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Medisys Corp., a privately held U.S.-based medical device manufacturer founded in 2002 is working to launch a new product, IntensCare, with an aggressive timeline. This initiative is being championed by the new CEO, Art Beaumont, to stimulate growth for Medisys.
The IntensCare Project started informally in September 2006. It received additional funding in July 2007. Art Beaumont reorganized the team in August 2008 to achieve an aggressive launch date in August 2009.
The team is struggling with strategy, scope, an aggressive timeline, interpersonal, and team leadership issues. We are left with one of the team members, Valerie Merz, struggling with what to do: should she resign or bring up the issues with Art?
Think about your own experiences and what you have learned in course to provide evidence to thoroughly answer the following questions:
What is the core strategy issue that this team is struggling with? Who is aware of the strategy issue? Who isn’t?
How is the strategy issue impacting or not impacting the scope of the project? How is the strategy issue impacting the team individually and as a whole?
Does this project have the right project leader or leaders? Who would be the best Project leader or leaders for this project and why?
What can the project leader(s) do to reduce the team’s conflict?
What should Valerie Merz do?
Prepare your answers to these questions in a PowerPoint that is no more than 11 slides, including the title slide with your name. You must provide one aligned answer to each question. Do not answer each question by saying that I believe this and my partner believes that.
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4059
OCTOBER 30, 2009
ANNE DONNELLON
JOSHUA D. MARGOLIS
MediSys Corp.:
The IntensCare Product Development Team
It was just six months away from MediSys’s planned August 2009 launch of IntensCare, their new
remote monitoring system for use in hospitals’ intensive care units. The company was investing $20.5
million in the new system, which represented the most ambitious project in the company’s 10-year
history.
Valerie Merz, marketing manager for IntensCare, was feeling enormous pressure as she reviewed
the agenda for the upcoming meeting of the product development team. Once again there was no
scheduled time to resolve the debate over the modular design that she knew was critical to successful
adoption and long-term success in the market. Without this modularity, she was certain that the
system would lose market share to the competition’s forthcoming products, both scheduled for
release within the year. And it wasn’t just her P&L that would take the hit; the team, and the whole
company, would look second-rate.
“Why isn’t Jack stepping up on this issue and getting it resolved?” Merz wondered. Jack Fogel,
senior production manager, was the project lead for IntensCare, but in Merz’s opinion, he was far too
focused on the details of the product side and far too little concerned about the business issues and
the impending launch. Perhaps it was time for her to blow the whistle and get the bosses involved.
How else could she get her colleagues to do the right thing for the company and not just for their
own departments?
________________________________________________________________________________________________________________
Babson College Professor Anne Donnellon and HBS Professor Joshua Margolis prepared this case solely as a basis for class discussion and not as
an endorsement, a source of primary data, or an illustration of effective or ineffective management. This case, though based on real events, is
fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to actual companies in the
narration.
Copyright © 2009 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
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4059 | MediSys Corp.: The IntensCare Product Development Team
MediSys: Background and Organization
MediSys Corp., a privately held U.S.-based medical device manufacturer, was founded in 2002.
Its annual revenues in 2008 were $400 million, and the company employed 1,750 people. 1 The
company developed, manufactured, and sold medical monitoring systems for the hospital segment.
MediSys’s first two products were highly successful specialty pulmonary and renal monitoring
systems. Though still relatively small, the company was very profitable. Its entrepreneurial culture
had fostered innovative thinking across the company, and as a result, numerous promising initiatives
were at various stages of development—from redesign to development of new systems.
However, the board of MediSys saw early signs that growth was slowing. Two well-known
public competitors, with deep pockets and strong reputations in the industry, had announced they
were moving into MediSys’s key markets with products designed to compete with IntensCare. A
similar competitive response seemed likely as MediSys launched future products as well.
Partly to counter this threat, an aggressive new president, Art Beaumont, was hired in January
2008 to sharpen strategic focus while preserving the innovative culture and restimulating rapid
growth. Within weeks, Beaumont introduced a series of changes. As shown in the MediSys
organization chart (see Exhibit 1), the company continued to be organized functionally; however,
Beaumont created an Executive Committee consisting of his five direct reports: the vice presidents of
sales and marketing, research & development, design and engineering, production, and
administration. His intention was to develop them into an executive team that would jointly create
and implement a strategy for growing the business swiftly. His early months in the job convinced
him that, despite the entrepreneurial culture, some of these managers had become entrenched in their
functional roles and that progress could take some time. While he worked on shaping his
management team, Beaumont also formalized a process for product development. He believed that
MediSys could outmaneuver its larger, richer competitors by speeding product development through
the use of cross-functional teams. Speed was the key. 2
New Product Development at MediSys
Historically, MediSys’s approach to product development was essentially sequential:
1.
Research & Development (R&D) staff typically started the development sequence by
proposing new technologies or new systems that could yield significant new business
opportunities.
2.
Once the leadership agreed on a new idea, Marketing developed product descriptions from
customer needs and responses to new MediSys concepts, and then passed these on to Product
Engineering and Software Design.
3.
Engineering and Software Design developed them into product specifications, and passed
those on to the Regulatory group who researched and, where necessary, conducted clinical
trials to test prototypes of the systems.
1 In 2008, the average value of annual shipments per paid employee in the medical equipment industry was approximately
$190,000.
2 A widely cited economic model developed by McKinsey & Co. calculates that going 50% over budget during development to
get a product out on time reduces profits by only 4%, but staying on budget and getting to market six months late reduces
profits by a third.
2
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4.
Once these specifications were finalized, they were passed on to the production group, which
arranged for the fabrication and assembly of the products.
In August 2008, Beaumont introduced a new parallel system for product development in which a
”core team” of people assembled from all the critical functions—R&D, Marketing & Sales, Product
Engineering, Software Design, Regulatory, and Production—worked together continuously to move
a product from conceptual stage to final production. For every core team, a project leader was
designated to orchestrate its work, keep an eye on the complete project, secure resources for the team,
and serve as a liaison to senior management. Beaumont believed that the project leader needed to
have cross-functional expertise, a track record of high performance, and the respect of his or her
colleagues.
Most of MediSys’s professional employees embraced the cross-functional team design and parallel
development process. Conceptually, it fit their entrepreneurial and team-like approach, though it
was more disciplined and formal than they were used to. They understood that parallel
development required new ways of thinking and behaving, particularly in relationship to the
functional areas that had grown up with the company. “Parallel development doesn’t allow people to
single-mindedly defend the position of their functional area,” one employee noted, “or what’s easiest
or best or cheapest for their own functional area. It forces people to look at the bigger picture.”
While requiring that functions look at the “bigger picture,” parallel development did not alter the
way reporting and evaluation occurred. All employees, including core team members, continued
reporting to their functional managers who continued to supervise and evaluate them.
Art Beaumont recognized that the management style of all the MediSys executives would also
have to change in a parallel development environment:
I know I am asking these folks to give up control, which will be hard for them in the
context of this major investment. But as the company has grown, a management style
has evolved here that doesn’t reflect the entrepreneurial spirit that everyone loves to
brag about. It has become much more of a command-and-control culture with an
emphasis on technical excellence. Not that we don’t need that, but the competition has
become intense and our reputation is on the line, so we need all the brain power and
discretionary effort we can get. I think that cross-functional teams are the only way to
get that. But it will be challenging for my direct reports and me to change our styles to
be more patient, open, and trusting, and not to intervene.
History of the IntensCare Project
IntensCare had developed in typical MediSys fashion (see Exhibit 2 for a time line of this product
development effort). In September 2006, Aaron Gerson from the R&D group had the idea for a
patient monitoring system that would collect data on patients in intensive care units and post it to an
electronic database that could provide an integrated profile of an individual patient’s health and
would also send email messages to various physicians and nurses involved in the patient’s care. He
pitched this concept to Peter Fisher, a friend in Sales, who tested it with clients and found great
interest. The two invited a third friend from Software Design (who later left the company) to chat
with them about how this might work, and before long an ad hoc product development group had
organized itself informally to develop this opportunity.
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4059 | MediSys Corp.: The IntensCare Product Development Team
Over the next year, this ad hoc group developed preliminary market research and product
designs, which they took to the senior leaders of MediSys to request funding for further product
development. In July 2007, the group was given $500,000 to be used for software development and
ongoing product engineering work. Progress was slow, as the team members were often pulled
away to work on other priorities in their functional areas. Fisher had been promoted to vicepresident of Sales and Marketing, but started working immediately to identify an external hire to
replace himself in this effort.
In August 2008, Beaumont formalized a core team and chartered it to accelerate the new
monitoring system. (See Exhibit 3 for his notes on a list of team members and their backgrounds that
Beaumont had obtained from Human Resources as he was planning the changes in the IntensCare
project.) The team members included two people from the original ad hoc group: Aaron Gerson, the
R&D researcher who formulated the idea, and Bret O’Brien, a manager in product engineering. Jack
Fogel, senior production manager, was named project leader based on his extensive production
experience at MediSys and his track record for successfully managing the interface between
engineering and production. Dipesh Mukerjee was assigned to oversee the software design and
development (and had made it known immediately that he intended to outsource both functions to a
firm in India). Karen Baio was asked to represent Regulatory Affairs, and a new external hire in
Marketing—Valerie Merz—was assigned to oversee the product launch and manage the P&L for the
new product. Managing this as a business was Merz’s sole assignment for the next three years.
Beaumont approached the IntensCare project with a sense of urgency: “Two competitors have
announced that they will launch similar monitoring systems within the year. We have to get this
product out the door on time and we cannot make a mistake.” Beaumont committed an additional
$20 million to the rapid development of IntensCare and communicated the new IntensCare goal:
“Launch an innovative, world-class MediSys product by August 2009.”
The IntensCare Team
Before the IntensCare team was formally chartered by Beaumont, the group was convened by
Aaron Gerson and typically met every other Friday afternoon for an hour or so. When Jack Fogel
was appointed project leader, he continued this practice but he also met frequently with Bret O’Brien,
Gerson, and Mukerjee individually or together to brainstorm solutions to problems that had arisen.
In addition to Fogel’s various departmental responsibilities within production, he was responsible
for the final assembly of the IntensCare product. Fogel characterized his role on the team as follows:
I try to keep all ends tied together for the net result. Where are we on software
development and testing, engineering design, order and delivery of the component
parts, and fabrication planning? I tie all the pieces together to make sure they hit the
floor at the same time. I make sure communication is happening so that all things are
getting done.
While the team had made significant progress in the six months since it had been reconfigured,
Fogel knew there were still difficulties to overcome if they were to meet Beaumont’s very aggressive
release date.
On February 2, 2009, Mukerjee sent everyone a terse text message that suggested even bigger
problems to come, as O’Brien’s critical path depended on getting the software in final form by May 1:
“Problems again with delivery dates from India. Need to talk to you asap.”
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On February 12, O’Brien e-mailed Fogel:
Jack,
We are running into some serious engineering problems trying to fit the data displays
and battery units into the customer size specs Marketing provided. Can you spare some
time tomorrow to meet alone with me and Aaron to brainstorm solutions to this? I
know we have a meeting tomorrow afternoon with the whole team, but we need to do
some serious thinking together before we put this in front of the rest of the team. I can’t
afford the time to deal with Valerie’s predictable drama over this.
Bret
P.S. Have you talked to Dipesh recently about the delays with the software? Any
updates?
“Bret’s right,” Fogel muttered to himself; “Valerie is going to go through the roof if she hears
about these two major problems. We’d better get these issues and the specifics all nailed down before
we bring these up in the team meetings.”
Merz had her own critical path to product launch, and any major problems in product design
would create a cascade of delays in the marketing of the product that the IntensCare business plan
could not accommodate, from the production of marketing copy to the development and publication
of technical installation guides to the final development of the webpages devoted to the system. In
fact, she was hoping that an accelerated time line might leave room for at the least the initial planning
of how the monitoring system could be modularized for the variety of clinical situations where the
system might be used, from military surgery units to neonatal intensive care. While she was not
counting on this, she felt she had to demand it now if she had any hope of getting it in the next
version.
Merz’s experience to this point with her colleagues on the IntensCare team had not given her
much confidence in their competence in general or, more particularly, in their ability to deliver the
product that Beaumont and the market were expecting. She was very frustrated with Fogel as the
team leader. Having led two other major product development teams for her former employer, Merz
knew what was possible “when the team leader was really in the driver’s seat.” Yet, here she was
responsible for the IntensCare’s P&L, but not in a formal position to get the other team members to
deliver. She described her relationship with the product and the team this way:
I feel my position is mini-general manager. I have ultimate responsibility for profit
and loss on IntensCare. The engineers and production staff don’t report to me, but I’m
responsible for refining the product road-map. If I don’t keep on them, they’ll stray to
other projects. I provide the technical support to customers: the training, the hotline, the
technical support for field reps. I’m in charge of pricing, advertising, and sales
promotion activities. I have all the responsibility but no authority to get others to live
up to their commitments. I have no idea what Jack is doing, but it looks like he is just
another “good guy” who doesn’t want to ruffle any feathers. Bret and Aaron always
seem to have each other’s back. And who knows what Dipesh is doing; I worry that this
offshore development is going way off track and no one even knows.
Bret O’Brien was the lead engineer on the IntensCare project; he also managed several other
engineers working on redesigns for the two existing MediSys systems and on one new system in the
early stages of development. At the formal start of the project six months earlier, O’Brien had two
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4059 | MediSys Corp.: The IntensCare Product Development Team
other engineers reporting to him who worked full time on the IntensCare. However, due to recent
recession-driven companywide cutbacks, those engineers now split their time between IntensCare
and other projects. O’Brien knew from the beginning that his staff would be deeply challenged to
meet the aggressive deadlines: “It was already almost mission impossible; this product is as complex
an integration of software and hardware as any NASA project, not to mention all the other pressures
to accelerate the time line.” And that was before the staff reductions. Now his solitary focus was on
designing a high-quality product as quickly as he could. He had resigned himself to accepting the
constant berating from Merz about the time line, coping with it by avoiding her as much as possible.
“Let Jack give her the bad news,” he told himself. “After all, they are the two that will get all the
glory for this product.”
O’Brien described his view of the roles of the various functions within the team:
We all have very different drivers, which really complicates our ability to make good
decisions together. Marketing is revenue-driven, and this product should be a big
revenue generator. Production likes the product because it shows off their ability to
manage a complex supply chain of software and hardware components. Of course, we
in Design and Engineering are also integrating the software and hardware elements into
the design, but Dipesh and I are too busy with our own parts of this complex project,
and he spends so much time in India with our software contractor that we never get to
talk about integration in any big-picture way. I operate pretty much on my own. My
objectives in engineering are to deliver at cost, on time, and with specified features.
Dates are my driver, and quality too. And Regulatory—well, their role is to throw
roadblocks in front of everyone.
Karen Baio, the lawyer who represented Regulatory Affairs on the team, knew that she was seen
as an obstructionist by most of her teammates. “Sometimes their childishness really bugs me,” she
reported. ”They act like this whole effort is some kind of game we are trying to win, instead of an
important healthcare initiative that will save many lives and therefore must function perfectly and
operate within the law.” Baio’s patience and persistence were well-known throughout the company,
as she had been with MediSys for many years. She found Mukerjee and Merz increasingly difficult to
tolerate. Software developed overseas was notoriously problematic in the medical diagnostics field,
yet Mukerjee acted like this was a non-issue. A hotshot newcomer to MediSys (like Merz), he
regularly asserted his expertise and substantial experience with developing and testing medical
diagnostic software and dismissed Baio’s concerns about the time required for adequate testing of
externally produced software before integration into the IntensCare system.
But it was Merz who really got under Baio’s skin. “Valerie sees herself as MediSys’s savior,” Baio
commented. “She is self-centered, myopically focused on marketing, and very aggressive in our
meetings.” Like others on the team and even in Marketing, Baio wondered what signal Beaumont
was sending to the company by personally hiring someone like Merz. Baio described several
instances in which Merz downplayed the risks of failing to test the product thoroughly, insisting that
“lead users will help us test” the system once it was installed. Baio was almost looking forward to
the upcoming meeting where she suspected Merz would turn red with anger when she heard there
were expected delays in the product design—a rumor Baio had heard from Gerson.
For his part, Aaron Gerson was fairly confident that IntensCare would be a big hit in the
marketplace. He wasn’t as worried as his teammates about the time line and aggressive goals; he had
seen many an executive try to push product development faster and fail. He also knew the
competition well and didn’t believe they were capable of getting a better product to the market faster
than MediSys could. His only concern was the new offshore software development, an unknown
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they had not dealt with in previous products. While Mukerjee seemed competent and confident,
Gerson was withholding judgment on whether this outsourcing approach could be both successful
and cost-effective.
A Sticking Point: Modular Design
One of the most hotly debated topics among the IntensCare team members regarded modules. By
creating a modular design within the system, the customer would be able to tailor the system to a
variety of clinical situations, (e.g., neonatal intensive care, day surgery, or field hospitals), and thus
have greater flexibility.
Merz firmly believed that customers demanded a modular design:
The hospital equipment distributors we have interviewed are insistent that a
modular design will allow them to sell our system into a much wider set of segments
from hospitals to military organizations to a variety of clinical arrangements.
Furthermore, the two competitors who have announced their plans to enter the field
have described what is essentially a modular design.
While Merz believed that IntensCare had to be modular, she thought modularity might be
introduced in the second version, after the initial product introduction. She had not expressed that
view to her teammates because she feared that such a compromise suggestion would be used by
engineering as an excuse to continue ignoring the demand for modularizing anything.
O’Brien acknowledged that engineering had no intention of developing these modules – at least
for this version of the system. He and his staff were at capacity just trying to solve the internal space
problem, which was critical to meeting the launch deadline; they couldn’t waste time with
redesigning for modules. “Besides,” noted O’Brien, “modules were addressed only in the most
general terms in the original 2007 IntensCare business plan, so we never designed for them, nor did
we specify such requirements for the software people.” It seemed that the team was at loggerheads
over how to proceed on this issue.
February 13, 2009
IntensCare was behind on design, clinical testing, and production schedule. Still, the team was
fighting to meet the August deadline for introducing the monitoring system to the marketplace. The
marketers were busy preparing a training video for technical installation and another for medical
users; software designers in the United States and developers in India were in constant
communication about the programs; the engineers had their hands full with the space problem; and
the production engineers were ordering components and arranging the assembly lines. Regulatory
was revising clinical test protocols and schedules. The team as a whole still had to decide about
modules.
Art Beaumont was aware of the difficulties confronting the team:
We have several problems going on right now. But I know all these people are really
working hard to resolve them. Now, if I jump in there and shout or accuse them, what
I’d basically be saying is that I don’t have faith in the people I’ve assembled to get the job
done, and I don’t think they’re giving it their best effort. And that’s not what I should be
doing. My job is to support them, not to shout at them.
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4059 | MediSys Corp.: The IntensCare Product Development Team
Still, pressure was intense. Production would have to start soon to assure projected market
introduction. Any additions or changes to the design would threaten a delay in production. At the
same time, IntensCare had to meet strict quality and regulatory standards as the company adjusted
the product to satisfy market needs.
As Valerie Merz was headed to lunch just before the Friday meeting, she walked past a conference
room near Bret O’Brien’s office. She couldn’t help hearing him complaining loudly to Fogel:
Look, Jack, if you don’t get that woman off my back about this modular issue, I am
going to demand to be let off this team. As it is, there is no way I can even come close to
meeting our scheduled milestone of handing the design off to your people! And you
know there are even worse delays coming from the Indian software team. Why don’t
you call off today’s meeting and we’ll get your boss and mine in here and give them the
straight story?
Merz stopped in her tracks, tightened her fists, and took three deep breaths. If she walked into
that conference room, there was no telling what she might do or say. Maybe she should turn around
and walk right into Beaumont’s office and hand in her resignation.
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-9-
Note: Shading indicates IntensCare core team members; asterisk indicates Management Committee members.
Exhibit 1
MediSys Organization Chart, 2009
106-001
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4059 | MediSys Corp.: The IntensCare Product Development Team
Exhibit 2
Time line of IntensCare Product Evolution
September 2006
R&D person gets inspiration for the product
October 2006
Sales person vets the concept in the market
December 2006
Conversations include software designer
June 2007
Ad hoc team presents product concept to senior leaders
July 2007
Senior leadership of MediSys allocate $500,000 to development of IntensCare
January 2008
Beaumont hired as president
August 2008
Beaumont formalizes NPD and charters a core team to develop IntensCare
August 2009
Projected IntensCare launch date
10
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Exhibit 3
Beaumont’s Annotations on HR’s List of Prospective Team Members for IntensCare
Karen Baio, Regulatory Affairs
Employed in 2002. J.D. 1989 from University of Illinois. Previously employed by Pfizer.
Thompson rates her as high performer. Sharp woman. Watch for general counsel potential.
Zoe
Jack Fogel, Senior Production Manager
Employed in 2002. B.Eng. 1971 from Tufts University. Led the renal monitoring system launch.
High performer, well-respected by colleagues in production and engineering. Seems a bit laidback for
this job, and not as business-focused as I’d like but no one else has the experience of launching such a product
Aaron Gerson, R&D
Employed in 2002. PhD 1972 from M.I.T. Lead scientist on both monitoring products. Has four
patents. High performer. Created the IntensCare product concept and was ad hoc leader of the
group that did early development of the project. Brilliant, need to keep this gug involved in company long-term.
Could replace Arnie if he wanted to
Valerie Merz, Marketing Manager
Employed in 2008. MBA 1997 from Stanford University. Came with very high recommendations
from competition. Peter Fisher rates her as his top performer. I like her. A real go-getter, could be GM
material when we grow up.
Dipesh Mukerjee, Software Design
Employed in 2004.
2002 M.I.T. graduate, previously employed by General Electric Healthcare.
Ambitious guy, very intelligent. This may be too much for him at this stage, but I think he is determined to prove himself.
Bret O’Brien, Product Engineering
Employed in 2002. M.S. 1991 from Georgia Tech. Previously worked for Philips. High performer.
Led the engineering effort on the pulmonary systems. Len Broman rates him highest performer in
the group and has personally groomed him as a manager. Part of ad hoc team for early development
of IntensCare. This guy seems very expert but narrow. Can he be developed into a project leader? Does he get the business
issues? Fisher says he’s passive aggressive.
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