Too many companies are failing to innovate. One reason, say the authors, is the polarized approach companies take to innovation. At one end of the spectrum, corporate R&D efforts tend to focus on product refreshes and incremental line upgrades that generate modest growth for lower risk. At the other end, venture capitalists favor high-risk "transformational" innovations that seek to upend industries and generate outsize returns. But there's a better, middle, way. This article presents the growth driver model, a framework that partners corporations with outside investors to identify and develop innovation opportunities, drawing on corporate resources and talent and externally recruited entrepreneurs. The authors illustrate the model with a detailed case study of how it revived innovation at Cordis, a large medical technology device maker.
This note provides an overview of the healthcare system in Ghana. It discusses the public and private sector as well as traditional medical practice. It also discusses the country's pharmaceutical industry. It is recommended as a companion to Professor Regina Herzlinger and Ben Creo, "mPharma: Scaling Access to Affordable Care," HBS No. 323-033 (Boston: Harvard Business School Publishing, 2022, rev. 2023). mPharma is trying to create the largest pan-African healthcare company ever to provide much needed primary care and a reliable, fairly priced supply of drugs. Founder and CEO Greg Rockson must decide how best to achieve this lofty goal. He must prioritize launching a telemedicine program, expanding his pharmacies across the continent, and/or creating a new payment program to cover the cost of medication. Rockson cares deeply about health equity, but his venture capital financed company must be profitable.
This case teaches key success factors for both startups and established medtech firms. It examines how to structure a firm to maximize financial returns. Medtech entrepreneur Duke Rohlen is proposing a new model for innovation and business growth. From 2007 to 2019, Rohlen sold four medical technology (medtech) companies, all of which were acquired at significant multiples of the capital invested. While the average medtech startup exited 8.6 years after starting, Rohlen's companies had an average time to exit of 40 months. Rohlen then saw that the companies acquiring his startups were sold to larger firms, in short time spans after the initial sale, at prices significantly higher than their pre-acquisition value. Rohlen observed how much value his companies had created for others after he sold them: $1.5 billion for Covidien (after sale of FoxHollow to ev3), $1.1 billion for Philips (after sale of CVI's Stellarex from Covidien to Spectranetics), and $280 million for Stryker (after sale of Spirox to Entellus), for a total of about $2.9 billion. Rohlen wondered how he could still create innovative new products yet capture a higher portion of the financial returns. He proposed a new model for innovation and business growth, called the Chassis and Growth Drivers model. Partnering with major private equity firms Hellman & Friedman and Kohlberg Kravis Roberts & Company (KKR), Rohlen's firm Ajax Health plans to invest $1.3 billion to prove the model's viability. For $1 billion, they're submitting a bid to buy Cordis, a maker of medical devices for cardiovascular and endovascular procedures. Cordis was formerly a standalone business before it was bought by Johnson & Johnson and then its current owner and seller, Cardinal Health. If their bid is successful, they will invest an additional $300 million to fund an off-balance sheet accelerator, which will develop innovative new products that will drive revenue growth for Cordis.
mPharma CEO Greg Rockson is attempting to create the largest pan-African primary healthcare company. He must evaluate a three-year strategy potentially involving three key components: a rapid and extensive expansion of the company's network of 600 retail pharmacies in nine African countries, the future of a recently launched telehealth program, and the creation of a new customer payment plan that will cover the cost of the common prescription drugs that are used for prevalent communicable diseases, such as malaria. Rockson must balance his desire to promote health equity with ensuring that mPharma becomes a profitable company. This case is suitable both as a general business case for MBA students of any level and as a case for courses focused on the healthcare industry, the pharmaceutical value chain, health care systems in Africa, innovation in health care, social entrepreneurship, and African businesses.
The case involves repositioning an old 6-story warehouse in Pittsburgh and many of the issues of rehabilitation and selecting and managing the development team especially in a world of capital market uncertainty. The case also demonstrates the alignment of interests of the players, the construction process and the various methods available to contract with the general contractor including lump sum, cost-plus and guaranteed maximum price.
Thomas McDonald, senior vice president of Equity International, is weighing an investment in the Brazilian homebuilder Gafisa. Was this the right country? The right company? The right co-investor? The right time? McDonald would be investing alongside a Brazilian private equity firm, GP Investments, and must decide how to structure the investment. Especially, he must decide how to align his interests with those of GP. GP has recruited EI due to its prior experience with the Mexican homebuilder Homex. McDonald must also consider: Is that experience transferable to this investment?
Bill Smith is informed by his general contractor that a key component of the Aria Resort is going to be delayed. Aria is the centerpiece of CityCenter: a $9 billion complex and a bet-the-firm decision for MGM Mirage. Smith must make a decision as to whether to force the general contractor to complete construction or to have the MGM Design Group take over this piece of the construction. The case also looks at the economics of the CityCenter project and discusses the organizational underpinnings needed to make a massive construction process a success.
CityCenter is a $9 billion project for MGM MIRAGE. The project's star architects have a major disagreement about a critical design issue. Bill Smith, head of the MGM MIRAGE Design Group, must resolve this issue to the satisfaction of all the project's stakeholders. This case explores many issues in the construction of large scale buildings: how to envision such a project, how to manage the architects, how different designs adds value, and what criteria matter in resolving a dispute between designers. The case also explores the construction costs and revenue benefits of having two buildings built with significant leaning away from vertical.
A construction company experiences a crane accident with multiple fatalities. The CEO, a client, and an employee must make choices to meet the company's obligations. Set in 2006, the case looks at the choices faced by board members of a museum which is an important client and which is faced with a completion deadline, and of a key employee who has other offers of employment and is negotiating a stay put bonus. The rights and interests of the surety company that provided the construction bond are also interwoven. The protagonist is the CEO of a multi-generational family business who must now negotiate with these parties and then decide whether to attempt to raise new capital, declare bankruptcy, or try to lead a controlled wind-down. The case explores crisis management, decisions by principals operating in the zone of insolvency, construction contract types, the limits of recourse available from construction bonds, roles of board members, calculation of an employee stay-put bonus pool, subcontractor and vendor communication, and reputational issues around bankruptcy or closure of a closely held family business. Analytical tools include contract status report, contractor balance sheet, stay-put bonus pool.
This note examines the background of the credit crisis of 2007-2008, discusses potential causes of it, and considers its ramifications. The exhibits contain a variety of pertinent data regarding the rise of securitization, debt levels, and typical aspects of financial crises. A new matrix is introduced for thinking about a country's potential economic performance at any point in time.
Roberto Charvel is a young MBA graduate making his first personal real estate investment in his native Mexico City. Charvel is planning to purchase and renovate a nine unit apartment building. Is the market good? Should he sell or lease the units? How should he handle other issues like the architectural designs, the construction process, and the legal process? How should he balance all the competing demands on his time? This case serves as an introduction to the multifamily property type.
Enterprise Community Partners must determine whether to rebuild the Lafitte housing projects in hurricane-ravaged New Orleans, and if so, how to mitigate the risks. Set in January 2007, more than a year after Hurricane Katrina made landfall, the case examines how Enterprise has a number of environmental, contractual, reputational, and legal risks to overcome in making the project a success. Given these risks, Enterprise is unsure whether to rebuild in New Orleans at all, and whether to renovate the site or redevelop it into a mixed-income community.