Strategic Planning Symposium for the Boston Chapter of the Association of Clinical Research Professionals.

It is such a pleasure to have the opportunity to participate in the annual symposium for the Boston Chapter of the Association of Clinical Research Professionals.

This is such an exciting time for Boston as we watch the consistent evolution of the biotech industry. We are truly witnessing something great as infrastructure and partnerships are developed to further this industry in Boston. It has been inspiring to watch the formation of collaborative teams designed to meet market requirements. Within this symposium we have representatives of many current issues that demand attention.

Boston has exemplified the importance of synergistic efforts in meeting new drug development demands at increasingly rapid rates. Our dedication to bringing new drugs to market for the benefit of a broad range of disease populations is evidenced by our many efforts to continually improve the research process. The ability to accomplish this is reliant upon the strengths of many, rather than the vision of few.

As we all know, the world of drug development utilizes talents from a variety of sources and experts in the following topics exist among us in the local industry. We have representatives for:

Representative for each of these topics have developed as individuals have seized the opportunities at hand and played to their strengths. If we can carry this forth into the execution of new organizations, and the shoring up of existing ones, we will build an even more vibrant biomedical environment.

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The very process of this initiative reflects many of the components inherent to strategic thinking. In simple terms, throughout the evolution of this industry, we have seen plans and technology implemented, market reaction and consumer response assessed and next steps implemented based upon the reception of the audience. We have all witnessed the movement of the biotechnology industry into the forefront of society’s mind, from the stock market to the end consumer. Media has brought biotech into the limelight with both advantageous and deleterious results. Those that once thought of themselves as rather peripheral to the process of educating the general public about the importance of industry support have become important voices for balancing public perception.

Biotech startups are finding the business environment more conducive than ever before. According to Ernst & Young’s 13th annual industry report issued in 1999, more than 1200 biotechnology companies nationwide had sales of $11 billion and gross revenues of $15.2 billion. In 1999, Biotech companies employed 153,000 people, up 42% from 1997. It will be fascinating to see the results of the 2001 report. The last report, entitled “Biotech ‘99: Bridging the Gap,” states that New England has the largest distribution of biotech companies in the U.S., with the majority of these companies located in Massachusetts. The New England region has surpassed the San Francisco Bay area, which was first in 1997. The third largest region is the Mid-Atlantic.

According to the Massachusetts Biotechnology Council, the biotech industry employs around 28,000 people statewide. Massachusetts is #1 in NIH

Research Grants Per Capita. In fact, Boston, Cambridge, and Worcester are all in the Top 100 for NIH grants awarded nationally. Massachusetts biotech companies expect FDA approval for 9 new pharmaceutical products in 2002, and 19 Massachusetts companies are developing 35 anti-cancer drugs.

The rapid expansion of the industry has brought two key issues to the forefront that, if not addressed, will hamper continued growth. The first is the tremendous requirement for the expansion of a qualified workforce and the second is the critical need for collaboration between solid business leaders and the scientific community. In 2000, I was asked to accept the role as Chief Executive Officer of the Raines-Cox Research Institute in Memphis. I was recruited on the basis of my background and experience in transitional organizations. Biotech is in a state of evolution and I have focused the majority of my career on transitional management.

In the late 80’s, I established a practice that serviced evolving organizations. This included start-ups, restructuring and mergers.  My approach was rather unique at the time, long before interim executive management was a mainstream concept. I provided key level expertise to organizations that lacked business depth in their leadership. My average client was a non-business professional who was an expert in another area, much like the scientists and M.D.’s of the biotech arena. A key focus of the practice was executive coaching, as the development of leadership skills in my typical client was crucial to their continued success. This was extremely rewarding work and coupled with financial analysis and organizational development, allowed me to be instrumental in furthering the goals of many organizations. The expertise required for this type of work was directly transferable to an emerging biotech industry.

My transition from the Boston market into the Memphis market has been an interesting one. Inc. Magazine has named Memphis as 8th of the 50 Best Cities for Startups and it is an emerging biotech market. As a new market, Memphis has been particularly insightful in analyzing its strengths and weaknesses in the biotechnology environment. It been forced to address tough questions and is encouraging an evaluative process that continues to enhance its position as a serious player.  Though work force development issues require ongoing attention, the synergy of the community looks favorably upon a changing environment. A concerted effort to develop new industry and upper level positions is well underway and the potential is tremendous.

The Raines-Cox Research Institute, for which I serve as CEO, is a multi- disciplinary, multi-site clinical research institute with two divisions, community service and clinical trials. It was initially conceived as a single site concept but in the past twelve months has created collaborative relationships with Nashville, Knoxville and Boston with new opportunities recently presented in Kalamazoo, Michigan and Birmingham, Alabama. The institute provides both the staffing and infrastructure essential to clinical research, as well as community programs that enhance opportunities for patient recruitment.

In addition, we provide essential support for patients in various disease populations. One such program that is gaining local media attention is entitled “A Woman’s Influence’. It is designed to support women as the health care coordinators of the family. The completion of a two-year behavioral study conducted by the Institute reveals that she is the overseer of family health. The study data launched this program that provides disease prevention and maintenance information for all family members through communication directed to the woman in the family. The program is supported by the Assisi Foundation of Memphis and has gained preliminary interest from NCI.

All of these accomplishments are the direct result of strategic thinking, which we talk more about in a moment. Furthermore they confirm the high transferability of solid business skills into the research environment.

The biotech climate is rapidly recognizing the value of collaboration between business leaders and the scientific community.  I serve on the Memphis Area High Tech Council and various other committees dedicated to developing the city’s opportunity in the biotechnology industry. I speak on business issues at a variety of state and national conferences. A few years ago only scientists or medical professionals served on these boards or spoke at these events. Today it is critical that the business community and the medical profession form a partnership that works and will succeed over the long run.

We all realize that opportunity exists. Having established that the climate is conducive to new ventures in this field, let’s review some key elements for launching a new opportunity:

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Before you undertake any effort, analyze your market. Look at what is realistic right now and where you hope your product or service can go in the future. Ask yourself:

What makes my service or product different? Define the benefits of your idea. Who is interested in what I have to offer? Define your market. How will I attract the attention I need to gain my position in the marketplace? Define your marketing plan. 

I want to emphasize to you that strategic planning is not product development, although that is an important component. It is the ability to define the overall vision, the foresight to quickly determine the changing needs of an evolving marketplace and the skill to adapt accordingly.

Writing a business plan does not make you a strategic thinker. Writing a business plan has nothing to do with the implementation of action steps to achieve the plan or the successful monitoring of your implementation. Writing a business plan will help you secure funding; implementing one will help you secure a business.

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Since the engineers, physicians, scientists, and technicians within the industry have intellectually driven the biotech industry, key business issues have often been viewed as secondary. To succeed, we need to bring in the business professionals who will analyze concepts and ask the hard questions. When I attended the CEO/Investors conference in New York City last spring, investors candidly discussed this issue; they had seen many attempts to launch a business undertaken by well meaning scientists that resulted in defunct organizations. Unfortunately the success rate for such an endeavor was low. Investors now demand a qualified business team to work hand in hand with the scientific team. Once again, it is the marriage of business and science.

A good example of the benefits of combining efforts lies in the successful application of common business tools. There are many tools that are successfully utilized in other industries that this industry can benefit from. At the Institute, we have experienced some interesting results by bringing a job costing system into the clinical trials environment.

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This is great tool for manage the profitability of a clinical trial. It allows us to predetermine the amount of professional time the trial will require, we can assess early our staffing needs and levels, and we can determine the best work flow plan to carry out the necessary tasks while still maintaining a reasonable margin. A job costing system will enable you to identify tasks, assign increments of time required to complete those tasks, associate those time blocks with the personnel required to complete those tasks, and assess the costs of supplies and procedures. This type of planning allows us to utilize our work force in the most proficient and cost effective manner.

This is the concept of job costing. The concept of job costing is essentially new to the biotech industry. It allows us to perform task analyses and determine the personnel, supplies and outsourced charges associated with each tasks. Job costing techniques can be adapted to most environments. We use a hybrid for the clinical trials environment that allows us to perform two important functions:

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Basic business principles are the same regardless of your company’s size, industry or structure. The models, strategies and systems are universal. Key elements for success include the concepts of: Analyze, Adjust and Adapt.

Analyze:

• Understand your product, market and competition.
• Determine your strengths and weaknesses. Know your obstacles.
• Determine the best methods for positioning your organization as a leader in the marketplace.
• Determine ahead of time the likely hurdles you will face and PLAN for them.

Adjust:

• Continually monitor your strategies. What looks good on paper may not transfer well in reality.
• Don’t become married to an idea. Let the realities of the market lead you. Listen to your audience.
• Adjust your strategies and planning to fit the demands of the marketplace. This can mean assessing and preparing for a diminishing work force, letting your research goals redirect you to unexpected but fruitful outcomes, overcoming public perception of a particular product or service, etc.

The key is adjusting your course in response to the feedback you receive from the market, your investors and the bottom line, all of which must continually be taken into consideration.

Adapt:

This is probably the most often overlooked key in strategic thinking. Often times, organizations adjust without adequately preparing for the adaptation curve inherent in any change. Often organizations have not prepared the market or their personnel for changes that may well be beneficial in the long run. This can sour what would otherwise be a positive change.  

• Prepare your audience for the change and allow them the time and support necessary to adapt. This may mean developing good educational programs that lead your audience in the direction of the change.
• Give them the information needed to answer likely questions they will have concerning the change in direction.
• Remember that you work more closely with the details than your market, investors and some personnel. What may seem obvious to you may take them a while to catch up to.

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Understanding some of the distinctions between the cultures of business and science is imperative of merging these two cultures. One of the most complex differences between the two can be related in very simple terms.

Science by its nature is task-driven. Building a business is relationship driven.

This is not to say that the business community does not function in a task-oriented environment or that scientists do not build good relationships. It does acknowledge that the natural focus of each, are different. One of the most important elements in any successful business is the ability to develop and lead people. Most business leaders have great dedication to the betterment and success of their people and use many different vehicles to fulfill this goal. This is not the focus of science. In this environment, studying humans from the cellular perspective and applying great skill and effort to bettering their health opportunities is a calling that many dedicate their lives to fulfilling. This is not the focus of business. Knowing, understanding and building upon these differences yield phenomenal opportunity for success.

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So how do we bring these often diverse perspectives together to create something significant for all?  In the highly competitive world of biotech, you are looking for the same dollars that your peers seek as well. Often, what will set you apart is your team. The quality of your team will be dependent not just upon the science or technology, but the leadership depth of your business professionals as well. Often in this industry you see a lesser focus on the business players brought to the table in a startup. The problem with this approach is that appropriate skills are not matched to appropriate tasks. How is this relevant?

Let’s talk about the forum of a presentation to potential investors. These Speaking Engagements are made to an audience primarily made up of business professionals. Usually, there will be an individual or a process to interpret or validate the science behind the enterprise, however the majority of the group will be those well-versed and focused on issues such as bringing the drug/technology to market in the least amount of time, cost versus benefit ratios, positioning in the marketplace to maximize IPO opportunities and resulting stock values.

Your investors are not investing in the science; they are investing in the opportunity.  Your scientists are not investing in the opportunity; they are investing in the science.

Bringing representation to both sides is the key to a dynamic opportunity. The business community is not disinterested in the science or what it may bring to the human race; they are just playing to their strengths. When everyone performs according to their knowledge, gifts and talents, the opportunity at hand experiences its maximum potential.

Your ability to speak the language that assures the business community of your understanding of their endpoint, and how it will be achieved, will give you the strongest position when competing for funding. Good science with poor enterprise leads nowhere. Weak science with a strong marriage of business and science may well lead you to a stronger product. How can I make a claim like this? Because the consistent interaction of a good team will identify early that a product is not making its milestones, a good interactive team will begin to strategize early to develop alternative methods or directions, financial tools will be utilized to determine the endpoint of each change in direction. These tools utilized together give you the strongest opportunity for success.

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The focus today is on technology transfer and this is an imperative first step before we can really exercise our options for further development of basic research. However, without an understanding of the necessary components for a successful enterprise, we bear the risk of presenting the opportunity to begin with no real way to execute.

Let the scientist be the scientist; let business leadership enhance the enterprise.

It is seen over and over that our society assumes overt skill in one-area leads to expertise in an unrelated arena. This is the basis of the ‘Peter Principle’ that was the ‘bizword’ of the 80’s. This addressed the perpetual problem of American business, which continually assigns capable employees tasks with increased skill level requirements until they exceed their capabilities. This is a classic principle for setting someone up for failure. As a society, we have adapted this concept to include the expectation that expertise in one arena naturally makes one an expert in an unrelated venue.

First and foremost, this dynamic creates an impossible environment for many to flourish in. I have worked with many clients with extremely strong skills in a specific venue that felt it unacceptable to admit they had little knowledge of how to run or develop their business. My advice to them has always been to concentrate on their revenue-producing skills and let someone with an expertise in business leadership and development, handle the operational side of the organization.

A key element of IEM is executive coaching. In this area, we focus on the development of leadership skills in non-business professionals. While this may sound like a contradiction, it is not. As an Interim Executive, which is a key service the practice provides, our dedication is to the professional development of non-business professionals. Though it was never the goal to attempt to transfer 20 years of tactile experience to a client base, it was imperative that they understand how to interact with those that they would eventually hire for key positions. This enabled them to develop the language and assessment skills necessary for evaluating their own, as well as their peers’ and competitors’, performance.

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Strategic planning is an intellectual process where the greatest risk is convincing the author that all is on track; strategic thinking is an instinctual process that requires ongoing evaluation of decisions and continual readjustment. Strategic planning is like a road trip with a map in hand; strategic thinking is more like sailing, where an ability to remain consistently in tune with changing elements is essential for arriving at the destination.

Though the elements necessary to the writing of a business plan can be found in many books, the ability to actually develop one requires years of tactile experience. These are skills acquired in the field and sometimes the best teacher is failure itself. The ability to translate a negative experience into one that adds to the wisdom and insight of a professional is an important one. I took the challenge of working with a failing market; this was Boston in the late 80’s. It was at this time that I established a practice that focused primarily on firms in transition. This included emerging companies, mergers, and dissolutions. It was a transitional market with many firms in great need of support. The lessons gleaned from that experience have been universally beneficial to me.

It takes an entrepreneurial heart to bear the risk of a new venture. More than anything, it takes logical processing of the risks and benefits and then, most importantly, a plan for overcoming the obstacles.

I have said all of this to make a point; value collaboration with those who have lived the process. Recognize strategic thinkers and find ways to engage them in your enterprise. Don’t make the mistake of executing a textbook exercise. Sometimes your most valuable players are very different than you might have imagined them to be. Acknowledge experience, but prize instinct. Become an expert in collaboration. Together great things will happen.

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