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An example from the pharmaceutical industry

Strategy work in a silo? Challenge accepted   

  • Wiebke Gronemeyer
  • Sebastian Barnutz
  • Thursday, 23. February 2023
Strategy in pharma

When specialization becomes a problem, people like to find new words for it. Someone who’s a master in a specific field becomes a one-trick pony. Proven expertise is now referred to as “blinkers”. And what was previously valuable knowledge is now defined as the need to see the bigger picture.

This downside of division of labor can be experienced in any organization. Finding the right mix between broadly distributed and insular knowledge is a common organiza­tional challenge. What the right mix actually is can also change. We are currently observing this kind of change in pharmaceutical organizations. 

The division of labor has its downsides

Pharmaceutical organizations are traditionally characterized by a pronounced division of labor. Their products are subject to very tight manufacturing specifications. One division of such an organization, Market Access, is concerned with nothing more than bringing new therapies through the approval process with as few regulatory requirements as possible. Regulations as to how the market is worked – for example, cooperation with doctors’ practices – have also increased over time. Whereas Sales is only allowed to talk to practitioners about approved medications, Medical Affairs – the internal and external medical sales force – is allowed to discuss upcoming therapy options.  

As a result, there are three different communication perspectives and each division of an organization looks at health issues from the viewpoint of its own expertise, knowledge, and coding.   

Divisions collect their own information  

If you follow the path a drug or form of therapy takes from the research phase to the moment it ends up on a prescription pad for the first time, there are numerous occasions when the different divisions receive information of relevance to the organization, but rarely reaches it.  

This is not due to laziness, nor a disregard for communication channels. It’s just that the expertise is so pronounced and the knowledge for a task so specialized that the employees in the respective division sometimes don’t even realize how relevant this information would be for the people in the neighboring silo. The path a drug takes normally begins with Market Access where they work to ensure that the drug is approved for the intended therapy, and that the regulatory requirements are low.   

It is very good news for Medical Affairs and Sales if the requirements are lower than expected – and even better news if existing therapies and drugs are undercut. That would mean they are, in practice, much easier to apply, which is an unbeatable argument when talking to practitioners. But if Market Access does not sense this difference, the information will not be emphasized. This does not necessarily mean that it will remain unmentioned, but it may be buried in a dossier written in Market Access language that escapes the attention of other divisions.

“It’s your own fault,” Market Access might now say. “The information was passed on but you didn’t want to see it.” And they would be right. But Medical Affairs and Commercial might be equally justified in pointing out that it takes too much time to sift through mountains of PDFs and paper for meaningful information.   

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Keeping an open mind and thinking about other pers­pectives

This isn’t a problem that is unique to Market Access, either. It can also be seen in Medical Affairs, which aims to conduct expert discussions with practitioners and the extent to which they can use a new drug or form of therapy.   

Generally speaking, one feature of Medical Affairs’ self-image is that this discussion is medically oriented: What helps the patient best? What difference can this new drug or therapy make? However, medical practices and hospitals not only have to pay attention to the medical rationale. Therapies also have to be feasible in the everyday working conditions of the institution in question – and are also subject to the logic of net value added. It is legitimate to object to this, but it is what actually happens. This often leads to the undoubtedly problematic situation that although a form of therapy is better for patients, e.g., because it takes less time or can be used for outpatients, treatment centers may nevertheless decide against its use for economic or organizational reasons.  

Practitioners know that this perspective is not going to gain them any sympathy, which is why they do not present these concerns on a plate; they tend to first check out the people they are talking to see how receptive they are to this kind of consideration. That is why it is worthwhile not only applying one’s own perspective as a guideline in conducting such a conversation, but also communicating across perspective-related boundaries.   

Existing exchange forums aren’t working  

As pharmaceutical organizations have realized there is a need for more cross-silo exchange and understanding, interfaces and committees that foster exchange and go beyond merely throwing out dossiers do exist. But this process still goes no further than the transmitting of information, because every item of information that is received is accompanied by the question “What has it got to do with me and my concrete work?”  Once again, what gets in the way of the information flow is the form of coding. Any information that cannot be directly translated into an individual’s own field is not given further thought. For the operational field this is not in itself problematic. Of course, everyone involved in the process will be annoyed if they learn about important changes or useful information much later than what might have been possible – but nobody can really complain. After all, everyone has stuck to the rules. And there’s no need for a rethink either, because the daily work routine in the silo simply carries on.  

Strategy work needs a change of perspective – and knowledge of it 

In the long run, however, information that makes a difference for the organization as a whole and not specifically for one of the three fields will get lost in this way. Information that is necessary for strategy work. This could be, for example, the fact that competing products with significantly fewer regulatory requirements will be launched onto the market. Or that practitioners are clearly fed up with having four visits a day from the same organization – and from their perspective, having the same conversation four times over. From the organization’s point of view, however, it was just one conversation with Medical Affairs and one with Commercial on two different forms of therapy. If the strategic level of a company only hears about this when practitioners announce that they unfortunately have no time for anyone from that company, it is often too late to correct the decision.

How can structures be adapted?   

How can an organization position itself to prevent this problem? Where can we tackle structures to create new ones that facilitate information handling and processing?

In looking for design options, we tend to use the same heuristics for all organizations – irrespective of whether it is a pharmaceutical company or a steel foundry. Every organization has three structural dimensions: communication channels or a communications hierarchy that regulates who is authorized to give instructions to whom and how information flows through the organization; programs or processes that regulate how openly or regularized tasks are accomplished; and personnel, which is also a form of structure in that qualifications and career paths have an immense influence on how employees see their environment and solve problems.  

It is pretty obvious that pharmaceutical companies are 1) very heavily regulated with respect to communication channels and processes, and 2) these rules cannot be easily dismantled. The question therefore arises of whether it is possible to enable better communication through a different form of staffing and qualifications.   

Pharmaceutical companies are heavily regulated with respect to communication channels and processes.

Two interesting perspectives open up here. The first is that thought could be given to integrating Medical Affairs and Commercial roles in a single position. The sharp distinction between these fields is more of a convention than a legal requirement and is mainly due to self-reinforcing tendencies that pharma companies separate these divisions simply because that is how things are done in the industry. But it is also possible to imagine other go-to-market models where the change in roles is explicitly implemented in discussions with practitioners. If that were the case, a technical discussion would then become a sales discussion, while of course ensuring compliance with the respective legal premises.

Similar changes also work within an organization. If Sales positions are filled by people who previously worked in Medical Affairs, they will understand and embody these two sides of the organization. In this way, an organization can train employees to understand both sides of the communications structure and become a mouthpiece for communicating into the strategic field. This would be especially helpful in translating a specialist medical perspective  because this is not always understood in top management circles due to their differing career paths.  

Where should contradictions of purpose and perspectives be united?   

As a second possibility, it is worth looking at the organigram of an organization to retrace the course of its communication channels. The question here is where the different perspectives are intended to be united in formal terms. How far does some information have to travel up the hierarchy (i.e., how high are the walls of the silo) before it reaches a position where someone is responsible for looking at two otherwise separate fields?   

Compared to other companies, what is noticeable about pharma companies is how far this journey goes. We have encountered organizations where a country department has nobody in a responsible position for that country but is simply docked onto the global hierarchical level. All the knowledge about the problems of the specific country market, the viewpoints of key opinion leaders, the everyday problems of practitioners and the concerns of patients has to climb the hierarchy ladder – and thus moves out of the country organization.   

Enabling formally impossible communication  

It is unlikely that any ways of changing these strongly regulated communication channels and sometimes bizarre paths of organigrams will be found fast. Fortunately, however, there is something else that every organization also has – the informal level. If a formal exchange and alignment of perspectives is impossible, some kind of evasive switch to an informal level is only natural. This is not illegal; it merely a case of keeping one another informed. 

However, such a smoothly functioning exchange of information is dependent on numerous preconditions. To conclude, we would like to offer some questions that can help locate the right place for informal exchange:   

  1. Will both sides gain something from this additional knowledge? Such an exchange must facilitate everyday work or enable better-informed decisions. One-sided sharing of knowledge will only remain stable at a hierarchical level.   
  2. Which bodies understand enough of the other party’s coding and rationales to translate the information? Without such understanding, it will again be a case of merely dumping information garbage.   
  3. Finally, what is the lowest hierarchical level that can meet both preconditions – and is also powerful enough to withstand any irritation caused by, for example, a compliance department?

Start with small steps

No rules are being broken, that is true, but experience has shown that regulatory bodies react indignantly if communication that is not explicitly provided for in formal terms actually occurs. From a certain hierarchical level upwards, it is easier to deal with this pressure. The danger, however, is that by then, the person involved is already so far removed from operational matters that no information with any link to the outside world is actually exchanged.   

The most important thing is to think in small steps. Every small change to this impressively effective silo structure can already be seen as a success.  

Wiebke Gronemeyer

Dr. Wiebke Gronemeyer

is a senior consultant at Metaplan. She is particularly passionate about shaping strategies in complex environments through well-chosen discourse.

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Seastian Barnutz

Dr. Sebastian Barnutz

is a Partner at Metaplan. He designs organizations and organizational hacks with clients.

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