Pharma Global (PG), a division of a major pharmaceutical company, undertook a significant organizational transformation to adapt to an evolving market landscape. This strategic initiative aimed to reshape decision-making processes, streamline hierarchy, and empower employees. Over a five-year study, insights emerged about the leadership shifts necessary to navigate such high-stakes changes, emphasizing the importance of embracing uncertainty and fostering adaptability.
At a strategic planning retreat in Frankfurt in 2020, PG’s executive team confronted a critical juncture. For two years, they had debated a transformation plan but had not implemented any changes. During a coffee break, PG’s head, Gerrick, posed a pivotal question to his colleague, Giorgio, who oversaw several affiliate organizations: “What if we simply proceed with the transformation? What are the potential outcomes?” This inquiry catalyzed a shift in perspective, urging the team to consider the risks of inaction.
The executive team faced a common dilemma: how to move forward without definitive data or proven methodologies, especially when the proposed changes ventured into uncharted territory. Many organizations struggle with similar questions, and PG’s experience offers valuable lessons for navigating uncertainty during transformation.
A significant challenge for PG was the tendency to overanalyze the decision to change. By the 2010s, the company confronted a considerable shift in its business model. Following a major acquisition, PG expanded its research and development pipeline, adding complexity to its portfolio management. Unfortunately, the established top-down culture and rigid bureaucratic procedures inhibited the necessary agility.
To advocate for the transformation, PG’s leadership sought guidance from two prominent consulting firms. Their assessments consistently indicated that PG required substantial reorganization to enhance agility. Despite this, two years passed with the executive team still requesting further data and risk assessments. While their caution was understandable, they overlooked a critical aspect: the nature of the challenges they faced.
Traditional organizational changes often involve technical problems with clear solutions. In contrast, PG’s transformation represented an adaptive challenge. Although the overall direction was evident, specific solutions needed to arise organically within the organization. Given the absence of direct industry benchmarks, PG was poised to pioneer this approach on a large scale.
To escape the trap of excessive analysis, the leadership reframed their discussion. Instead of seeking more proof of the need for change, they asked: “Why shouldn’t we change?” This shift in mindset highlighted that the real risk lay in maintaining the status quo. Aligning quickly, the executive team adopted a new goal: to become the first large pharmaceutical company to flatten its organizational structure. This decision was considered a worthwhile risk, signaling to employees a commitment to purpose-driven and empowered work.
As organizations consider significant changes, they should reflect on several key questions. Are they addressing a technical problem where risks can be managed, or are they confronting an adaptive challenge that requires navigating uncertainty? Are they focused on mitigating risks, or avoiding uncertainty entirely? Additionally, what are the consequences of not changing, and what benefits could arise from being an early adopter of transformation?
Another hurdle PG faced was the longing for a comprehensive, detailed plan. Historically, the company relied on step-by-step roadmaps that clearly defined roles and responsibilities. However, the nature of this transformation necessitated a more agile and iterative approach. The team recognized that rigid plans could stifle innovation and adaptability, so they chose to focus on setting a clear direction while empowering teams to experiment and learn.
PG’s leadership understood that the transformation involved not just structural changes but also a shift in the way employees worked and collaborated. To facilitate this, they invested heavily in employee engagement and communication. Regular feedback from employees at all levels was solicited, and the leadership communicated transparently about the progress of the transformation. This approach ensured that the initiative was not merely top-down but rather a collaborative effort involving all staff.
The results of the transformation were substantial. PG successfully flattened its organizational structure, leading to faster decision-making and enhanced employee empowerment. The company improved its ability to innovate and adapt to market changes, resulting in a more engaged and motivated workforce.
PG’s experience serves as a testament to the necessity of embracing uncertainty, empowering employees, and adapting to shifting circumstances during organizational transformation. By learning from its challenges and focusing on critical elements of change, PG achieved a remarkable turnaround, creating a more agile and competitive organization. These insights provide invaluable lessons for other organizations embarking on their transformation journeys.
