Pharma Global (PG), a division of a prominent pharmaceutical company, has embarked on a significant organizational transformation aimed at enhancing agility and decision-making efficiency. This transformation process, which began in 2020 during an executive retreat in Frankfurt, highlights the complexities and challenges organizations face during high-stakes changes.
The journey of PG underscores a common dilemma: how to proceed with transformation when definitive data and methodologies are lacking. Despite extensive discussions and analyses, PG’s leadership hesitated to implement changes that would reshape the company’s hierarchical structure and empower employees. During a pivotal moment, Gerrick, the head of PG, posed a crucial question to his colleague Giorgio: “What if we simply proceed with the transformation? What are the potential outcomes?” This query became a catalyst for action, shifting the team’s perspective on the risks of maintaining the status quo versus the uncertainties of change.
Over the course of a five-year study, the leadership team discovered that many organizations struggle with similar challenges when navigating complex transformations. The resistance to change often stems from an overemphasis on gathering data and risk assessments. PG’s previous reliance on a traditional model that prioritized blockbuster drug portfolios was no longer viable after a significant acquisition expanded its research and development pipeline. This shift necessitated a more agile approach, yet the existing top-down culture and strict compliance measures hindered progress.
To address these challenges, PG enlisted two leading consulting firms, which provided consistent recommendations for a substantial reorganization. However, two years later, the executive team was still requesting additional data, hesitant to act without thorough risk evaluations. This caution proved counterproductive, as the nature of PG’s transformation was not a technical problem with clear solutions, but rather an adaptive challenge requiring collective input from various teams.
Recognizing the need to reframe their approach, the leadership team shifted the conversation from “Why should we change?” to “Why shouldn’t we change?” This pivotal change in mindset allowed the executive team to align on a bold objective: PG would become the first large pharmaceutical firm to flatten its organizational design. This decision was driven by the understanding that embracing uncertainty could foster a more empowered workforce and accelerate organizational learning.
As they moved forward, the executive team also confronted another common hurdle: the desire for a comprehensive, detailed plan. Traditionally, PG had relied on step-by-step roadmaps with defined roles. However, the nature of their transformation required flexibility and an iterative approach. The leadership recognized that a rigid plan could stifle innovation, so they focused instead on establishing a clear overall direction while empowering teams to experiment and learn.
Employee engagement played a crucial role in the success of this transformation. The leadership team prioritized communication and actively sought feedback from employees at all levels. By fostering a culture of ownership and collaboration, PG ensured that the transformation was not merely a top-down initiative but a shared vision among all employees. This investment in engagement boosted motivation and commitment to the new direction.
The results of PG’s transformation have been significant. The company successfully flattened its organizational structure, which led to faster decision-making processes and improved innovation capabilities. The shift also resulted in a more engaged workforce, enabling PG to respond more effectively to market changes.
PG’s experience offers valuable lessons for organizations undergoing similar transitions. Embracing uncertainty, empowering employees, and adapting to evolving circumstances are critical components of successful transformation. By learning from their mistakes and focusing on the essential elements of change, PG was able to achieve a remarkable turnaround, positioning itself as a more agile and competitive player in the pharmaceutical industry.
This case study illustrates not only the challenges faced by Pharma Global but also serves as a blueprint for other organizations embarking on their own transformative journeys.
