One company benefits from comprehensive market access, the other from a promising new product: When pharma companies combine expertise, licenses, and resources, win-win situations should arise. The emphasis here is on “should”. In this article, we delve into the specific hurdles organizations face in such alliances and propose proactive solutions to overcome them that go beyond appeals to employees.
The first hurdle for alliances is the gap between the place where they are formed and the place where they are performed. Alliances are based on strategic decisions and represent an investment. Both partners want to make sure that their joint development and market approach will be successful. The contract is negotiated at a management level, where the required investment is also determined, resources agreed on, and the rules for the RACIs defined. However, it is the respective operational level where the mutual engagement occurs. Team members use and interpret the rules, develop routines, and negotiate how things are implemented. They cultivate a distinct organizational culture within an alliance, albeit temporarily, and where both entities contribute their respective domestic cultures to the partnership. This dynamic gives rise to significant clashes, as well as generating tremendous potential.
Three problem pillars in pharma culture
Alliances in the pharmaceutical industry encounter various challenges due to the prevailing organizational cultures. Cultural aspects often revolve around competition, knowledge protection, and a focus on individual success tied to advancing through the ranks of management. These aspects can be observed in the behavior of employees in response to existing organizational rules and procedures in pharma companies. This leads to the following problems in alliances:
1. Competitiveness: Cooperation in a highly competitive market environment breeds mistrust and a competition-oriented mindset. This, in turn, creates additional hurdles, as alliance members may view each other as rivals rather than collaborators, which hinders effective teamwork. Instead of critically examining issues and identifying their root causes, alliance members tend to quickly attribute any problems to the alliance itself. This tendency to blame the alliance, rather than seeking to understand the issue, hinders problem-solving and can lead to a lack of accountability and trust within a team.
2. Knowledge protection: Handling knowledge with care is part and parcel of everyday life in a pharmaceutical company. However, the learned routines and automatisms get in a company’s way when employees are no longer required to protect knowledge but to share it. An alliance will experience difficulties establishing a common information basis, which leads to dysfunctional coordination. We have observed how even in the same organization different functions keep secrets from each other, use information strategically, or simply forget to inform their colleagues. What can be a showstopper in cross-functional collaboration has an even greater impact in an alliance of two organizations.
3. Conflicting priorities: Alliance members navigate multiple expectations simultaneously – those of their own organization, those of the alliance team, and those of the partner organization. Loyalty to one’s own organization often takes precedence over the alliance team’s interests. This loyalty conflict can lead to negotiating team interests in a micro-political manner, which results in tensions and distracts from the alliance’s shared goals.
One alliance – four sets of rules
One might think that similar organizational cultures are helpful for cooperation. The opposite is actually the case: If both sides keep knowledge secret and are oriented toward competition, this double minus does not result in a plus.
As an employee working in an alliance, the initial struggle is to work under two sets of formal procedures and requirements from two different organizations. Alliance members need to maneuver through them without being overwhelmed by their combined magnitude or contradictory frameworks. For instance, how can they ensure speedy delivery if it is still uncertain whether they must undergo a medical review from just one or both companies?
The second struggle is to work under two sets of informal rules. Formal procedures are often ambiguous and therefore need to be interpreted. Their interpretation by employees shapes an organization’s culture – the way of working shared within a group or team. To accomplish their tasks, alliance members have to establish their working methods, adapt rules, and establish workarounds and shortcuts.
For example, standard operating procedures significantly restrict the number of pharmaceutical industry employees permitted at Advisory Boards. To comply with these rules, only the officially permitted number of attendees is noted in meeting minutes, even though more people have actually participated. This is where organizational culture comes into play. Culture is not something that is easily dictated or learned from a book; it evolves in response to formal rules.
The interplay between formal rules and organizational culture, which is multiplied by the presence of two organizations, poses several challenges for alliance members:
- Rules are ambiguous: Uncertainty exists about which formal rules should be applied.
- Rules compete: Alliance members place significant emphasis on their own organizational cultures, resulting in a contest in which rules dominate. Time constraints often impede the development of a collaborative culture, too.
- Rules entail risks: Adhering to an organizational culture always entails risks, as informal practices often exist in ambiguous areas. In an alliance this will become precarious territory, as there is less transparency on how management will respond and what they will tolerate, safeguard, or overlook.
Rethinking team orientation
A fundamental shift in team orientation is required to overcome these obstacles. At a management level, it is crucial to consciously design an alliance framework that guides collaboration within an alliance team. At a team level, creating a shared understanding of roles, goals, and the meaning of rules can prevent many conflicts.
The management team that negotiates an alliance framework can create freedom for the alliance team by not imposing guidelines that follow their respective domestic organization’s logic, but rather by creating new rules or protecting the alliance team from conflicting rules and requirements. This approach implies less control at a management level. Focusing on the alliance team will grant a greater degree of freedom from the constraints of the domestic organization. And the alliance will become the primary orientation, with goals and priorities emerging from the team’s joint work.
This approach will foster autonomy and cohesion within an alliance team. However, it also introduces some uncertainties for the domestic organizations. Risks have to be assumed at a management level to protect team members in the event of conflicts. For example, management may proceed with medical clearance from just one partner in the alliance, rather than seeking clearance from both, even if this decision has to be defended vis à vis their medical colleagues.
The alliance team, on the other hand, can create and ensure their understanding of cooperation. They can exploit any rules-related ambiguity by interpreting them together and coming to agreements. In well-designed discourses, workshops, or discussion rounds with the respective supervisor, they can clarify key questions: How do we want to live out certain roles? Why do we have certain constraints in our domestic organization? What can we agree on for productive cooperation?
Navigating the complexities of pharma alliances is not a trivial task. With their blend of potential rewards and inherent complexities, pharma alliances present a specific set of challenges that require precise navigation. The three problem pillars identified — competitiveness, knowledge protection, and conflicting priorities — form the crux of these challenges, with formal and informal rules further complicating the dynamics.
Success hinges on a dual strategy. First, management must consciously design the alliance framework in a guiding manner while allowing autonomy and cohesion within the alliance team. The emphasis here has to be on flexibility and a willingness to deviate from established norms of the domestic organization. Second, the alliance team must create a shared understanding of cooperation, interpreting rules together, and forging agreements that facilitate productive collaboration.
The reward for mastering these dynamics will be a synergistic partnership that leverages the unique strengths of each organization. Such alliances can drive innovation and efficiency in the pharmaceutical industry, paving the way for further advancements.