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Darwinian leadership in the life sciences industry

Good leadership is about adapting to the exceptional features of our industry

Darwinian Leadership

If you search Amazon for a book on business leadership, it will offer you over 50,000 choices.Some will tell you to be a servant-leader, while others will tell you to be an inspiring autocrat. Some draw their lessons from Buddhism, others from military special forces. There is hardly an idea or a human activity that has not be held up by some author or other as the model for leadership in business.

But for all their differences, one single idea unites all these authors: leadership is a universal trait. To believe the books, the fundamentals of directing a business are the same whether that business makes cars, flips hamburgers or invents medicines. To believe the literature, leadership is leadership whatever the industry.

But the idea of universally applicable laws of leadership doesn’t sit well with those of us who know and love the life sciences industry. How can it be right that our industry, which takes many years to bring a product to market, should be led the same way as the fashion industry?

Surely leading scientists at the frontier of human knowledge is different from leading an army of minimum-wage warehouse packers? And the task of leadership must be different when the cost of getting it wrong is not merely lost sales, but lost lives.

In my most recent research, I set out to discover if and how leadership in the life sciences industry is different from other businesses. I interviewed 23 CEOs and other executives from companies as varied as Novo Nordisk and Novartis to Smith & Nephew and B.Braun.

In this article, I describe what these leaders see as the exceptionality of our industry and, in the subsequent articles in this series, I describe some of the ways in which they have learned to lead in this unique business environment. These lessons, and the science that underpins them, are more fully described in my published work.

Our social contract

The relationship between our industry and society is different from that of other sectors. Partly, this is because, in the words of Smith & Nephew’s Namal Nawana, what we do touches people at their most vulnerable. But it is also because, as Actelion’s Jane Griffith’s said, we touch almost everybody at some point in their lives.

We do so with science that is incomprehensible to most patients and, to continue doing so, we make a profit. And as Novo Nordisk’s Lars Fruergaard Jørgensen eloquently put it, at the overlap of health, science and business, there is bound to be emotion.

This special relationship means that the life sciences industry has an unspoken understanding with society as a whole: society allows us to make money from human misfortune and, in return, we’ll do our best to reduce and mitigate that misfortune.

Some other industries, such as education, agriculture and defence, have special relationships with society, but none is as emotional and pervasive as that of the life sciences. It can
be seen in the way we are regulated, how our intellectual property is protected, how our products are paid for and in our symbiotic relationship with government-funded research.

This social contract has fundamental implications for leadership. Society expects more from our life sciences companies that it does from any other sector, both in terms of what we make and how we behave. The social contract also means that the people who choose to work in our industry are often motivated by higher motives as well as financial rewards. Life sciences leaders who do not adapt to those implications do not last long in this industry.

Our complexity

Every industry has two sides – supply and demand – and its complexity is a product of the two. On the supply side, the complexity of the life sciences value chain, from basic science and discovery to marketing and support of patients and professionals, is a defining characteristic of the industry, to use the words of UCB’s Jean- Christophe Tellier.

On the demand side, 100,000 known diseases and innumerable injuries are addressed through multi-tier, multi-party healthcare systems that vary markedly between countries. As Will McGuire of Second Sight put it, it’s no longer as simple as inventing a great product; health economic issues based on political choices are now as important as clinical factors.

This combination of supply and demand-side complexity is not unique to our industry. The software sector addresses many different needs, the movie industry works, like us, through networks of firms and many other industries have long supply chains. But pharmaceuticals and medical technology, sectors that are often integrated in their application, are exceptional in their degree of complexity on both supply and demand sides.

This exceptional complexity of the life sciences industry means that understanding how customers define value is exceptionally difficult, as is coordinating activity to create and deliver that value. It also means that, compared to other industries, it is harder to be successful and easier to make catastrophic errors. The implications of this for life sciences leaders are very wide, ranging from who they recruit and how they structure their organisation to how they motivate and manage.

Our risk

Although all businesses are, by definition, risky, they vary greatly in what assets are at risk, the level of risk and the period over which risk persists. The life sciences industry sits alongside other capital-intensive businesses in making very large bets.

Allan Hillgrove of Boehringer Ingelheim made clear to me that the combination of size of investment, timescale and level of risk mean that leaders in our industry need to take a much longer perspective on planning than their peers in other areas. Even this clear view, however, neglects the intangible assets at risk, such as reputation and relationships.

Leo’s Patrice Baudry pointed out that, in the life sciences industry, it is particularly important to be seen by other firms as a reliable, competent partner. Other interviewees mentioned Vioxx and vaginal mesh as examples of the longevity of risk. BTG’s Louise Makin summarised it neatly when she said that, in this industry, you need to have an appetite for risk.

Even compared to other capital-intensive businesses, pharma and medtech is an exceptionally risky business. It is hard to imagine any other sector where such big bets are made on such large combinations of technical and commercial risk over such extended time periods.

Even though it is not strictly true to say that ours is the riskiest business, it is easily arguable that the combined size, complexity and longevity of risk in the life sciences industry make it exceptional. As the person ultimately responsible for managing that risk, the CEO of a life sciences company must first understand it and then mitigate it as far as is possible. Like the social contract and complexity, risk has enormous implications for how they chose to lead.

Our people

It has become a cliché that a business is its people, but industries vary enormously in the people they employ. In particular, industries differ in the level of skills they employ, the range of different expertise they require and the proportion of the highly skilled in their workforce.

The life sciences industry lies towards the higher extreme on all three of these dimensions and can reasonably claim to be exceptional in the composition of its workforce. Or, to use the crisper, to-the-point description given by Lundbeck’s Deborah Dunsire, to be a world-class life sciences company requires a very high concentration of intellectual capital across a remarkably large range of disciplines.

That is not, of course, to say that other industries employ only low-level workers. But very few, if any, other businesses depend on experts that rank alongside the leading academic experts in their field, as do pharma and medtech. And, as Elekta’s Maurits Wolleswinkel taught me, what makes life sciences businesses special is that they require a high degree of knowledge intensity across not only technical functions but also across other areas, such as medical affairs, manufacturing and marketing. Nor is such high expertise found only in head office. GE’s Kieran Murphy made the point that the provision of integrated solutions, rather than discrete products, to a hospital required not only product expertise but an expertise in hospital workflow and design that was superior to that found in most hospitals.

Of course, other knowledge-based sectors also employ bright people. But it is hard to find another industry that is comparable to the life sciences in the level, breadth and extent of expertise. It seems obvious that such a company cannot and should not be led the same way as other, less-expert, workforces.

As I discuss in later articles, this expert workforce makes demands on the leadership capabilities and style of CEOs in pharma and medtech that are exceptional and different from those faced by their peers in other industries.

Darwinian leadership

The idea of ‘survival of the fittest’ is often misunderstood. It doesn’t mean that those who are fit, in the sense of strong or capable, survive. Rather, it means those that fit best, in the sense of aligning to their environment, are those that prosper.

Looked at in this Darwinian sense, the four factors described above are evolutionary selection pressures acting on the industry’s leaders: they are environmental factors that favour some leadership behaviours and disfavour others.

What emerges from my research then is that good leadership is adaptive leadership. The C-suite executives I spoke to, all eminent and successful in their roles, had learned this. They had learned that our industry is exceptional in its complexity,

its risk, its workforce and its social contract. They had learned that each of these four factors had important implications for how they lead. As a consequence, they had learned that leading in any standardised, formulaic way, as prescribed in any of the 50,000 books of an Amazon search, would be folly in our exceptional industry. Instead, they had learned to adapt in several ways.

These lessons, specific to the context of the industry, allowed them to not only survive but to thrive. My research went deep into these lessons and the personal factors – the so-called microfoundations – that underpin them. In the next three articles

in this series, I’ll cover some of these findings. But if you want a single take-away, then it is that leadership in the life sciences is neither being a servant nor an autocrat. It owes little to Buddha or to military training. It is about adaptation to the exceptional features of our industry environment and it owes much to Darwin.

This article and the others in the series are based on “Leadership in the Life Sciences: 10 Lessons from the C-Suite of Pharmaceutical and Medical Technology Companies” and is available from Amazon and other retailers.

Professor Brian D Smith is an expert on the evolution of the life sciences industry. He welcomes comments and questions at brian.smith@pragmedic.com

27th September 2019

Professor Brian D Smith is an expert on the evolution of the life sciences industry. He welcomes comments and questions at brian.smith@pragmedic.com

27th September 2019

From: Research, Marketing

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