Spotlight: Smith & Nephew’s Sr. VP Alain Tranchemontagne and his Five Principles

Smith & Nephew Sr. VP Alain Tranchemontagne: The Five Principles

Alain Tranchemontagne Smith & Nephew Sr. VP

For more than 25 years, Alain Tranchemontagne has spent his career driving success for some of the biggest names in the medical device sector of healthcare. Through stints at Ansell Healthcare, Covidien and now Smith & Nephew, he has navigated positions in sales, marketing, general management, strategy and commercial development.

At Smith & Nephew, he is currently responsible for MarCom, DTC, SEO, tradeshows, pricing, contracting, surgeon education, sales rep training, commercial excellence, surgeon-led innovation, grants, fellowships, professional affairs, employee trust, risk management, several customers, and he chairs the Andover facility for the $2.5B business. At a large and successful company, with competition from the likes of J&J, ZimmerBiomet and Stryker, how much upside can you achieve? In Alain’s case, a lot. Three years ago, the company had decided on a significant restructure. It wanted to integrate its various businesses, which include adult reconstruction, robotics, sports medicine, trauma and extremities, advanced wound management, and ENT, into a single U.S. entity.The objectives: to accelerate growth, deliver efficiencies, and de-risk the business. As of November 2018, Smith & Nephew released its Q3 results.The U.S. business would deliver another quarterly sequential improvement and its highest growth in many years.Representing half of Smith and Nephew’s revenue, the U.S. performance was critical to meet analyst expectations.And it did.It lifted the stock almost 8% in a single day, setting expectations for future performance. What kind of leadership do you have to provide to achieve results like that?

FIVE PRINCIPLES Like many successful leaders, Alain has articulated certain key principles that work together to create and maintain success.

1. Create a culture of accountability

Alain told us “Most people asking for accountability mean ‘get rid of someone who presumably failed to deliver.’But all this exhibits is a situation of failed accountability. If individuals are to be accountable, they need the engagement and support of the company. How do you teach employees to measure their own progress, be empowered, and take responsibil-

ity? In other words, how do you communicate that it’s their initiative that will make the difference? Alain’s prescriptions: • Set a process supported by metrics, transparency and collaboration to build commitment and accountability • Define the metrics, such as surgeon adoption • Review the metrics regularly, as often as weekly for the most critical ones, identifying those that are “at risk” • Link these reviews to personal aspirations, interests, challenges or any other topics deemed personally important by individuals on the team. This creates a connection between the personal and the business goals, reinforcing commitment. He says “When I took over the MarCom team during the integration phase, I put in place a new leader and we started to review the performance of our DTC investment.We knew patients helped pull products through the channel. However, the data soon revealed that we generated $1 of revenue for every dollar spent.As a result, the team proposed to reduce the investment by 90% and change the formula to a more targeted, SEObased program.”The SEO-based program is more focused on social media vs. mass media. They are able to measure the response of patients and look at specific geographies and messaging.Alain told us “Over the course of 18 months, the team fine-tuned the program with the help of metrics, continuously raising the return on every dollar invested from $10 initially to $18 today.”

2. Overcome your market position

In the case of Smith & Nephew, this is quite a challenge—to move the needle on a $2.5B business. Alain says business wisdom proposes that “relative position in the market dictates your strategic options to compete.” But how do you use that viewpoint to inspire new approaches?Alain says “Explore possibilities.Then estimate outcomes and compare to your aspirations.Invariably, aspirations exceed expectations.Use this performance gap to formulate actions intended to bridge the gap without necessarily following the prescription.In other words, don’t do more of the same.Instead, add something different.” For instance, S&N has not historically been a leader in adult reconstruction. So the need was to create a uniquely differentiated— and valuable—solution to establish a beachhead.“One of our technologies in this space fits the bill: it is proprietary, demonstrably superior to competitive offers, and offers immense value.However, it was insufficient to overcome the share gap because payers and providers aren’t aligned on value creation. Therefore, we created a series of solutions that capitalized on different technologies in other spaces to create a broad set of value propositions related to the core business.These multiple actions created strong growth in a number of ways, thereby also de-risking the business.” One example was showing how a more expensive combination of S&N devices was really cost-effective vs. the cheaper competition because it afforded more protection against possible infections that would result in high-cost revisions.

3. Drive all dimensions of innovation

Alain says that, while we all know innovation propels growth, we need to apply innovation to processes and business models as well as products. Why do we resist change in process? Because it puts more of the onus on people’s behavior. But he says “Ensuring an on-going dialog at this level builds muscle memory even while making change more gradual.” To exemplify this effort, he offered their experience with surgical implants, “The second most expensive market development tool for surgical implants is surgeon training.Moreover, adoption rates across the industry are not stellar. In order to meet our growth and efficiency objectives, we could not rely on this model.Therefore, we shifted the focus from the traditional, course-based model, which I liken to undergraduate training, to a surgeon-based model that parallels what a PhD student would experience.This initial change triggered an on-going evolution of our education model that today exceeds industry standards 2-to-1.”

4. Manage the portfolio

“At S&N, we organize innovation by business and technology. However, a number of technologies are similar across businesses,” Alain told us.To make this more efficient, they assembled an independent team of engineers focused on iterative innovation across a number of portfolios.“We put in place a process to ensure align-

ment at the business unit level with metrics and regular reviews.”This enhanced the focus on bold programs. And it created a predictable flow of solutions to market. The change paid off significantly. It yielded an 18:1 return on invested dollars, a growth rate roughly 6 times the growth rate of the overall portfolio, and a vitality index similarly higher.Alain doesn’t recommend this practice across the entire business, but he says it helps smooth out the growth curve of the overall portfolio. ”We implemented separate teams and review processes for different groups of innovation.We coordinate efforts through the business units to ensure alignment.However, by keeping resources independent, we avoid funds drifting due to circumstances.”

5. Create a learning culture

Alain points out that we spend a significant portion of our young lives learning in school, and a significant portion of our careers applying those lessons. But learning—especially in these rapidlychanging times and in this profession—of necessity should be a lifelong pursuit. With his business teams, Alain institutes stretch targets so people are always reaching beyond their abilities and improving their skill sets.Second, he exposes them to a diversity of experiences that fall outside of their traditional focus at a professional or a personal level. To accelerate growth, he has to raise the performance level of the sales organization.The S&N sales training program used to be limited to an initial course in product familiarity, so that the staff could explain it properly to customers. Rinse and repeat with new products or upgrades. But now sales has to face Value Analysis Committees, which are much more demanding of all aspects of performance, price and efficiency. He says “We identified seven different areas where training was needed.We mapped four levels of mastery, broke down the content into bite-sized learning modules, and digitized and gamified the material.Finally, we set to evolve it continuously, making every micromodule certifiable.The outcome has so far earned us six national and global education awards in the past year.More importantly, it has pushed the team to explore different industries, learn about psychology, and introduce practices from outside the industry.” This change in tactics also shows up at their National Sales Meeting. There is no product training conducted there anymore: that’s done as needed during the year. Instead, the NSM features digital competition, role-playing and other activities aimed at fostering engagement, collaboration and certification.

TURNING THE BATTLESHIP AROUND As we noted above, with 16,000 employees and a large portfolio of products, plus competition from other big names, it’s not easy to restrategize a company like S&N for significant growth. Yet Alain and his team have managed to do just that.S&N, J&J, ZimmerBioment and Stryker together represent about 90% of the market in adult reconstruction.But S&N led the market in hip reconstruction, with 4% growth globally and 6% in the U.S., and was the second fastest growing knee reconstruction business at 4%. Their knee implants franchise continues to perform strongly, delivering 4% revenue growth driven by their differentiated technologies: the VERILAST bearing surface; JOURNEY II, LEGION and ANTHEM knee systems and the LEGION Revision Knee System. Revenue from hip implants was up 4% globally, with the U.S. producing its best growth for a number of years. This performance was driven by a renewed focus on the POLAR3 total hip solution and its class-leading survivorship data, as well as demand for the REDAPT Revision System. And all of this is a result of concentration not on product innovation, or sales training, or any other single factor. It grew out of a multi-layered strategy on all the areas that affect a business. Ultimately, leading an organization to meet the street’s expectations is not an easy task.However, if you can instill in all of your employees a sense of entrepreneurship by letting them own their portion of the business, support them with tools, process and engagement, and challenge them to develop their skills along the way, you will be successful.Otherwise, you are just pushing water up a hill, with a fork. •