Leadership lessons from research firms
Oct 28 2013
For some answers, we can look at the Science journal, which brings out an annual ‘survey of top employers’ pharma inventor companies. This year’s top 20 is dominated by US-based firms (no 1 is Regeneron followed by Genentech). For us Indians, it is a matter of great pride that Biocon — the Bengaluru-based biotech company — is ranked no 6 ahead of giants such as Novartis (8), Du Pont (12), and Monsanto (14) and is the only Asian company in the list. It is also possibly the only lady-led firm in the top-20.
Pharma research by nature is capital-and commitment-intensive with long gestation periods. It is inherently risky with uncertain outcomes, and requires top-notch individuals with high motivational levels. Research has to be science-based which means it has to deal with large amounts of data across time and regions, and scientists need to experiment, look at cross-disciplinary approaches including engineering, complex algorithms, genomics, and molecular chemistry. Failure is an accepted norm, since it too is considered to have learning value.
The normal organisational structures and systems cannot work in research-based firms. They face a huge challenge in terms of making delicate balances in several managerial areas, such as: slack time versus standard time, fixed working hours versus flexible hours, close supervision versus least or no supervision, and intractable output versus measurable production, and managing the business needs of efficiency and shareholder-value. Moreover, when growing, performance and monitoring systems need to supplement the vibrancy of a small boutique where innovation potency is based on personalised decision-making by the entrepreneur, rather than crush it. The knowledge-employees are not attracted so much by money (which is more of a hygiene factor), than by non-monetary rewards such as meaningful work, recognition of their efforts, respect, and entrustment of responsibility.
The Science magazine survey reports some unusual benefits to employees. For example, Genentech (ranked no 2) provides onsite dry-cleaning, car washes, haircuts, and concierge services — the idea is to free the expensive employee’s mind free from daily routine encumbrances. Pubs, food-courts, pool tables and gyms are almost passé. The survey highlights Biocon’s success in luring 70 scientists from the US — not an easy task by any means — to work in its labs in India.
These companies inculcate a culture of celebration and recognition of efforts of their scientists (unlike many in India where the CEO tends to hog all the limelight). Thus, the nature, mindset, and quality of leadership are substantially different for cutting-edge research companies. Only that leadership enjoys credibility that can understand and talk science and appreciate and lead innovation. The survey mentions five other drivers (motivational factors) for employees in choosing employers. These are: the company ‘treats employees with respect’, is ‘socially responsible’, has ‘loyal employees’, articulates ‘clear vision’, and prides in ‘quality research programmes’. These attributes again indicate the crucial role of value-based leadership in creating a self-regulatory and self-renewing organisational spirit.
The companies have, therefore, developed strategic and ethical frameworks that allow scientists and managers to act responsibly with long-term orientation and talk in terms of credible data-driven parameters. Though timelines and timeliness are crucial, yet compromises on market-based needs are not acceptable. Leading companies believe that their responsibility towards society does not commence after achievement of business goals, but form integral to their core business. Profit is not an end in itself, but a way to secure the future of the company! This also means that in firms engaged in researching, developing, manufacturing and marketing new, innovative medicines for the benefit of mankind, pure administrators with process-driven mindsets are unlikely to be successful or welcomed.
We can learn something from Bayer and Boehringer Ingelheim (BI), both Germany-HQed and ranked no 7 and 20, respectively. The two are among the largest and oldest companies in the list. Bayer and BI are 150 and 130-years-old respectively, and each operates in more than 100 countries. Both companies realise that pioneering innovations are vital for their future. In their long histories, they have faced several challenges (including World Wars), yet the commitment to research and development has remained unwavering.
Excellence comes from integrity of actions and interactions. Captains in other industries and even in educational institutions can learn much from the manner these great companies are organised, manage resources, undergo change, and generate respect in society.
(The writer is a professor of strategy and corporate governance, IIM-Lucknow)