The case study examines the organizational transformation challenges faced by MedTech Diagnostics, an $850 million medical diagnostics company attempting to balance innovation speed with regulatory compliance and quality standards. CEO Patricia Chen must navigate the tension between traditional, reliability-focused operations and agile innovation pods, while facing a critical contract renewal worth $187 million that represents 22% of the company's revenue. The case illustrates the complexities of dual operating models in regulated industries. MedTech's traditional divisions generate $120M in EBITDA and are FDA-compliant but are declining at 8% annually. Innovation pods achieve 120% growth and high customer satisfaction but face higher post-market issues and lower FDA approval rates. Hybrid teams – intended as a compromise – satisfy neither approach, demonstrating the difficulties of organizational ambidexterity. Chen faces three strategic options: controlled evolution over 24 months, creating a separate subsidiary for innovation, or transforming into a platform company. Each option carries significant costs, risks, and uncertain outcomes. The case explores critical organizational design questions, including culture change, stakeholder management, resource allocation, regulatory navigation, and leadership alignment in transformation contexts. Key themes include managing organizational culture during transformation, balancing innovation with quality in regulated environments, addressing internal resistance and political dynamics, developing effective dual operating systems, and making high-stakes strategic decisions under uncertainty. The case is designed for classroom discussion on organizational change, innovation management, and strategic decision-making in complex operating environments.