The combination of our two consumer life science businesses into one larger, more formidable segment supports today’s needs, tomorrow’s growth, and our long-term ambitions.
Rob Carpio
Group President, Filtration Group Life Sciences
Combine To Simplify & Segment Businesses
Porex is the developer and manufacturer of porous plastics, sintered PTFE, porous polymer fiber, porous polypropylene, and porous membranes.
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Rob Carpio, Group President, Filtration Group Life Sciences: [email protected]
Sometimes Simplification Comes From Combining, Not Breaking Apart
The power of 80/20 lies in helping organizations better understand their businesses. We use data to help us get a picture of which customers and products are most valuable to our businesses and then segment those customers and products into quadrants. Those quadrants help us understand where our business strategy is most impactful and challenges us to identify how to maximize resources where opportunities are most pronounced. The focus that comes from simplification and segmentation gives us a competitive advantage as we organize in a way that gives our strategies the highest probability of success.
But after a business is organized into segments and after teams are put in place to lead those segments, the real fun begins as it did with AG Industries (AG). Going through a second round of segmentation helped them to reflect on what is working and where there is more value to be gained. What AG learned was that effective segmentation and max probability of success may come from combining things versus breaking them apart.
AG has two aspects to its business: filter manufacturing for OEMs and buying and reselling components for home care providers. Over the last year, AG developed a third business offering: contract manufacturing. The team quickly realized that there was more value to be gained by better serving its Quad 1 (i.e., OEM) customers as well as further developing its contract manufacturing capability to support growth within the Porex Life Sciences Institute (PLSI). AG had been a contract manufacturer to PLSI in making finished product for PLSI’s Saletto product. In the case of Saletto, FDA-regulated quality manufacturing is paramount which AG excels at but which requires focus.
To achieve that focus and provide for the control needed, the team realized that the structure of the business needed to change. AG is in the process of shedding the buy/resell business to a competitor in exchange for increased Quad 1 business and building the capability needed to make Saletto a market success. With that increased focus, and the need to allocate resources in a way that maximizes success, it made sense to merge AG with PLSI under the leadership of Avi Robbins who has led PLSI from its inception.
“While we need to be mindful of change for the sake of change, we also can’t be constrained by decisions we’ve made in the past,” said Rob Carpio, Group President, Filtration Group Life Sciences. “There is beauty in simplicity as it provides clarity; with AG now a much simpler business combining it with PLSI gives both teams the greatest chance of success in executing their strategy.”
Segmentation Leads To Combining Consumer
Life Science Businesses
In some cases, segmentation shines a light on how businesses and segments are structured. In Porex’s case, it had two segments that had the potential to be stronger together. Its Air Care business is a relatively small ($27 million) business with high growth potential. Its Writing Instrument Component (WIC) business — while larger at $42M — shared commercial, operational and innovation similarities with Air Care. With price being a factor in these more mature markets, the team realized that it needed to add scale to better compete and maximize its chances of success.
Products for both Air Care and WIC are made on similar machines with similar processes. So, the team asked itself: Could we put both business plans in a better spot by bringing the teams together and maximizing leverage at these points of impact? The answer was a resounding yes.
The team made Ashley Barefoot, segment lead for Air Care, the leader of the combined business. The commercial strategies for the segments have not changed, but how they operate will as the teams work together to be the most successful, low-cost producer in their market.