posted 27 Apr 2004 in Volume 7 Issue 8
Business transformation through leadership development
Many companies overlook the value of creating structured development programmes that turn high potential employees into the successful leaders of the future. In the first of a two-part series, Stephen John describes how a global pharmaceutical firm has created a programme to identify and develop the core capabilities required from tomorrow’s leaders. Part two will follow this autumn to provide an update of the course's success.
A pharmaceutical company (APH) was presented with an interesting challenge in the months after its merger. APH was the combination of two medium-sized, and some say mediocre performing, pharmaceutical companies of European heritage. APH had a vision for its future – perhaps an impossible dream – of becoming a global company in the top five organisations in its industry throughout the world.
Realising its dream would require transforming its functions, strategy, structures and operations as well as developing a cadre of global business leaders to formulate and implement the strategy. Individuals, teams and entire functions would need to move from a local to a global perspective. The performance ethic would also need to be significantly raised if APH was to become a global player in the rapidly consolidating pharmaceutical industry.
The globalisation of the pharmaceutical industry
A number of forces were converging in the pharma industry as the millennium was closing. Overall healthcare costs were increasing at an alarming rate as a percentage of gross national production in developed countries. Disease rates were increasing rapidly in developing countries and big pharma and biotech companies saw their costs for developing and bringing products to market skyrocket. These companies faced greater pressure to discover, develop and launch new drugs across the globe. Alongside these business challenges, they were expected to take a more prominent role as corporate citizens in their communities and across the world. If these weren’t enough, today’s business leaders are also expected to formulate and implement strategies that will sustain their organisations over the long term for the benefit of their customers, employees, shareholders and the communities they serve.
These challenges would require APH to develop global leaders across all levels of the organisation – leaders who were more effective business people as well as corporate citizens. Other industries had faced similar situations as the 1980s closed, for example oil and gas, and financial services. They responded to these challenges by building global leadership capabilities across their organisations. In addition, they created cultures of organisational learning where individuals and teams shared their knowledge. Both leadership-development and knowledge-management (KM) strategies and tools have played significant roles in creating world-class companies in these industries. Companies that are high performing and also employee and community-citizenship friendly.
What we did
APH faced these challenges in the summer of 2001, approximately 18 months after APH was formed. The executive committee asked our department, Global Organisation Effectiveness and Leadership Development, to formulate a strategy for developing global leaders across all levels and regions of the organisation. They asked us to identify the capabilities needed and to recommend how these capabilities would be developed: job rotations, task forces, leadership-training programmes and so on.
In addition, they asked us to design a talent-management process and system that would assist the senior leadership in identifying employees who had the potential to develop global leadership capabilities.
Our mandate was clear. By the autumn of 2001, we would be required to present
a strategy and plan for developing these business leaders to the CEO. We would have less than six months to collect data from our senior business leaders as well as benchmark ‘best practices’ within and external to our industry. We immediately went to work by forming a team composed of three leadership-development specialists from APH and one external consultant with deep expertise building global leadership capabilities. Our team drafted a set of objectives, process and expected outputs from the team that would be presented to the CEO and his team.
Our overarching goal was to identify the capabilities that three levels of management or leadership would need to move APH into a globally recognised pharmaceutical company. The three levels were:
- Managers of managers;
- Senior level – officer level (VP) to CEO.
Our process for identifying the leadership capabilities for the above categories was straightforward:
- Identify from the talent-management system those senior leaders that modelled global leadership capability – these leaders represented functions such as R&D, sales and marketing, industrial operations, and support functions from all regions, the Americas, Europe, Asia, Middle East and Africa;
- There would be three teams. Team one would identify what supervisors would need to become global leaders. Team two would identify what managers of managers would need, and team three would identify the same for senior leaders – officers to CEO. Core capabilities and requirements of every APH leader would be surfaced and defined;
- Each team would have a leader from the business units identified in step one;
- Each team would have one of our department members as a facilitator to keep discussions on track;
- Our CEO, global head of HR and a distinguished academic and expert on leadership development, Ram Charam, would start the week. Each team would work separately during the day with a general session at days’ end to share progress and insights. As an aside, web-based technology was used for voting in the general sessions and to share summaries, leanings and progress from each of the teams;
- During the week, senior leaders from APH would visit, sharing their perspective on challenges facing APH and the industry itself;
- By the end of the week, each team’s output would be discussed, reconciled, and core capabilities across all levels of leader would be agreed on. Ways of developing each level’s capability would also be discussed. It was agreed that my department would ultimately decide on the format for developing capability;
- Within 30 days from adjourning we would summarise our work and recommendations to the CEO for circulation and final adjustment by the group of 30 in the workgroup;
- Within 60 days of receiving the group’s feedback, our team would prepare a report and present to the CEO and his team for approval.
Nobody could have predicted what happened next. With senior support, we thought that implementation of the workgroup’s recommendations was certain; we couldn’t have been more wrong.
In autumn 2001, we brought our recommendations to the CEO. He approved building a full curriculum for the three levels of leadership described earlier. We would use the APH leadership profile as the starting point for creating the courses for each level. We would contract with either world-class academic business schools, such as Harvard, London School of Business or Insead, or with internationally known consulting firms, such as Andersen. It was expected that we would offer the curriculum to our line leaders by the second quarter of 2002.
The CEO’s retreat was held in November 2001 and included all his direct reports, one of whom was the global head of HR. He would represent the suggested curriculum, and the implementation plan and budget for 2002/03. The retreat participants endorsed the presentation in full. We were up and running. I received the go-ahead on a Wednesday evening and started calling universities and consulting firms for proposals. On Friday, at the close of the retreat, budgets were discussed and confirmed. Our budget was cut, not by a little, but completely. The reasons given were that there was not enough short-term payback. I received the call on Friday night.
It would be October 2002, almost a year later, before the approval and budget came. And it was only a partial victory as we were to start the global leadership development with our managers of managers. We would defer development experiences for senior leaders and supervisors indefinitely.
The managers-of-managers group was seen as critical change agents in globalising APH. This group could influence their direct reports, peers and the senior leaders they reported to. They were upper-level middle managers who had significant specialised technical knowledge in their disciplines. They were high performing sales and marketing, R&D, and industrial-operations professionals. Others were support professionals in law, HR, communications, finance or alliances.
The talent-management process had matured in the merged organisation and was identifying high-potential future leaders who would need and demand world-class development experiences in their work assignments and in executive programmes.Good fortune smiled on us. In May 2002, a new head of HR took over. He was a line executive, head of one of our major countries and became a member of the management board. He was briefed and quickly understood the needs of our future leaders and how our recommendations were supportive of these needs. He presented our recommendations to the chairman and in October 2002 I started to build the first global business leader programme.
Building global leadership education
Our first programme would need to be well designed and implemented. We would have less than six months to select a vendor, identify the topic areas, write custom cases and vignettes, convince senior leaders to not only visit the programme participants but also to teach in the sessions.
We quickly chose a US-based business school and a European one to work together to provide a unique experience for our leaders. The programme would take place over three weeks in total. Week one in the US, week two would take place in Europe about three months later, and the programme’s third week would be held approximately one year after week two. The participants would come from all over the world, representing all our function areas. They would be selected from the talent-management process and must be a future leader or demonstrate high potential to qualify as such.
Each group would master topics such as strategy execution, working across functions, and most importantly working across cultures. In addition, personal-leadership development would be emphasised. Leading change, and building and sustaining global networks were critical skills that needed to be developed by this group.
We scheduled six groups for 2003, approximately 300 participants at 50 per group. Global terrorism and war in Iraq sent chills through APH. Travel was restricted to essential only. We held our breath as the management board considered cancelling the first group in April 2003. The chairman deemed the programme essential business travel – we were on our way.
Our first group concluded week two in June 2003. Our closing module on Friday asked teams to come back with action plans. No surprises: listen better, communicate more often, delegate better, and so on. They left each other to their individual action plans and wished each other well until they met again the following June for the third week.
Several weeks later, I received an e-mail asking my opinion about forming a virtual learning community. The e-mail came from our R&D function who had a well developed KM capability. I gave the go ahead, but I never heard back from them.
The second group started in October 2003 in the US with their second week in Europe in January 2004. The programme had been revised and was gaining a strong reputation within the organisation. This was no standard leadership course. APH executives, including management board members were teaching in class. There was a lot to learn and great networking with peers and APH executives.
Group two had a magical quality about it. You could sense it from the first week. They were special, they were connected and acted like a community from the start. On the Friday afternoon of the second week the teams presented their action plans. Everything sounded like group one’s plans from the previous June. Thirty minutes before we were adjourning, a participant raised his hand and asked for some time at the front of the room. I agreed and he rose out of his seat and came to the front of the amphitheatre.
I didn’t know what to expect and what happened next took me by surprise. He ummed and ahead and then spat it out. The group wanted to form a community, a community of change agents. Their purpose was to payback APH for investing in them and believing in their leadership potential.
They presented a simple concept: parts of APH that needed change advice but couldn’t afford expensive outside consultants could come to the change-agent community e-room (formed by group two), and post their problems. Individuals from the group would volunteer and have contact with the APH function unit needing the service or advice. A small team of change agents from group two would be formed if needed, depending on the complexity of the situation. They would utilise the tools, processes and concepts they had learnt in weeks one and two as the foundations for their services.
They talked for 30 minutes on the vision, purpose and structure, and how they would get this started. Their spirits rose and fell. At the end, they agreed to move forward, one participant would form the e-room platform. The date was 11 January. Time would tell. A month went by and no action had been taken. By 17 February there was a breakthrough. The e-room developer e-mailed me for group two’s participant list. The e-room is ready to deploy and by the end of the month the virtual room was up and running.
Community is part of the culture here. It is in the values and is lived by many on a day-to-day basis. I will track the progress of this group’s e-room for change agents. When I think about global leaders, that Friday during the second week of this group’s course comes to mind. I still see and hear the excitement of the group.
Part two will follow in autumn this year where I will provide an update on group two’s progress.
Stephen John is head of global organisation effectiveness and leadership development at a global pharmaceutical company. He can be contacted at email@example.com