Archives for October 2019

There are two paths to the pot of gold at the end of the gender diversity rainbow.

You can persuade: proclaim the evidence-supported benefits of having more women in the highest decision-making positions. The percentage is growing but it continues to be a long haul.  Companies still think of it as a human resources issue and not the bottom line issue it is now recognized to be.

Or, if you are a regulator, you can impose a quota. This may sadden you, but you will definitely end up closer to the goal and more quickly.

Many jurisdictions have imposed quotas to speed up diversity. It started in 2008 when Norway required listed companies to have women in at least 40% of board seats. Belgium, France, Italy, Germany, Spain and the Netherlands also mandate minimums, backed by sanctions and fines in the case of the first three. The UK offers “guidelines.”

Just this year, California has mandated the 40% goal within two years.

 

Quotas Work

The share of women directors in affected countries has grown four- or five-fold since 2007, compared with a global 29% growth overall.  But the imposition of quotas does not sit well with many as a solution.

One of those is Alejandra Aranda, Founding Partner and President of Humanitas, or Cornerstone Santiago in Chile. She is among several of our members who are prominent in civic politics and working tirelessly to bring about gender equality.  Two years ago she played a leading role in persuading her peers in high-end recruiting to adopt a code of internal conduct and commitment to diversity.

It can be a frustrating mission. Interest and involvement on the part of employers ebbs and flows.  Despite growth in recent years, a new survey by Cornerstone Santiago revealed only 15%  who see diversity as a major challenge, a long way behind the flavors of today, namely innovation (38%) or digitalization (30%).

 

Priorities Change

“Gender diversity is an issue in which substantial progress has been made and that is why today it does not represent a major challenge,” says Aranda. “Right now, digital fluency and innovation are serious concerns. Strategic priorities change.”

Robin Toft, CEO of a recruiting firm the Toft Group, is looking further out.

“We have a talent crisis because there are not enough qualified candidates out there,” she says in a recent interview.  “I believe the answer is women and Millennials, so a huge and heightened forecast on diversity hiring is really on.”

Music clearly to the ears of Alejandra Aranda.

“Quotas may work in some environments,” she says. “But if we were to put a quota here in Chile I would consider our public policy to have failed.

“We have many very influential women eager to participate.  We need to counter the myth that there are not enough women qualified or interested.  That’s our biggest challenge.”

 

In the US, a rare disease is defined as affecting 75 in every 100,000 people, in Japan the definition is 40 out of 100,000 and in the EU it is 20 out of 100,000. In China rare disease does not yet have a specific definition, but it is under study.

The 8th China Rare Disease Summit held in Shenzhen on September 21^st,  2019 was a great opportunity to measure the progress made by China.   Through exchanges with public officials, academics, representatives of patient associations and industry experts, we sensed a paradigm shift.  There are three fundamental changes, that are interconnected but not yet at the same level of maturity.

 

Regulatory Reform

First, regulatory reform has been successfully implemented. There is no longer a major backlog in the drug registration process. More importantly, the National Medical Product Administration (NMPA) has created an accelerated pathway for products for urgent needs and for which foreign data could be acceptable.

Then, a list of 121 China rare diseases has been issued by the National Health Commission (NHC) in February 2019. It is far away from the total number of rare diseases, which is estimated to be in the range of 7,000. But it is a first step towards recognizing the urgent needs of Chinese patients and the deficiency of the current Chinese drug system which is not supplying these drugs.

 

Changing Attitudes to Patients

Second, the authorities are changing their attitudes towards patient groups and associations. China is a communist country and has been historically very reluctant to recognize grass-roots organizations that the Party does not control. In the case of rare diseases, patient associations are even more important as the market rule prevents the “natural development” of drugs.

There are a very limited number of patients and these diseases are unknown to most physicians. In China on average, a patient suffering from a rare disease needs to wander around in the health system for five years before finding the right diagnosis. Therefore, the authorities are no longer trying to shut down the patient groups but are recognizing them.

The event in Shenzhen was organized by one of the patient associations and the NMPA allowed them to make the opening speech, de facto recognition of the association. We all hope that formal recognition of such groups (through legal registration) will progress soon. Even more meaningful will be their joining in the NMPA‘s registration decision-making. We understand it is under consideration.

 

Funding for Rare Diseases

The third fundamental change is funding. Economic considerations are more important than for “normal” diseases. Treatments are more costly as patients’ numbers are limited and access is more difficult as only a few medical centres are able to make a correct diagnosis. As for drug policy in China, pricing and reimbursement reform is taking a long time compared to registration reform, but progress is coming.

During the event it was confirmed that the State Medical Insurance Administration (SMIA) is considering a specific fund to cover rare disease costs. The total amount could be in the range of RMB 500,000 (USD 70,000) per patient but is not yet confirmed and the future process is not yet known.

All this progress has been achieved in the last two years.  If the new paradigms are implemented to their full extent, China could significantly impact the overall course of the global pharmaceutical industry.

With 20 percent of the world population, China has the biggest pool of patients. Thus, a rare disease in China benefits from a cohort four or five times bigger than those of the EU or US. On the economic side, there is no doubt that the Authorities are willing to find better solutions in term of access than in the US.

When reforms are fully operational, China will propose volume and reasonable prices. Professor Hu Shanlian, an eminent Chinese health economist, concluded his speech by wishing one day to see Western countries use China as a reference price when listing new products at home. Today China gets products last in the product life cycle and needs to refer to international prices.

But when all the reforms are fully operational, it could be the reverse: China attracts the launch first and then the world would refer to the China price.

( Eric Bouteiller leads Cornerstone’s Life Science and Health Practice Group. This article first appeared in the global industry website pharmaboardroom.com)

 

Leadership development teaches that the #1 job of a CEO is vision and values – purpose.  Leadership strategies are the inspiring part of inspiring and enabling.

But you don’t have to get there in one fell swoop. Choosing the grandest, boldest, riskiest big steps is more dramatic, but less certain than enabling your team to take a series of smaller steps, each with a higher likelihood of success.

Leadership strategies are broad choices. This is all about aligning strategic choices with resource and capability choices and value creation.

In isolation, a theoretical strategic choice is practically useless. It’s not real until you apply resources and capabilities. And it’s not worthwhile unless the application of those resources and capabilities create more value than you invest.

While it’s possible that you can assemble new resources and create new capabilities to implement a new strategy, that path is fraught with risk. The more likely, safe shot is to pursue strategies for which you already have resources and capabilities in place.

 

Organizationally Likely

This choice should be easy. While it is certainly possible that you can implement a reorganization effectively, efficiently and fast enough to implement your new strategy, it’s almost guaranteed that you will pay a price in confusion, inefficiency and demoralization. The more likely, safe shot is to get people to flex within their current organization and roles to make things happen.

“Every time we were beginning to form up into teams, we would be reorganized. I was to learn later in life that we tend to meet new situations by reorganizing…and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization.” -Gaius Petronius, A.D. 65 – Roman governor and advisor to Nero.

 

Operationally Likely

This one’s math. Scope is a function of resources and time. While it’s possible to stretch your operations over the short term, things are going to start breaking if you push too hard for too long. The safer, more likely shot is to add resources or time if you want to get more done.

An easy way to do this is to re-direct resources from one area to another. But this works only if you actually reduce the scope of work required in the area giving up resources.

Too many leaders see the upside in being more open to risk without taking into account the downside. Choosing the safer strategy that your organization can implement with the right operational allocation of resources and time is less dramatic, but generally more rewarding over time.

 

It’s not that long ago that sitting on a corporate Board of Directors was a social imperative.  As an attainable goal, it depended on the spoon in your mouth when you were born.  Silver, and the door was open.  Plastic, and you should settle for getting out of the mailroom.

Things have changed, including the democratization of The Board.  Outside Directors – i.e. not executives of the firm – are highly prized and increasingly highly paid. The effectiveness of a Board and its neutrality is frequently judged by the number of independents.

That’s because a well-managed organization wants to be led by experienced people who can provide both independent oversight of a sector of activity and contribute intelligently to policy and planning.

This new practicality in the approach to Boards of Directors has attracted a new professional dimension to the role.  Board service has become a steadily more rewarding career experience, sought after by smart, articulate and accomplished people seeking opportunities to participate in change and improvement.

More players than seats

Aggregate statistics are not available for the way things were, but the way they are now indicate the number of qualified candidates seeking a Board seat is greater than the number of seats available.  Given the slow rate of Director turnover, this pressure will likely refine and raise the qualifications required to play.

Unsurprisingly, the increasing attractiveness of the Non-Executive Director (NED) has led to specialization by headhunters and recruitment firms.  Here at Cornerstone International Group we have a group specializing in Board Advisory and CEO recruitment with expert members in Europe, North America, Latin America and Asia.

“The Talent pool may seem small when there are often only a handful of men and women on a Board,” says financial services expert Lydia Goutas of Cornerstone Vienna.  “But the research and recruiting process must be rigorous. Both the time commitment and liability of NED´s has greatly increased, a reflection of their influence on an organization´s success, stock price and reputation.”

New profile for Directors

In the past, favored targets would be CEOs, CFOs and presidents of companies or large divisions.  But the profile is becoming more multi-faceted as business needs change in the face of digitization and technology.

A challenge for recruiters is the absence of a formalized pathway.  Candidates interested in becoming Directors face a hurdle in making that interest known.  You don’t apply for a seat on the board, and you don’t find them in the want ads.

Organizations seeking Directors are often limited to word-of-mouth or an updated version of the old-boy network.  This is particularly troublesome with the growing presence of female Directors and a wide-spread desire in the world of corporate leadership to see many more.

Once again, the most likely solution comes not just from the world of recruiting but a very specific niche of it.  The business model of the Retained Search firm is built on wide-reaching networks of people qualified in diverse ways.  Not only that, but the market knowledge to know qualified people currently engaged who might consider a change of scenery from a timely approach.

Until they make “directoring” an MBA grad credit, retained search  is likely to remain the best way to find a seat on a Board of Directors, and for Boards to find you.