With a broad portfolio of products,a global medical device maker captured over 50% of sales in most of its categories in the US, where employees were organized by product divisions. In Europe, however, the company lagged behind competitors in sales partly due to a decentralized operating model that didn't align with the company's US operations. Its businesses in Europe were focused on individual countries, with little collaboration among them or with the US business, and suffered from lack of clear ownership for vital functions like sales and marketing.
An operating model serves as a blueprint for how resources are organized and operated to get critical work done. It encompasses decisions around the shape and size of the business, where to draw the boundaries for each line of business, how people work together within and across these boundaries, how the corporate center will add value to the business units, and what norms and behaviors should be encouraged. By optimizing through a new regional operating model that improved efficiency and helped the company achieve share levels in Europe that matched those in the US, the medical device maker stood to gain hundreds of millions.
With an understanding of the company's ambitions and the challenges posed by its current operating model, the Bain team worked with company executives to:
- Conduct an extensive diagnostic focused on understanding the status quo in each of the company's key European countries, including the unique regulatory environments and customer needs. This effort helped determine how the company should organize its operations in Europe to accelerate growth.
- Lead workshops with key stakeholders from the US and Europe to facilitate discussions of how business is done and how functions and activities should be owned and shared.
- Help design operating procedures, relying upon Bain's Results Delivery® approach, to govern alignment among regional teams, mitigate expected risks and maintain focus on goals.
- Run a program management office to facilitate meetings on both sides of the Atlantic to review initial proposals and plan roll-out to the broader organization.
Based on these research efforts, insights and workshops, the Bain and client team put forward a number of key recommendations to clarify and improve operations:
- Create a regional operating model connecting US and European operations, in which employees organize around product divisions rather than single countries.
- Apply the new regional operating model in Europe, so that multiple divisions serve 16 countries rather than separate divisions serving each country.
- Embed ownership of sales and marketing within each division to boost accountability.
- Leverage shared services functions for work that could be scaled across the regions.
- Develop global opportunities for employees who wanted experience in multiple geographies.
With proper approval from executives within the medical device manufacturer, Bain helped the organization implement the new operating model, managing a project management office that helped support the transition. Once fully implemented, the new regional operating model showed immediate results:
- Revenues in Europe increased 5% within the first year using the new model.
- Employee engagement in Europe increased by 4% within the same timeframe.
- Trust between divisions and geographies was established and international development opportunities were provided for key talent.
- The company established the foundation it needed to increase scale and market share in Europe, and generate millions in additional revenue.
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.