I’ve spent a lot of time over the last three months talking to people in the Biopharma sector here in Copenhagen about their leadership capability challenges. And what comes up in every single conversation, is how much disruption this sector is experiencing. This is the first of three articles I’m writing to share some of the insights I’ve gained, and to share my thoughts on what leadership capability challenges are ahead for leaders in this increasingly disrupted sector.
Back in January, the World Economic Forum’s annual conference used the theme "The Fourth Industrial Revolution". Building on the Third Revolution, the digital revolution, it is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. This technological revolution seems to be taking hold in Biopharma, just as much as it has with travel, taxis and TV. An article in Bain Insights back in 2014 about the future of Pharmacy highlighted that pharma companies still operated in a high-margin environment, and that as a result, they often focus on defending their positions rather than doing things differently.
This high-margin environment is eroding as the world’s governments attempt to put a lid on their soaring healthcare costs. The top ten trends driving the Biopharma sector are then adding layers of complexity to these overall pricing pressures, including a record-setting pace of industry consolidation, traditional biopharma companies and biotech upstarts teaming up to drive scientific breakthroughs, and the jobs landscape undergoing a sea change driven by large players ‘rightsizing’ and focusing their R&D on niche opportunities.
Even spectacular past performance does not ensure job security
Why am I spending time pointing this stuff out? Because I believe that our Biopharma leaders need to learn how to handle a VUCA world. A world of volatility, uncertainty, complexity and ambiguity. Harvard Business Review published its annual Best Performing CEOs in the World report recently, which analyses long term CEO performance using indicators such as returns, sustainability and governance. Five of these top CEOs are in the Biopharma sector, including Novo Nordisk’s Lars Rebien Sorensen, who was ranked Number 1 for the second year in a row. However, since the report was published, two of those Biopharma CEO’s have announced they are stepping down, including Sorensen. And as commented on by a HBR spokesperson, “a stark reminder that even spectacular past performance does not ensure job security”.
We stand on the brink of a technological revolution
Klaus Schwab, author of “The Fourth Industrial Revolution”, recently said “we stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another”. Leaders in Biopharma are now starting to experience this VUCA world for themselves, and to handle these challenges successfully, a specific set of leadership capabilities are needed, which were outlined back in Havard Business Review’s 2014 article What VUCA Really Means for You, and depicted in Tanmay Vora’s popular sketch note. These capabilities can be summarized as using VUCA to handle VUCA. Using a Vision to navigate volatility, increasing Understanding to handle uncertainty, getting Connected to make sense of complexity, and being Agile to respond to ambiguity.
VUCA invites inaction
The term VUCA originated in the military. General George Casey was the 36th U.S. Army Chief of Staff and former Commanding General of the Multinational Force in Iraq, and when talking about how to lead in hazy and changing times, he said “VUCA environments become invitations for inaction – people are befuddled by the turmoil and don’t act. And to succeed, you must act”.