How to Manage Effective Leadership when Change is the Only Constant

A disciplined approach to changing behavior can achieve change agility.
Nov 02, 2012
Volume 36, Issue 11

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).

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)
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.

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.

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