Program Outcome #2

Artifact Summary 2 – The Transformation of Cook Medical

The artifact presented for this program outcome is a proposal written for course OL 645 – Organizational Change and Development. The program outcome my presented work represents is outcome number 2 “Integrate and apply analytical principles and skills to make complex strategic decisions.” (Saint Mary’s University of Minnesota, 2018). One of the course objectives this presentation addressed was “Analyze the influence of organizational beliefs and policies on global economies.” (Saint Mary’s University of Minnesota, 2018). The artifact presented, The Transformation of Cook Medical is an organizational systems analysis paper. We were asked to analyze an organizational system that had gone through a change.

Change, at any level, is generally difficult for people. The organization I analyzed is still in the midst of a major change. The business was impacted by a warning letter from the Food and Drug Administration (FDA) regarding their manufacturing and record-keeping processes. Many companies would have been badly damaged with such a letter, but Cook Medical has made it through. While there have been several changes to the organization regarding policy, procedure and talent management, the company has primarily maintained its culture. The senior leadership communicated the changes to the employees and they continue to communicate. The open communication has been the most effective aspect of the changes made. The paper analyzes how the changes occurred and why they have been successful.

The artifact is presented after the summary references.

References

Saint Mary’s University of Minnesota. (2018, July). 2018-2019 SGPP catalog & student handbook, Organizational Leadership, M.A. Retrieved from http://catalog.smumn.edu/index.php

 

The Transformation of Cook Medical

Laura Englander

Saint Mary’s University of Minnesota

Schools of Graduate & Professional Programs

OL 645 Organizational Change and Development

Dr. Joseph Linton

March 25, 2018

 

The Transformation of Cook Medical

Introduction

            When the Federal Drug Administration (FDA) sends a warning letter to a company, change is imminent. Either the company fails to follow the guidelines and is shut down by the FDA, or they make the suggested changes and survive or maybe even thrive under difficult circumstances. Cook Medical, in Bloomington, IN, received an FDA warning letter in 2014 and has, under superb leadership, made changes and is still going strong. Such change does not come easy. Patterns of work had to change, budgets had to be adjusted, and resources had to be fully realigned to tackle the very serious consequences the FDA would hand down if recommendations were not met. While a mere change is not quite enough, a full transformation was necessary for Cook – the largest privately-held medical device company in the world. It was no small task.

Background

Cook Medical began in 1963 by William “Bill” Cook. Bill and his wife Gayle began the company in an apartment making products for physicians that included the first wire guide and catheter set. These products were made to enter an artery in a minimally invasive way. The company has built that first product line into 16,000 products shipped all over the world to physicians of many specialties (Strother, 2016). There are close to twelve thousand employees in all Cook Group companies worldwide. Medical devices are the primary line of business, but the Cook family has proven to be extremely philanthropic as evidenced in the renovations and revitalizations of several buildings including a grand hotel in southern Indiana which they operate under Cook Group. The Cook Group company is currently run by Carl Cook, the son of Bill and Gayle. Bill passed away in 2011. Carl, who became CEO the day after his father died, and the other senior leaders make it a point to honor the vision and mission that Bill Cook started.

The Cook Medical mission statement reiterates the need for innovation and the importance of patients: “Cook is dedicated to bold leadership in pioneering innovative medical solutions to enhance patient care worldwide. That means we’re always trying to find a better, simpler, more efficient way to treat patients” (Cook Medical, n.d.). The mission and vision around patients first and quality work is led by Pete Yonkman who became President of Cook Medical shortly after the company received the FDA letter. Yonkman has an exceptional reputation as a leader which can majorly impact the view of stakeholders inside or outside the company (Jones, 2012, p. 40). The company was about to experience its most significant change ever which reiterates the importance of a capable and influential leader who listens. Yonkman was tasked with creating a new vision for the company which he needed to expertly frame to become a new reality for the stakeholders which, Ladkin (2001) asserted is a quality attributed to leadership (p. 101).

Impetus for Change

Cook Medical began making medical devices in 1963 before the FDA was in existence. The products that Cook makes are largely by hand, and each product has a specification sheet and instructions for assembly which are still on paper (Strother, 2016). The FDA had inspected Cook many times, but the letter had to do with the lack of documentation. Products at the start of the company had short specification sheets while now they are much more complicated and several pages long (Strother, 2016). There was not enough redundant validation or quality oversight in the manufacturing of the devices according to the FDA. Cook needed to alter the way it manages the products. Paper records are planned to be replaced with electronic records which can reduce the time a production worker takes to find the small part of instruction they may need in a long document (Storther, 2016). To make these significant changes, Yonkman and his leadership team would need to foster communication with their stakeholders to build trust, solve problems creatively and coordinate the actions of the company (Crosby & Bryson, 2005, p. 67). Communication would prove to be the best weapon through the difficult times the company was about to face.

Organizational Structure

Cook Group is made up of several different businesses including real estate, health clinic, travel and the largest business being medical devices. Although the companies are not all located in the same geographic area, the divisions are oriented by the type of business (Fairfield, 2016, p. 247). The Cook Group is a multidivisional structure with several different businesses, each of which has different functions and are self-contained (Jones, 2012, p. 156). The corporate headquarters have leaders who oversee all businesses and ensure communication of institutional messages which outline internal and external messages (Lammers, 2011, p. 165). Cook Medical, the primary business of Cook Group, evolved into a product divisional structure which grouped each of the support areas for the ten core business units, each of which revolved around a medical specialty area (Jones, 2012, p. 154). Cook Medical operated under this divisional structure until a modification was made recently by the new leadership.

With the transformation led by Yonkman, the ten business units were divided into two larger divisions called MedSurg and Vascular. Both larger divisions have a Vice President who reports to Yonkman. Under each large division, the separate business units, or specialties as they are now referred, have a Vice President and managers for sales and product management. Manufacturing is primarily centralized with employees cross-training to build different products if they choose. Much like Jones (2012) asserts, the Cook product division structure contains functions that support all divisions which operate centralized (p.154). Human resources (HR), engineering, information technology (IT) marketing is examples of the centralized functions at Cook Medical. Within the centralized functions, each employee may be assigned to a specialty which becomes challenging when resources are tight. One specialty might lose an engineer to another specialty if the management team needs them on another project for a different specialty. There is a risk of conflict when allocating resources within a company that has a complex structure like Cook (Jones, 2012, p. 396).

The leadership team must understand that the process of change and sharing resources will necessitate the need to actively listen to their subordinates and practice suspended listening to fully hear concerns before reacting (Crosby & Bryson, 2005, p. 67). It appears that Yonkman has fostered this style of open communication within his leadership team. Employees have seen the most change through the transformation and Yonkman has been sensitive to their needs to communicate. He solicits input at weekly lunch meetings with employees and encourages the employees to ask him questions directly (Strother, 2016). The transformation will only be successful if communication is open and if the leadership can question its strategy, review its vision and inspect its corporate identity (Goleman, 2006, p. 97). Yonkman showed that questioning the way things had been done was the way to lead Cook into its next phase. Now he had to get the employees on board.

Employee Perspectives

Each group of employees in the Cook Medical organization was affected by the transformation. Cook is known for having a culture that is family-like and welcoming while being non-judgmental. The culture of Cook can be maintained while the subcultures will need to have the new company direction communicated or the transformation may not succeed or sustain (Murray, Lazure, & Péloquin, 2017, p. 43). Perspectives from what change was needed and how jobs were affected were noted in the following subgroups.

Manufacturing Employee

Manufacturing employees were the most affected by the FDA warning letter. The way in which they do their jobs is changing and will continue to change through the transformation. New skills for using electronic workstations will be required which is much different than reading the paper versions they have now (Strother, 2016). They are now charged with learning new skills, and those that succeed will take responsibility for their development (Dowell & Silzer, 2010, p. 62). More opportunities for advancement should also come into view for employees on the manufacturing floor as growth continues.

Sales Supervisor

While the role of sales representatives for the company may not change, there are implications to consider that the sales supervisors will need to address. First, the FDA warning letter is public knowledge and competition will do what they can to ensure they use it to their advantage. The company will need to provide supervisors with proper messaging for the sales staff to ensure any damage control can take place as needed. The sales supervisors will also need to direct their staff how to handle the loss of production and back-orders as the engineering and manufacturing team must work on product documentation issues. The sales supervisors will need to provide clear communication of what is expected and ensure the sales team do not take the changes personally which can hurt the morale (Murray et al., 2017, p. 44).

Human Resources

The human resources (HR) team must adjust their hiring practices. Many consultants for regulatory issues had to be hired when the FDA letter was issued. Documentation had to be adjusted and often created. The HR team was told to freeze any other hiring until the FDA letter could be addressed. Once the consultants were in place, the hiring of other functions could resume with careful restrictions. Hundreds of thousands of dollars were allocated to the consultants which cut into the HR budget considerably. The HR team was also pushed to better align their hiring strategy with the business transformation strategy (Dowell & Silzer, 2010, p. 65). For instance, the profile of knowledge, skills, and abilities to manufacture employees now needed to include the ability to engage with technology. Hiring the right people and ensuring they understand the transformation process would be paramount for the HR team.

Executives

The executives at Cook Medical had to meet and continue to meet frequently to put together a strategy for the organization. Disseminating their ideas for what needed to be changed with respect for the FDA recommendations had to be balanced with input from the employees with their ideas about how to make the change. Sharing knowledge and being open to hearing from subordinates would be key to the transformation. Wheatley (2005) asserted that each company has communities within which practice knowledge sharing and the leadership must provide conditions for that to continue if the transformation is to be successful (p. 181). The executive team at Cook Medical communicated with its employees and the community to ensure the knowledge sharing continues. This is one of the main reasons for the successful transformation.

Conclusion

The transformation had to happen at Cook Medical for them to stay in business. The FDA warning letter was the impetus for change. The leadership team had a real opportunity to mess it up which could have resulted in several thousand people losing their jobs. Thankfully, Yonkman and his team decided to embrace the change and create a sustainable future for the privately held company. By providing employees with opportunities to raise any issues with the changes and by not judging their concerns, conversations were more candid and protected from a judgment which Murray et al. (2017) asserted will lead to sustainable transformation (p. 44). Organizational changes are simply not easy to implement otherwise. The transformation Cook Medical is making should be viewed as an example for other companies that find themselves in a similar situation. The Cook Medical company is thriving. Mr. Cook would no doubt be very proud of the legacy he has left especially knowing the values he instilled are being upheld so expertly.

References

Cook Medical. (n.d.). The cook medical mission statement. Retrieved from https://www.cookmedical.com/about/mission-and-values/

Crosby, B. C., & Bryson, J. M. (2005). Leadership for the common good: Tackiling public problems in a shared-power world. San Francisco, CA: Jossey-Bass.

Dowell, B. E. & Silzer, R. (2010). Strategy-driven talent management: A leadership imperative. San Francisco, CA: Jossey-Bass.

Fairfield, K. D. (2016). Understanding functional and divisional organizational structure: A classroom exercise. Management Teaching Review, 1(4), 242. doi:10.1177/2379298116661843

Goleman, D. (2006). Working with emotional intelligence. New York : Bantam Books.

Jones, G. R. (2012). Organizational theory, design, and change. Upper Saddle River, NJ: Prentice Hall.

Ladkin, D. (2011). Rethinking leadership: a new look at old leadership questions. Cheltenham; Northampton, MA: Edward Elgar.

Lammers, J. C. (2011). How institutions communicate: Institutional messages, institutional logics, and organizational communication. Management Communication Quarterly, 25(1), 154-182. doi:10.1177/0893318910389280

Murray, S., Lazure, P., & Péloquin, S. (2017). Understanding culture and subcultures for efficient and sustainable transformation. People & Strategy, 40(2), 40-45.

Strother, B. (2016, August 6). Cook addresses FDA criticism, doesn’t stop there. Herald Times Online. Retrieved from https://www.heraldtimesonline.com/free_access/cook-addresses-fda-criticism-doesn-t-stop-there/article_c8b27c0d-b5dc-592d-9303-6e0019846452.html

Wheatley, M. J. (2005). Finding our way: Leadership for an uncertain time. San Francisco, CA: Berrett Koehler Publishers.