Erik Peterson at Biometra (A) Custom Case Solution & Analysis

Evidence Brief: Erik Peterson at Biometra (A)

1. Financial Metrics

• SciMet acquired Biometra for $12 million (Paragraph 4).
• Peterson's annual salary is $65,000 with a potential 25% performance bonus (Paragraph 8).
• Biometra's projected first-year sales for the Cell-Saver catheter are $3.5 million (Exhibit 3).
• The parent company, SciMet, has annual revenues exceeding $250 million (Paragraph 3).

2. Operational Facts

• Peterson manages four direct reports: Andrews (Sales), Greenberg (Marketing), Walters (Finance), and Sorenson (Operations) (Paragraph 12).
• The Cell-Saver launch date slipped from March to June due to manufacturing delays at the SciMet plant (Paragraph 22).
• Biometra operates under a matrix structure: Peterson reports to Curt Hardy (VP Sales) on commercial matters and Richard Jenkins (VP Operations) on production issues (Paragraph 10).
• Manufacturing of the Cell-Saver is outsourced to SciMet's central facility, not controlled by Biometra (Paragraph 15).

3. Stakeholder Positions

• Erik Peterson: General Manager. Believes the matrix structure prevents him from making necessary operational decisions (Paragraph 28).
• Richard Jenkins: VP Operations, SciMet. Views Peterson as inexperienced and overly aggressive; prioritizes SciMet's core product lines over Biometra's small-scale needs (Paragraph 18).
• Curt Hardy: VP Sales, SciMet. Supportive of Peterson but focuses primarily on sales quotas rather than organizational friction (Paragraph 11).
• Jeff Knight: Director of Corporate Development. Peterson's mentor; responsible for the acquisition but lacks direct authority over Jenkins (Paragraph 6).

4. Information Gaps

• The specific technical root cause of the Cell-Saver manufacturing defects is not detailed.
• The exact profit margin impact of the three-month launch delay is absent.
• There is no data on the competitive landscape or the market share of rival catheter products.

Strategic Analysis

1. Core Strategic Question

• How can Biometra resolve the structural misalignment between its growth objectives and SciMet's rigid operational control to ensure the successful launch of the Cell-Saver?
• Can Peterson establish the authority required to manage a subsidiary when he lacks control over his primary supply chain?

2. Structural Analysis

• Matrix Failure: The reporting structure creates a conflict of interest. Jenkins (Operations) is measured on SciMet efficiency, while Peterson is measured on Biometra growth. These incentives are diametrically opposed.
• Power Asymmetry: Peterson has the title of General Manager but possesses the functional power of a project coordinator. He cannot compel the manufacturing plant to prioritize his product.
• Value Chain Disruption: The critical path for Biometra's success—manufacturing—is entirely external to Peterson's control, creating a strategic bottleneck that no amount of sales effort can overcome.

3. Strategic Options

• Option 1: Demand Structural Autonomy. Transition Biometra to a standalone business unit with its own dedicated manufacturing resources. Trade-offs: Higher overhead costs for SciMet; potential for redundant capacity. Requirement: Approval from SciMet CEO and significant capital expenditure.
• Option 2: Formalize the Service Level Agreement (SLA). Establish a binding internal contract between Biometra and Jenkins' operations department with clear penalties for delays. Trade-offs: Increases bureaucracy; does not solve the underlying personality conflict with Jenkins. Requirement: Intervention by Curt Hardy and Jeff Knight.
• Option 3: Strategic Retreat and Re-alignment. Delay the launch further to fix manufacturing issues permanently, while Peterson focuses on building political capital within SciMet. Trade-offs: Loss of first-mover advantage; significant revenue shortfall. Requirement: Tolerance for short-term financial failure.

4. Preliminary Recommendation

Peterson must pursue Option 2 immediately while building the case for Option 1. The current informal arrangement is the root cause of the failure. He must force a meeting with Hardy and Jenkins to define Biometra's priority status in writing. Without a formal commitment of resources, the Cell-Saver launch will fail regardless of Peterson's effort.

Implementation Roadmap

1. Critical Path

• Week 1: Secure a joint meeting with Hardy (Sales) and Jenkins (Ops). Present the financial impact of the three-month delay.
• Week 2: Draft a Memorandum of Understanding (MOU) that designates the Cell-Saver as a Tier-1 priority for the SciMet manufacturing facility.
• Week 4: Appoint a dedicated liaison within Jenkins' department who reports functionally to Peterson for the duration of the launch.
• Day 60: Conduct a full quality audit of the first production batch to prevent further slippage.

2. Key Constraints

• Organizational Inertia: SciMet is a $250M company that views Biometra as a minor $12M experiment. Obtaining priority is a political, not logical, battle.
• Relationship Capital: Peterson has already alienated Jenkins. Any implementation plan that requires Jenkins' voluntary cooperation is likely to fail.

3. Risk-Adjusted Strategy

• Contingency: If Jenkins refuses the MOU, Peterson must immediately escalate to Jeff Knight to request a temporary move of manufacturing to a third-party contract manufacturer. This preserves the launch date even if it reduces margins in the short term.
• Personnel: Peterson must re-assign Sorenson (Biometra Ops) to be physically present at the SciMet plant daily. Distance is contributing to the lack of urgency.

Executive Review and BLUF

1. BLUF

The Cell-Saver launch will fail unless Biometra's reporting structure is immediately reorganized. Peterson is currently a General Manager in name only; he lacks the authority to command the resources necessary for success. The matrix structure has created a functional stalemate between Peterson and Jenkins. Peterson must stop trying to manage through persuasion and instead force a structural change that grants him direct control over his supply chain or a binding priority agreement from SciMet leadership. Without this, the $12 million acquisition is at risk of total write-down.

2. Dangerous Assumption

The analysis assumes that Jeff Knight and Curt Hardy have the political will to challenge Richard Jenkins. If Jenkins is more powerful within the SciMet hierarchy than Peterson's supporters, any attempt to force an SLA will result in Peterson's termination rather than operational improvement.

3. Unaddressed Risks

• Talent Attrition: Peterson's direct reports (Andrews, Greenberg) are witnessing a leadership vacuum. If the launch continues to stall, Biometra will lose its core commercial team to competitors. (Probability: High; Consequence: Critical)
• Quality Failure: Rushing the manufacturing process to meet the June deadline may result in defective catheters reaching the market, leading to litigation and permanent brand damage. (Probability: Medium; Consequence: Catastrophic)

4. Unconsidered Alternative

Peterson could stop acting as a General Manager and start acting as a Chief Sales Officer. By ceding operational control entirely to Jenkins and focusing only on pre-sales and market development, he might remove the friction point. This would involve letting the launch date slip as far as Jenkins requires, thereby making Jenkins solely responsible for the financial failure of the delay. This is a survival strategy rather than a growth strategy.

5. MECE Verdict

APPROVED FOR LEADERSHIP REVIEW