The fast-changing and pressurized environment in which they operate means pharma companies must now take a more aggressive approach to adopting new leadership structures, writes Waseem Noor, a consultant at the executive search firm Russell Reynolds Associates, in an Expert View piece.
The leadership profile of the typical pharma company in the 1980s was clear – it was built on the direction of the chief operating officer, chief financial officer, chief strategy and head of research and development (R&D), supported by the work of regional and business unit heads, and steered by the chief executive.
Tighter industry regulation in the 1990s sparked the first shake-up in pharma leadership, when specialists began joining traditional managers at the helm of the pharma company through direct recruitment or internal promotion.
The chief medical officer brought the voice of the patient into the C-suite, and the chief quality officer began engendering a culture beyond basic compliance demanding continuous improvement in the patient’s interest through top-level accountability.
The more recent wave of regulatory pressure, however, is giving rise to a much more dramatic change in the pharma leadership profile. The 2000s have been characterized by regulations pressuring pharma companies to make patient outcomes a central part of drug approval. Today, purchasing power is shifting from physicians toward patients and payors, and digitization is a powerful catalyst to this change.
Given these pharmaco-economic movements, pharma companies now must take a more aggressive approach to leadership rather than the incremental changes taken in the past.
By institutionalizing three categories of leadership in the C-suite – transformation leaders, ecosystem leaders, and enabling leaders – pharma companies can get in front of the rapid developments occurring in the industry and position themselves to adapt to and thrive in an increasingly dynamic market.
‘Transformation leaders’ design and drive the growth of an organization to meet the challenges of pharma’s new landscape
Chief transformation officer: skilled in the processes of fundamental organizational change and fully backed by the board, the CEO, and the executive team, the chief transformation officer orchestrates large-scale transformation, inspires staff, and models the behavior necessary to embed change.
Chief digital officer: preparing for, building, and operationalizing its digital capabilities will be increasingly critical to a pharma company’s success. By challenging traditional ways of working and defining a company-wide digital strategy, the chief digital officer helps the pharma company fully benefit from digitization, which often includes the evolution of new business functions.
Chief data officer: regulations that govern the use of big data and the capacity to generate useful insights from it are two challenges that the chief data officer is charged with addressing. By building life cycle management processes and ensuring access to the relevant data sources and analytics tools, the chief data officer translates data into financial outcomes.
‘Ecosystem leaders’ manage the pharma company’s relationships with the increasingly complex external world around it
Chief patient officer: the shift in purchasing power away from physicians and toward patients described earlier requires a more patient-centric business model. The chief patient officer supports this model by giving leadership a holistic view of the patient experience.
Chief public affairs officer: As transparency increases, consistent messaging is becoming more and more important. The chief public affairs officer ensures these activities across the areas of public and health policy as well as government and investor relations.
Chief external innovation officer: R&D, in-licensing and corporate acquisition are making room for new models of engagement with external innovators. The chief external innovation officer is a not-yet-seen but inevitable role that will manage the complexity of these new relationships with the goal of competitive product development and faster time to market.
‘Enabling leaders’ get ahead of and manage two challenges that often result from the restructuring, acquisition, and cost-cutting efforts of transformation – organizational fatigue and administrative complexity
People and culture leaders: C-suite roles, such as chief people officers, chief diversity and inclusion officers, and chief culture officers will work to shape company culture and build and maintain employee morale.
Productivity and efficiency leaders: consolidation and centralization are ways to boost efficiency. Positions such as the chief administration officer take responsibility for back-office administration productivity by making strategic decisions aimed at increasing administrative efficiency across the entire global organization.
Many of these positions are novel to pharma, but other industries have solidly embarked on strategic leadership transformations. Despite functional barriers putting pharma organizations behind the change curve historically, regulatory pressure will push organizations to evolve their leadership structures in the future.
Whichever positions pharma companies incorporate, they must keep three things in mind:
First, talent is key; each of the roles requires a professional who embraces change and is skilled in transformation.
Second, conflict is inevitable; leadership should expect it and not be derailed by it.
Third, success must be measurable; clear performance indicators should be attached to any and all new positions.
A pharmaco-economic disruption in the industry is undeniable. The transformation that an individual company embarks on will be company-specific, but the necessity of change itself is not up for debate.
Embedding transformation that centers around patients, capitalizes on digitization, cultivates new and complicated relationships, and manages the inevitable bumps in the road, will set pharma companies up to thrive in their rapidly changing environment.