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The mission matters

The mission statement is more than a platitude

Mission statement matters

In scientific research, it is the unexpected findings that move knowledge forward.

As Isaac Asimov said, the most important words in science are not ‘Eureka’ but ‘That’s funny!’. We are all taught stories of serendipitous discoveries, from Fleming with penicillin to Newton and his falling apple.

These stories are usually apocryphal but their popularity reminds us that it is not the confirmation of our beliefs that is the most important part of science but the contradiction of our assumptions and prejudices that leads to new and useful ideas.

So it is in my most recent research into the evolution of the life sciences industry, where one surprising finding revealed something very important about how CEOs of life sciences companies lead their complex organisations.

I have long been a sceptic about mission statements, those well-meaning but often bland words in annual reports and on reception walls, that profess the company’s raison d’etre.

In most companies, they have little practical importance. In four decades of working in and researching the industry, I couldn’t remember one example of when the framed statement on the wall had significantly influenced strategy or tactics.

As I entered this new phase of research, my view was that mission statements were another management fad with little substantial value.

But, when interviewing more than 20 CEOs of life sciences companies for my latest book, the data contradicted my long-held views. The people I interviewed were all successful by any measure and, collectively, had about 700 years of experience in the pharmaceutical and life sciences industry.

My research questions were about what they had learned in this time and, especially, what they had learned that seemed uniquely applicable to our industry.

And almost every one of them began by stressing to me how important the mission statement is, how it frames their thinking and how it has a practical and not just decorative purpose.

This dissonance between my ingrained belief and what CEOs told me led to investigate why and how mission statements are important in the life sciences industry. Four distinct but related reasons emerged from the research, each of them a useful lesson for those who lead, or aspire to lead, in our exceptional industry.

Missions guide experts

The analysis of industries has to consider both their demand side – the market – and the supply side – the companies – and industry complexity is the product of both. That analysis tells us that our industry is much more complex than most.

On the demand side, we address a huge number of different diseases, conditions and injuries. As a global industry, we do this via about 200 countries, each of which has differing health systems, payer environments and regulatory schemes.

Developed and emerging markets differ greatly but there are also great differences between developed markets, such as Europe and the US. And within markets, therapy areas differ hugely, ranging from rare diseases and oncology to primary care and vaccines.

To address this complexity, the supply side of our industry must bring together thousands of high-level competencies ranging from discovery and adverse event reporting to intellectual property law and health economics.

As Deborah Dunsire, CEO of Lundbeck, put it, our industry demands a very high concentration of intellectual capital across a very wide range of disciplines. In short, a successful life sciences company is a diverse army of experts.

But experts are hard to lead and armies of many different experts even more so. No leader or leadership team has the technical knowledge to fully understand, let alone micromanage, such a diverse and expert group.

Instead, they must be allowed a lot of autonomy or, as the jargon has it, given a high degree of discretionary authority. But this freedom has its dangers. Even when they are given the same end objective, different functions and business units can chose to march in different directions.

This can easily reduce both the effectiveness and efficiency of any organisation. In the research interviews, CEOs described the coordination of many diverse experts as the main challenge of their job.

Mission statements, especially those written in patient-oriented terms, are the tool CEOs use to guide the discretionary activity of their experts. By making clear why the company exists – typically to save, extend or improve patient lives – mission statements make the direction of travel clear.

In practice, CEOs use the question ‘does this fit with the mission?’ to gently steer diverse groups of experts in the same direction. They complement more explicit management by objectives and, especially at senior levels of the organisation, provide a kind of lodestar for how functional leaders should achieve their objectives. Mission statements are more than platitudes, they are adaptations to managing organisations full of experts.

Missions speak to society

The life sciences industry has a unique, albeit implicit, contract with society. Through reimbursement, patent protection and research funding, most modern societies encourage and enable pharmaceutical and medical technology companies to profit from human illness and injury.

During the post-second world war decades, our entire industry evolved to thrive in this benevolent environment, and modern business models are dependent on this social contract. But the other side of this deal is that, in return, society requires us to innovate to continually reduce that suffering.

We have come to expect many illnesses and injuries to be treatable. The success of vaccines, antibiotics, HIV treatments and many other therapies is evidence of how society has benefited from the deal. No other industry has the same sort of bargain with society, which has been beneficial to both sides.

But, precisely because this arrangement is unusual, it has important implications. In the words of Jane Griffiths, Global Head of Actelion, this social contract makes our industry uniquely ‘emotionally salient’ and this salience makes the contract fragile.

It would be very easy to break, or appear to break, this implicit agreement. Indeed, the actions of some companies – price gouging and access issues for example – have created the impression that the contract is liable to abuse by the industry.

If this impression persists and develops, it could lead to a loss of trust and, potentially, loss of our advantages to both sides
of the bargain. We see this in developed countries with calls for price controls, for example.

Mission statements are a declaration by CEOs, to both society and those in the industry, that they recognise and value the industry’s social contract.

By making clear that the company’s goal is societal and not just economic, mission statements value so-called ‘prosocial’ behaviour, such as innovation and accessible pricing, by the company and that they disdain the sort of financial engineering or regulatory gaming we see in other industries.

CEOs use mission statements to maintain their essential relationship with the society on which they depend. They are not merely words, they are signals of agreement to the social contract.

Missions guard reputations

One of the most unusual features of the life sciences industry is its interconnectedness. Its value chain is disintegrated and distributed.

Products and services are brought to market not by individual companies but by networks of companies, their partners, suppliers and distributors. In the real world, competition is not between companies but between complex networks of organisations.

These include life sciences companies but also contract organisations and non-commercial organisations such as academic institutions. And since these networks tend to be long term and involve very complex transfers of knowledge, they do not depend simply on financial transactions but on semi-permanent, trusting business relationships.

This importance of networks, and therefore of inter-organisational relationships, means that a firm’s value is not simply the aggregate of its physical assets and intellectual property. Reputation is also a critically important asset.

As Patrice Baudry of Leo explained to me, in the life sciences it is particularly important to be seen as a competent and reliable partner. Organisational reputations are therefore precious but they are also fragile. While it takes years of effort to build them, the careless action of a single person can destroy them.

Mission statements are devices designed to protect reputations. They are often couched not only in terms of what the company wants to achieve but how it intends to achieve it, with reference to values such as integrity and honesty.

When CEOs craft mission statements in this way, they are trying to encourage reputation-enhancing behaviours and discourage short-term actions that might destroy trust and relationships with partners.

In effect, CEOs use mission statements to give salience to reputational value, making their employees cherish this vital intangible. Mission statements based on values are not simply virtue signalling, they are a way of preserving the networks that are a notable characteristic of the industry.

Missions create commitment

The workforce of the life sciences industry is, as already mentioned, exceptionally expert. This can be seen in the expertise of its most highly qualified people but also in the range of different expertise it employs and the proportion of its employees that are highly qualified.

In many ways, pharmaceutical and medical technology companies are quintessentially knowledge-based enterprises. Their principle assets go home every evening and the effectiveness of a life sciences company is correlated to the commitment of its people.

The industry is not unique in this but its expertise profile means that commitment must be managed differently from other, less knowledge-intensive, businesses. Researchers describe three kinds of commitment: continuance, normative and affective. The first refers to the need to work, for example financial need.

The second refers to feelings of obligation to work, for example to teammates. The third refers to the desire to work because of identifying with the goals and values of the organisation. All of us are driven to some degree by all three kinds of commitment but,
for experts in any field, affective commitment is the most important.

Creating and maintaining affective commitment is a large part of the leaders’ role in life sciences companies. Mission statements, especially those that make clear a commitment to the patient and prosocial organisational values, are one way in which leaders in pharmaceutical and medical technology companies manage the affective commitment of their workforces.

When CEOs write and communicate mission statements, it is part of an effort to increase affective commitment and gain benefits such as increased motivation and staff retention. In effect, it is a recognition that, for expert workforces, the other forms of commitment – normative and continuance – are less important.

Mission statements are not a public relations exercise. When used well, they are ways of creating alignment between the values of the organisation and its people.

Missions are adaptations

The evolutionary biologist Theodosius Dobzhansky famously said that, in biology, nothing makes sense except in the light of evolution. The same can be said about the life sciences industry.

In many, perhaps most, industries the mission statement is a platitudinous piece of internal propaganda with little substantive value. But this doesn’t seem to be the case in the life sciences industry and this exceptionalism only makes sense in the light of evolution.

What we see in a well-crafted mission statement is an evolutionary adaptation to an unusual environment of expert workforces, social contracts, organisational networks and affective commitment.

Life sciences leaders use mission statements not as window dressing but because they work as practical, effective adaptations to an unusual industry environment.

This article and the others in the series are based on ‘Leadership in the Life Sciences: Ten Lessons from the C-Suite of Pharmaceutical and Medical Technology Companies’ and is available in hardback and electronic versions from all major outlets.

Professor Brian D Smith works at SDA Bocconi and the University of Hertfordshire. He is a world-recognised authority on the evolution of the life sciences industry and welcomes questions at brian.smith@pragmedic.com

23rd December 2019