Customers are second
There aren’t many CEOs who could drive their company’s stock
price to more than $40 a share when the bottom line isn’t yet in the
black and investors are third on the chief executive’s priority list. But
under the Lukianov philosophy of prioritization, things are just as they
should be.
“I think everything I’ve been taught over the years about putting the
needs of the customer first really isn’t the best way to do things,”
Lukianov says. “We do not put the customer first at NuVasive. The first
priority is your internal staff, your second priority should be the customers, and your third priority is your investors. If you take care of
No. 1 and No. 2, No. 3 (the investor) gets everything they want.”
Lukianov’s group of No. 1 priorities has been growing. When annual revenue reached $60 million, Lukianov approached the board with
the idea of moving away from the company’s contracted sales force
and hiring an internal team. Lukianov says he believed he could
achieve faster growth through dedicated sales representatives who
were trained in the culture of Absolute Responsiveness, possessed
greater knowledge of the company’s product line and unique surgical
approach, and could serve as the face of the organization to the surgical community.
“Our product allows the surgeon to approach the spine from the
side, not from the back or the front, so it’s less invasive for the
patient,” Lukianov says. “We train surgeons on cadavers here in our
operating rooms, but it takes in-depth knowledge to explain the
technique to surgeons and convince them to attend the training. You
need commitment and dedication to be successful, and I just didn’t
see any way to sustain 50 percent growth rates when we couldn’t
retain business because of the churn in the sales force.”
Despite laying out the business case for taking on the fixed
expense, Lukianov says that it took him three months to convince
the board and other members of senior management about the
soundness of his plan, and while he eventually got the green light in
June 2006 and has since hired more than 220 sales reps, with so
much at stake, he spends a great deal of his time monitoring the
team’s performance and ROI.
“I think before you go forward and ask for this kind of commitment and investment, the company has to have achieved a certain
level of success, so it’s all about the timing of the request,” Lukianov
says. “We had been through the IPO, the restart was well on its way,
and we had just passed $60 million in revenue, so I thought this
investment would take the company to the next level and beyond.”
In addition to holding reps accountable for their individual performance via scorecards, Lukianov holds quarterly webcasts
where he reviews the entire sales team’s dashboard and its
progress toward reaching the company’s revenue goals. He is also
personally involved in the hiring process for each sales rep.
He insists that only A players will fit NuVasive’s culture of Absolute
Responsiveness and reach his high productivity standards. He uses 10
criteria to evaluate prospective new hires but finds that the genuine A
players think of themselves as lucky. Lukianov says he is a lucky man,
and since he believes that success is perpetuated by like-minded
individuals, being lucky is the litmus test for prospective sales representatives at NuVasive.
“I ask during the interview if the applicant considers themselves to
be lucky,” Lukianov says. “Then I watch for their body language in
response to the question. I think when a person feels lucky and has
an attitude of gratitude they will fit in to the culture and be successful with our high standards.”
Building an in-house sales team has also enabled the company’s
growth plan. Lukianov has been able to leverage the group’s marketing expertise and their expense through several acquisitions of
new products and technology that were poised for market, only
requiring the addition of a ready, willing and able marketing team.
Two of the most recent acquisitions include the January 2007 acquisition of technology and assets from Radius Medical LLC, a privately owned company that makes bone graph strips, and in May 2008,
NuVasive announced the intent to purchase the Osteocel Biologics
business from Osiris Therapeutics Inc.
