Relevance Regained

February 1, 2013
Simon Chalk

Simon Chalk is director of the BioPhorum Operations Group, simon@biophorum.com

Volume 26, Issue 2
Page Number: 40–45

Improvement strategy should be linked to business strategy.

While other industry sectors have adopted prepackaged improvement programs since the 1980s, it is only in the past decade that the biopharmaceutical industry has witnessed the rise to prominence of the three-letter acronym (TLA)-based improvement initiative. Business process management (BPM) and human error reduction (HER) are currently in vogue. While much has been promised by these prescribed solutions to improve business performance, much of this promise has proved illusory. Even where measurable improvement has been achieved, it has not always shown where it matters in overall operational performance and on the bottom line.

Simon Chalk

The truth is that while most of these approaches do have intrinsic value, unless the approaches are rigorously adapted to the situation of the business and the needs of strategy, the results are unlikely to be what is required.

Many managers intuitively know from their own experience that just improving things without a clear link to strategy will not necessarily produce better business results. In some companies, the problem has been exacerbated by changes in priorities and direction caused by the switch from one TLA to another, as disillusion with the previous approach has set in. A few unfortunate organizations have nearly drowned in the resulting alphabet soup.

Change needs to be focused on delivering the business strategy. It is through realizing the strategy that the company gains competitive edge, and it is this that delivers the bottom line. Moreover, for the biopharmaceutical industry, GMP compliance needs to be up front and center along with productivity and service. It is not the job of managers to seek novelty or simply to promote change; it is their job to implement the business strategy and to build the organization's capability to get better results in the future.

Many improvement programs do not derive their change agenda directly from the business strategy but come complete with their own. Too often, this leads to change being driven by the dictates of the approach, not by the needs of the business. Things frequently end up being done because the selected approach says "it's a good thing" and not because improving the way a particular task is done is essential for the company to deliver its strategy. As a result, precious resources can be diverted away from the important things and dissipated on something that comparatively doesn't really matter.

The other main failing of prescribed solutions has been their tendency to significantly underestimate the practical difficulties of achieving lasting change in an organization. Anything that does not involve hard work and a degree of pain is unlikely to achieve something that is either substantive or lasting.

Most approaches treat companies as structures with processes to be altered. This approach is far too mechanistic. From a change perspective, it is much more useful to think of companies as organisms. It is not just changes in the structure that make the difference; it is changes in the people and more specifically their behavior, skills, and capabilities that lead to lasting improvement.

There are no simple solutions or short cuts to improved business performance, but there are some fundamentals upon which a pragmatic, strategy-directed change program can be built:

1. Provide the organization with leadership. This should give excitement to the strategy, endow the organization with the right sense of urgency, and foster the desire to achieve superior performance.

2. Clearly communicate the values and guiding principles that underpin the strategy and make them real in the form of the appropriate behaviors, policies, performance measures, and reward and recognition systems.

3. Concentrate on bringing people along and gaining their commitment to the actions that have strategic significance. Particular care needs to be taken to ensure that operational management understands and commits to the strategy.

4. Make sure the basics are in place before becoming more ambitious. It is important to build sound processes, habits, and capabilities into the business to avoid the risk of building on sand.

5. Direct the improvement where it gives maximum impact in delivering the business strategy by targeting the actions that are key to achieving operational excellence and GMP compliance. Given that a company only has limited resources and an ability to absorb only so much change at any one time, it is essential that these tasks receive priority.

6. Make sure that the organization is capable of handling the load being placed upon it. Over-stretching an organization disproportionately reduces effectiveness and generally results in nothing getting done properly. When estimating the load on the organization, don't forget to factor in those actions that have to be done for corporate or regulatory reasons because these can significantly drain away the resources available for improvement.

7. Invest in training and development to raise the overall capability of the business and particularly those capabilities that support the core competencies. Train managers in the behaviors required and ensure that people have the skills and tools to solve problems and are competent in the mechanisms and processes chosen to make improvements.

8. Assess each technique, theory, and approach rationally in terms of problems it can solve. After careful consideration, discard what is not useful, adapt what remains to suit the needs of the situation, and purge it of all unnecessary buzzwords and jargon.

9. Test and refine solutions through experimentation and be prepared to make (and learn from) minor mistakes. Make sure that this is supported by a no recriminations culture.

10. Never lose sight of what you are trying to achieve. This means that the focus should always be on outcomes. No matter how great the promise and how wonderful the journey, if it doesn't deliver it has not been worthwhile.

It is important to remember that the performance of a business does not have to be perfect. It just has to be good enough to exceed customer, regulator, and stakeholder expectations (and then you must ensure that it stays that way). In this sense, the search for best practice or world-class performance for its own sake is misguided. It risks diverting attention from what is strategically important and wasting resource on standards of performance that may be unnecessary or imperceptible to the customer.

To perform over the long term, the winners will be those companies that can most effectively deliver their strategies. Any change initiative that is not directed by the requirements of the strategy and tailored to the needs of the business is unlikely to succeed because it will lack true relevance. It is only by creating a clear link with strategy and following through with a pragmatic approach to implementation that a company makes the best of its strategy and thereby gives itself the best chance of success.

Simon Chalk is director of the BioPhorum Operations Group, simon@biophorum.com