Steven Blum, Director of Health Economics at Forest Laboratories and one of Pharm Exec’s 2011 Emerging Pharma leaders, recently spoke with Associate Editor Jennifer Ringler on building leadership and team rapport in today’s lean organization.
Jennifer Ringler: How do you motivate staff in an environment that’s focused on doing more with less?
Steven Blum: First, I’d like to mention that any statements I make are my personal views and opinions, and do not represent the view or position of my employer, Forest Research Institute or its parent company, Forest Laboratories. That being said, as far as motivating staff in an environment where you need to do more with less, I think the key is really to have a good plan, a good team, and good leadership. I think you need to effectively communicate what your strategy is and what some of the key objectives are. That way, each person knows what their role is and how it fits into the overall objective of the organization. It’s important to build a culture of accountability—I think that you need to lay out expectations. It’s important for a leader to show commitment early on, and there needs to be accountability on all levels—management really needs to serve as a role model for accountability.
Each person in the organization that’s involved in any particular project really needs to understand what their roles and responsibilities are. In doing so, they need to own that role—they need to be responsible for keeping pace with the organization; they have to be able to anticipate and overcome challenges; and most importantly, they need to be enabled and they need to be empowered. Which is something that we need to do as managers—we need to empower them, and give them the latitude to be effective in their positions.
You also need to eliminate distractions and any negative forces. If there’s somebody within the organization that doesn’t have the same commitment or has an opposing position, then it’s important to determine whether they’re going to be a distraction or not—they may not be the right person to be serving in that capacity. It’s fine to have different ideas, but you really need to maintain positive energy and eliminate those distractions.
I think it’s also important that you need to have a good measuring stick—one of my favorite sayings is that you can’t manage what you can’t measure, so it’s really critical to establish expectations, set timelines, and set benchmarks that progress can be measured against. Having that type of transparency really lets everyone know where you are versus where you should be and helps keep you on that path going forward. Having transparency is also important in communicating business decisions. When resources are limited and you have to do more with less, proactively keeping people informed about decisions really helps to eliminate some of the second guessing and keeps the team focused—it’s really important to continually engage and maintain momentum. Reach out to the team, keep them involved, let them know what’s going on, and try to keep them motivated and excited.
Communication is key, but it also has to go in both directions. So I think a lot of companies are pretty good about sending messages downstream, but you really have to work harder in making sure that communication can also flow upstream. To do that, you really need to build a culture of trust, where people know that their opinion counts and they’re not afraid to come forward if they see a problem or if they have an idea that they think may result in some sort of improvements. You really need to encourage that type of open and honest communication. It’s also important to give the people the tools they need to do their jobs effectively—whether that’s appropriate resources, training, or the type of supervision that they need. A lot of times you deal with shared resources, so it’s critical to be clear on prioritization when you have competing tasks.
So I think if you do all those things—you keep people engaged with their jobs, and they know how important their role is and how it fits within the big picture, you can keep them focused on the task at hand and you can focus on achieving those shared objectives. And if they’re emotionally engaged in a positive way, they’ll certainly be motivated. And as a company, if you’re able to align incentives or performance reviews along with those goals, then the employees will also have some skin in the game. So I think a lot of these are things you can do to keep the team focused, even when you’re dealing with a smaller team or smaller resources.
JR: It’s interesting that you mentioned the phrase, ‘You can’t manage what you can’t measure.’ That brings to mind the question, as more and more functions are outsourced in the industry, what is required to maintain that essential oversight and control? Is there any risk of dilution of quality and integrity in the drive for increased efficiency and lower costs?
SB: Certainly. If you’re not effectively managing your partners and the vendors that you work with, there certainly can be a gap, and you do have to have good communication channels between you and the partner. You don’t want to just drop something in their lap and not continue to monitor, to make sure that you’re getting the same level of quality that you would expect from an internal team.
The first step in deciding whether or not to outsource something is making a strategic decision in terms of what you want to keep in house versus what you want to outsource. And there’s really a number of different factors you need to evaluate in determining which functions to outsource—beyond the obvious factor, which is cost. From a strategic standpoint, you need to get a sense of which capabilities you want to own. A lot of the decision-making and core planning elements are things you’re naturally going to want to keep, but it’s when you start to look at some of the more functional areas where you can start to make some decisions.
Certain functions, from a risk perspective, are things that you’re going to want to keep in-house. So for a lot of organizations that are going through a transformation or evolving their business model, outsourcing might be a good way to address current needs while you start to build that capability in-house. For more established firms, that’s where you might be looking for some more operational efficiency. So you really need to know what it is you want to outsource—you need to understand what the capabilities are of the various firms that are out there. It’s a relationship. There are a lot of great vendors and companies that are out there.
You have to have a good team on your side that can integrate with them, that can work with them, to ensure that you’re getting the same quality that you would expect from your in-house team. And if you don’t think that you’re going to be able to get that same baseline of quality that you would expect, then it probably doesn’t make a whole lot of sense.
The other thing to think about is capacity, in terms of how many resources you’re going to need. One of the nice things about outsourcing is that you can use it to add capacity. So you can have an internal team, but at times when you have a higher demand, you can add some capacity from the outside without to increase your overhead or your full-time employees and so forth. Regardless of what you do, measuring performance and measuring the quality of work, ensuring that you’re getting the types of efficiencies that you expected when you started to engage in an outsourcing venture, is going to be critical to continue to monitor as you’re working with a partner.
JR: Is the ‘middle manager’ an endangered species in tomorrow’s pharma?
SB: As our organizations start to move towards flatter hierarchies or more non-traditional organizational structures like a matrix, there is less of a need to have as many layers of traditional command-line supervision. So you can certainly flatten the hierarchy by eliminating some of the more traditional supervision, if you think you have some redundancies. I think the biggest thing to understand is what your organization is going to look like, how you envision it, and then getting a sense of what types of people and resources you think you’ll need to fill out that organizational structure and be successful.
A lot of middle managers are folks that have been promoted into those positions, they’ve come up through the ranks, the have a lot of industry knowledge and institutional know-how that they’ve built up over the years, so it’s important to get a sense of which individuals can play a key role in helping the organization to transition to a new structure. Some of those middle managers may be people who are able fulfill some of those roles, even if the job is not the same exact job that they’re doing now. It’s very likely that they do have relevant skills and abilities, and a good base of knowledge from moving up through the organization.
I think when you move towards a leaner organization, you move away from traditional supervisory tasks. The people that you’re going to want to have at hand are the people that can be effective project leaders—people who are willing to get their hands a little bit dirty. You need to establish the resources that you have and the resources that you think you need, and determine who is going to get you through that transition and lead you into the future.
Organizations really need to be able to challenge themselves, to look beyond current roles and responsibilities when assessing the organization, because you don’t want to discard talent that might be misplaced or misused. You’re going to want to identify who your top people are and find them roles where they can be effective, while at the same time ensure that they are professionally fulfilled. The bottom line is, as the company transitions to leaner times, you don’t want to throw the baby out with the bathwater.
JR: In addition to the strong management skills you’re discussing, it seems that stable partnerships will be an integral part of success for pharma companies going forward. What are the key elements of productive partnerships with external groups, given that lean management practice puts companies on a more outward-looking trajectory?
SB: You need to have good partners. You’re likely to have a number of different partners or vendors that you work with, and they’re all going to want to have a piece of your business. So your really have to manage that vendor selection process and the relationships with the vendors. Internally, you need to have good project managers that are able to manage the vendors. It’s important to remember that it’s a relationship—there’s going to be a learning curve between the organizations as they start to learn how to work with one another and what the dynamics of that relationship is going to be.
You really need to have good processes and systems in place. You need to figure out how your organizations are going to be integrated, or at least how their work stream is going to be integrated into yours. You need to figure out how to best work together, and how information is going to be shared. Again, it’s a relationship, so it’s going to need to be managed over time.
If you’ve had success working with a partner, then you’re certainly going to want to continue to leverage those efficiencies and work with that partner. Maybe they’ll move from being strictly a vendor to more of a strategic partner over time. In working with the vendors you need to know their capabilities, but you also need to know who on the team is going to be working with you—whether you’re getting their A-Team or not. And if you are getting the A-Team, I think it’s really important to know whether they’re going to have the time and ability to focus on your project.
A lot of times you look for big names or people that have a lot of recognition, but are they really going to be engaged in your project or not? Or are they the person who shows up at the capabilities presentation and kickoff meeting, but then you don’t see them visibly involved in the project? So it’s really important to know from an organizational standpoint, not only who the manager is, but who the people are who you’re partnering with, and if they’re really the people you wanted. Whether you’re really getting their expert people or getting their junior staff, is going to make a difference.
If you set expectations, continue to monitor progress, continue to monitor your success, and continue to make changes as necessary, it’s possible to have a good partnership.
JR: Back to the topic of internal best practices, is your company doing enough right now in leaner times to foster talent development, mentoring, and other HR functions that help to retain top performers? Where do you see the ‘people-planning’ gaps?
SB: I think you can always try to do more. I’m a big fan of developing human capital—I’ve always been an advocate of constant improvement and continual learning, whether that means me continuing to learn the business, or sharing my knowledge with others in the organization or in the industry. As a manager, it’s vital to incorporate time for training. It’s really easy to get caught up in managing the day-to-day tasks, so taking time out from your schedule to train or mentor people is going to compete with time that would otherwise be spent on certain projects and tasks. So on a personal level you really need to make that commitment toward your people.
It’s a lot easier to make that commitment at an organizational level, because then you’re really demonstrating the importance of training, and you’re likely to get a greater commitment from people. You get more consistency when you do things at an organizational level than if you leave it up to an individual manager to train his or her people, but you have to have good people and good resources. There’s a lot of efficiencies that you can gain with formal training and development programs.
Mentoring isn’t going to cost you a lot in terms of money, but it’s certainly going to cost you in terms of time for both the mentor and the mentee. That time can be well-spent because you have that knowledge transfer, and often that’s something that you can’t bottle any other way. If an organization encourages mentoring, either formally or informally, it can really help with team members coming up on the learning curve.
At Forest, we have a process for onboarding new hires that is really focused on trying to get them acclimated to our culture as quickly as possible. In a lean organization, training and development are really critical for a number of reasons. First, you’re dealing with less resources, so you really need to ensure that your team has the tools they need to do their job—especially if more is going to be expected from them. You also want to provide them with ongoing training so they continue to grow within the organization, so that they’re able to take on new or additional responsibilities.
It’s also critical from a succession-planning standpoint. You’re going to want to be able to plug any holes that you have quickly, so that you don’t lose any momentum or have an impact on your timeline. So having people that are able to quickly step into a role is really ideal. They may still need some additional training, but at least you’re not stuck having to go all the way back through the whole recruitment process, trying to identify somebody from the outside, then worrying about whether they’re going to fit within your organization.
But ideally, with a lot of your top performers, you want to do what you can to keep your best people from leaving in the first place. You want to identify who the rockstars are within the organization and do what you can to keep them. You want to really leverage the organization to identify those people. Things such as peer reviews or 360-assessments can often present different perspectives than the traditional review process.
I’m a big fan of meritocracy—I don’t have a problem treating people differently. You want to reward the people that can do the most, so from my standpoint, people that prove themselves and demonstrate that they can provide value to an organization—I’m more inclined to give those people more of my time at the end of the day. It’s great to have a commitment to training and development. Your employees also need to see it as being beneficial. If they don’t see the training and development as a valuable use of their time, then you’re not going to get the type of response that you expected—for training and development to be effective, it really needs to work for everyone.
At Forest, we’ve always had solid training and development for our field-based folks. Over the last few years I’ve really seem a strong commitment from the organization to ensure that our internal staff were also receiving great training and development. I’ve had the opportunity to attend a number of different courses, and I think they’ve been great—I’d love to attend more of them. Especially because this way, you have the opportunity to interact with some folks from other groups within the organization, and you quickly find out that the organization has a lot of really smart people. I think it’s key to identify who those people are and how they can grow and adapt in the organization.
JR: If you take a step back and look at the bigger picture, what do you think the prevalent organizational model for pharma will be in five years’ time? Will it be a return to innovation and science, or a distribution platform to commercially execute the inventions of others?
SB: I think there’s room for both—a company that’s focused on the science and developing the compounds themselves, as well as leveraging the inventions of others. Licensing products from others does take out some of the risk from a development standpoint, in that you’re dealing with a product that has been proven up to a certain point, depending on where it is in the development cycle. So that may minimize risk, but ultimately you’re not going to know a lot about the product until you get some experience in patients.
The downside of licensing is that you’re really limited in what products are available for licensing, so you’re going to have to pay a premium for that product in terms of things like royalties and fees. You also have to compete with other firms for that product, and the rights may be limited to certain territories, or may not be available in the terms that you may be interested in. Often with the licensing model, you may have a partner that you need to collaborate with during either development or commercialization, and that’s not always easy—it’s another relationship that needs to be managed, and some partners are going to want to be more active partners than others.
I think Forest in particular has done a really great job in this area. They have a really strong structure in place for managing collaborations, and many of the partners that we’ve had have often wanted to collaborate with us for multiple programs.
In contrast to licensing, though, if you look at in-house development, you can really remove a lot of those constraints. You own the molecule, you own the rights, and you can even out-license the rights to certain territories if you wanted to. You can develop the molecule when you want, how you want, without really having to be in alignment with a partner. But there is more risk involved, and there is more overhead in having to maintain all the different discovery infrastructure and capabilities. You’re also likely to be a bit more focused towards specific targets and therapeutic areas, whereas with in licensing, you really can be open to any and all opportunities.
I think there are also probably some options that are in between. You can have some research collaborations where maybe you’re not fully at risk, or maybe you have first dibs on a candidate. So I think in-licensing, or in-house development, or something in between, that can all work—it really depends on the organization and what they determine they need in order to be successful. It’s also about the culture of the organization—some research-based organizations may have a little bit of that ‘not invented here’ mentality, and you really want to make sure that you’re giving the appropriate commitment to whatever the product is, whether you discovered it or somebody else did.
Either way, I think innovation still fuels this industry—there’s always going to be a need for better and new treatments. I think companies can be successful using either route, whether through in-house discovery or in licensing other people’s inventions. In the near-term of the next five years or so, fundamentally I don’t think you’ll see that big of a shift. But maybe moving a little bit further out, things will change a bit.