institution Fellow Marek Gootman told the crowd, is nothing short of the key to its vitality.
“One of the things that connects everyone is where we’re pooling our talent from,” he said, “and talent is a key driver of economic competitiveness.”
Harnessing the potential of the labor pool today, however, means facing serious headwinds, Gootman said. For one, employers are demanding more workers with a college education despite the fact that many out-of-work members of the labor pool don’t have more than a high school education. A recent Brookings analysis of 130 population centers by county – among them Columbus’ Franklin County – found that 55 percent of those out of work have, at most, a high school degree, while only 20 percent have a bachelor’s degree. In Franklin County, that gap is even wider.
Brookings, a research partner with Fisher’s middle market center, is an advocate for workforce programs – apprenticeships and social enterprise initiatives, to name a few – that can help solve this supply-demand imbalance. And with technology’s reach extending these days to traditionally “non-digital” jobs, building workforce skill in this area is quickly taking on critical importance, Gootman said.
“This is something that everyone, large and small, is going to be grappling with,” he said.
While these challenges might prove formidable to larger companies, they can be downright crippling to the middle market sector, whose companies create 60 percent of the country’s new jobs but can lack the capacity or perspective to reach outside their four walls for workforce help. New survey data Brookings compiled with the Fisher middle-market center and released at the session showed the sector’s firms struggling to hire for needed skills, underinvesting in talent planning and facing intense competition from larger companies.
By moving from an adversarial relationship to one that’s focused on building a better region, middle-market firms and larger companies can join forces and better leverage support from the public sector, Gootman said.
“You’re reliant on these mid-sized firms for the economic vitality of the region,” he told the crowd. “Large firms can find their own value in working with the middle market.”
The ground war
Shifting demographics and an explosion of digital technology are very much on the minds of top talent leaders at some of Ohio’s biggest brands, who joined Fisher Prof. Marc Ankerman for a panel discussion following Gootman’s keynote. In a wide-ranging question-and-answer session, human resources leaders from Cardinal Health, Marathon Petroleum, Nationwide and Wendy’s Co. grappled with the challenges ahead.
At Nationwide, a top Columbus-area employer, process automation and the rise of driverless cars are two technology-centered trends likely to disrupt not only the company’s base of 10,000 call-center associates – but the insurance models at the heart of its business, said Kathy Smith, the insurer’s VP of talent development. The oldest business represented on the panel – 125-year-old Marathon Petroleum – is similarly bracing for technological upheaval, but also investing in readying its existing workforce for it.
“We’re really focusing on repurposing our workers’ skills and preparing them to learn automated technology,” said Tony Moore, head of talent acquisition.
Technology is even transforming the hiring processes at the heart of human resources, said Will Shepherd, Wendy’s director of enterprise learning and development.
“We’re having to meet applicants where they are from a technological standpoint, and recruiters are stepping that up,” he said.
No matter what technological leaps are around the corner, panelists told the crowd they still have an eye on the kinds of capabilities that won’t show up on a resume, Smith of Nationwide highlighting collaboration and “emotional intelligence” as critical.
“We need to continue to build skills in the hard stuff,” said Kelly Wilson, VP of talent management at Cardinal Health, “but the soft skills are so important.”
The collaborative summer sessions continue with a look at data and digital disruption on Wednesday, Aug. 16, featuring speakers from Cisco, Safelite Group, Columbus-based data analytics startup FactGem and the Ohio State University Moritz College of Law’s Program on Data Governance.
Seats allotted for COE are currently full but employees of member companies may join the waitlist for the seats by e-mailing Jackie McClure at firstname.lastname@example.org. More spaces are expected to be released to the center the week of July 31, and those will first be extended to waitlisted attendees.
The routine “Best Places to Work” features that offer a snapshot of what it’s like to be a part of Columbus-based CoverMyMeds often focus on what stands out at first glance: The pool tables, the beer tap, the jeans-day-every-day vibe.
Nate Lusher, an agile coach at the health-care software startup, says the key to understanding the company’s culture is to look closer.
“Those are great, but they’re not what’s going to keep you there for the long haul,” Lusher told attendees at a Center for Operational Excellence event Tuesday. “They’re an expression of our deeper culture.”
Lusher and colleague Rick Neighbarger, director of quality and risk management at CoverMyMeds, offered a peek inside the Columbus company’s culture at the latest meeting of COE’s IT Leadership Network series. They also detailed their own efforts to make tools and behaviors key to continuous improvement a part of it, a challenge that’s intrinsic to process improvement efforts at companies of any size.
CoverMyMeds, which automates the once-cumbersome prior-approval process for prescriptions, has been a part of the Columbus business community for not even a decade but has drawn attention for its rapid growth and status as a sought-after place of employment. The last time CoverMyMeds disclosed its annual revenue – about two years ago – it was nearing the $100 million mark, and the company just this year closed a deal to be acquired by health-care giant McKesson Corp. for more than $1 billion. Columbus Business First called the acquisition the biggest tech startup exit in the city’s history.
Beneath that surface layer of culture, which the company notably pledged to keep following the sale, is one that values and trusts its people. And the people themselves, Neighbarger and Lusher said, are primed to experiment and take action.
“We’re not afraid to try something out,” Lusher said. “We’d much rather dive in and do it and learn from something.”
The effort of turning that experimentation into lessons learned and, eventually, better processes has included the introduction of a number of lean and agile tools at CoverMyMeds: Kanbans and story cards, metrics on cycle time and work in process (WIP), and an articulated vision of product ownership, just to name a few.
What’s crucial, Neighbarger said, is not what the tools are but how they’re deployed.
“You can’t just pick up techniques that a large multi-national bank uses and drop them into a small health-care IT company,” he said. “You have to tailor your techniques to principles.”
That principle-first approach ultimately has helped gain traction at CoverMyMeds as the company works to deploy a broader quality strategy that continues to manage risks amid continued growth. In short, the jargon matters much less than the results.
“Our goal is not to become ‘agile,’” Lusher said. “Our goal is to become great.”
Fast-growing and routinely honored as one of the region’s best places to work, CoverMyMeds also has been working to ingrain a culture of continuous improvement into everything from its day-to-day software development to its big-picture strategy. But how does a structured approach to lean and agile thrive in a casual, jeans-day-every-day culture?
The Center for Operational Excellence is thrilled to host for its next IT Leadership Network forum on Tuesday, June 6, two leaders at CoverMyMeds at the forefront of its efforts to drive lean practices: Director of Quality and Risk Management Rick Neighbarger (pictured, right) and Agile Coach Nate Lusher. Neighbarger and Lusher in this wide-ranging discussion will offer insights on:
Operational excellence in a startup culture: Driving change in a consensus-building, not top-down, environment;
“Stealth lean:” Teaching the tools and behaviors without getting lost in the lingo;
Garnering buy-in: Selling change up and down the ladder; and
Moving forward in the face of change: Continuing a lean journey after the McKesson deal.
This session not only offers an inside look at the nationally recognized culture at CoverMyMeds but offers insights on leading and sustaining change that leaders can apply no matter the industry or company.
by guest author Aravind Chandrasekaran, associate professor of management sciences, Fisher College of Business
Anyone who has taught lean principles grounded in the famous Toyota Production System (TPS) to organizations outside the manufacturing industry has – at least once – heard this common refrain: “(Insert industry here) isn’t cars on an assembly line. This doesn’t apply to my work.”
Leading lean thinkers, of course, have learned how to work with individuals and teams to move past this roadblock and garner buy-in – that’s why the practices and tools intrinsic to TPS have made their way into countless industries. Lean still can be a target for criticism, though, and one need look no further for proof than an article published earlier this year in the New England Journal of Medicine – and the debate it ignited.
The January issue of NEJM featured an article called “Medical Taylorism” where authors and physicians Pamela Hartzband and Jerome Groopman assert that lean principles “cannot be applied to many vital aspects of medicine. If patients were cars, we would all be used cars of different years and models …” This tipped off a flurry of rebuttals, including one from Lean Enterprise Institute CEO John Shook boldly titled “Malpractice in the New England Journal of Medicine.” In his piece, which itself attracted widespread attention, Shook writes that the foundational lean principles of continuous improvement and respect for people are critically important in the health-care system.
Shook is right, but I’d like to approach this discussion from a different angle, namely that this line of criticism has emerged elsewhere – and it’s rooted in a lack of understanding of lean deployment.
One of my initial research areas sought to understand how standardization and “smart application” of Six Sigma principles can aid R&D and innovation efforts. I pursued this as a number of business press publications and industry practitioner blogs lamented the damage Six Sigma does to creativity and praised the need for variation for innovation. Several years of research with my colleagues in Fortune 500 companies made us realize such sentiments don’t hold much water. We found, in fact, that principles of Six Sigma – when applied to the innovation process correctly (hence the “smart” in “smart application’) – can help reduce unnecessary variation and stop worthless innovation activities that consume R&D funding.
I’ve more recently collaborated with researchers and physicians to tackle similar questions in health care. Once again, the findings – published in several academic and practitioner outlets – are very similar: The smart application of lean and continuous improvement principles can help develop a safe and patient-centered health-care system.
In arguing that patients aren’t cars, the NEJM’s authors are absolutely right – but they’re dead-wrong in concluding there’s no place for lean in “many vital aspects of medicine.” As with our R&D research, we’ve found that lean deployment in hospital settings minimizes unnecessary variation that comes from care providers, not patients. In fact, it frees up time and effort to cater to the necessary variability in a population diverse in its illnesses, economic backgrounds, languages and more.
As an example, I spent years with other researchers – including somephysicians – looking at Ohio State University’s Wexner Medical Center, specifically a lean deployment effort in its kidney transplant discharge process. Medical research has found that transplant recipients after discharge must drink at least three liters of fluid a day – failure to do so can spike creatine levels, elevating blood pressure and increasing the likelihood of readmission. In our study, we found variations in how nurses delivered these instructions to patients: One nurse, for example, recommended drinking “a lot of fluids” while another suggested 100 ounces. Interestingly, nurses varied their wording across patients, while one patient would receive different instructions from more than one nurse. This wasn’t a matter of intentional deception, but the inconsistencies confused patients as they took in a tremendous overload of instructions.
Overhauled through the lean deployment via standard work design, nurses in our medical center now clearly explain the specific volume of fluid, use a jug to visually illustrate, and discuss the consequences of not following the instructions. Preliminary findings show this approach soothes patients’ anxiety levels and has reduced the chances of readmissions in the first month after transplant.
This isn’t just a lean approach to a problem – it’s a smart lean approach. And in an environment that, yes, isn’t cars on an assembly line, that matters more than ever.
Culture matters – and the companies that do it right know it pays dividends inside and outside their four walls.
This month, four Center for Operational Excellence members made the cut in an annual ranking by Columbus Business First of the Best Places to Work in the Columbus area. These companies scale the heights of the list by creating an environment where employees are engaged, inspired and driven to deliver.
The rankings – which came from a record 235 nominations – were made after employees at each nominated company completed a workplace satisfaction survey run by a third-party firm. Found among the 50 winning slots in five company-size categories are members:
Mills James – The Columbus-based, employee-owned creative media company ranked No. 8 in the “Large” category, for businesses with 100 to 249 employees – Mills James has 103 Columbus-area staffers and 160 company-wide. Summing up its secret to success, the Mills James team wrote: “We don’t hire employees; we hire principled, passionate, creative owners.”
Fuse by Cardinal Health – It didn’t take long for this scion of member Cardinal Health to make a mark as a top place of employment in the Columbus area. Cardinal Health opened this 122-employee innovation lab that develops commercial technologies for health-care customers little more than a year before it landed the No. 3 “Best Places” spot among large companies. Fuse, which is hosting a tour for next year’s Leading Through Excellence summit, said the company is “making it happen in health care” by having “killer talent” and being “big and visible.”
Safelite AutoGlass – The Columbus-based vehicle glass and claims management organization notched the No. 8 spot among extra-large companies in the “Best Places” ranking, for those employing 250 or more. Safelite, which has more than 1,200 employees in the Columbus area, said it works to create a “people-powered, customer-driven culture.”
BMW Financial Services NA LLC – The automotive financing arm of the iconic manufacturer landed at No. 6 in the extra-large company ranking. BMW Financial, which employees 570 in Columbus and more than 700 company-wide, wrote that “our associates are the key to our success.”
The rapidly evolving digital world is changing how we communicate, how we process information, and even how we add and network with members in our organizations, raising many questions:
Is my LinkedIn profile opening or closing doors? Are my internal presentations truly selling my ideas for change? What can I look at online when hiring a candidate? How can I build a value-adding network with other women in my organization?
We’re tackling all these questions next Friday, June 26, with a dynamic trio of speakers bringing the latest best practices in digital communication and the development of corporate women’s networks. Featured at this members-only Women’s Leadership Forum are:
Debra Jasper, founder, Mindset Digital (10 a.m.) – Jasper in this opening session will share her insights on the biggest shifts in digital communication, highlighting new ways to showcase expertise and determine what’s most essential to convey as attention spans shrink, whether managing up or down. She’ll chart the course for helping women leaders create powerful messages and connections inside their organizations and across the broader business community, offering vital advice on managing your “digital footprint.”
Kailee Goold, attorney, Kegler Brown Hill + Ritter (11:15 a.m.) – Goold leverages her legal expertise to walk attendees through practical considerations that arise amid the rising use of social media in the workplace. That extends to using social media during hiring decisions, managing employees’ use of social media, and workplace liability issues.
Mike Kaufmann, CFO, Cardinal Health Inc. (1:30 p.m.) – Following a networking lunch, Kaufmann will take the stage to share his experiences as the executive sponsor of Cardinal’s women’s network group. Using the success of Cardinal’s network as a healthy and innovative one for employees, Kaufmann will offer up key advice for other companies, including engaging men – a unique approach that is gaining popularity in corporate America.
This event, open only to employees of COE member companies, has limited seating available. Click here to register.
Looking back at a storied history that stretches back more than a century, Ryan Arbogast remembers Nov. 1, 2013, as a low point for the company his great-grandfather founded in 1907.
Arbogast, fourth-generation president at prosthetic product manufacturer WillowWood, sat anxiously in a Florida courtroom and listened to a judge deliver the most devastating blow yet in a legal battle that spanned nearly a decade – and, up until recent years, seemed to be moving in their favor. WillowWood, the judge said, was blocked from selling its Alpha® Classic and Hybrid Liners and sleeves because a key ingredient was found to infringe on a competitor’s patent.
Arbogast remembers picking up the phone and calling company headquarters, tucked away in a village southwest of Columbus, Ohio, to deliver the news.
“I was totally blindsided,” he said. “I hadn’t foreseen any possibility we’d have this product taken away from us.”
Calling the now-halted Alpha Liner merely a product is an understatement. In the 17 years since its introduction to the market, the sock-like sleeve that slides over a residual limb to make amputees’ prosthetics fit comfortably had become WillowWood’s lifeblood, composing nearly three-quarters of the annual revenue for a company at the lower end of middle-market range.
The product that helped triple WillowWood’s revenue and work force in just a generation was packed up and bound for a storage facility. What remained were nearly 200 employees wondering what might happen to their jobs come Monday and a cavernous company warehouse that had been bursting at the seams just hours before.
“You could hear your voice echo in that room,” Development Engineer Chris Kelley said.
Almost instantly, WillowWood was left with a gaping, multimillion-dollar hole in its top line that wouldn’t be plugged by legal appeals or going on record to “respectfully disagree” with the decision.
Arbogast and his team needed to act, and the next steps they took charted a path that helped WillowWood survive, thrive and innovate without a pink slip in the process.
A century of growth
WillowWood itself sprang from an act of innovation in the face of adversity. Ryan Arbogast’s great-grandfather, William, survived a railroad accident but emerged a double amputee, albeit one unwilling to settle for the poor prosthetic options before him. He took it upon himself to carve prosthetic legs that best met his needs using wood from willow trees on his farm, giving the company its name and first burst of inspiration.
A direct precursor to the Alpha Liner WillowWood would introduce at the end of the century came in 1921 with the rollout of the Sterling Stump Sock, a wool prosthetic sock the company says quickly became the industry standard.
The next 70 years of growth for WillowWood, then named Ohio Willow Wood, weren’t without pivots and setbacks. The company turned to making polo mallets and balls at the height of the Great Depression in order to survive, and a decade later made parts for airplanes and boats during World War II. Major innovations came from the 1950s through the 1980s as William Arbogast’s children and grandchildren introduced new prosthetic feet and knee-shin units to the industry.
The last drastic change for WillowWood came in 1996 with the introduction of the Alpha Liner, which prompted the company to shed its profit-leading wool sock department and focus the bulk of its research and development resources on the product. The comfort and performance of the Alpha products hit the market 10 times more expensive than its wool-sock predecessor – not that the industry minded.
“That changed the company entirely,” Arbogast said. “Demand was so huge we threw everything into production capacity and maintaining quality.”
Payroll more than doubled in several headcount increases, and sales followed right along. This secured for WillowWood a market niche ahead of very small, mom-and-pop operations but still a fraction the size of some overseas manufacturers.
“We had the innovation and the engineering technique to command a price that keeps a small company like us profitable,” Arbogast said.
On the heels of its product successes and growing intellectual property portfolio, WillowWood made a formal commitment to process improvement in 2006, when it joined the Fisher College of Business Center for Operational Excellence at The Ohio State University.
Amid this growth, small licensing skirmishes weren’t uncommon for WillowWood, but it was a pair of patent-related lawsuits the company filed in 2004 and 2005, respectively, against St. Petersburg, Fla.-based competitor ALPS South that set its future troubles in motion. Leaders say the lawsuits created few ripples at the company in the ensuing years, but that was before the tables turned.
WillowWood eventually found itself on the defensive, losing a 2012 jury trial sparked by a lawsuit ALPS filed and, in March 2013, facing a court order to halt selling Alpha® products containing a specific formula whose ownership was in dispute. That ruling marked the first true disruption to WillowWood’s day-to-day operations, but paled in comparison to the broader November order that pulled the plug on all Alpha Liner products containing the formula in question.
“I called a group of people into a big conference room and told them to shut everything down,” Operations Manager Mark Alter said. “We’re done.”
For front-line employees, the ongoing legal battle to which they paid little notice over the years was very much on their minds.
“The biggest question on the floor at the time was, ‘Are we gonna survive this?’” Chief Financial Officer David Pierson said.
Of the options before WillowWood, leaders immediately took the quickest, easiest route off the table: Layoffs.
“We said right off, ‘We’ll do everything possible not to lay people off,’” said COO John Matera. “It’s not part of our culture. We don’t do it.”
WillowWood instead turned to triage on its revenue side, its next steps a blend of survivalist-minded innovation and a determined effort to continue holding fast to the customer-centric values its founders established a century ago.
That determination was at once noble and pragmatic: The Alpha Liners contained what’s called a thermoplastic elastomer gel that gained traction among customers for the soft, comfortable barrier it created for a residual limb against the prosthetic. That wasn’t the case with silicone-coated liners, another WillowWood offering that contributed but a fraction of Alpha’s haul to the top line and appealed to the minority of customers seeking a sturdier, harder material.
Silicone liners weren’t seemingly the answer to WillowWood’s very big revenue problem, but its R&D team saw in them a lingering possibility: Was it possible to align one to customer demand and save sales in the process?
An under-development silicone liner that featured a softer-grade silicone proved to be the answer. One problem still, however, stood in the way: That liner didn’t make it far enough through the R&D pipeline to have shop floor-level tooling designed, and WillowWood lacked the production capacity to install new equipment. Luckily, the company had plenty of very concerned employees ready to save their jobs and their company. Within a few weeks of the court ruling, company leaders sought volunteers for a second shift and had it up and running, employees more than willing to overhaul their own schedules to help WillowWood through the tough stretch ahead.
That launched the fastest, most fraught R&D project in WillowWood history.
All hands on deck
Call it semi-organized chaos.
WillowWood employees plunged themselves headlong into development of a soft, silicone-based liner and designing – virtually from scratch – the proper tooling for a notoriously complex process. Employees turned out one newly designed production tool a week, scavenging equipment originally purchased for other products and retrofitting shop-floor tools.
“It was a full-court press with everyone involved in designing the tools and making them,” Kelley said.
What was once guided by written documentation and established processes was being determined on the fly, problems in the morning shift becoming solutions in the early hours of the afternoon.
“There was a lot of waking (R&D) people up in the middle of the night,” said Randy Elzey, supervisor of the Alpha line.
Elsewhere in WillowWood’s headquarters, silos were falling out of necessity. The company’s custom fabrication and Design group moved into production on newly formulated liners. Front-office staffers pitched in on the production floor.. Arbogast himself spent time on the factory floor running electrical wires.
“Everybody pulled down their own piece of the action,” Chief Marketing Officer Doug Kreitzer said. “We moved a lot of people around and there was a real sense of camaraderie.”
It paid off. Within a few weeks, WillowWood successfully developed the soft-silicone Express Liner with a limited supply set to leave the building on Dec. 1, exactly a month after the court decision. The company strategically designed liner profiles that matched the largest swath of customer demand and, in the following weeks, moved on to other configurations to align supply with as much of the market as possible.
Wasting no time, WillowWood in December began developing a different kind of thermoplastic elastomer gel that stayed outside the restrictions of the patent ruling but would be attractive to Alpha customers as well. This brought two potential new products into the R&D pipeline, but one very big challenge to the shop floor: Liners with different fabrication methods that literally clashed like oil and water.
Among many other differences, silicone liners cured by a drastically different process than the in-development thermoplastic elastomer liners, dubbed K12 and K27. In the frenzy to turn out the Express Liner, engineers cleverly retrofitted production equipment production equipment to have both in process on the floor.
The company’s decision to run development of two similar thermoplastic elastomer liners at roughly the same time eventually became fortuitous. The K12 Liner made it to the customer testing phase by early in 2014, but initial feedback pointed to durability problems, prompting the company to scrap it and pivot to K27, losing little time in the process.
“Had we not identified the K12 problems through testing, we would have been in trouble,” said Jeff Doddroe, the company’s new products director. “We were very fortunate to be able to do that switch in a very small time window.”
WillowWood may not have batted 1,000, but the upheaval to its long-established R&D processes was unprecedented and transformational. The company typically begins with a New Product Development department feasibility study and moves to finding materials, shaping processes and developing prototypes for internal validation, before creating several iterations and eventually involving all WillowWood departments as market arrival nears. From the first stirrings of a new product through training, manufacturing and shipping, the process can take anywhere from nine months to two years.
It’s a tried-and-true approach, Doddroe, “but it’s also mundane.” The more software development-like approach to WillowWood’s rapid-fire Express Liner rollout, in fact, wasn’t entirely unwelcome.
“If we say we’re going to make a silicone liner,” Doddroe said, “we’re talking a high 90th-percentile that it goes to market. If we were to work the way we did on this project, we’d have a higher percent fail, but this really worked out for us.”
WillowWood leaders acknowledge this drastically sped-up process didn’t merely involve working faster. While entirely confident in the safety and quality of the finished product, they say risk-taking – heretofore an under-exercised muscle inside WillowWood’s walls – played a key part.
“As far as I’m concerned, though, we had no choice,” CMO Kreitzer said.
Voice of the customer
Customers responded as well as – or better than – WillowWood could have expected in light of its troubles.
Sales initially were decimated but climbed to hover about 50 percent below prior-year revenue through the quarter following the court decision. A prosthetic foot product whose sales soared beyond expectations, also helped cushion the blow.
Linda Wise, WillowWood’s sales and marketing manager, credits much of the company’s survival in those days to the relationships it has built over the years with its 19 distributors in 18 countries across the globe.
“There’s a lot of history, a lot of trust, between us and these companies,” she said.
Still, it required some difficult conversations with distributors and end customers, Wise said.
“They stuck with us, but we didn’t sugar-coat it,” she said. “We continued to try and partner with them and find solutions for patients, whether they involved us or not.”
WillowWood’s sales in the spring of 2014 indicate patients’ solutions very much involved them. The April 2014 release of the company’s innovative, heat-absorbing Alpha SmartTemp Liner and the K27 formula liners buoyed sales right back to year-ago levels – even beyond.
“Our reputation, and that relationship base we built, saved our business,” Arbogast said.
The company’s remarkable customer retention speaks to a bond, the effect of which extends well beyond the walls of WillowWood’s sales and marketing department. In fact, leaders say, it contributed to the all-hands-on-deck attitude seen throughout in the roughest days. Many prosthetic businesses began just like WillowWood, driven by a tragedy or disability that lends immense personal significance to the work at hand and the customers whose lives it impacts. WillowWood’s slogan calls its work nothing short of “freeing the bodies and spirits of amputees.”
“There’s a personal investment in what we make here that our folks believe in,” Chief Administrative Officer Dave Curtis said. “We’ll have amputees come here, we have test patients running all over the place. It’s very easy to know you make a difference in what you do.”
A year out from that game-changing court decision, sales have leveled off to a predictable pace unheard of in the dead of last winter, though they’ve retreated from the highs seen in the wake of the Alpha SmartTemp Liner’s rollout.
“We introduced new products, made a lot of changes and a lot of additions,” Product Release Director Pat Thomas said. “We’re kind of on clean-up duty now to get our product line back in shape.”
Meanwhile, at least one major unknown in the wake of the case has come to a conclusion. The WillowWood competitor’s liner gel formula patent expired in August, clearing the way for the company to once again legally make the liner once so popular with customers. The company went back into production on the liners in late September, while sales began in early October.
Now, the company is left with a full production schedule and many lessons learned.
One of the most transformative effects of the court decision was the collaborative environment that developed among employees, many of whom found themselves at least temporarily in new departments and roles. That exposed an opportunity and a flaw, Thomas said.
“We need to emphasize cross-training more,” he said. “This really exposed a lot of holes in our processes, especially ones that overlapped.”
The events of the last year also have Arbogast completely reevaluating the company’s approach to developing and protecting products.
“We can’t rely on intellectual property like we did,” he said. “There are a lot of loopholes in the U.S. legal system, and it’s not one that’s going to protect us. We just need to stay ahead of the competition by a generation or two.”
To do so, leaders agree a new approach to R&D is in store. In the years WillowWood turned out the liners at a breakneck pace, the company added more and more testing to the R&D process. This was by no means required by federal safety standards – as an externally worn medical device, prosthetics are comparably low-regulated – but rather an effort to keep aligning with the product quality the market appeared to demand.
“We discovered we can move a lot quicker than we ever thought we could,” Operations Manager Alter said.
Not that the pace seen amid the frenzied days of silicone Express development is where WillowWood wants to be.
“We don’t want to stay where we are or go back to where we were – but we do need to pick a point in between,” Arbogast said.
The future for WillowWood, leaders say, will bring changes inside and outside the company’s four walls. Not the least of them is a much-needed culture change Arbogast said he was rolling up his sleeves to lead just as the company’s legal troubles peaked.
“I took over in 2010 and spent two years positioning the culture and the employee base to be more strategic in our planning, to think further out, and November (2013) hit just as that machine was starting to run,” Arbogast said. “We had a hundred-year-old company with an ‘If it’s not broke, don’t fix it’ mentality, and now that’s completely gone.”
One crucial area of future change for WillowWood is its product spread, which leaders admit relied entirely too heavily on liners. Arbogast says he hopes to diversify product mix through a number of new opportunities, which range from a high-potential software package for patient care to its LimbLogic vacuum system that helps amputees ensure their prostheses don’t come off.
“We want to pick those niche problems and attack them,” Arbogast said.
A natural progression from a broader product mix is a broader sales footprint, which the company is pursuing as well. Plans are in the works for an expansion to the South American market this year.
“The more sales we have internationally, the better off we are,” CMO Kreitzer said.
Wherever these paths take the company, leaders say they hope WillowWood can maintain the urgency and energy that carried them through those unprecedented rough waters – with growth and innovation, not survival, as the driver.
“It made for some exciting days, to be sure,” Thomas said. “I just don’t know I’d want to do that again.”