final version of bundle case 1205
TRANSCRIPT
1
Caring For the World, Putting Patients, Doctors and Nurses FirstLivia Liu Sebastian MorenoSteven Oakley Catarina Levita SchallenbachAmelia Tsui Julia Zhu Sylvia Zureic
2
Johnson and Johnson Medical Devices will complete restructure smoothly through aligning Critical Tasks, Culture, People and Formal Structure with growth drivers
JnJ MD is the #1 global leader in
surgery and orthopaedics and #1
leader in China and emerging
markets
2015 sales achieved $21B and benchmark levels of profitability
50% of sales generated OUS and 20% of sales in emerging markets
Current pipeline of product filling by 2018 have sales potential > $6B
Expanding new product freshness index from 25% to >30% by 2020
Rapidly changing demographics,
increasingly unmet customer needs,
and new commercial models
challenge JnJ MD’s profitability
Increasingly aging population and majority “minority” require more
customized healthcare products and services
New commercial models need more collaborative and cross-functional work
to accelerate growth and innovation
How can JnJ MD ensure sustainable competitive performance?
Culture
Align the restructuring with
Johnson & Johnson’s Credo
by implementing change
management plan
People
Identify key employee groups
to retain employees and
upgrade information system
Formal Structure
Transform from a Top-down
structure to Matrix
Management and design
open work space
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
3
By restructuring and focusing on disease states, Johnson and Johnson will sustain its position as a leader in the industry
Using robust regional model, disease states strategy and identified key geographies, Johnson and Johnson needs a holistic human resource strategy to support future growth
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
Leadership team
R & DSupporting
FranchiseCommercial Organizatio
n
Supply ChainOthers
Technology
Regional Model Disease State Strategy
Nine Key Geographies
4
Diagnosis / photo
Dissecting the Brain’s Anatomy
Framework
5
Critical Tasks
People Culture
Formal Structure
To restructure smoothly, MD needs to make sure its Critical Tasks, Culture, People, and Formal Structure align with its current growth drivers
With new internal and external challenges, MD needs to first identify critical tasks then adjust other three elements
Congruence Model
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
6
Finding the Vital Rhythm
Critical Tasks
7
Keeping best talent, encouraging innovation, and sustaining core culture are critical tasks for MD
We will now analyze the congruence of the three components with the critical tasks, and ultimately recommend how they can achieve and accomplish these goals
Retain talent and cultivate leaders
Adopt to new structure at the same time as aligning with
credo
Encourage innovation while
transitioning from a decentralized to a
regional centralized model
Create a pipeline for leadership development
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
Maximize Business performance
Support Growth Drivers
Align with Culture, Formal Structure,
and People
8
Our recommendations are closely congruence with critical tasks, then support Johnson & Johnson business growth
Adopt to new structure at the same time as
aligning with credo
Encourage innovation while
transitioning from a decentralized to a
regional centralized model
Retain talent and cultivate leaders
Create a pipeline for leadership development
People
• Restructure Sales Team with Tailored Compensation Plan
• Upgrade Information System to Enhance HR Analytics
Formal Structure
• Transform From a Top-down Structure to Matrix Management
• Design Open Workspace Office
Culture
• Align Restructuring With Credo
• Implement Change Management Plan to Strengthen Three Priority Areas
Focusing on improving key employee groups’ performance, adjust physical and management structure as well as align restructuring with credo will address challenges during transition period
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
9
Growing the Muscle
People
10
By restructuring sales team and upgrading information system, Johnson and Johnson can retain talents and encourage innovation as well as boost business performance
Sales Team Restructure
Expected Increase in Revenue (in billions)
• Identify key employee group to retain talents• Lay a foundation for further implementations
• Automation of certain services in different departments
• Provide information for sales department and other supportive functions
Identify Key TalentsU
pdat
e In
form
atio
n Sy
stem
Three Key Steps
• To deliver unique and tailored services• Incentivize Sales team to achieve better performance
+0.564%
$25.16
Without Implement
After Implement
$25
After identify key employee groups, Johnson and Johnson should focus on sales team restructure as well as upgrade information system since it will encourage innovation and facilitate business growth
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
11
Analyze talent pool to determine range in employee impact and performance variability
Employee Group Impact Required Knowledge, Skills,
and Abilities
Range in Employee
Impact
Performance Variability
Sales
Introduce customers to
devices across disease states
Detailed product knowledge, relationship management with
customer, collaboration across departments
Research & Development
Create new products, drive
innovation
Research, creative problem solving, teamwork
Human Resources
Talent management
HR strategies, change management
Marketing Product awareness
Understanding of market trends and customer needs,
product knowledge
Operations Quality controlKnowledge of R&D,
manufacturing process, and supply chain
Identify key employee groups to retain employees who provide firm-specific knowledge, skills, and abilities. These invaluable employees will help spearhead the implementation of the proposed changes
Executive Summary | Framework | Critical Tasks | Recommendations | Mitigations
Low M
edium H
igh
12
• Introduce change to key talents first
• Update compensation system
• Improve communications between different functions
• Utilize diverse knowledges
• Reevaluate talents with updated criteria
• Encourage cross-reginal work
Adopt to new Structure and Align
with Credo
Encourage innovation
Retain talent and cultivate great leaders
Identify key talent to address the critical tasks through a new sales structure
Restructure Sales Team
• Only one sales interface with the hospital
• New technical consultants to lead with practitioners
• R&D team focused on innovation through disease states
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
13
Sales team structure proposal
Business Development Role• Develop hospital relationships,
procurement/purchasing• Sell products, negotiate bundles
Technical Consultant Role• Support Sales team ”level 1” tech
instructions• Relays feedback and engages in
productive dialogue with R&D Dept. to help encourage innovation
R&D Department• Incorporate feedback from Tech
Consultants into MDs• Focus on innovative product
development into disease states
Supply Chain Hospital Director
Technical Consultants
R&D Department
Doctors/ Practitioners
Sales team as business developers, focused on hospital relationship. Technical team as product application, relationship with Surgeons. R&D scientist team focused on research and development of
new MD solutionsExecutive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
Business Development
Hospital Johnson and Johnson
14
By restructuring sales team, we can increase employee engagement as well as productivity which will lead to an increase of 2.9% of ROI
111.26
+31.84%
Cost
Bonus
163.25
Turnover
Revenue
ROI Analysis (in millions)
Current ROI
31.84%2.9%
Increased Amount
Expected ROI
28.94%
ROI Comparison
V
• Revenue is expected to increase $163.25 millions
• Return on Investment will be 31.84%
• ROI will increase 2.9% compare with the current 28.94% ROI
ROI Analysis
Based on our assumption of 25% of employees are highly engaged, 60% are neutral 15% are lowly engaged, after rebalancing the compensation system, employee engagement will increase which will lead to a higher company growth rate. Higher company growth rate will eventually lead to an increase
of revenue and higher ROIExecutive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
15
Upgrading Information System to provide data for HR and other supporting functions
Sales team given higher degrees of autonomy, so Information Management System should be tweaked to address changes. HRMS and CRM to be integrated, to promote cross-departmental collaboration and optimize operations.
• Re-organize platform to meet the matrix management
system and the new sales structure
• Consolidate HRMS with CRM system to promote cross-
departmental information sharing
• Increase input requirements of external facing employees to
help HR identify key skills and performance
Upgrade HRMS to fit with new disease state structure
Benefit
• Short Term
- Performance Management
- Governance Risk Compliance
- HR Analytics
• Long Term
- Data Automation
- Marketing Automation
- Sales Automation
Cost
• Indirect Costs
- Lost productivity of
implementation
- Training & Support
• Hard Costs
- Software/Hardware
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
16
Formal Structure
Adjusting the Bone
17
Transform from a top-down structure to matrix management would accelerate innovation & growth
Johnson and Johnson should adopt a matrix structure for its key product projects to unleash employee potential, support innovation, and maximize business impact
Top-down Matrix
Leadership
Functional Managers
Functional Managers
Functional Managers
Assigned WorkersAssigned Workers Assigned Workers
Project Managers
Leadership Leadership
Project Managers
Functional Managers
Functional Managers
Functional Managers
Engineering Marketing
Advantages• Facilitate cross-function collaboration
• Delegate responsibility and hold
everyone accountable
• Accelerate communication process
• Reward teams that provide solutions to
disease states and hospital relationship
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
18
Johnson and Johnson should convert to an open workspace plan in order to align the physical work environment with the critical tasks
Design open workspace office to foster open communication and collaboration
% Who Report it being Worse
(Scores 1 or 2)
% Who Report it being Better
(Scores 4 or 5)
Better Inclusion?
Better Collaboration?
Better Innovation?
Better Decision-Making?
Better Engagement?
9%
9%
11%
6%
10%
39%
70%
54%
59%
Core Characteristics
Traditional vs Open Space
59%
Focus Group Information from one Fortune 500 pharmaceutical company in the states. Data from 3 different campus across southwest, east and west regions (n=69)Participants all came from a traditional workplace and were presently working in an open space. They were asked torate and discuss differences between the two.
• Align with the overall restructuring
• Cultivate transparent and timely communication in the working environment
• Build physical foundation to foster cross-functional collaboration
• Provide broader platform to generate new ideas
• Save big money on real estate such as reducing number of desks and altering the desk-to-employee ratio
Align with Critical Tasks and Lower Cost
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
19
Strengthening the Spine
Culture
20
Aligning restructuring with Johnson & Johnson’s Culture
Leverage Johnson & Johnson’s Credo as the guiding principle to ensure the restructuring aligns with culture
• Following the credo, necessary for business success
• Innovation culture generates optimal value for the organization
Assumptions
• Support autonomy in job roles• Procedural justice: involving
employees in restructuring• Incentivize innovation
Norms
• Serve customers first• Treat employees with respect• Empower employees
Values
• Collaboration and innovation • Employee retention• Championing new structure• Greater quality products and
customer satisfaction
Artifacts
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
21
- Serve customers first
- Treat employees with respect - Empower employees
Values: “CREDO”
- Incentivize innovation
- Employee autonomy- Procedural justice
Norms
- Incentivize innovation
- Employee autonomy- Procedural justice
Norms1st Part of Credo
2nd Part of Credo
- Collaboration and innovation - Championing new structure- Employee retention
ArtifactsRewards
Perception & Confidence
Culture: How these elements align
All of norms can be found in our recommendations which bring credo into new disease states strategy
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
22
Incentivize InnovationMaintain Employee AutonomyEmpower Employees
Create Change Agents Group – Empower Employees
Culture Survey – before, during, & after changes
Map impacts of changes & build action plans
Training to align restructuring to organizational values & Credo
Compensation – Reward
Intrinsically & Extrinsically
Collaboration & Innovation
Employee Retention
Championing New Structure
Recommendations
Critical Tasks
Change Management
- Culture
Norms
Culture: Foundation for our Recommendations
Implement Matrix
Management
Restructure Sales Team
Upgrade Information
System
Create Open Workspace
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
23
Preventing Infection
Implementation and Mitigation
24
After evaluating implementation difficulty and time/cost, we suggest Johnson and Johnson execute recommendations below
Johnson and Johnson should mitigate relevant risks by creating quick win and strategic communication
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
Cost Time LengthImplementation
Difficulty
Change Management Plan
Restructure Sales Team
Upgrade Info System
Implement Matrix Structure
Increase Open Office Space
Potential Risks Process or Not
Low M
edium H
igh
Recommendations
25
Risks and mitigation plan
Johnson and Johnson should mitigate relevant risks by creating quick win and strategic communication
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
• Prioritize current resources and communicate effectively • Select low-risks teams as pilot to create quick win • Calculate ROI and provide alternative solutions based on sensitivity
analysis
Mitigate Potential Risks
Risk Level Mitigation Level
Majority of employees resist change
• Be aware of the difference between those employees who are more willing to change and those that resist change
• Customized communication strategies with different groups of employees
Find suitable candidates to the technical consultants and business development positions
• Make sure recruiters and leaders understand the new roles and have the ability to recruit them
• Use the new career paths to find internal candidates in specific areas
Handover of sales team
• Guarantee that all clients (hospital and practitioners) are aware of the change to minimize their resistance
• Assure that all sales information are inputted on the system before the changes happens
• Make sure after implementation that technical consultants and business development team utilize the system properly
Low M
edium H
igh
26
Johnson and Johnson MD should implement the strategic plan in next two years
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
(months)Change Management Plan
• Culture Survey• Create Change Agents Group• Map Impacts and provide culture training• Communicate Clients of change
Restructure Sales Team• Define Roles and Responsibilities• Development plan and training program• Assess employees and choose the team• Align compensation • Communicate and train • Implement the new structure
Upgrading Information System• Define data and metrics to be analyzed• Structure the system• Train and implement
Implement Matrix Structure and Open Workspace
• Survey to identify Pilot Groups• Implement and Collect Feedbacks• Analysis and Implement broadly
Milestone
27
28
Appendix
29
Low UNIQUE high
Low VALUE high
Low
Per
form
ance
Var
iabi
lity
hig
hSales
R&D
Operations
Human Resources
Marketing
Appendix 1– People: Impact & Variability
30
Appendix 2 - Restructuring Sales Department
Sales team as business developers, focused on hospital relationship. Technical team as product application, building relationships with surgeons. R&D scientist team focused on research and development of new MD solutions.
- Streamline Sales Team- responsible to sell all MD products to one or more hospitals- only one sales interface with the hospital- focus on hospital relationship and business development
- New structure positions- Business Development (Sales)- Technical Consultants (Technical Product Application)- R&D Scientists
Define new roles and responsibilities.Define career paths.
Analyze talent pool to determine employee impact and performance variability.
Assign employees to new positions.Build training and development plan.
Implement and communicate changes to all interfaces.
Initiate training and development
31
Appendix 3-Data Source: Rebalancing Compensation System
32
Appendix 4-Data Source: ROI Calculation
33
Source: https://www.shrm.org/about/foundation/research/documents/retaining%20talent-%20final.pdf
Source: http://www.kenan-flagler.unc.edu/~/media/Files/documents/executive-development/powering-your-bottom-line.pdf
Source: http://www.gurufocus.com/term/wacc/JNJ/Weighted-Average-Cost-Of-Capital-WACC/Johnson--Johnson
Source: https://www.shrm.org/ResourcesAndTools/business-solutions/Documents/shrm_ansi_cph_standard.pdf
Appendix 5-Data Source
34
• Define new roles and responsibilities
• Implement matrix structure to improve communication through disease state
• Assess the new roles and reevaluate job impact and compensation
• Change bonus program to reward matrix/disease state and business development (hospital) solutions
• Assess employees to new job requirements
• Analyze talent pool to keep them in the organization
• Build new career paths
Talent ManagementCompensationOrganization Design
Appendix 6-HR challenges to bolster J&J MD new strategy
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
• Build development plan, based on the assessment
• Train different skill sets for different disease states
• Hire new technical team• Internal and external hires• Build onboarding program
aligned with new structure
• Utilize upgraded information system to determine who to target and how
• Analyze information and relate to performance, training, and compensation
HR Data AnalyticsRecruitmentTraining and Development
35
• Define new roles and responsibilities• Implement matrix structure to improve communication through disease state
Organization Design
HR challenges to bolster J&J MD new strategy
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
1. Identify key sales leaders to create the job descriptions2. Job description of new BD position - at least 5 yrs experience in MD, disease states knowledge, knowledge on business strategy, ability to work independently, etc.
36
• Assess the new roles and reevaluate job impact and compensation• Change bonus program to reward matrix/disease state and business development (hospital) solutions
Compensation
HR challenges to bolster J&J MD new strategy
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
1. Take into consideration additional requirements for new BD position and technical consultants, to create revised comp/ben plan to ensure retention.
2. Increase salary base, include bonus, adjust commission3. Bonus suggestions: - Bonus related to ROI of projects created between technical experts and R&D teams - Bonus related to the amount of projects in a year that Business Development (sales) creates to hospitals. 4. Performance management: - The employees would create a set of goals to achieve in one year (examples above) - The upgraded info system will later give goals information back to HR. HR will be able to predict bonus amount and budget it.
37
• Assess employees to new job requirements• Analyze talent pool to keep them in the organization• Build new career paths
Talent Management
HR challenges to bolster J&J MD new strategy
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
1. Use current assessment tool to identify key employees that fit new structure2. Input data points from previous talent management system (HRMS) into new upgrade information
system 3. From this assessment, the leaders will have a deep comparison between people and will be able to
decide which ones will continue in the new roles4. With the new info system, HR will also be able to analyze performance of commercial team
38
• Hire new technical team• Internal and external hires• Build onboarding program aligned with new structure
Recruitment
HR challenges to bolster J&J MD new strategy
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
1. Identify internally who are the employees in R&D or sales that fit in technical consultant role. Follow current internal recruitment practice.
2. Recruit outside technical candidates aligned with JnJ culture and with MD technical expertise. Follow current external recruitment practice.
3. Develop onboarding program, focused on product and disease state training, and on systems training. The training length will be 1 year. New tech team will have both technical training and market training.
4. A final transition will be the sales team introducing to the tech consulting the practitioners (surgeons, nurses) they will deal with from now on.
39
• Merge HRMS and CRM to create shared platform for necessary departments, promoting cross-departmental collaboration
• Utilize upgraded information system to determine who to target and how• Analyze information and relate to performance, training, and compensation
HR Data Analytics
HR challenges to bolster J&J MD new strategy
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
1. Identify internally who are the employees in R&D or sales that fit in technical consultant role. Follow current internal recruitment practice.
2. Recruit outside technical candidates aligned with JnJ culture and with MD technical expertise. Follow current external recruitment practice.
3. Develop onboarding program, focused on product and disease state training, and on systems training. The training length will be 1 year. New tech team will have both technical training and market training.
4. A final transition will be the sales team introducing to the tech consulting the practitioners (surgeons, nurses) they will deal with from now on.
40
• Build development plan, based on the assessment• Train different skill sets for different disease states
Training and Development
HR challenges to bolster J&J MD new strategy
Executive Summary | Background | Framework | Critical Tasks | Recommendations | Mitigations
1. Build training programs for each disease state2. Start training employees on the products that they haven't sold before3. Train to use new system4. Use data from Information system upgrade to create new training programs