How to Manage Effective Leadership when Change is the Only Constant

As readers of this publication are well aware, there is a "new normal" in the bio/pharmaceutical industry. It is undergoing transformational change because of initiatives such as quality by design (QbD), tighter regulatory enforcement, increased supply chain complexity, patent expiration, new drug development (e.g., biologics, generics), and changing trends in patient practices (e.g., more personalized treatments, virtual monitoring, and managing of conditions).

Being able to effectively lead an organization through these major transformations is a core competence because it creates a change-agile organization that is prepared to do things differently to achieve the most optimal result during and after a transition. Such leadership allows organizations to avoid performance dips (see Figure 1) that may occur in productivity or morale during times of change (1). For example, research shows that organizations that do not manage change well are four times more likely to lose talent (2). Effective change management enables successful adoption of changes with minimal turmoil and brings to light systemic factors necessary for sustainability of results.

Figure 1: Illustration of the performance dip avoided by "change-agile" high-performing organizations during times of intense change. (FIGURE 1 IS COURTESY OF THE AUTHORS)

Leaders of biopharmaceutical companies today face the daunting tasks of leading their organizations through continuous and overlapping changes, and developing change agility throughout the organization in a world where 70–90% of strategic change initiatives fail to achieve their business objectives (3). At the heart of change agility is the ability to judiciously, practically, and positively shift behaviors towards new expected results.

The most effective organizations take a disciplined approach to changing behavior, leveraging the principles of applied behavioral science, which is based on 100-plus years of peer-reviewed research and scientific theory. The goal is to consistently and practically reinforce those behaviors that enable us to achieve our goals and win in the market faster than the competition.

The prize? Organizations that effectively use a behavioral focus to lead during times of change have experienced significant results including: an increase of $500 million dollars in pharmaceutical sales; an improvement in crucial preventive maintenance performance of up to 325%; an increase in the utilization of plant equipments leading to high-value product yield and adding $40 million to the bottom line for a manufacturing company; improved on-time shipments from 15% to 98%; and double-digit increases in employee engagement scores*.

Take the example of a biopharmaceutical company that had launched several new vaccines, with revenues projected to double from the previous year. The company was forecasting a 60% increase in units produced and a strong upside potential. However, it was struggling with a culture that was complacent and resistant to change, as well as a laundry list of other challenges as listed below:

• A new labor agreement was in place, but many packaging operators were unhappy with it

• Many supervisors were new, with varied levels of people-management experience

• 83% of employees had less than one year of packaging line experience

• Quality assurance reports showed too many deviations in product quality, purity, or sterility

• The right-first-time error-free data entry overall rate was only at 12%.

The company launched several efforts to address these challenges, beginning with organizational redesigns, followed by the addition of Lean Six Sigma methodology to improve processes. Also, the company organized team-based Kaizen events, based on a Japanese method for continuously improving processess, to engage employees.

These changes helped, but not everyone followed the desired behaviors because operators and supervisors were not exactly sure how to act differently. Although some improvements were seen, those improvements were not sustained. This result led the leadership team to realize that something deeper was needed—a culture change, which required skills beyond what they had to achieve real behavior change at all levels of the organization.

The company focused on the behaviors needed to succeed during these changing times. Coaches helped all leaders, including front-line supervisors, to pinpoint specific behaviors that were crucial to achieving genuine business results. The team also provided behavior coaching, including personal action plan development and execution, with feedback collection. Lastly, coaches helped leaders apply positive and corrective consequences, including feedback that reinforced desired behavior and discouraged undesired behavior.

After just one year, the company saw a cost avoidance (i.e., cost reductions from shortenend cycle time and rework) of $7.3 million and when capacity improved, it was able to in-source a chemical that had previously been outsourced earlier, resulting in $1.3 million savings. Through the capacity increase, fewer days were worked with more output, thereby reducing headcount. Consumers benefited as well because the vaccine backlog plummeted to virtually zero. Improvements in operations enabled a $500-million increase in the sales of vaccines.

The business improvement was attributed to the cultural change achieved, including the management's ability to lead successfully during times of intense changes. Supervisors acted more like leaders, operators felt more cared for, and clarity of direction sharply improved. The change process proved successful, and it is now being replicated in other business units across the globe.

Another example involved a biotechnology company that was looking to increase the number of high-quality drugs brought to market by, in part, better leveraging its vendors and partners to do everyday, non-oversight work. This organization was specifically interested in leveraging applied behavioral science to identify and reinforce the few critical behaviors that key performers and leaders needed to consistently do to ensure the sustainability of their results to date. This company was successful in sustaining its targeted results by integrating sustainability behaviors into their daily work and embedding them within their business management system.

Key steps for leading through change

Below are some specific leadership tips for change agility in the "new normal."

Communicate about the change. When major changes occur, such as a merger or an acquisition, or process changes related to QbD, questions run through everyone's minds. Leaders need to lead from the start of the change to help people understand what is happening, why it is happening, and what it means to them.

Address your personal reaction to the change. Regardless of whether you are the CEO, a quality assurance professional, or a front-line technician, when change occurs, people in general can experience a range of reactions (e.g., exhibiting active or passive resistance, or being enthusiastic about the change but unable to develop specific action plans or stay motivated) (4). All reactions are natural and valid. Ultimately, the goal is to become change-resilient and create the best possible outcome for you, your employees, and your end users—the patients. Leaders often need to attend to their personal reactions to a change before they are able to help others.

Support your team through the change. During times of change, leaders must focus on the business while also tending to the staff. Successfully leading in the new environment requires helping team members by first gauging their reaction, then matching your coaching strategy to those reactions.

Focus on key priorities. Change can naturally lead to rumors, gossip, and other distractions among staff. Effective leaders need a plan to keep employees focused on current and future priorities and to ensure that staff members feel successful about what they are accomplishing. By focusing them on a few short-term priorities within their control, management can provide structure in the midst of uncertainty, hence ensuring that the change succeeds and that productivity and morale remain high. Make it a point to catch staff members "doing it right" so that the focus on priorities is a positive and motivating experience for all.

Retain key staff. It is the good swimmers who are most likely to jump ship. This reality creates real risk for any business. Leaders know that it takes more than compensation to keep their best performers engaged during times of change. With an average industry turnover of 14%, during times of stability, and the pharmaceutical industry's current talent shortage, losing focus of key players in times of change is not an option (5). One-on-one communication with their immediate supervisor that is personalized and career oriented can offer a strong positive influence on a high-performer's decision to stay.

Track and resolve issues. Change creates "noise" in any system or process. Leaders can gain tremendous loyalty from their teams by tracking and resolving (or escalating) questions and concerns.

Conclusion

Leading through change involves more than good project management and encouragement. Leading through change is about helping staff perform in new ways quickly and consistently to achieve new results, and helping them to be ready for the next change that will come more quickly than they might expect.

*Results achieved by Continuous Learning Group clients.

Tracy Thurkow, PhD, is partner of the Continuous Learning Group, tthurkow@clg.com, Karen Gorman is senior partner of the Continuous Learning Group, kgorman@clg.com, and Paula Butte is senior partner of the Continuous Learning Group, pbutte@clg.com.

References

1. T.J. Galpin and M. Herndon, "Welcome to the Big Leagues of Change Management," in The Complete Guide to Mergers and Acquisitions: Process Tools to Support M&A Integration at Every Level, T.J. Galpin and M. Herndon, Eds. (Jossey-Bass Publishers, San Francisco, CA, 1st ed., 1999), pp. 42–54.

2. Right Management, "Ready, Get Set...Change! The Impact of Change on Workforce Productivity and Engagement," in Leadership Insights, Right Management, Ed. (Right Management Inc., Philadelphia, PA, 2009) pp. 11.

3. M. Beer and N. Nohria, Harvard Bus. Rev., 133–141 (May–Jun. 2000).

4. J.M. Smith, When "It" Happens! at Work: 5 Action Steps to Make Change Work™ for You (ChangeMatters LLC, Morgantown, WV, 2nd ed., 2009). pp. 77.

5. M. Duggan, DrugTopics, 154 (8), 21 (2010).