I WOULDN'T WANT TO CLAIM THAT salespeople at Ballard Medical Products Inc. have it easy. They'd bristle at that. George Wojtowicz, for instance, might point out that he has to rise in the cold black of the Indianapolis night and drive two and a half monotonous hours through the featureless landscape of north-central Indiana when he has morning calls in Fort Wayne. OK, that's not easy. But when he gets there, lays the product on the prospect's desk, and the man offers to pay him three times what Wojtowicz (wo-TOW-wich) is asking, that's hard?
Having the right products -- at the right price, naturally -- does make Wojtowicz's job a great deal easier and, even he will admit, a whole lot more satisfying than some other salesmen's. But to his credit, Wojtowicz himself is one of the reasons why the medical products in his kit often turn out in his customers' eyes to be the right ones. That's because he and his sales mates frequently help create them, and they are always part of the process of improving them -- they along with practically everyone else working for this extraordinary little company.
Extraordinary?
Yes, but not for any of the ordinary reasons -- not because its technology is high, its financing sophisticated, its marketing creative, or its luck unbelievable. Instead, at Ballard Medical Products, whose offices and factory lie outside Salt Lake City in Midvale, Utah, management has found an extraordinary way of establishing customer contact and responding to customer needs. The beauty of the technique lies not in the specific practices Ballard Medical employs, however. Other companies in other markets and industries wouldn't necessarily want to do everything that the Ballard organization does. But other companies could surely profit by understanding the way founder and chief executive officer Dale Ballard has created an organization that executes its business strategy so well. Ballard has a way of thinking about structuring a company that in today's economy almost ensures superior results.
Ask most people to describe their company's organization, and they'll probably sketch boxes connected by lines. The boxes enclose discrete functions. Here's a box for R&D, and one for marketing, and over here is sales. The lines connecting the boxes indicate information flow. R&D tells marketing, and marketing tells sales, and so on throughout the company.
The boxes and lines, while intended to be merely representational, nonetheless say something about how the people within the company view their roles and relationships. Put a box around R&D and, if only subliminally, you're saying that R&D happens only there. People in other departments don't do it. Connect the R&D box to marketing with a line and you're suggesting that communications to or from R&D should follow that line.
While it's true that people don't always stay strictly within the boxes and lines, the graphic representation does create an attitude, a mind-set, within the organization: this is my job, and that is not, and if you want to talk to me, you must use the proper channels.
Ballard Medical's organizational philosophy, in contrast, has a different influence on how people there think and act. "Anybody in this company can talk to anybody else about anything," brags John Paine, a salesman in the Southwest who, like many of his colleagues, also worked at Dale Ballard's first company. "It's the same company, the same idea. It worked before," Paine says, "and it's working again."
DALE BALLARD, 65, HAS BEEN choreographing the design, manufacture, and sales of medical products since 1956, when he founded Deseret Pharmaceutical Co., which he sold to Warner-Lambert Co. in 1976 for $138 million. The sale made Ballard and many employee stockholders reasonably wealthy people. At the time of the purchase, Warner-Lambert promised to keep hands off the Deseret management but, predictably, didn't. Ballard consequently left the company, though on friendly terms, in 1978. Soon he launched a new business, Ballard Medical Products. The idea was to make the new company the R&D arm of the old one. However, says Ballard, the concept didn't work because his old company ignored the new ideas. Maybe they were good potential products, but from Deseret's perspective, they hadn't been invented there.
If Deseret won't make them, Ballard decided, Ballard Medical will. He had built one company; he would build another and make some more people rich. Besides, when Ballard's poor but industrious daddy taught him the value of hard work, he neglected to mention the utility of play. So fishing is Ballard's single known self-indulgence. What else was the man going to do with his time, if not build another business?
The company he's now running is still small ($9.7 million in sales last year), publicly traded, and trying (successfully) to grow in the hospital-supply industry, dominated by a handful of giants such as American Hospital Supply and Johnson & Johnson. Dale Ballard's goal is to make the company large enough and sufficiently profitable to fetch a healthy offer from an acquiror. His growth strategy is to develop and dominate niches that the giants have neglected.
One problem with niches, however, is that small ones usually don't provide enough expansion room to accommodate a growth-bent company. Such a company must keep finding new niches to fill. Another problem with niches is that when one of them turns out to be large and profitable, it soon attracts competitors that begin to squeeze margins.
A good response to both of these problems is continuous innovation. A steady flow of new products enables a company to expand from niche to niche when the niches are small. And when a niche is large, a series of advanced new products can keep a company so far ahead of its rivals that it never has to resort to direct price competition.
New-product innovation, it turns out, is Ballard Medical's response to both of these problems. And that means that the company has to stay close enough to its market to anticipate demand. It has to know what its customers will need -- and know it just a trifle earlier than the customers themselves.
True, Dale Ballard has a leg up on the competition. That's because he has the enviable ability to recognize terrific new-product ideas when he sees them. He has a sensitive and educated gut, what Ballard Medical product manager Richard Lambert calls an "uncanny sense of knowing what is a product." But this ability probably involves less God-given talent than long-cultivated skill, and in either case the knack, whether innate or acquired, shouldn't be mistaken as the crucial factor in his company's success.
