Stryker Case Study Essay

CASE STUDY: STRYKER
Teamwork Challenges at Stryker Corporation The Stryker Corporation was built on innovation. “When Dr. Homer Stryker, an orthopedic surgeon from Kalamazoo, Michigan, found that certain medical products were not meeting his patients’ needs, he invented new ones. As interest in these products grew, Dr. Stryker started a company in 1941 to produce them. The company’s goal was to help patients lead healthier, more active lives through products and services that make surgery and recovery simpler, faster and more effective.” Homer Stryker started Orthopedic Frame Company to sell devices for moving patients with spinal injuries. A short time later he invented the first power tool  the oscillating cast saw  for removing plaster
casts after patients’ broken bones had healed. After that, the company began providing hospital beds.
These early initiatives, the oscillating cast saw in particular, formed the foundation of what is now the Stryker Corporation, one of the leading companies in the worldwide market for orthopedic devices. Stryker employs over 15,000 people with most of its operations being in the United States, Europe, and Japan. As a leading medical technology company and one of the largest in the global, multibillion dollar orthopedic market, the range of products that Stryker manufactures is amazing –replacement joints such as shoulders, knees, and hips; high technology tools like imaging systems that help surgeons reconstruct body parts; and a variety of other medical devices and products, including surgical tools and hospital beds. One of Stryker’s recent orthopedic innovations was a navigation system for hip replacement surgery that permitted surgeons to observe via a computer screen the precise positioning of a hip prosthesis. Due to the nature of the procedure, the navigation system had to have the capability of withstanding the various physical stresses put on the equipment, including pounding with a surgical hammer. In addition, the navigation system  especially its sophisticated electronics  had to survive repeated sterilization under
270-degree-Fahrenheit steam pressure. However, shortly after field testing of the hip replacement navigation system began, significant problems were discovered. Numerous complaints were received from surgeons and the systems were returned to Stryker. Examination of the returned units revealed that the precision electronics of the system frequently failed and metal parts were broken or damaged. Finding a solution to the navigation system problems was assigned to Klaus Welte, vice president and plant manager for Stryker’s Freiburg, Germany facility, which was acquired in 1998. Under its previous owner, Leibinger, the Freiburg facility had developed a magnetic imaging navigation system for use in neurosurgery. After the acquisition by Stryker, the Freiburg facility applied its expertise to developing other surgical tools, including ones for orthopedics. Thus, the Freiburg facility was given the responsibility for solving the problems with the hip replacement navigation system. Welte’s first challenge was assembling a team to work on solving the navigation system problem. Welte believed that the team’s success “would require both a clear view of what had to be accomplished and a deep understanding of each team member’s abilities.” Welte assembled a team of the best people at Freiburg in operations, computer-aided design, engineering, and research. One team member was talented

in structural analysis, communication, and follow-through.
Another member provided the ‘social glue, for the team and would never stop until all tasks were complete. Still another team member was an organizer who helped keep the team on task and from rushing ahead before it was ready. Yet another team member was especially knowledgeable regarding how a product design will successfully survive the manufacturing process. Another person was noted for highly innovative  indeed visionary  product design ideas. Although each team member’s abilities were important, how those abilities fit together was equally important. According to Welte, “Creating an effective team requires more than just filling all the job descriptions with someone who has the right talent and experience. … By no means can you substitute one engineer for another. There are really very, very specific things that they are good at … and how well the team members’ abilities combine is as important as the abilities themselves.” How well the Stryker team jelled became evident in their approach to problem solving. Due to the number of problems with the hip replacement navigation system, the Freiburg team addressed each problem separately, beginning with the most crucial issue and working down to the relatively minor problems. The solution for each problem was thoroughly tested before moving on to the next issue. Consequently, the team did not have a fully assembled prototype until all the problems were addressed.
This approach proved successful, both in terms of the ultimate success of the prototype design and the team working effectively together as problem-solvers. In the first nine months after the redesigned hip replacement navigation system was released, the company did not receive a single complaint from surgeons  an incredible achievement for complex surgical equipment. Additionally, the navigation system quickly contributed to double-digit growth in worldwide sales in Stryker’s medical and surgical equipment segment. Although the redesigned hip replacement navigation system proved reliable and essentially problemfree, not the same can be said for the orthopedic hip implants themselves, the surgical insertion of which is guided by the navigation system. There were ongoing problems with the actual hip replacement joints manufactured by Stryker. The United States Food and Drug Administration (FDA) issued a total of three warning letters in less than a year’s time regarding recurring quality problems. As Jon Kamp, a reporter for The Wall Street Journal, observes, “[s]uch letters require demanding and sometimes-costly changes and can be hard to shake. They also may crimp approval for certain new products, although Stryker doesn’t have many new products likely to feel an impact.” As an incentive for managers to “resolve quality control deficiencies and achieve world-class systems, Stryker … [decided to] link 25% of each senior executive’s and division president’s annual bonus to this issue.” In addition to the quality issue, Stryker, as well as four other companies  Zimmer Holdings Inc. and Biomet Inc. of Warsaw, Indiana, the DePuy Orthopedics unit of Johnson & Johnson, New Brunswick, New Jersey, and Smith & Nephew PLC of London, England  were charged by the United States government of financially rewarding “doctors who selected a company’s hip and knee implants, even when they weren’t necessarily the best for a particular patient.” All but Stryker agreed to pay $310 million to settle the government’s claims of the companies violating antikickback laws, whereas Stryker only agreed to

government supervision; none of the companies admitted any wrongdoing. A subsequent subpoena from the United States Department of Health and Human Services (HHS) sought information on the antikickback settlement; Stryker characterized the HHS request for information as “oppressive and overly broad.” The matter is still playing out in court as this case is being written. Given the challenges that are plaguing Stryker’s orthopedic hip implants, could the company perhaps benefit from a team effort similar to that used in redesigning the hip replacement navigation system? (This case was written by Michael K. McCuddy, The Louis S. and Mary L. Morgal Chair of Christian Business Ethics and Professor of Management, College of Business Administration, Valparaiso University.) Discussion Questions 1. Discuss the extent to which the characteristics of well-functioning, effective groups accurately describe the Freiburg hip replacement navigation system team. 2. Explain why teamwork is important to effectively solve the problems which field testing of the hip replacement navigation system revealed. 3. Describe how the task functions and maintenance functions are operating within the Freiburg team. 4. Explain why diversity and creativity are important to the effective functioning of the Freiburg team. 5. How could Stryker utilize insights gained from the experiences of the Freiberg team to address the ongoing quality problems with the actual orthopedic implants? 6. Obviously, close working relationships need to exist between companies that design, manufacture, and market surgical implants and the surgeons who use those implants. What impact might the antikickback issue have on the working relationship between Stryker and the surgeons that use its orthopedic hip implants?