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DPI Client Interview
Reichert, Inc.

	John Burgess, CEO of Reichert, Inc.

              "I can still see the shelves in my office filled with ten years of strategic plans, developed for Reichert by outsiders, that were never implemented," says John Burgess, President and CEO of Reichert, Inc. "These plans were full of spreadsheets and resulted in all kinds of reports. They were long on process and short on action. There was a disconnect between the plan and the implementation, because they were unrealistic. You have to have a balance between the strategic vision and the operational competence. So I looked through these plans, and then I threw them all out and said, 'We need a strategy.' "

              Some months before coming to this conclusion, Burgess had joined Reichert to run this hundred-and-sixty-year-old company best known for designing and manufacturing instruments used to examine people's eyes. Reichert's phoroptor is familiar to almost everyone who has had his or her eyes tested because most eye doctors use it to determine prescriptions for glasses and contact lenses. And Reichert's non-contact tonometer is the instrument that most patients love to hate. It measures the fluid pressure in your eye by propelling a puff of air against the cornea to detect the possibility of glaucoma. Throughout its history, the company had been a leader in this field. But in recent years Reichert had become a non-core stepchild to its corporate owners, and its competencies were diminishing as a result.

              "When I came into the business," Burgess explains, "we went through some significant restructuring and management changes, and brought in some new key people. If you go back thirty or forty years, we were the largest optical company in the world. But in the last few years, through a succession of downsizing, selling, different owners, etc., the company had really been stripped."

              To get the company back on the road to leadership and growth, Burgess realized that a different approach to that of traditional strategy consultants was needed. He looked around at alternatives and came across DPI's Strategic Thinking Process. It seemed to match the approach he wanted to take.

              "There was no commitment to the plans that had been inflicted on the company over the years, partly because our people weren't involved in making them. I wanted to gain the agreement of the people inside the company to the plan that we were going to go off and execute," Burgess explains. "What I didn't want to do was go up to the proverbial mountain top and come down with an idea, and then spend the next three or four years trying to convince people it was a good idea. So I felt the thing to do was to take the people up the mountain with me. And I think the DPI process allows you to do that because it involves people at all levels of the company."

              Despite understandable skepticism from several managers who had been subjected to many fruitless strategy projects in the past, they decided to go ahead with DPI's Strategic Thinking Process. Doubt was gradually erased as the participants realized that they would, in fact, construct their own strategy and truly have ownership of it. "They came to see that this is an honest process and not one brought in by me to convince them to do what I wanted," says Burgess.

              In the course of the process, an important revelation took place.

"So we decided to pursue a Market Category Driving Force that would open up a lot of new opportunities beyond the marketplace we are accustomed to serving, and outside of our own traditional restrictions."
        – John Burgess

              "The Business Concept we developed around this new concept helped us to define where we would take our future strategy:

              "Our strategy is to identify the assessment and treatment needs of the eyecare market and respond with differentiated instruments, systems and services that improve or preserve human vision. We will concentrate on high-growth professional consumer segments in geographic markets with healthcare infrastructures that bring critical mass.

              "What flowed from there of course was that to be successful at this, we would need to cultivate certain Areas of Excellence. One was Product Innovation, which is a step beyond Product Development. We described it so that it would be clear and implementable:

              "We must excel in accessing and applying existing and new technologies to create differentiated products to meet or exceed the customer needs better than the competitors, and do it in a timeframe that's appropriate and at a cost which our customers can afford.

              "The other Area of Excellence was Market Knowledge, which we described as follows:

              "To excel at understanding and anticipating current and emerging needs of the eyecare market in order to identify opportunities more quickly and more often than any competitor.

              "So that led us to re-establishing contacts with the thought leaders in the eyecare world–individuals and institutions who are generators of new concepts, to get the benefit of their market knowledge. In that way, we can develop new products that not only work, but that the market will need. That's part of the difference between being a Product-driven company and a Market Category-driven company."

              In developing a list of Critical Issues, Burgess was surprised at some of the items that rose to the top, specifically quality improvement, and improving operational costs.

              "That shows you the state of the company," says Burgess. "One would have thought that the Areas of Excellence per se would have been clearly the top issues. But these are the issues developed by the group, and they felt that, in order to achieve the greater vision, we had to fix some of the basics, quality and cost being foremost. Since then we've done well with those, and I believe we're as good as, or better than, the standards in our industry."

              A list of five other Critical Issues included, among others, fixing their slow and unreliable new product development process.

              Once the effort to improve quality and productivity was underway, Reichert could now turn its attention to creating an on-going stream of innovative products. To accomplish this, a new methodology or process was needed–to develop new product ideas that fit Reichert's strategy, and bring the best ideas to fruition.

"We liked DPI's concepts of the 'product hopper' and keeping it full, keeping the product concepts moving, being able to move them from the hopper down through strategic development, and through the Strategic Filter."
        – John Burgess

              Says Burgess, "We said, 'Okay, we've got sort of a product development process in place but it's slow, and it doesn't have a method for deciding the important questions: What products should we develop and why, and what's the priority?' We were looking for a way to generate new ideas and get the products up and moving, but to be sure they were needed by the market, do-able from our standpoint, and innovative so that we could re-establish our leadership in the market we had decided to go after.

              "We liked DPI's concepts of the 'product hopper' and keeping it full, keeping the product concepts moving, being able to move them from the hopper down through strategic development, and through the Strategic Filter."

              The end result–products that would 'fit' their market and strategy.

              "I have a diagram on my wall that I call the 'Status of The Strategic Process.' I've got a big funnel, my hopper, and a list of products going into it. At the bottom of the funnel is Opportunity Development. This is a shorter list of products which we are in the process of trying to understand, so that when they get to the Strategic Filter we can answer all the questions.

              "Then there's a line–that's the Strategic Filter. If they get past that, they go to what we call 'Technology Validation.' These are products that have gone through the Filter, but we are uncertain we have the technology understood to the point where we can move forward with them. We have to be sure they will work.

              "The next gate is 'Proof of Technology.' Once we've proven the technology, it goes into the Product Development Cycle. We have a list of products in there. Then the next gate is 'Product Launch.' And the last gate is 'Production Release'–these products have gone through the process and are now in production."

"Another new product is a disruptive technology in the measurement of intraocular pressure. We have a chance to 'change the rules' with this new instrument."
        – John Burgess

              "With the hand-held tonometer we set ourselves a goal, and we developed and launched it in 249 days. And we have several others in the pipeline. A new product we have coming out this fall is a disruptive technology in the measurement of intraocular pressure. We have a chance to 'change the rules' with this new instrument."

              In the past Reichert has certainly been no stranger to changing the rules through product innovation. Burgess explains, "We invented, many years ago, the air puff technology which uses a puff of air to slightly compress the eyeball so we can measure the pressure inside. This replaced an older technology, which required an ophthalmologist to anesthetize the eyes. When Reichert's air puff technology was introduced it effectively 'changed the rules of the game' by eliminating the need for anesthesia and a visit to the ophthalmologist. The test could be administered by a technician.

              "Now we're trying to change the rules again," Burgess says. "It's not easy to do because of established practices in the market, but we know there are some serious competitors out there and we have to move forward to market with these innovations before they do. When you try to make a change like this it may take time, partly because the market didn't ask for it and isn't expecting it. But to quote Dr. Deming, 'No one ever asked for the electric light bulb.' And Mike Robert also points out, 'No one ever asked 3M for Post-it™ Notes.' "

              Another result of the DPI process was a decision to mount an LBO of the company from its corporate owners, who had designated it non-strategic and were looking for a buyer. Burgess found the strategic clarity acquired through the process to be invaluable in presenting the Reichert story to potential investors.

Another result of the DPI process was a decision to mount an LBO of the company from its corporate owners.

              "Do you remember when Norman Schwartzkopf was doing his briefings during the first Iraq war? Did you have any doubt in your mind about what he was saying? He had a map. A very clear map. We have our maps. We have our Driving Force. We have our Business Concept, our Areas of Excellence. We have our Strategic Filter. We know our Critical Issues, and we can point to the results before and after, and quantify them. With all of that it's easy to explain our business. On top of that, our senior managers all have the same understanding and talk from the same song sheet. Not only that but the people on the factory floor share that understanding, so it's all very clear and consistent."

              Reichert's plan for the next five years is to grow to three or four times their present size through a combination of organic growth and selective acquisitions.

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