Critical

What my heart surgery taught me about supply chains

With all this talk about tariffs we’re all getting a crash course in supply chains whether we like it or not. I also got one, but not where I expected to.

Two weeks ago, I was lying on an operating table for a catheter ablation (a relatively simple heart operation, designed to even out my heart rate). As the anaesthetic took effect, weirdly, I started thinking about supply chains, having noticed the incredible choreography of materials flowing into that single room.

Take the sterile supply chain. The surgical instruments around me traced back through sterilization units, to medical manufacturers, to specialized steel producers in Germany and Japan. The disposable supplies – from surgical drapes to catheters – linked to massive polymer production facilities and oil refineries on multiple continents.

The pharmaceutical chain is equally fascinating. My anaesthetic drugs begin life in pharmaceutical plants in India and Switzerland, while the contrast dye used to image my heart originates from rare earth mineral mines in China.

Then there's the human expertise chain. My electro-cardiologist trained for 15 years, supported by universities, teaching hospitals, and research centres. The specialised nursing team represented decades of accumulated experience.

Even the building systems – medical gases, purified water, backup power – had their own complex supply networks stretching back to industrial gas manufacturers and power stations.

Question: In your organisation, what do you need to understand about the fifth and sixth-tier suppliers who might be critical to your success?

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The master plan

A lot of strategic plans that I read suffer one of two faults. See how yours fares on these:

• Fault #1: It ONLY has a static view. It describes the organisation as it is, not as it wants to be. It’s essentially a catalogue of functions, or roles, or services, along with some initiatives to make these better.

• Fault #2: It ONLY has a future view. It describes an aspiration, but without the steps, or stages, needed to get there. There’s no underlying logic of the pathway, or roadmap to success.

So, what should a strategy that avoids these faults look like? I can tell you in just 33 words. That’s how long Elon Musk’s original strategy was for Tesla. Tell me what you think of this, his so-called ‘master plan’, devised almost 20 years before he became de-facto President of the United States:

1. Build sports car.

2. Use that money to build an affordable car.

3. Use that money to build an even more affordable car.

4. While doing the above, also provide zero emission electric power generation options.

Yes, that really was his strategy. If you don’t believe me, look here.

Step 1 was achieved in 2008, with a USD$120k ‘proof of concept’ low-volume roadster. They’re so rare, I’ve never seen one in the flesh. Step 2 was achieved in 2012, with the Model S, which was at the upper bounds of ‘affordable’ (about USD$80k). Step 3 was reached in 2018, when the Model 3 entered production (at about USD$50k). Musk continues to claim there’s a USD$25k car in the works (although I suspect that today he’s busier ensuring that no government employee could ever afford one).

Indeed, Musk has now fallen sharply from the pantheon of great strategists.

His implementation of DOGE (Department of Government Efficiency) has both the faults above. He commits the first fault in his criticism of government as a bureaucracy that lacks a “feedback loop” to the public will, but doesn’t present a picture of what it should be. He commits fault #2 by not setting out the stages that he’ll follow beyond the first, a wholesale dismantling of people and process.

Question: How would you explain the trajectory, or logic, of your strategy over time?

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Origin of the species

And, while we’re talking cars . . . today, there’s a very good chance you drive, or your family owns something like this. Most commonly called an SUV (sports utility vehicle), these account for 60% of all new cars sold in Australia.

A generation ago it would have been a hatchback; two generations ago, almost certainly a sedan. But do you know that your SUV has a lineage that goes back almost 100 years? Back in the 1930s General Motors created the origin of the SUV species.

They rightly called it a Suburban which spoke to the new ways in which the aspirant upper middle classes were increasingly living.

It still exists today, 90 years later, now in its 12th generation, and still selling well (at least in the USA where its size is an attraction, not an annoyance). It even has a star on Hollywood’s Walk of Fame, as the car has appeared in 1750 films, and in at least one TV series every year since 1952.

So, what did GM get right?

They got the essence right.

At first glance, it’s just a multi-seat vehicle, sitting high, on a truck frame. But think about why you like your SUV: its essence isn’t its space, it’s its flexibility. You can move people, or stuff. Lots of people, or just one or two. And, you can get people — and stuff — in and out easily. GM did what Kodak failed to do (see last week’s 5MSM) - understand the true value proposition of these cars. They’re at 10 million and counting.

Question: What’s the essence of your key product or service?

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People ask me two common questions about this newsletter: (i) How long does it take to write?; and (ii) Do I enjoy writing it?

My answers: (i) this one took 40 minutes (ii) yes, very much. My method is straightforward: (i) observe the world around me; (ii) note that which is absorbing, noteworthy, or entertaining, and (iii) relate them to strategic questions that I’m discussing with my clients. Simple.

If you’re absorbed or entertained for five minutes, then please click the heart - it means a lot to me to know you’re reading.

Have a great week and see you next Friday,

Andrew