STRATEGY TO OFF-SET CURRENCY FLUCTUATIONS GENERATES A HALF BILLION DOLLARS IN NEW REVENUE.                                   

In this case study I want to illustrate how design thinking can lead to innovative corporate strategies.

A chance lunch with the president of Sci-Can found him in foul humour. He was an importer of medical and dental equipment from Europe and every time there was an adverse currency correction, his profits would be drastically reduced – or worse! It was clearly a significant problem for this privately held company. After empathizing for some time I suggested that he make something locally that he could sell to his EU suppliers which would have the effect of neutralizing the fluctuations.

He liked the idea but found the prospect of becoming a manufacturer rather daunting, and besides, what should he make? I suggested we spend some time with his salesmen and customers doing some ethnographic research to find some un-met need in the customer environment. In the meantime, he explored some of the financial implications.

After several weeks of office visits we started to see a pattern emerging. Nurses were the last to leave a dental office and as they locked up they turned on the autoclave, the principle device for sterilizing instruments. We inquired why; surely the instruments needed to be sterilized for every patient? The cycle time for the autoclave was around 1 hr 15 minutes, clearly far too long to do between patients. Their solution was to simply disinfect between patients and sterilize once a day.

We discussed  this with the dentists themselves and they revealed two motivating themes: the alternative was to have multiple sets of instruments, but at $5,000- a set, that was considered a non-starter, but what we also found was that most of them were concerned about the possibility of being infected with HIV-AIDS as this was the beginning of the AIDS epidemic.   We had two things; a problem/opportunity, and motivation.

We defined the problem as the need to make a sterilizer that could do a cycle between patients which we defined as maximum 10 minutes.

The president agreed to the budget estimate and we started work. An engineer was engaged and after much exploration and prototyping we developed a promising concept; to separate the pressure containment function from a fixed multi-purpose volume. We in effect created a small stainless steel tray and cover which would slide into a heavy steel sleeve that would contain the pressure. After much more prototyping, the cycle time was reduced to six minutes and the decision was made to proceed to production. The product went on to international distribution and generated over $0.5 billion in new revenue.

But the essence of this case is that by understanding the client pain, searching for an un-met need, providing a solution, we could develop a new strategy (becoming a manufacturer, using the existing supply chain and distribution channel) that generated more revenue than the previous distributor model.