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Stephanie L. Woerner, PhD, director and principal research scientist at the MIT Center for Information Systems Research, discusses the outlook for next year among biopharma firms.
This interview was originally published by Pharmaceutical Executive.
Stephanie L. Woerner, PhD, is a Director and Principal Research Scientist at the MIT Center for Information Systems Research. With over 20 years at MIT, Dr. Woerner focuses on how companies use technology and data to create more effective business models and manage the organizational change caused by the digitization of the economy. She received her PhD and MA from Stanford University.
Q: As Forbes recently shared, “For the past two decades, the biopharma sector has witnessed the shedding of hundreds of thousands of jobs, and all signs point toward an acceleration of these losses.”1 As many of their executives are leaning into emerging technologies, like generative AI, as turnaround panaceas, what are the realities facing their employees?
A: As one of your Q&As pointed to my MIT colleague's earlier findings, “...large companies are securing only 5% of their revenues from new digital value propositions;”2 that should temper their board of directors' expectations of such assertions.
Instead, C-Suites, and of equal importance, their boards, should remember that the goal is not digital transformation but rather a profound business transformation. Specifically, if your employees do not have quantifiable value propositions, such as accessing new prospects, retaining existing clients, reducing costs—or other offerings that are valued by external or internal customers—frankly they should not be pursued in 2024.
While this recommendation might be challenging to accept, the good news is that there have been some companies which have focused on outputs and outcomes versus just inputs; and they have created valued business transformation via practical digital strategies. For example, Bayer's Climate FieldView offering provides a simple solution for farmers to make data-driven decisions to maximize their return on every acre.
The FieldView platform provides a central hub of information and visualization tools for farmers to leverage, and this includes connections to dozens of platform partners—from aerial imagery, to insurance, soil analysis, and more. Bayer also recognized that end users do not want expensive and complicated tools that are challenging to integrate into their existing operations. Their starter kit is under $500 and works with over 80% of equipment types. As a result, it is not surprising that this Bayer offering has helped to contribute towards the 15.6% growth that their Crop Science division contributed in 2022. Value creation and simplicity of adoption were two key themes of Bayer's business transformation.
So, for your biopharma readers who have seen challenges in their sector, the great news is that if they can remember that it is not just doing digital but being digital, they can create new sources of value, which are larger than the 5% metric which you had mentioned earlier. And by being digital, I am referring to how employees have a laser focus on creating new digital assets that the target end users will be willing to pay for in terms of external invoices or internal budget transfers. Within the biopharma vertical, an example is AstraZeneca, where the CIO seems to have created this mindset as part of their culture. www.workboard.com/results-astrazeneca-cindyhoots/
Q: Like other Fortune 500 verticals, legacy M&A transactions have created complex fiefdoms across some of these organizations. As a result, wasted resources and the ultimate failure to realize the value from digital in their bottom lines have been common. Given this context, what are your top three recommendations for the readership?
A: First, based upon my 20-plus years at MIT and working with leading organizations, build a common language around the various existing and emerging digital terms. With the complexities of global firms, especially those with legacy organizations, employees need to have a common language and agree upon assumptions around these terms. Without this common language, one will likely see the continued failed transformations that my team and I have observed over the years.
Second, to avoid the common pain point of dormant multi-million dollar digital assets that reside within Fortune 500s because employees are not aware that they exist and/or the culture focuses on starting projects from scratch, CIOs along with their CEOs need to take a more disciplined approach towards their digital strategies and readers can learn more about four potential pathways that my colleagues and I recently shared here, www.europeanbusinessreview.com/four-pathways-to-future-read-that-pay-off/ and here www.youtube.com/watch?v=Qv9Mffi5sQs.
Finally, by being digital, most biopharmas need to change their ways of working. The recurrent challenge that many Fortune 500s have with friction between IT and commercial continues as the sales and marketing teams often perceive their tech counterparts as blockers to the speed of transformation. As a result, the inevitable shadow IT systems and duplicate efforts continue.
Per the recent research that my colleagues and I conducted, which included over 1,000 firms, one key observation was how smarter firms enabled sales and marketing teams to be empowered for their unique needs but tempered with a CIO and CEO co-sponsored message that upcoming efforts need to leverage the firm's existing platforms. As CIOs are often peers to their C-Suite colleagues, my last recommendation is for CEOs to take an active role in communicating such expectations.
While this CEO does not have to be an expert in generative AI and other potential technologies, this person is accountable for helping to recalibrate her or his workforce's mindset so that limited resources can enable the firm to be ambidextrous in terms of innovating to engage and delight customers while simultaneously reducing costs by means of readily available technologies.
About the Author
Michael Wong is an emeritus board member of the Harvard Business School Healthcare Alumni Association.
1. Numerof R, Mass layoffs continue across the biotech sector, what does this mean for pharma’s future? Forbes, August 23, 2023. Accessed November 13, 2023. https://www.forbes.com/sites/ritanumerof/2023/08/22/mass-layoffs-continue-across-the-biotech-sector-what-does-this-mean-for-pharmas-future/?sh=1d68a4343fa1
2. Wong M. Planning Ahead with Dr. Jeanne Ross. Pharmaceutical Executive. Published March 25, 2020. Accessed November 13, 2023. https://www.pharmexec.com/view/planning-ahead-dr-jeanne-ros