Are Mergers the Answer?

Is this necessarily a merger strategy or do you think companies can do it alone?

Well, the funny thing is if you ask 10 companies, you'll get 10 different answers. I'm not convinced that scale is the answer. Strictly from a financial standpoint, if you go back over the last 10 or 15 years and look at whether companies that have merged have returned greater value to their shareholders than those that have remained independent, I think the data would say that the companies that have remained independent are at least as financially viable, if not more so than the ones that merged.

Now there's a bit of a chicken-and-an-egg situation there, because in some cases the companies that merged probably merged because there was some sort of inherent financial weakness. But mergers clearly have not been a panacea. You can't point at all the mergers that have been done and say, "Well, gee, this has been the answer to whatever the challenges are for the pharmaceutical industry."

I'm also not convinced that mergers in and of themselves are an aid to innovation. In some ways, the bigger organizations are harder to manage than smaller ones and less nimble than smaller ones. So I think one of the challenges is this: How can you use technology to give the kind of scope and scale that perhaps you would also get through a merger, but retain the kind of nimbleness that some smaller companies have?

Resource Library:

And your answer?

My answer is that smaller is better. Bigger helps in some situations, but companies that attempt to remain independent, I think, are going to be the winners.

You take the view that project management can help speed time to market.

One of the erroneous views that is held is that if you put all this project management discipline in place, somehow you're going to slow projects down.

I disagree. The one thing I have to do is make sure I'm doing the right things, and that's what portfolio management is about. The other thing I have to do is make sure I'm doing them right, and that's what project management is about. And by doing the job right, in fact, we are able to deliver more quickly.

But the more important thing is that we deliver within budget, and even more important than that, in an industry like ours that is heavily regulated, is that we deliver with the appropriate measure of quality. If we deliver a system or business capability and it is somehow flawed or it somehow does not stand up to regulatory scrutiny, we simply cannot use it. And so what this effort was about was not just to address the time dimension but the cost and quality dimensions as well.

We went out and did an RFP and looked at a number of project management service providers. We partnered with a group internally that is really our internal training organization for Bristol-Meyers Squibb called the Productivity Development Center. We worked with Boston University to create lectures delivered by several of us Bristol-Meyers Squibb executives that became part of the management training course itself, so that we're delivering this course in a way that meets our needs. I and some of my colleagues go into the course, do sessions on negotiation, risk management, conflict management—all of which are part of effective project management.

We have now been through five training sessions, and we will have about 120 people who have gone through this training. And what we have done is target this toward people in our information technology and information management organizations who have significant project management or program management responsibilities.

As a result, we've built a whole cadre of people who have the same set of techniques, who have the same vocabulary, who have the same set of forms and processes that they follow for project management, so it has given us a tremendous amount of flexibility as well in terms of moving people around and knowing that they're going to be effective when they hit the ground.

How much of this kind of thinking was initiated during the days of Y2K? Project management offices set up to tackle that problem are, in many cases, being used to bring more discipline to projects of all kinds.

What I'm talking about certainly builds on that. What I think we were struggling with as a firm is that we didn't have just one flavor of program or project management. We were a little like Hallmark cards, you know, we had one of these for every occasion. And what we needed to do was standardize some of the good work that had been inside. It's always easier to go through that standardization process if you're bringing people in from the outside who are experts in the process and who bring instant credibility.

Now we have quarterly portfolio reviews, and we measure whether projects are on budget, whether projects are delivering on time, and then we have quality standards and quality reviews. Every single project that we do has a budget that is funded by a business area, and if the perception is that they are not getting value for that investment, they simply stop making it.

One of the sort of secondary criteria for success for the work that we are doing is that our business colleagues have been willing to fund projects much more aggressively and at much higher levels than before. And the reason they're willing to do that is because, first, IT works in close partnership with the business and, second, we make the commitment to the business side in terms of the timeframe in which we'll deliver, the cost at which we will deliver, and the quality of our delivery, and we meet or exceed those targets.

And as long as we continue to meet or exceed those commitments, what we find is people are willing to make investments. If we weren't doing those kinds of things, they wouldn't make those investments.

If you're doing your projects on time and on budget and the quality is good, what's the significance of that competitively? Does that mean you can get new drugs to market quicker?

Sure. Every major initiative that we have under way right now has a set of business metrics associated with it that deal with one or all of the following: They deal with capacity, meaning how many drugs can we discover and develop simultaneously with our budgets in the work force we have available to us; speed, meaning how long does it take us to identify new compounds that perhaps we want to take into testing, how long does it take us to take those drugs all the way through human testing and then to file them with regulatory agencies; and then the third is quality—are we bringing forward potential new drugs that are going to be of sufficient quality that they're going to, in essence, meet a significant unmet medical need and, thus, hopefully be financially advantageous to us as well?

Every major initiative that we're working on now has its own set of business metrics associated with it. Now, because these are relatively complex, relatively large, multigeographic, multifunctional initiatives in many cases, they are not going to be successful unless we're dealing with the three dimensions of people—meaning, are we organized correctly to deliver that business value, do people have the right skills to deliver that business value, and are they trained appropriately in the processes that they use in order to deliver that business value.

Next is process, meaning, do we have a well-defined and standardized set of activities that support the process, whether it's drug discovery, drug development, manufacturing, what our sales people do in the field? And then when those processes are codified, do we have a set of technologies that support the efficient and effective execution of those processes?

By making sure we are delivering the technology on budget, on schedule, with the right level of quality, then we contribute to the realization of those business objectives. We have some thoroughly aggressive objectives in terms of reduction of cycle time in our clinical development area, increase in capacity of our research groups and effectiveness of our sales force out in the field. Again, everything we do has to support those business objectives.

But the only way those things could happen is if we were putting the technology in place that made those processes executable and enabled the people to work the way they need to work.