Cornerstone Blog

The Life Sciences & Healthcare industry is at a fantastic period with unprecedented improvement of health thanks to innovation.

Products are developed under market forces. But as the Covid-19 pandemic demonstrates, when there is an urgent, public health need authorities have to intervene to ensure sufficient financing and reduce commercial risk to the companies.

Covid-19 has accelerated cooperation between the authorities and the industry at a level not seen before. A major facilitator is the Pharmaceutical Research & Manufacturer’s of America (PhRMA) which represents innovative biopharmaceutical research and discovery companies and is based in Washington.

Brian Toohey, Senior Vice President for International Advocacy of PhRMA, was the guest speaker at a recent Cornerstone International Group webinar.

“We are seeing a wonderful transformation in science,“ said Toohey. ”The industry is moving from treatments to cures with great breakthroughs in oncology and many other fields.”

PhRMA is devoted to advancing public policies in the U.S. and around the world that support innovative medical research, yield progress for patients today and provide hope for the treatments and cures of tomorrow.

Toohey identified three pillars on which innovation in Life Sciences and Healthcare depends:

1. Market access
2. Intellectual Property (IP) – the battleground for continued investment in biopharmaceutical research, and
3. Global trade

With costs of $2.8 billion to get a new medicine to market all three pillars are essential for continuing innovation, says Toohey. Also essential is the support and vision of regulatory authorities and governments as displayed in the current pandemic. Authorities have initiated policies to mitigate the risk borne by the discovery companies under the pressure to create a vaccine.

Addressing the challenge of the strong development of Market Access as a job across the whole industry, Toohey advocates first building a strong academic foundation in top universities. Pricing and assessing medicines are a science, he says, and education should be thorough. Then candidates should join companies and probably enter product development groups, in order to get the business discipline.

For more information on Cornerstone’s Life Sciences and Healthcare group, contact eric-bouteiller@cornerstone-group.com

Second in a series by Steve Manning – Head of Financial Services / PE and Family Office Search Practice – Asia, Cornerstone Singapore

You’re not happy with your current CxO level management team. You are finding out your investment is a tangled web of interrelated human wheels and cogs. Managing people is complex and hiring Private Equity leaders entails heavy lifting from a soft skill standpoint.

Adding a new CxO will potentially create instability in a firm that has relied on perhaps generations of insiders or, in the case of a newer start up, a mercurial leader to harness the company. Perhaps your confidence in management rejuvenation is even waning after all the politics, personalities, and history rear their ugly heads.

Having determined that new talent is essential there are significant calls to make in your endeavour to locate and secure them.

1. Confidence to Compromise on Ideals.

First and foremost do you have core characteristics of the ideal profile nailed down?  It is complex to transpose ideals onto a bullet list. It is not sufficient to transcribe that the CEO ‘must be a leader’.

While drawing up a no-compromise competence check list, take a look at the basics for your private equity sector.  Focus on a handful of core demands specific to portfolio companies and aligned to soft skill talents.

2. Soft Skills

Having dispensed with hygienic hard skill credentials in part one, arguably the most critical focus area is soft skills.  Jeffrey Cohn and J.P Flaum surveyed and interviewed the managing partners of 32 private equity firms (including Blackstone, Carlyle, KKR, and Silver Lake) about their CEO search process and how it has changed over time.

“Among the surprises: executives said they’ve learned to pay less attention to attributes such as track record and experience, the criteria typically most prized by recruiters, and to give more weight to softer skills”. HBR June 2016

There are essential soft skill sets more pertinent to managing a portfolio company.  A number may only surface through deep-dive personality assessments which will require intuition and evaluations supported by your search partner.

 

Leadership Presence
The prospective CxO will have leadership presence, which is admittedly hard to quantify, but immediately apparent.  For example, when you talk with a candidate, do they have that special sparkle and intensity that sets them apart in charisma and thought leadership?   You may even find it difficult keep up with their conversation, they’re so quick and lucid. The profile does not require a confident extrovert, but it is a trait required to harness a portfolio organisation and inspire confidence.

‘Presence’ in the leader will encourage and support other talents to transform an existing workforce.  Finding this is a style and culture assessment where your search consultant’s instinct and evaluation processes will help greatly.

Manage active investors
Effective executives will be able to work with an active owner. You want candidates to show an aptitude to working with an investor lead, and quite possibly a multitude of overseers.  Investors are tremendously experienced in their respective business sector with strong customer and business contacts and financial expertise on getting the best out of the company.   Having led a multibillion dollar division in a large structured conglomerate may not provide the best experience for a candidate who will work with a highly active and knowledgeable, ‘in your face’ owner.

Equally, prospective chemistry between the CxO and a deal owner requires exploration.  Both  are out in the top right corner and likely to be opinionated and not lacking in ego,.  This takes some probing on respect, communications style, vocabulary, language and shared values.  It also relies heavily on your search consultant’s instinct to mitigate bias in the assessment of compatibility.  To do this the search partner will also require a careful assessment of the deal owner’s own personality.

People Assessment
People assessment sits near the top of required skill set priorities for a new executive.  Senior leaders have very likely experienced a number of regular global re-organisations within a multinational.  But did they tackle change in a small- or medium-sized enterprise, possibly where staff have 20 or 30 years tenure, and one or two key individuals carry the weight of the company?

Assessment skills are required in abundance while moving a company through transformation and growth.  Imagine a private equity company investor commenting “are you sure Joe is up to the task, he seems to me to be very quiet”?   Confidence and surety in evaluation is a must.

Complex decision making
A mental aptitude to multi-task, competing priorities and the ability to make decisions rapidly are essential.  The 80:20 leader will thrive rather than a big business planner.  Similarly, the candidate must possess clarity in the face of multiple demands and toughness to recover from inevitable setbacks.

What happened when the candidate was up to his or her neck in a swamp? How have they behaved in the past while extricating their business from downturns? Ultimately, the candidate will be a decision maker, and have proven most decisions were correct.

Co-existing chemistry
With a tightly supervised portfolio firm, the CxO will have a capacity to provide and be comfortable with a more open-book approach with the board as well as having confidence in being able to share the bad news, as well as the good.   This will include a temperament to field calls frequently, and not take criticism or negativity personally.

The CxO who feels tasks are his or her their own responsibility and is prepared to say “let me get on with my job”, will have demonstrated the equanimity to handle investor involvement.

Contentious issues
In a similar vein, ideal prospects will show a resilience to handle contentious issues, knowing how to achieve balance between taking orders and operating in a vacuum.  All leaders are prepared to be challenged, but private equity company investors are very shrewd and will see though smoke and mirrors.  Bluster and generalities won’t pass muster.

Well-placed questions on soft skills will quickly surface vulnerability pointers.  CEO level managers usually don’t hide their personality, preferring to be clear about their views, and the way they work.  Evaluations take time to unearth compatible candidates, and assessment will likely go beyond typical competency match interviews.

In Part Three we will look at the motivation and interest level of the candidate to lead your portfolio company.

 

Steve Manning is a search director, and is Head of Asia Financial Services / PE and Family Office Practice at Cornerstone International Group based in Singapore. www.linkedin.com/in/jstevenmanning

Many people may not be familiar with the term Intercultural Intelligence, but in a world of global business where crossing boundaries is routine, it has become a vitally important aptitude and skill.

Cultural intelligence allows a person of one background, or culture (say, a Swede) to interpret the unfamiliar mannerisms of someone from another culture (say, an Italian) in the way fellow Italians would. A high ICQ (Intercultural Quotient) is essential for any business professional working in an international or cross-cultural setting.

But Intercultural Intelligences goes beyond purely geographical criteria. Companies have cultures which are often very distinctive; a person joining a new company spends the first few weeks deciphering its cultural code. Within any large company there are sparring subcultures as well; for “trivial” and well-known examples: the sales force versus the engineers or researchers, and the marketing managers versus regulatory people.

Covid Contribution

The current Covid crisis gives us new examples, upsetting classic communication codes in digital and virtual and altering behavior with masking. At the moment, we are all learning some new intercultural aspects:

• because Covid means accepting new cultures;
• because interculturality means understanding cultural differences.

Intercultural intelligence is related to emotional intelligence, but it picks up where emotional intelligence leaves off.
A person with high emotional intelligence grasps what makes us human and at the same time what makes each of us different from one another. A person with high intercultural intelligence is able to tease out of a person’s or group’s behavior:

• those features that would be true of all people and all groups,
• those peculiar to this person or this group

The vast realm that lies between those two poles is “culture”.

InterCultural Intelligence is Critical

InterCultural Intelligence, then, can be seen to be critical in any organization operating in different cultures or composed of widely differing cultural components. Fortunately, it can be evaluated and, where lacking, can be acquired.

It’s interesting to note that sometimes, people who are somewhat detached from their own culture can more easily adopt the mores and even the body language of an unfamiliar host. They are used to being observers and making a conscious effort to fit in. Why is it that some people act appropriately and effectively in new cultures or among people with unfamiliar backgrounds while others flounder?

Our experience at Peak Lifecycles HR, the member firm of the Cornerstone International Group in Paris, suggests that the answer doesn’t lie in tacit knowledge or in emotional or social intelligence. A person with high ICQ, whether cultivated or innate, can understand and master such situations, persevere, and do the right thing when needed.

The Intercultural Quotient is associated with individual decision making, task performance, global leadership success, job performance, multicultural team performance, and firm-level strategic decisions such as offshore outsourcing, for example.

Essential Attribute

ICQ is, therefore, an essential attribute among business professionals affecting the competitiveness of their businesses, industries, and countries.

Not surprisingly, assessing the ICQ of an executive level candidate has become a highly important component of the recruiting process. “Intercultural Competence” is of paramount importance for success in today’s global business environments.

Assessing the degree of intercultural Intelligence is a necessity for recruitment, development, and retention, resulting in experience, competencies and certifications in suitable tools for measurement. It is a critical measurement in the predictive success of recruiting for any position where candidates will have to deal with their ability to manage such differences.

To learn more about Cornerstone’s assessment services in relation to Intercultural Intelligence, please contact the author. Contact data below.

5 Learnings from 2 Global Leaders on Re-Inventing Your Firm for an Evolving Normal

“2020 has been a fascinating year with what COVID is bringing to the table. We are focusing our efforts in three big buckets. The first and most important one is to keep our associates safe. The second one is to keep our business running.  And our third priority is to accelerate the reinvention of Mars Wrigley”

That’s Blas Maquivar speaking.  He was one of two world leaders to join Cornerstone Chairman Simon Wan recently in a webinar discussing Global Leadership Perspectives in an Evolving Normal.

Blas is president of Global Emerging Markets, one of four geographic leaderships in Mars Wrigley, a family-owned multinational doing $37 billion a year in confectionery and  food products. He’s based in London.

The second speaker, Daniel Gamba, is located in New York. He is the co-head of fundamental equities at BlackRock, the world’s largest investment manager.

Two heavy hitters. And one of the key take-aways from an exceptional exchange  was not just the fact of change, but the Speed and the enormous Breadth of the changes brought in during 2020.

Learning #1 – Engaging employees

“The priority on our associates, or employees, is fundamental,” says Maquivar. “Our number one challenge as leaders is to engage our associates, to keep them energized, to keep them motivated, to build their resilience.  And it’s not just about physical health, but also emotional health.”

With the right associates and the right brands, other priorities fall into place – keeping the business running and accelerating the reinvention of the firm.

Acceleration at BlackRock also has a human focus on talent development, incorporating not only traditional learning but skillsets in technology and data sciences.

“We still recruit in the top Ivy League schools, but we also go to a much broader number,” says BlackRock’s Gamba.  “We hire about 500 people from over 200 schools globally, looking for diversity.

And not just in technology and skillsets but also age. We have to build a bench of talent who can represent the next generation.”

Learning #2 – The Digital Default

Mars Wrigley has over 50 global brands in the marketplace. Being in business over 100 years would indicate a solid understanding of consumer habits.  Today, to remain a leader even two more years calls for prompt understanding of the dramatic change in those habits.

We need to be agile, courageous and take risks. Like everyone else, we have limited resources. We have to get this right.”

The single most disruptive development is the “digital default” — making services so easy to access online that it becomes the natural place for people to go to.  Another macro shift is a back-to-nature and close-to-home preference associated with the environmental awakening.

“We really need to be best in class first on understanding these consumer changes,” says Maquivar, “and they are happening fast.  Something that was going to happen in five years probably will happen in a year and a half.”

Learning #3 – The Circular Economy

BlackRock has a unique world overview, with professionals practically carpeting the planet. According to Gamba, the firm is in contact with between 5,000 and 10,000 clients every week.

As an investment manager for $7.4 trillion of other people’s money, being not just on top but ahead of trends is everything. Today’s focus is on the circular economy and sustainability.

Our CEO made a big statement in January about sustainability and how sustainability and sustainable-driven companies are going to actually outperform the market. We are seeing acceleration of that.”

“We’ve seen tremendous success on sustainable related solutions,” continues Gamba. “Companies that invest in circular economy or are really aligned to the UN sustainable development goals are outperforming companies who haven’t really evolved into the new clean energy world.”

Learning #4 –“There’s no rest at the top”

If you are a Formula One racing fan, you are resigned to seeing Mercedes driver Lewis Hamilton quickly build up a lead from the start, then be able to ease off to stay there.

Not so much in Daniel Gamba’s world.

“Being a leader is actually the task of remaining a leader,” he says.“It’s always easier to be #2 or #3 because you can just watch and copy #1.”

BlackRock stays ahead in several ways, one of the most important being diversity and leadership training.

“We create a lot of internships so our younger colleagues can have several different experiences both in skills and geographies.”

The secret is to view the Covid disruption as an opportunity to re-invent your business.”

Learning #5 – Finding the Balance

Both of the webinar speakers believe implicitly that success is determined by talent. Daniel Gamba interprets his priority in 2020 as “keeping our talent safe, healthy and able to operate despite the pandemic.”

We’ve gone very rapidly from about 35 offices globally to 66,000 “offices” where our people are now working”

Maquivar, too, obsesses about his people.

“The associate angle is in my mind every day. While digital and online are now a part of our DNA, we miss the human connection. There is a lot of creativity and spark achieved through physical human connection. The tricky part in the future is how do we find the right balance, so we don’t go back into the past but still acknowledge the need for human connection.

“I don’t think we have the answer yet. And it’s going to be very, very important that we crack the code and find the right balance on that physical and digital connection amongst us.”

You can view the full discussion on video here. 

Replay this topical exchange in full

In times of great ambiguity, leaders of global organizations require long-term vision, purpose, determination, and adaptability.

Watch Recorded Webinar

Managing change is one of the new skillsets for the future, say executive leaders on two continents.

Daniel Gamba of New York, Co-Head of Fundamental Equities at BlackRock, and Blas Maquivar, President of Global Emerging Markets with Mars Wrigley in London, addressed how global leadership is adjusting to a new “normal” that is still evolving.

They spoke to business leaders in 45 countries on a Cornerstone webinar moderated by Chairman Simon Wan.

“We won’t be going back to pre-Covid,” says Gamba. “Something else will emerge, and bring new opportunities. We must be ready for it.”
Speaking from London, Maquivar also sees change as inevitable and personal.

“We still need human connection, but the balance has changed,” he says. ”I don’t think we have found that answer yet. But it’s going to be very, very important that we crack the code and find the right balance on that physical and digital connection amongst us.’’

You can view the whole discussion here.

Three months ago you might have asked that question. But the amazing take up on digital communications has reset the board.

Everyone is still there! They are not down on the third floor anymore (and may not be for a while, with talk of second and third waves) but they are out there, listening, caring, querying, and cheering.

We may have seen a record of sorts at last week’s DNC convention which required 400 operations centres, hundreds of video feeds, speakers using video production kits sent by mail, and a lighting-fast, roll-call tour of 57 states and territories.

So, yes. Everyone is still out there and savvy leaders are more vital than ever.

We’ll be looking at this on Wednesday with a webinar bringing together global leaders in London, New York, and Shanghai.

Check the video to hear from Simon Wan in Shanghai, Chairman of Cornerstone International Group and Moderator of the discussion

And click on this link to gain access to the webinar itself on Wednesday, August 26 at 11:00 EDT

First in a series by Steve Manning – Head of Financial Services / PE and Family Office Search Practice – Asia, Cornerstone International Group, Singapore

 

Part One – Core Hard Credential Constituents

The bar is set high. Dynamics at Private Equity firms is fast, aggressive and all conquering. As the investor leader you’re thrust into that all too familiar position of tackling senior leadership management issues at a newly acquired portfolio firm.

This four-part series will look at the challenging factors surrounding the search for the ideal candidate. The focus is squarely on meeting unique demands of private equity performance, but will often be reviewing  many senior executive traits.

Part One will visit portfolio company executive core credentials, diving into hiring assessment essentials to find the hard skills needed to lead a portfolio company and run the business. Part Two will examine parallel soft skill essentials.

Part Three will explore the ideal of openness, and justification for compromise  and how these impact the successful conclusion of senior executive hiring.

Part Four will balance needs with compromises, float tangential opportunities to expand horizons and clear the myopia hiding that elusive ‘pink giraffe’ management candidate.

Let’s get started

 

1. You Want to Find a New Executive Leader Quickly, but have Exacting Requirements.

You’re not happy with your current C-level management team. You feel the current executives are hampering progress with their blinkered experience from 20 years with the firm. They just can’t see through your own lens.

No great mystery.   You are the deal partner, this new portfolio entity is your baby, and you’ve mapped out how you will create the next sensational growth company and earn that once in a life-time carry.

But life just got more complicated. You’ve found out your investment is a tangled web of inter-related human wheels and cogs. And the most complex of all components to manage is people.

Take stock.  You’ve provided capital surety. It’s now only people that matter. How you act with management selection will determine your success.

You know what you need.  You can visualise what the next CxO team will be like, and what they need to possess in terms of experience and capability. But, you didn’t buy a $10bn company expecting to lure the right people over time.  You want and need to move quickly.

But in-demand executive talent with what you consider crucial private equity portfolio management experience is scarce and hard to attract. And that will compound challenges in hiring. Adding a new CxO can create instability in a firm that may have relied on possibly generations of insiders, or in the case of a newer start up, a mercurial leader. Perhaps your confidence in management rejuvenation is even starting to wane after all the politics, personalities, and history rear their ugly heads.

Incidentally, pause a moment.  Did you take that advice to have an independent assessment of all the management team pre-closing?

Having determined that new talent is essential there are significant calls to make in your endeavour to locate and secure it.

 

2. Your Search Partner.

Do you need to engage a professional search firm?

It’s not a given. As the investor leader, it is expected that you have a very solid idea of what you are looking for in terms of the executive talent needed to deliver your goals.  But that in itself threatens to become an obstacle by consuming too much of your time.  You are an investor, not a recruiter.

Engaging a search partner with expertise and an outstanding reputation in PE may be a wise strategy.  The search firm will have a database of qualified candidates to complement your own. More importantly, their professionals will have the experience and knowledge to know what lines of questioning to pursue in order to quickly uncover exceptional talent or expose weakness. [See the Editor’s Note below]

 

3. Confidence in What is Essential.

First and foremost, do you have core characteristics of the ideal profile nailed down? You will have your own, and your colleagues’ depth of knowledge to draw on, perhaps there’s a template you can work from. But be rigorous in pursuit of the finely tuned skills which will absolutely square the circle for your CxO portfolio team.

While deriving a no-compromise competence check list, take a look at the basics for your private equity sector. Focus on a handful of core demands specific to portfolio companies in two broad criteria, hard and soft talents.

 

4. Hard, Run-the-Business Competencies.

The bedrock to candidate credentials are hard competencies; the daily experience to manage and grow a portfolio company.

Topping a daunting list of experiences is a thorough understanding of your market place.  Most often, your candidate will have previously operated as a senior leader within a relevant sector. A candidate must have the experience to:

1. synthesise your portfolio company business model and value proposition, and consequently be able to assess your firm’s ability to compete;
2. imagine and propagate a strategy and plan. The CEO will have to deliver a vision and forward path to the board confidently and convincingly;
3. build trust with members of the workforce, who may have spent a lifetime in their industry and have to get behind a new credible direction. Employees may have become blinkered by a lack competitiveness, rather than seeking solutions.

Your future executive will require ‘the right kind’ of board experience. A large divisional CEO at a billion dollar MNC may have sat in on corporate board meetings, presented updates for their region, or division. Others may have been on the board of SMEs with a dictator Chairman.

Private equity uniqueness is that portfolio company boards consist of financial sponsors, possibly veteran industry advisors, who want to be involved. The CEO has to maintain control and keep to the script, but accommodate active member involvement. A good example would be having managed well under a family owned company chairman.

Ideal candidates will have an ability to create a vision and strategy that will both meet private equity company thinking and be realistically executable. The portfolio leader may find the drive for re-invention and accelerated growth incongruous in the context of market realism.

Frequently there will not be a strong strategy thinker in the existing management team and the CxO candidate is likely to take on the role to visualise, create, test, write and present a business roadmap. Have they ever prepared a master plan largely by themselves?

Large human resource, talent development and acquisition departments perhaps made life easier for a candidate in the past, but they now need to be a step ahead of a smaller and less experienced team to guide and lead. And how will a candidate handle employees that will be left behind, particularly those who might be destructive to the culture and fabric of the company.

These are very real situations in a new portfolio company and strong people skills are a must.

 

The ability to build

The candidate must have an ability to build and lead a high-performance team with complementary strengths.  Hiring success pivots on whether exceptional future candidates will want to work for your candidate and buy into his or her strategy.

Transformation is going to be unceasing. Anticipated company performance may not be as anticipated. The addition of new business through bolt-on, or the loss of key individuals through change are frequent occurrences. The candidate will have to demonstrate performance during disruption; to be strong but adaptable, not hesitating on people decision making, and turning corners.

Similarly during disruption the CxO must be adept at managing or changing core DNA, or the culture of a company. There will be transformation in the business, and also in the culture, it will need to be shaped, and communicated.

Assessment of the right CEO has to probe for real life experiences of implementing new people strategies, not just re-arranging deck chairs. If they previously left a role because they were tired of frequent re-organisations then don’t expect them to flourish in a private equity portfolio firm.

The future CxO will have to execute on stretched goals and deliver healthy operating margins, re-direct the business, hire high-level game changers, but with constant pressure on spending. A portfolio company’s own dry powder can be limited; free capital will have quickly been scooped up. They must have worked successfully in this tight financial scenario and still deliver growth.

Hard skills are somewhat easier to identify through life experiences, and results. Well-placed questions on hard skills will quickly surface problems.  Evaluations take time though to surface compatible candidates, and alignment assessment will go beyond typical opaque career experiences.

Be sure your search consultant has depth in their relevant industry experience, walked your ‘shop floor’ and talked with senior management to really tune into your company environment.

 

EDITOR’S NOTE:

The author, Steve Manning, is a search director, and is Head of Asia Financial Services / PE and Family Office Practice at Cornerstone International Group based in Singapore. Cornerstone is a global firm with financial services search capability in member offices around the world.  You are invited to find out more at www.cornerstone-group.com)

When a retained search consultancy sets out to fill a senior level position, it doesn’t promise to find a suitable candidate. It undertakes to find the “best” candidate.

Not long ago, that was assumed to be a man. No more. Any hiring officer who specifies the gender or race of a candidate is ready to be led out to pasture and likely to be sued.

Diversity and Inclusion has been a rapidly rising issue for many years now, driven mainly by racial inequality. In 2020, this has burst into a firestorm of protest and rioting across the U.S. and many other areas of the world.

Here at Cornerstone International Group, we have championed D&I for many years. Many of our members are active leaders in the cause led by Alejandra Aranda in Santiago and Elena Terol in Madrid.

All recruiting firms take gender diversity seriously today. Not for PR or moral satisfaction, but because studies have confirmed that women leaders stimulate innovation and contribute balanced decision-making.

Yet, despite the data, the road to the corner office is steep and uneven for a woman.

One of the troubling statistics coming out of a recent study of the US workforce (by Leanin.org and McKinsey) is that the percentage of women is almost equal to that of men at entry level — 48% to 52%.  By managerial levels, the time for the promotion, that has fallen to 37% — 63%.

This would seem to spotlight the internal promotion system and many studies confirm as much. It also identifies an opportunity for the executive recruiting firm.

And the search business is on track.  Three years ago, Santiago’s Aranda led a gender diversity initiative that brought together the top nine search firms in the region to sign the Chile Code of Good Practice promoting D&I in recruitment.

This month, Chairman Simon Wan and President Larry Shoemaker will pledge Cornerstone International Group’s support for #AESC, a commitment to diversity and inclusion everywhere in the world, and to promote it through social media.

The AESC – Association of Executive Search and Leadership Consultants – is a powerful organization.  It holds members to the highest standards of practice – 16,000 professionals in 1,200 offices in 70 countries.

Details of our support and commitment to the elimination of race and gender in leadership development will appear here in the next few days.

At time of writing, over 611,000 people have died from the COVID-19 virus.   These are people who were not expecting to die and it is reasonable to assume that a fair percentage of them held senior positions managing the world’s business.

So you might logically move to another assumption, that the world’s Boards of Directors have been busy making sure their sucession planning for critical positions is up to date and implementable on short notice.

You would be wrong.

According to a new study co-authored by Spencer Stuart and Bain & Company, picked up by Hunt Scanlon, many Boards in turbulent times put leadership succession on hold, even when the subject was high on the agenda before the crisis hit.  Every crisis comes with something “more important”.

In the event of forced succession – i.e. the death or incapacity of the executive – lack of an up-to-date plan of succession makes a necessity more difficult than it needed to be.  However, it is the issue of leadership efficacy that will endanger an organization more when a Board puts a hold on its succession responsibilities.

“Although boards are reluctant to change leadership during times of crisis, postponing succession creates risks,” says the Spencer Stuart/Bain & Company report. “It can deprive companies of both the leadership needed to navigate a turbulent landscape and the ability to identify and pursue opportunities to win coming out of the crisis.”

The report found evidence that Boards are behaving in the COVID crisis as they have in previous recessions by concentrating on near-term decisions and management stability. In April and May of this year, CEO transitions fell worldwide compared with the same months in 2019, including by one-third in Europe and Asia.

But according to the report, instead of focusing merely on leadership continuity, Boards should be evaluating near-term needs and alignment for the future and be more willing to initiate change.

To obtain alignment around a new leader commonly takes a year, making those who get a head start be best positioned for the future.  Before going through such post-crisis change, Boards will prioritize core leadership characteristics such as courage, empathy, humility, learning agility, judgment and the ability to elicit the best ideas from diverse teams.

The report concludes by identifying four areas where CEOs should focus in order to successfully steer their companies through the crisis.

You can access the complete report here: Covid-19: Is Your Board Hitting the Brakes on CEO Succession?,

 

One of the consequences of the COVID-19 crisis has been an acceleration toward the digitalisation of doctor’s meetings. In China, Tencent announced last  March that the crisis has enabled them to multiply the number of registered patients by 1.6, with a total of 18 million customers in June.

At first sight, it looks like a short term burst during the crisis, but in fact, it runs deeper. Currently, hospitals in China are back to normal operations, but patients still hide away from big hospitals.

At the beginning of the epidemic, as in many countries, big Chinese hospitals were a factor in the dissemination of the virus. Patients switched massively to lower-tier hospitals and on-line consultations. Now they are reluctant to go back into the queues of big hospitals.

I recently moderated an event on the impact of COVID-19 on the doctor-patient relationship for the French Healthcare Community in China.  The focus was on Tencent, the social media conglomerate that is now bigger than Facebook which has launched new services in healthcare, now called “Q Health” in English.

450,000 doctors registered

Q Health has become the biggest e-hospital integrated platform in China, with 450,000 doctors registered! It goes far beyond telemedicine.  It has moved the whole hospital eco-system onto the internet, including selecting and booking the best doctors, meeting doctors (starting from the first consultation, not the second one), and the delivery of pharmaceutical and medtech products directly through the e-commerce arm of the platform.

There are also improvements for the brick & mortar infrastructure. Diagnostics has, of course, to be done on-site: the platform enables the reduction of the minimum time of waiting and directs patients to the labs or clinic that is less used or nearest to their home. There are almost 300 registered smart hospitals and clinics in the country.

Before the epidemic, China was already one of the global leaders in healthcare digitalisation. The entry of telemedicine has been relatively smoother in China than in the US or EU.  Some say it is because Chinese doctors prefer to “play computer games”. Maybe. But I see a more important and simple rationale.

Twice as many patients per day

In the West, the market is well established. In China, it is not. Most doctors see double the number of patients per day than their counterparts in the West. Consultations take on average a few minutes per patient (vs 10-20 minutes in the West). So digitalisation is not seen as a threat to their way of work, but as a way to reduce the burden of the number.

In China, healthcare is undersupplied and a public service. It is frequent, even in big cities to see several doctors consulting together in the same room, without a private room for their patients. The latest data from the National Health Commission shows that 72% of beds are still supplied by state entities.

Beyond the deployment and the statistics, digitalisation is triggering profound changes in the mindsets of doctors. They start to see their patients as “their assets” and no more see their obligation being to “serve the masses”. We are far from private medicine as seen in the West, but awareness is beginning.

Quality reports on doctors

Entry into the digital era also enables the implementation of quality control in the consultation process. When they collaborate with internet platforms, doctors are paid a little bit more and are thus ready to walk the extra mile and be subject to reports by patients, which they would refuse in the normal context of public hospitals in China.

On the business side, we see the same acceleration of digitalisation. Wechat — a kind of integrated Whatsapp, Facebook & Paypal, but more powerful — is now compulsory for any company working seriously in China. A few years ago, the headquarters of international companies were flagging Wechat as unnecessary and dangerous because it was outside of corporate policy. Now it is the reverse. It is the common denominator for the 500 most successful companies in China.

But Wechat alone is not enough and also needs a customer relationship management (CRM) that can communicate with other channels. Life sciences companies are reducing the number of medical representatives and increasing multi-channel marketing. The sales process requires strong sales force effectiveness (SFE) mechanisms.

Some companies are also adding a compliance module to their digital systems to put their sales teams under control.  The key success factor then becomes the capacity to integrate these different modules in an operational system such as those created by Euris, a global solutions provider for healthcare data storage and management which is helping the healthcare industry to transform its approaches and processes in China.

Government pushes development

The Chinese government has played a key role in embracing and accompanying the development of the phenomenon. The first key guideline on actively promoting e-health was adopted in 2015. Medical data entered into official vocabulary in the following year. In 2017, telemedicine and smart hospitals were officially defined.

More needs to be done in terms of regulations, but the authorities let the companies develop new concepts and approaches and will regulate progressively at a later stage. This is why, from a Western point of view, we see some compliance issues. Will prescription be only the result of the doctor’s choice? Or will it be influenced by commercial practices?

Proper regulations and time will be needed to improve the process and the interaction between the platforms, the doctors and the patients.  For the time being, we can see a significant improvement in the balance between supply and demand of healthcare services that benefits the Chinese middle class.

(This article first appeared in the publication PharmaBoardroom)