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white paper

Strategic Thinking:
Developing Critical Skills for the
Pharmaceutical Leader

by Marybeth Tahar, Senior Consultant


and Chair of the Board, Interaction Associates, Inc.

SAN FRANCISCO BOSTON


Phone 415.343.2600 Phone 617.234.2700
Fax 415.343.2608 Fax 617.234.2727
88 Kearny, 12th floor 625 Mount Auburn Street
San Francisco, CA 94108 Cambridge, MA, 02138
INTRODUCTION
In the high-stakes, high-pressure world of the pharmaceutical industry, the success or
failure of a product and its ability to improve the lives of millions of people depends on
the quality of the decisions made regarding its development and release. Yet, the book
Why Decisions Fail estimates that half of all business decisions are wrong, an alarming
statistic with often costly implications.1

The author of Why Decisions Fail, Ohio State business professor Paul Nutt, reveals in his
research that “managers make the same mistakes over and over again as they formulate
decisions.” Nutt, a consultant to the National Science Foundation and the National Center
for Health Services Research, cites three primary reasons why business decisions fail:
• Managers rush to judgment, jumping on the first solution they consider,
• They misuse their resources, spending their time and money during decision making on the
wrong things, and
• They repeatedly use failure-prone tactics to make decisions.

The implications for the pharmaceutical industry are clear: Leaders need to avoid the
pitfalls of decision making, while still retaining speed and flexibility. Detailed in this
article is a powerful set of Strategic Thinking skills that provide leaders with the knowledge
and confidence to do just that.

We’ll examine:
• What strategic thinking is and isn’t
• Why strategic thinking is vital to making sound business decisions
• How strategic thinking skills are especially critical in the pharmaceutical industry
• How to become a more strategic thinker with nine practical skills

WHAT IS STRATEGIC THINKING?


First, here’s what it’s not: Strategic thinking is not strategic planning. For greater clarity,
let’s parse some terms.

The simplest definition of strategy is what your company needs to do to achieve its
vision and fulfill its mission. Strategic planning, then, is a finite, linear, and multi-
step activity that results in specific plans, tactics, and a timeline for long-term strategy
execution.

Strategic thinking, on the other hand, is the process of considering complex and
ambiguous data in order to reach sound, shared decisions. Inasmuch as strategic

1
Nutt, Paul C. Why Decisions Fail: Avoiding the Blunders and Traps that Lead to Debacles. Berrett-Koehler, 2002.

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planning is a finite activity applied in one context and with one purpose (to pursue
company strategy), strategic thinking is an ongoing, continuous process with discrete
and powerful components that can be applied to many purposes and contexts.
As a skill set for leaders, strategic thinking is required in day-to-day decisions that
present ambiguity, uncertainty, and conflict. Even the most brilliant strategy cannot
succeed without superb execution. And strategic
thinking skills, applied to ever-changing, down-in-the-
trenches challenges, smooth the way for rapid, agile The implications for
execution.
the pharmaceutical
industry are clear:
STRATEGIC THINKING: VITAL IN BUSINESS
The estimate that half of business decisions fail has Leaders need to avoid
added urgency in the world of information overload in
the pitfalls of decision
which most leaders operate today. We are inundated
with knowledge and data, and decisions made amidst this making, while still
complexity are more complicated than ever.
retaining speed and
Strategic thinking is about taking in complex data and flexibility.
making a sound decision. To a large extent, decisions are
often wrong because they aren’t based on the right data.
Frequently, someone organized the data in a way that obscures the facts or misinterprets
the facts. Perhaps they didn’t choose the right variables, or they incorrectly linked cause
and effect. Other times, people look at the facts and simply draw an erroneous conclusion.
False assumptions about future trends or chance events commonly lead to poor decisions.

A lack of Strategic Thinking has an enormous negative impact for the leader and the
organization — including:
• Poor choices—bad decisions that could have been avoided. Great losses of money,
energy, morale, market share.
• Churn—individuals, teams and organizations don’t make choices or make choices that
don’t stick.
• Slow reaction times—individuals and groups don’t make a timely choice, or don’t figure
out that they’ve made a bad choice for a significant period of time.
• Longer decision cycle times, which slows implementation.

STRATEGIC THINKING IN THE PHARMACEUTICAL INDUSTRY


The need for clear, sound decision making is especially important in the pharmaceutical
industry. Drug companies compete in markets characterized by rapid change, constant
innovation, and the need to balance business, medical, scientific, public relations,

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and regulatory pressures. What’s more, like much of the rest of the business world,
pharmaceutical companies compete on a global scale and their leaders are under pressure
to look for growth opportunities beyond their traditional markets. Perhaps most
importantly, the decisions that are made from inception to release of many drugs today
have the potential to impact the quality of life of millions of people worldwide.

In a landmark report titled, Developing Business Leaders for 2010, the Conference Board
cited ten core skills that leaders need to master for success. Cognitive ability was number
one, with strategic thinking a close second — listed ahead of analytical ability, decision
making amidst ambiguity and uncertainty, and a
host of other skills including influence, persuasion,
and delegation. The report found “an environment Even the most brilliant
of extreme cognitive complexity in many industries, strategy cannot
requiring extraordinary strategic thinking skills and the
ability to make high-quality decisions quickly in the succeed without
2
face of competitive pressure and uncertainty.” That
couldn’t be more true in the pharmaceutical industry. superb execution.
And strategic thinking
STRATEGIC THINKING COMPONENTS skills, applied to
Strategic thinking involves nine skills that build
competence and collaborative capability to engage
ever-changing, down-
others in strategic conversations, along with the in-the-trenches
personal awareness to make sound judgments and
decisions. The nine skills are: challenges, smooth
the way for rapid,
Scanning: Accessing a broad range of critical
information that relates to the business decision or issue agile execution.
at hand. As Nutt observed, “A misleading context can
create a frame that illuminates an environment with
cues that will mislead subsequent activity. The search for insightful context is the most
important step in avoiding bad decisions.” 3

Patterning: Organizing information, grasping the essential themes or discovering synergy


among often disparate bits of information in a way that organizes and focuses thinking
and informs choice.

Hypothesis Creation: Rapidly forming beliefs and hypotheses from concrete but sparse
data and drawing conclusions.

2
The Conference Board, Inc., Developing Business Leaders for 2010, New York, NY, 2002.
3
Nutt, Paul C. Making Tough Decisions. Jossey-Bass, 1989.

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Multivariate Analysis: Identifying and balancing many variables simultaneously, seeing
the relationship and cause and effect among them.

Calibrating: Identifying the relative importance and/or urgency of an issue to help


understand the level of resources (time, talent, resources) to devote to it. This is important
for an individual but critical for an organization to have a common view of the time
investment. Correct use of this skill solves the “misuse of resources” problem identified by
Nutt.

Alternative Generation: Identifying multiple paths/ways to address the issue.


Creativity/orthogonal thinking happen here. In deploying this skill, the leader avoids the
rush to judgment that often derails a decision.

Analyzing/Forecasting: Projecting the impacts and subsequent consequences of options


and factoring it into your evaluation. Proper application of this skill will help researchers
select promising candidates for clinical development, avoiding the disastrous economic
consequences of late-stage failures, which account for over 60% of all drug terminations.

Decision Making: Deciding on a particular course of action.

Reframing: Challenging and revising existing conclusions and hypotheses.

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Strategic Thinking provides the foundation for ideas that leaders use to move themselves
and their organizations forward. It is a continuous process/pattern of understanding and
making choices about critical and complex issues. In today’s world, strategic thinking
happens primarily in groups. Therefore, it’s critical to develop leaders’ collaborative
strategic thinking skills.

Strategic thinking provides leaders with important skills to:


• See the forest and the trees.
• Scan for just the right amount of data from the best In the current era
sources to inform decisions.
• Organize data into meaningful patterns.
of rapid change
• Demystify complex situations for others. and unparalleled
• Identify and understand the relationship among opportunity, the
multiple complex variables. Make sound judgments
about cause and effect. sustainable growth
• Create robust, data-based hypotheses and advantage will go to
conclusions. Educate others and build agreement on
those hypotheses and conclusions. the companies whose
• Seek out and enroll key stakeholders strategically in leaders can see
their projects/decisions.
possibilities beyond
• Consider the possible impact of different options
and select a course of action that produces positive the traditional.
results.
• Constantly seek data and reframe hypotheses and
conclusions as necessary without getting stuck in old decisions, beliefs, or paradigms.
• Sit in the middle of a highly complex, ambiguous situation and select a successful
course of action.
• Describe the belief system from which they are operating to identify areas of alignment/
lack of alignment with others.
• Identify and integrate short and long term variables in difficult decisions.

CONCLUSION
There is enormous pressure in business today to be strategic, and yet strategy itself has
a bad reputation. Here’s why: People spend a lot of time creating a strategy, fine-tuning
a plan, and wordsmithing the way forward. The best intentions often break down in
execution, and one of the biggest culprits is a company’s lack of focus. Strategic thinking
offers a clear set of skills for leaders to use to ensure focus and execution.

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In the current era of rapid change and unparalleled opportunity, the sustainable growth
advantage will go to the companies whose leaders can see possibilities beyond the
traditional. Successful pharmaceutical leaders will integrate strategic thinking skills as a
way to innovate despite ambiguity, conflict, and complexity.

ABOUT THE AUTHOR


Marybeth Tahar is Chair of the Board and a Senior Consultant with Interaction
Associates, Inc. She designs and implements training, consulting, and facilitation projects
that support large-scale collaborative change initiatives. Marybeth has worked in the
organizational development field for more than 20 years.

Since joining Interaction Associates in 1986, Ms. Tahar has facilitated strategic planning
sessions for many Fortune 500 companies, and has developed and delivered leadership
development initiatives to thousands of individuals. Her primary client groups are
executives, middle managers, intact work teams, leadership councils, and planning
committees. She is a frequent speaker at such conferences as The Conference Board’s
Leadership Development Conference, Employers of Excellence, and the CLO Symposium.

Prior to joining Interaction Associates, Ms. Tahar worked for Intel Corporation as a
Production Supervisor and Manager of Management Development.

ABOUT INTERACTION ASSOCIATES


Interaction Associates, Inc. is a leading innovator in learning, leadership development,
collaboration and performance improvement solutions for Fortune 1000 companies. The
firm serves global clients and has offices in Cambridge, MA and San Francisco. For nearly
40 years, IA has helped clients build collaborative capability to produce extraordinary
results, improve critical business processes, and create and maintain productive work
relationships. Interaction Associates’ work benefits hundreds of organizations and
hundreds of thousands of individuals around the world.

More information at: http://www.interactionassociates.com

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