Pharmaceutical Executive Europe - July 2008 - (Page 14)

14 Strategy Fundamentals July 2008 Pharmaceutical Executive Europe Just Do It Dr Brian D. Smith looks at the value of management science to real-world pharmaceutical executives. s Percy Barnevik, one time chairman of AstraZeneca, was famously quoted as saying, business is 5% strategy and 95% implementation. It’s a quote that has always struck a chord with me and I am currently deep into a research project concerning how firms succeed or fail in implementing their competitive strategies. I recently spoke at a pharmaceutical industry conference on this topic and a member of the audience asked the question I am most frequently asked on such occasions: what the biggest single thing that separates success and failure in strategy? I hesitated, as I always do. The question reveals the inevitable clash of perspectives between managers, seeking the “silver bullet” of organisational effectiveness and academic researchers, who know that no single bullet exists and the answer always begins with “it depends” or “on the assumption that…” I almost began by saying “on the assumption that your strategy is strong in the first place…,” but I decided that they were wasted words for an audience of experienced and educated managers. So I began with what, in my opinion, is the big issue for most pharmaceutical firms: the buy-in fallacy. Just as very different societies share some cultural universals, such as incest-taboo and reciprocation, the pharmaceutical industry shares a near-universal belief in the power of buy-in. “Getting everyone on board” is assumed to be essential to getting things done and the antecedent to successful strategic change. But we’re a research-based industry and pride ourselves on challenging old ways of doing things, so what does the management research say about the validity of our culturallyembedded beliefs about buy-in? Well, quite a lot actually and little of it upholds the power of buy-in. Firstly, we know that getting buy-in is costly. It adds to the hidden “internal transaction costs” that Oliver E. Williamson described as the price of being in a big, complex organisation. Few readers will be unfamiliar, for example, with the time costs of meetings. Research estimates of how managers actually spend their time, such as the work of Henry Mintzberg, suggest that they do fare more meeting that working. This implies, of course, a high cost that must be justified in tangible benefits. Secondly, we know that the benefits are dubious. An exhaustive review of research into “participative decision A making” by Locke and Schweiger concluded that the benefits are minimal. It helps to communicate decisions, but shared-decision making doesn’t really improve commitment to those decisions. Those findings directly contradict the received wisdom about the importance of buy-in and imply that at least some of the time spent on it is wasted. Unsuccessful firms believe the buy-in fallacy; successful firms don’t. They create a strong strategy, then they just do it. Finally, we know that firms that spend less time trying to get buy-in are more effective. That’s not to imply management by dictat, but firms get things done better when managers have clear “decision rights.” Gary Nelson and his colleagues in a recent Harvard Business Review article criticised decisions “vetted by so many parties that no one person could be held accountable.” My own research into the strategy making processes of leading pharmaceutical companies found that it was more effective when there was a clear demarcation of roles between “deciders” and “doers.” So, on the basis of a vast body of research, of which the above is only a sample, my answer to this most common question is usually this. Unsuccessful firms believe the buy-in fallacy, partly because meeting and talking is easier than doing and partly because it makes it harder to be fired. By contrast, successful firms don’t believe in the buy-in fallacy. The spend time creating a strong strategy, then they just do it. About the Author Dr Brian D. Smith is a researcher, author and consultant in the field of competitive strategy and runs PragMedic, a specialist strategy consultancy. He welcomes comments and questions to brian.smith@pragmedic.com.

Table of Contents for the Digital Edition of Pharmaceutical Executive Europe - July 2008

Pharmaceutical Executive Europe - July 2008
Contents
From the Editor
News and Analysis
Calendar
The Long Shadow of January
Biotech in the War Zone
Just Do It
Patient Power!
Keep Talking
Partnering with the Patient
Vivre la Differentiation

Pharmaceutical Executive Europe - July 2008