The High Performance Management System
Are you a newly appointed leader of an organization in need of transformational change, a leader of an organization at a growth inflection point, or a leader of an early stage company in need of a solid foundation? If so, this book is for you. This book is also useful for aspiring leaders and managers of any organization. Once you learn the principles in this book and apply them through our management system, you will be well on your way to a dramatically different business.
I know this because I have participated as an executive and a consultant in numerous successful business turnarounds. The material in this book came from decades of experience—the teachers, mentors, and leaders that came before me; and the countless practitioners who have helped advance our management science and system.
My Introduction to the High Performance Management System (HPMS)
In September 1997, I joined the turnaround management team at Summit Technology, Inc. led by CEO Robert “Bob” Palmisano. Prior to Summit, I earned an MBA from a top school then worked my way up from a Product Manager role at Hewlett-Packard Co. to Vice President, Sales and Marketing of Mentor Corp.’s ophthalmic surgical business. So, by the time I arrived at Summit, I felt I knew something about leadership and management. Palmisano and a former Xerox executive named Richard “Dick” Palermo, completely and permanently changed this perspective.
Summit Technology was a Boston-area developer, manufacturer, and marketer of excimer laser systems initially targeted at cardiovascular disease. Under the brilliant technical leadership of founder and CEO David Muller, PhD, the company pivoted from cardiovascular to ophthalmic application of excimer and, in 1995, was first to receive FDA approval for photorefractive keratectomy (PRK) to correct myopia (nearsightedness). With a US market of 110 million (220 million eyes), the market was enormous. Summit was also successful in executing a unique and potentially profitable business model where users would purchase the laser for $500,000 and pay a $250 per-eye patent license fee. The large potential market, attractive business model, and charismatic CEO allowed for a successful initial public offering (IPO) in 1996, raising over $100 million in additional capital.
The Summit Apex Excimer Laser
With the IPO came high expectations, as much as 4 million procedures per year, for the highly lucrative procedure fees. Due to typical market adoption factors, however, procedures in the first year fell well short of expectations with a modest fifty-five thousand eyes treated in 1996. Summit responded to the pressures of the public market expectations by pointing to their customers, largely solo ophthalmic surgeon practices, for the shortfall. This in turn led the company to open nineteen company-owned Centers of Excellence in direct competition with their initial customers. The initial customers responded with vitriol and anger. Instead of helping their customers grow their businesses, Summit had put itself into direct competition with them. To further compound the problem, Summit had taken its “eye off the ball” and allowed VISX, Inc., its West Coast rival, to surpass them in technology, FDA approvals, and market share. The combination of disappointed shareholders and angry customers led Summit’s Board of Directors to replace Dr. Muller in 1997 with Robert Palmisano, formerly President of Bausch and Lomb’s Eyewear Division.
Palmisano quickly initiated a turnaround plan, which included divestiture of the company-owned centers; new executive leadership in marketing and sales, finance, manufacturing operations, regulatory and clinical affairs, and legal; and a mantra to “mean more to our customers.” I was fortunate to have been part of this team, starting in 1997 as Vice President of Marketing and Sales.
Palmisano also brought in Dick Palermo as our primary management consultant to assist us in adopting and implementing HPMS. Through this system, and a lot of hard work, we transformed Summit from a company with highly dissatisfied customers, unmotivated employees, and dissatisfied shareholders to a world-class entity in less than four years—culminating in a $972-million-dollar sale to Alcon Laboratories in 2000. This exit represented a nearly $900 million dollar increase in shareholder value—a result, I believe, which would not have been possible absent the choreography and discipline provided by HPMS.
I still recall Dick’s introduction of the HPMS to our executive team at an offsite meeting in December 1997. He spoke about the teachings of W. Edwards Deming and Joseph Juran, about the importance of culture and employee engagement, the need to see your business as a system of connected processes, and about the importance of process and leading indicators over the management of results.
At the first intermission, I went up to Dick and said, “I don’t know what the other functions are going to do, but effective today, this is how we are going to run Marketing and Sales.” In Deming terms, I had been “transformed” as an individual, and it was discontinuous! Over the next few years, we transformed Summit and I never looked back.
The system also transformed me as a manager and leader. Since 2000, I’ve implemented HPMS as a manager and primary consultant in over forty organizations—from large multinational corporations to small start-ups—often witnessing the same transformational results we enjoyed at Summit.