Authored by Karl Simpson
When you talk to biotech entrepreneurs and sector investors, the topic of management and leadership is one that often features very strongly as the critical success factor. However, there is a dearth of research analysis into the sector’s leadership landscape, whereas investment and product analysis is abundant. Getting the right executive team to develop the company, configuring the board and getting those components to function, represents a serious leadership challenge. All of which can be helped if people are accurately informed.
In a recent article: Talent: The Biggest Issue In Biotech Boardrooms Today, Bruce Booth from Atlas Ventures says that ‘Talent is everything’. In reflecting on his own analysis and commentary from other investors like Kevin Starr from Third Rock Ventures, he points to the sector’s considerable challenges with sourcing adequate volumes of proven biotech executives to lead companies or occupy board vacancies. This supply and demand imbalance has been heightened of late by the increase in IPOs over the past 2 years and the number of VCs who will look to step down from boards upon exit.
Investors like to work with people they have made money with before, a safe assumption to make. This leads to a visible herding of executives. A successful or seasoned biotech entrepreneur will often be courted by investors and will often find themselves at the helm of the new venture. This ‘been there and done it’ approach to leadership selection is based on the meritocracy that people throughout the sector, spanning all stakeholders, wish for. After all, biotech is a tough business, it requires the right blend of skill, experience, resilience and relationships (as well as luck) to triumph. Which means people cannot be artificially propped up in roles and so need to exhibit the right experience.
If you apply analysis to the problem you can then start to look for remedies, such pockets of expertise that can address the demand, especially those which are being generally overlooked. I wanted to look specifically at one cohort of the talent pool which I believed to be significantly under-represented, that of women leaders.
Diversifying by Gender
The debate around gender is particularly clouded by a lack of real data at the sector level and the reluctance of many to be seen to attach themselves to the topic for various reasons. We wanted real evidence to inform this discussion and so we researched 1491 biotech SMEs, interviewed 60 prominent industry executives and investors, and surveyed 530 industry professionals. This research has now been captured in a report: Diversifying the Outlook: The X&Y of Biotechnology Leadership.
Greater representation of women in executive roles is not a matter of fairness, it is a question of observing the principles that diverse perspectives around a board table, or across companies, will improve the way a business is run. From our research, we observed that only 10% of biotech boards were women, a figure which trails other sectors. The large-cap biotechs showed improved diversity at the board level, some 19.7%, although this still falls short of the levels being recommended by the UK’s Davies Commission for FTSE 100 companies.
Change must come from the top
The report looks at several influencing factors which limit the opportunities for women in biotech specifically at the executive and boardroom level. It is convenient to cite deficiencies in the pipeline of female candidates but too commonly this is coloured by a heuristic bias limited by the extent of a person’s own network. Our research shows a more promising picture with various different channels for identifying credible female leaders. The industry’s challenge is around how we look to augment our networks with these high potential women leaders and how we construct the right processes to attract and assess them as part of a broader recruiting effort.
Our research highlights the critical role Chairman and CEOs have in driving this issue from the top and so our report looks at this evidence and specific case studies where diversity is improving business outcomes. It is true that many male leaders, need to be given a more evidence-driven motive to think about diversify gender at the top of their companies and this report provides this analysis. They also have to be thinking about the ‘talent’ problem and how to find and recruit the right configuration of leaders, now and for the future.
The report finds that gender diversity at the leadership level will improve the success of biotech companies and for a sector with historically high failure rates, this should be motive enough to consider to appoint women leaders to their companies.