One of the benefits of achieving “late middle age” with a relatively intact brain is the perspective one has after participating in an industry for 40 years. My industry background has been primarily in cardiovascular medical devices, where I’ve worked for a Fortune 500 (Guidant, now Boston Scientific) and co-founded Acist Medical, NeoChord Inc and Phraxis Inc.
In that 40-year span I’ve watched two established companies take entrepreneurial type risk and in the process transform themselves and their respective industries: Scimed Life Systems and Edwards Life Sciences.
They essentially disrupted themselves, and their current customers, rather than waiting for an outside company to do so. Other companies, in healthcare and other industries, can learn much from their stories.
In the mid 1980s, Scimed Life Systems Inc sold cardio-pulmonary bypass (CPB) equipment (heart-lung machine and associated disposables) used during open-heart surgeries like coronary artery bypass grafting (CABG). CPB enabled the heart to be stopped (i.e. bypassed to the heart-lung machine), so that heart surgeons could operate in a bloodless field and on a motionless heart. It’s a great invention that continues to be used today, but sawing open the sternum, spreading the ribs, harvesting a bypass vein from the leg and stopping the heart all make CABG a highly invasive procedure with lengthy post-op recovery times. The key customer for SciMed at the time was the cardiac surgeon and the CPB technician.
In the early 1980’s, Scimed CEO Dale Spencer noted that a new procedure was being developed that avoided cracking the chest, harvesting a leg vein and stopping the heart. It was the early days of Percutaneous Transluminal Coronary Angioplasty (PTCA) and it was being shown that instead of bypassing the clogged artery, you could balloon open the clog itself by deploying a balloon catheter through a small incision in the upper thigh and threading it through the femoral artery into the clogged coronary artery. Spencer made the transformative strategic decision to migrate from being a surgical product’s company to being an interventional cardiology company so that he could ride this new wave. Note the following:
Since its founding in 1951, Edwards Life Sciences has been primarily focused on the heart, specifically surgically placed artificial valves. Today they are the largest provider of prosthetic tissue valves in the world. As such, their primary customer is the cardiac surgeon. The surgical placement of valves requires sternotomy, CPB and opening the heart chamber itself to access and replace the native valve. It is a life-saving procedure, but like CABG, highly invasive -- so not every patient who needs a new valve can tolerate the surgery. This leads to the sad reality that some patients are “sent home to die.”
In 2003, Edwards, under the leadership of CEO Mike Mussalem, acquired early-stage PVT (Percutaneous Valve Technologies) Inc. PVT was the first company in the emerging field of valves being placed interventionally rather than surgically. This “valve on a catheter” concept was met with skepticism by the surgeons, but even they had to admit that it was a worthwhile option for patients previously deemed inoperable. And Edwards, like Scimed before it, risked alienating its key customer, the cardiac surgeon, by embracing a new strategy that would send patients to the interventional cardiologist rather than the surgeon.
The defense of this strategy, as stated by Mike Mussalem, was that “someone was going to develop this technology and Edwards was best equipped to do so given its existing core competencies in the valve space.” Clearly it was a decision to be strategically focused on the disease rather then the doctor treating the disease.
The outcome of the decision to transform their product line and their customer base was as follows: