Building Agility into Pharma and Biopharma

Learning lessons from other industries

By Chris Driscoll

I worked in the Semiconductors industry prior to entering biopharma and have isolated the operating principles that differentiated their top performers.

Semiconductors organizations are relevant for us to study because they’ve conquered some of the major problems Biopharma and Pharma currently face. The typical Semicon-ductors manufacturer would run at, or near, capacity for 18 months and then demand would disappear. Several months later, it would have to ramp back up and implement technology changes along the way. This happened in roughly 18-month cycles. One of my sites had to change as quickly as the public’s taste for mobile phone gadgets. This required a rapid response of the entire workforce when a new product was being launched or changed. They didn’t have time for a slow response because they would miss the window. Their products weren’t seasonal like flu is for our vaccine producers, but the concept of a window of opportunity was exactly the same. If they weren’t fast, they’d lose.

Semiconductors couldn’t sacrifice quality or cost control in pursuit of agility either. If a site showed that it couldn’t maintain 95% yield and success rate or if its costs threatened the measly margins, the site would simply be closed.

Managing the Core

So, what did the best Semiconductors companies do to continuously improve quality, control costs, and increase agility simultaneously? They focused on a core set of activities and got very good at managing that core. This is the core:

1. Strategy Deployment
2. Operational Engagement
3. Lean Operating Principles

By managing the core, Semiconductors organizations were able to integrate quality, cost, and agility into their organizations. Biopharma and Pharma can accomplish the same thing.

Strategy Deployment

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” — Sun Tzu

“If you can’t explain it simply, you don’t understand it well enough.” — Albert Einstein

An organization must have a robust process for developing its strategy and meaningfully deploying the strategy to employees. Most organizations can successfully develop a strategy but they completely miss the ball with the second part, deploying it. Professor Lawrence G. Hrebiniak of Wharton Business School wrote that all of the MBAs that are hitting the streets have learned how to draw up a good strategy but have learned “very little about how to carry it out.” Strategy Deployment simply doesn’t get the attention that strategy development gets. The primary reason for this in our industry is that Strategy Deployment is not technical and our industry prefers technical solutions. The tendency is to quickly do away with non-technical activities. So Strategy Deployment takes the form of a distributed slide deck and an annual conversation. The problem with this approach is that there is no meaningful connection between the strategy and the actions taken by team members. The hope of the organization is that all managers cascade the core strategy points into individual team member goals.

In my interaction with all levels of Biopharma and Pharma organizations, I’ve found that these goal-setting meetings are largely perfunctory and team members feel like they’re “going through the motions.” In addition, performance to the goals is not reviewed until at least mid-year. These two occurrences are at the root of the problem. First, the goals aren’t connected to the new strategy in a meaningful way, so the strategy is not the team member’s reference point for activity. Second, nothing gets revisited until six months down the road. This is a large part of the recipe for slow change. There is no steering capability because the strategy had not been connected to the activity engine in the first place. When the market demands change, the organization will be slow to answer the call and may miss opportunities along the way.

ACME Gameplan
Mission	Objective
Strategy	Tactics

A better alternative is Strategy Deployment using a Gameplan approach. The Semiconductors sites I worked with used this approach to increase their agility while maintaining top performance in all other key areas. They used a single-page strategy document called the “Gameplan”. The Gameplan is divided into four boxes, with one box allocated to each of the following: Mission, Objective, Strategy and Tactics. You’ve likely seen or used this M.O.S.T. approach. The way to get the most benefit from it is to make it a living document that your team will refer back to instead of making it another piece of corporate wallpaper. Here’s how to make sure it’s a living document:

1. Assemble your management team and complete the Mission, Objective and Strategy boxes.
2. In a subsequent meeting that includes the next level down, complete the Tactics box.
3. Assign Tactics owners to guide completion of each Tactic.
4. At the end of the quarter, grade performance to the Tactics as a group; in the same meeting agree upon the Tactics for the following quarter.

Most folks will read this list and feel that your organization is doing this already. I would submit to you that if you look closely at this process vs. the one currently working in your group, you’ll identify meaningful differences. They may be subtle differences but they result in agility instead of rigidity. Some points to pay particular attention to are the definitions for each box you complete.

The Mission is the statement of why your organization exists. This should be written at the department level if you manage a support function or at the site level if you’re a site head.

The Objective box contains a statement of what you aim to accomplish. This is a concise statement of your intention. I know a Semiconductors manufacturing site that had the objective of becoming the center for consolidation of a certain technology type within its larger organization. This was a motivating statement for the team to see because it meant they had a plan for the site’s long-term survival. At the department level, the Objective can be as simple as a training department writing that it wants to become the industry benchmark for Biopharma training. The Objective doesn’t need to map directly from the higher level organizational goals but it should be business critical and motivate those on the team.

The Strategy box should be filled with a series of statements, no more than five or six, that address the crucial activities that must take place over the next one to three years. This is where the goals that typically cascade down in any organization can go. The key is to make sure you’re taking a “vital few” approach to what you write here. The Gameplan doesn’t need to say everything that needs to happen, just the most critical things.

The first three boxes are completed by the management team because the managers are the ones who are charged with leading the rest of the organization. Then, when the larger team is assembled to write the Tactics, the process begins by checking in with the next level to make sure they understand and agree with the first three boxes. When that’s accomplished, everyone is asked to review the first three boxes with emphasis on the Strategy and to think about what needs to happen in the first quarter of the year to get on the right track. The key is to get the team to agree upon the top four to six critical Tactics for the first quarter.

The next step is to assign ownership. This is something many organizations struggle with because they feel that the person whose name is in the box will feel responsible for getting everything done. Because of this concern, they either put more than one name in a box or they do not assign an owner. The Gameplan approach is to assign a name and to be clear that the person assigned is the shepherd of the activity, not the sole doer. The assignee is accountable for making sure the activity gets completed and for escalating any obstacles that threaten success along the way. Another key aspect of ownership is that the managers plus the next level down will be assembled near the end of the quarter to grade performance on the Tactic. This is simple stoplight scoring. Green means we did what we said we were going to do. Yellow means we didn’t quite get there but we made progress. Red means we didn’t get it done. This isn’t a grade of the owner per se but it feels enough like it to create a performance tension that will increase the odds of successful completion.

The success of Strategy Deployment using the Gameplan lies in keeping the document alive and meaningful by holding team-members accountable and breaking the strategy down into actionable Tactics. Semiconductors benefited greatly from this approach because they could change direction quickly. The focus on quarterly performance instead of annual performance increases the agility of the group. In addition, companies can write Tactics around agility, cost control, and compliance and be assured that real progress is going to be made in a relevant period of time.

Operational Engagement

Operational Engagement describes Semiconductors’ focus on meaningfully connecting the actions taken by team members to the Gameplan. This is done by setting clear expectations, holding staff accountable to those expectations and implementing robust operating reviews.

Expectations and accountability are areas that Semiconductors managers focused on getting better at, and Biopharma and Pharma managers can improve in these areas as well. However, for our purposes here we’ll focus on operating reviews because there is a significant difference in the way Semiconductors conducted them and this difference represents an opportunity for Biopharma and Pharma.

Operating reviews in Semiconductors were thorough assessments of the operations of the business. They were not problem-solving sessions or scientific advisory sessions. They were also not “governance.” There is a trend in our industry to implement governance processes instead of operating reviews. The problem is that governance tends to set up a system where team members come to governance committees to get permission to do certain things. This creates a culture of asking for permission, but the most agile organizations would rather have empowered teams making decisions instead of waiting in line to ask permission. Semiconductors’ operating reviews were focused on the critical tactics and the intention was to make sure the many teams across the organization were treating the tactics at the right priority level. To achieve Operational Engagement, all team members must have the Gameplan top-of-mind throughout the quarter. The operating reviews check progress at the activity level but they are far more about checking thinking. Managers in agile organizations are constantly working on the mindset of the teams, making sure that the behaviors throughout the organization reflect the compliant, cost-controlled, and agile organization that is desired. The operating reviews are designed to find teachable moments. A simple example is when a critical tactic is set aside because some team members attended an offsite training on improving their public speaking skills. These kinds of behaviors are highlighted as opportunities for the group to better align their behaviors with what the organization is calling “critical” tactics. By focusing the operating reviews on integrating intended behaviors into the organization instead of granting permission, Semiconductors built the capability to change without sacrificing quality or cost control.

Lean Operating Principles

Lean Operating Principles was a core area for Semiconductors. The application of Lean is also an area where Biopharma and Pharma differ greatly from the top Semi performers. Semiconductors had extreme cost pressure and they had to integrate cost consciousness into their workforce because they didn’t have time or resources available to staff large improvement departments to over-engineer continuous improvement for the company. Instead, Semiconductors used Strategy Deployment and Operational Engagement to integrate lean thinking. Contrary to much of the literature out there on Lean and Six Sigma, training classes and certifications do not create Lean-thinking organizations. These principles are put in place because they are the constant themes of Gameplans, operating reviews, performance reviews, and organization communication.

To be clear, I’m not saying that the principles are the themes on posters and company T-shirts. Instead, the principles are the themes that impact how performance is viewed by the organization. The importance of cost control, for example, is written into the Gameplan and it’s discussed in all operating reviews. Further, a staff member’s performance review is based largely on her/his success controlling costs.

The point with Lean Operating Principles is to get them to be second nature to all staff. Holding everyone accountable for the desired behavior is the only way to integrate the thinking. Semiconductors placed the accountability for cost control on everyone who managed a budget. Managers were shown how to perform a simple Lean analysis of their business process and they were held accountable for showing results. In the organizations I worked with, the focus was not on certification, class hours attended, or society memberships accumulated. The focus was on each budget owner showing cost control. This focus on results integrates cost control so it doesn’t become a department or an event. It simply becomes the way a company does business.

Chris Driscoll is principal at Driscoll Consulting Group and is a featured speaker at Contracting & Outsourcing 2009. He recently published Managing The Core, available at www.driscollconsultinggroup.com.