This article was authored by Karl Simpson, CEO and Founder, Liftstream, a company providing executive search services to the life sciences sector.
‘Predicting the future is a fool’s errand’ – wise words adhered by many, but most find prophecy a temptation too strong to resist. As we reach the peak of the Covid-19 crisis, inboxes are congested with invitations to webinars and virtual meetings, during which our future is forecast. Similarly, the news channels are awash with business leaders who are keen to set out their vision for the ‘new normal’ – a slightly mystifying phrase given the continuous transformations we all witness. The hordes of people predicting the demise of the office; accelerated technology transformation, reimagined workforce engagement and development practices; onshoring and so on; paint a world which sounds futuristic and starkly different. The truth is many of the trends highlighted by the crisis are already evident in many places of work.
While my cynicism may jump out at you in the opening paragraph, I happen to think that there are some aspects of the workplace and leadership which will be changed by the ongoing crisis. Which provokes a question – What does the CEO of the future look like?
This question is not a trivial one to answer. As you look across different industries, geographic regions, customer sub-groups, and more, you can imagine the degree of transformation will be varied. For this article, I have chosen to look at the CEO of the biotech company and what we might see as dominant requirements for the top job in the coming five years.
So what might we expect?
There are several themes, and I’ve highlighted nine which standout. I’ll address these individually, as well as pinpoint some of the interdependent functions that could be important, and individual competencies which would be required from appointees. In doing so, it hopefully provides some guidance to current and future CEOs for the role they covet.
Managing Decentralised Resources
Any CEO presiding over a biotech company in recent years will acutely understand the importance of establishing a mosaic of service partners who offer the range of intellectual capital necessary to undertake meaningful work that is central to achieve successful outcomes for the biotech company. These partnerships, frequently based on traditional vendor-client engagements, but sometimes under more creative arrangements, are integral to accessing the intellectual and human capital the company needs. These partners need to be motivated, beyond financial incentive, to act and respond as an extension of the company. The use of traditional outsourcing provisions remain, but the CEOs of the future must be successful in understanding how to identify and engage the right collaborators, but also how to successfully leverage their intellectual resources in service of the mission.
- Alliance Management
- Project Management
- Clinical Operations
- Relationship Building
- Strategic Planning
- Risk Management
Collaborative and Cross-Border Relationships
Open innovation was popularised by Prof. Henry Chesbrough and has been a central thesis in the growth and evolution of the biotechnology industry over the past couple of decades. Large pharma, struggling to find sustainable levels of innovation, now seeks to find the innovation outside the company, stimulating a demand which has fueled substantial investment. For anyone inside the industry, this landscape will be very familiar to them. This open innovation era has allowed biotech and life science ecosystems to thrive in locations around the world.
A biotech CEO needs to be able to forge strategic partnerships with companies that offer the jigsaw pieces that complete the puzzle. If you accept the premise that the best innovation happens outside your company, developing externalised innovation strategies is critical. It can also be hugely inefficient to internalise non-core expertise and business capability.
A CEO must find ways to select the right partners at the right time, under the terms which are advantageous to the company, while incentivising each party. These collaborative partnerships can involve multiple parties and many stakeholders. CEOs must be able to lead a team capable of establishing and cultivating productive relationships over the long-term, involving cross-function interactions, and often across borders and cultures.
- Business Development and Alliance Management
- Global Understanding and Perspective
Drug Discovery and Development while Commercially Focused
During the past decade, we have seen a far higher concentration on behalf of experienced biotech investors for managing the commercial aspects of a biotech company’s reason for being. The dominant mentality of yesteryear, which many times prioritised the full prosecution of science, has been overthrown by a need for determining, as early as reasonably possible, the purpose and application of the scientific innovation. In biotech, this is commonly a therapeutic product or a platform technology. Identifying the likely indication, the patient populations, the optimal clinical development plan, and the commercial viability of the product if successful, is an information-rich calculus that has to be taken earlier than in the past.
The challenge that many biotech CEOs face is they have often emanated from the science world, suggesting a predisposition to favour scientific exploration over commercial management. Today, they operate in a healthy funding environment where the size of Series A and B rounds have outsized historical averages, heightening a possibility for lax capital efficiency. Balancing the tensions between the pursuit of science and what is commercially viable will demand CEOs who can make the right decisions, often with imperfect or incomplete data and information.
This confluence of earlier and quicker assessment of risk, to eliminate the resource and capital inefficiency, alongside astute budgetary allocation for R&D oriented programs, emphasises the delicate balance that biotech CEOs must strike. This innovation-led commercial management can be complicated, especially as the commercial landscape is adjusting to pricing pressures, competition and myriad other influences.
- Decision Making
- Innovation Management
- Stakeholder Management
Global Payer Environments
There are few things which have dominated the discourse among biotech executives more than pricing. The biotech industry has been responsible for exceptional innovations in medicine and healthcare provision. These innovations can come at a cost; sometimes a steep one. How the industry continues to demonstrate the value of its innovative products is a matter of great contention, not only among industry executives but among the wider society. Politicians, of nearly all stripes and colours, see an opportunity to push back on the price of drugs and villainise the drug industry for its practices.
There are also the considerable differences that exist across continents; from country to country; and even within individual countries. Luckily, as mentioned earlier, the support of many expert advisors can help navigate this minefield. Nonetheless, the biotech CEO of today needs to be exceptionally well versed in all the dimensions of this matter; politically, strategically, tactically and commercially.
CEOs need to have a clear understanding of how to create value through innovation, not just for shareholders, but for stakeholders too. They must work to establish early and viable pharmacoeconomic models for the products they hope to commercialise and closely monitor the changes across the payer landscape. While an internal team, or an army of advisors, will be helpful in this task, the CEO themselves must understand and show leadership on this issue. Furthermore, the payer environment is such a prominent area of risk to biotech companies; there is a strong argument to begin adding experienced ‘payer’ expertise to the board of directors. I have worked closely with shareholders to define a profile for such a director, and there are examples of companies having appointed directors for this reason.
- Pricing and Reimbursement
- Market Access
- Government Affairs and Policy
- Commercial Acumen
- Strategic Agility
Global Regulatory Affairs Knowledge
Interestingly, very few CEOs have a background in regulatory affairs. In seems, this is not a function in which you hone the skills that the marketplace demands for CEOs. There are exceptions, of course, Katrin Bosely (ex-Editas) and Alison Lawton (Kaleido Bioscience) for example, both had stints in the regulatory affairs area. Regulatory Affairs has been a continually evolving landscape, and effective regulatory strategies are pivotal to the successful outcomes desired by aspirational biotech companies.
CEOs must be able to assimilate the regulatory requirements, including emerging regulations, that will determine the progress of their clinical programs or the ultimate approvals of products intended for commercial markets. Biotech CEOs need to be tuned into the complex requirements of regulators, and with proper guidance, lead the company’s efforts optimally. They must take care to avoid outcomes that might see the company required to re-do clinical studies, face refuse-to-file letters, or deliver clinical data packages which fail to achieve successful regulatory approvals.
Interestingly enough, at the turn the last decade, there was clear evidence to show that regulatory filings by small, resource-limited biotechs were far less likely to be successful than those which were delivered by large pharma. It was one of the distinct advantages of partnering with a large-pharma development machine. While I do not have more current data to compare, I suspect this delta still exists, although it has perhaps narrowed. It underlines the absolute importance of effective regulatory strategies and leadership, particularly in an environment where many more companies aspire to go the distance.
Among the companies with commercial interests, it will be important that CEOs are able to have a sufficiently broad perspective of the global regulatory setting to navigate towards positive outcomes in developing markets beyond the immediate commercial markets. With shifting global demographics, and economic prosperity emerging in other parts of the world, the CEOs need to steer the ship in such a way that they can capture value in as many of these markets as is realistically viable. The second phase of international commercialisation can be perilous in so many ways, and the regulatory strategy must be well-conceived.
- Regulatory Affairs
- Clinical Development
- Medical and Safety
- Decision Quality
- Problem Solving
Human Capital Value and Growth
Many leaders espouse about the importance and value of their people. Yet, often their actions do not mirror these sentiments. There is an increasing focus on human capital as a valuable resource that needs the same diligent care as financial capital or even natural resources. Such emphasis demands a leadership mindset that is long-term and which recognises the integrated basis on which these resources interchange, both internally within the company and externally with the community and environment.
This emphasis on how businesses grow the value of their human capital is gaining widespread attention among many stakeholders, not least institutional shareholders. The advent of ESG investing has accelerated this, but human capital is now much more broadly considered among investors. CEOs need to be highly focused on human capital asset value and how they manage this for the benefit of the company’s stakeholders, including the employees. CEOs will need to understand the demographics of the workforce accurately; how productive the workforce is, the team composition in terms of skills and experience; workforce attrition and causes of instability, the workplace culture and its development; equality, diversity and inclusion, and how employees are incentivised and compensated.
The demand for CEOs to possess an intricate knowledge of the human capital value of the business, and how it integrates with other aspects of the company, will gain prominence. The emergence of risk and crises amplifies the dynamic changes that can occur in workforce engagement and management. Such events can accelerate and decelerate workplace transformations; materially impacting employees and eroding human capital value. Successful leaders need to have a talent vision for their companies and be able to introduce the right strategies and policies to accomplish this. CEOs who sustainably manage the human capital value of their businesses are more likely to deliver successful outcomes in both challenging and good times.
- Human Resources
- Executive Leadership Team
- Board / Compensation Committee
- Building Effective Teams
- Hiring and Development of Others
Technology Convergence and Disruption
You don’t travel far in the biotech world these days before someone is talking about the world-shattering benefits of Artificial Intelligence. This new technology is expected to speed up, reduce the costs, and improve the outcomes of drug discovery and development. But this is not the only new technology in town. The harnessing power of big data, telehealth, robotics, augmented reality, nanotechnologies and wearables, all promise to be impactful on the therapeutics value chain.
The viability of these technologies is not something to discuss here, but unquestionably there are many ways in which technology may introduce advantages in drug development. Some biotech companies are at the forefront of this progress; however, many are still more traditional in their approach and organisational makeup. CEOs over the coming business cycle will need to be explorative with new emerging technologies, seeking to leverage their benefits. This convergence poses challenges though, as the technology and biosciences skills have remained quite separate despite a multi-generational promise of technology-enabled personalised healthcare. Assembling the teams with the necessary skills and know-how will prove very hard, given the dynamics and competing interests of both talent environments.
CEOs should find ways to ensure their operating teams, and also their board of directors, are suitably conversant with these new technologies. The CEOs will need to understand and employ the technologies as tools to improve processes and outputs but also to acknowledge the competitive disruption that such technologies can introduce to the marketplace. Silicon Valley has a pretty good track record of innovating, and healthcare is an area in their crosshairs. Failure to identify, monitor and utilise suitable technologies will prove detrimental to a company.
- Drug Discovery
- Translation and Clinical
- Technical learning
- Process Management
Company culture is difficult to describe. Most attempts hinge on the regurgitation of a list of ‘values’ or ‘behaviours’, and which often fall short of genuinely portraying a company’s culture; for good or bad. Anyone who has worked in a company with a strong company culture, knows all too well that the intangible dimensions of culture are what defines it most. You just know when you see it, feel it, experience it. Of course, the same is acutely true when you experience a negative culture too.
Very often, company culture is seeded by the board of the directors, with an expectation that they set the ‘tone from the top’. Although the board is crucial in casting the cultural DNA, it is incumbent upon the CEO and her management team to promulgate this cultural identity through the organisation as it grows or contracts. The manifestation of a company’s cultural identity begins to enable it to build a reputational brand that has currency in its interactions with stakeholders.
Company culture is complex. Because many things contribute to it, many things can also jeopardise it. Culture can be a source of value and competitive advantage, but equally a significant source of risk too. It is debatable to what extent the CEO must be the architect of company culture. What is certain, is their role in nurturing and facilitating the culture necessary to bring sustainable success to the company, by whichever metric that is defined.
Biotech companies grow in quite predictable patterns, emerging from scientific foundations to become more complex organisations with many high-skilled functions. The transitions from discovery to clinical development, and onwards to commercial, all bring cultural evolutions. Successful CEOs will develop cultures which seamlessly evolve; deftly dampening the negative gyrations that destabilise employees and transmit to external stakeholders.
- Human Resources
- Board of Directors
- Managing Vision and Purpose
- Ethics and Values
- Integrity and Trust
The paragraphs above point toward a CEO that must be across many different success factors. This multidisciplinary capability comes on top of the already established core requirements that a biotech CEO must demonstrate, many which will be familiar to you. The critical functions that are highlighted throughout this article also highlight the fact that managing a biotech company is a team sport, whether that be an in-house or virtual team. Which bring us to the last point.
Hiring and Managing Highly Diversified Teams
Putting together a team of leaders for a biotech company is not easy. A business starting out suggests the company is subject to higher risks than more mature companies, although risk exists at many stages of company building. Risk impacts your ability to attract the good talent. CEOs have to put together multidisciplinary teams that encompass the requisite skills, experience and competencies crucial to the business. In doing so, they often return to former colleagues, friends or close associates with whom they have an established relationship, trust and understanding. It is what drives much of the hiring from within personal networks.
In creating their team, the CEO will need to be placing an essential emphasis on diversity. Aside from the stated advantages of diversity, such as perspective, skills, market knowledge, risk awareness and more, there are increasing demands from stakeholders, including investors, to build highly diverse teams and to manage inclusively. Conceptually, this seems straight forward, but the multi-year data suggests that biotech has not been highly progressive in its approach to leadership or board diversity. CEOs will need to find new and innovative ways to identify and hire candidates from more diverse backgrounds, which will almost certainly require going outside their networks. It will require more considerable planning to afford the time necessary to acquire the right people and enrich the overall team composition.
Having put together the team, CEOs will need to manage this diversity and do so inclusively. Such changes in the way teams are built and led, will introduce new challenges for many otherwise proven leaders. For example, executive search firms are increasingly applying ‘inclusive leadership’ filters to their assessment criteria, meaning candidates need to exhibit inclusive behaviour in their leadership of teams and some track record of creating diversity. The elevation in the importance of building and managing diverse teams will shift hiring decision criteria, as well as performance management metrics for CEOs.
- Staffing and Talent
- Executive Management Team
- Diversity and Inclusion
- Managing Diversity
- Peer Relationships
The biotechnology industry was in great health going into the Covid-19 crisis, and with the importance of healthcare provision magnified by this global pandemic, it will unquestionably emerge with renewed focus and opportunities. This will demand great CEOs, both new and experienced, and the sophisticated blend of skills and competencies set out in this article will form a large part of being successful.
Liftstream is an executive search and leadership advisory company serving companies across the global life sciences industry.