Vas Narasimhan is not your typical CEO, having started his career in public health, where he became passionate about how to impact health on a large scale. Now, many years later and as the CEO of Novartis, his passion remains undiminished. The impact the company is having on patients is remarkable, be it with “miraculous” treatments that cure children of deadly diseases with one pill, or with the Novartis Access program.
In the second half of my interview with him, we talk about some of the changes underway in Novartis, such as how AI is being used to overcome organizational biases, the importance of both big “P” and small “p” purpose in an organization of 125,000 associates, of whom over 50 percent are millennials, and the 5 year cultural transformation the company has embarked on.
Vas, very nice to meet you. Let’s start with what led you to choose this career path.
I started out in the world of public health. I had studied medicine. I worked extensively at that time in Africa, in Latin America, with some great public health luminaries, people like Paul Farmer, Jim Kim amongst others, and I got very passionate about how to impact health on a large scale. That included time in Botswana. I had the opportunity to work on the first antiretroviral treatment program in 2001. I worked on malaria control, multidrug resistant tuberculosis. All of it showed me the power of technology to impact health on a large scale because, in the end, these were all ultimately about finding new medicines, new innovations, and trying to get them to large numbers of people. So then there was a moment in time where the question was, ‘Do I go into clinical medicine or do I try to take the path of leadership?’, and I decided at that moment probably against the advice of many wise people to go down the path of leadership. So, I took a detour out of public health into the business world and then the rest sort of took hold from there and I’ve ended up now being CEO of a great company.
And so that was when you made that decision?
I’d say 2003 or 2004.
And then for a lot of your time at Novartis you’ve been running the R&D activities where, I think, the company spends 10 billion a year?
9 to 10 billion.
Which is a big proportion, bigger than some of your peers, I guess?
Yeah, and the company’s legacy is an R&D based company, very committed deeply to innovation. We’ve generally always invested more than 20% of our innovative medicine sales in R&D. I’ve had the opportunity to work in R&D across the enterprise. So, in vaccines is where a lot of my background is, in vaccines R&D, but then also in Sandoz and our Biosimilars R&D and then also running our product development for all of Novartis Pharmaceuticals, so all of them gave me different perspectives certainly in innovation.
So, that kind of number, it’s hugely complex the targets you’re going after. Hundreds of thousands, I’d imagine, of projects. Warren Buffett says the number one job of a CEO is to allocate capital effectively, so how do you and your team…what gives you confidence that you’re allocating that kind of money into the right things?
R&D in our industry, I think it’s underappreciated how hard it is to do the work that we do. I always tell our teams it’s a miracle if we find any medicines at all. I always try to think about it, we try to unpack 4 billion years of evolution and try to find a single molecule that’s going to impact these complex systems that developed over these billions of years, and a human body is estimated to be 36 trillion cells, one cell has 100 trillion molecules, so this is really complex.
So, I won’t sit here and tell you we’ve got some magic algorithm to figure this out but what we try to do is take a risk-based approach where we have, of course, through all the various stage gates we look at whether it’s first coming into man or even an earlier stage, in animal studies, all the way through late-stage development. What I think we’ve learned is we have to try to quantitate the uncertainty of every one of these projects. Look at those numbers with open eyes, ask ourselves are we actually going to change the practice of medicine as in the standard of care, and then make the tough decisions. I would say over the last decade we’ve increasingly made the bar higher, probably stopped more projects in that effort to try to improve the returns we have in R&D and that is a challenge in our industry to keep showing we can find the next wave of medicines and do it in a more efficient way. The other element of allocating capital in R&D, in my mind, is not just selecting the right projects but also making the operations far more efficient, and one of the things we try to do at Novartis is invest heavily in technology including artificial intelligence in the actual operations of clinical trials to see if we can reduce the cost of every one of these medicines that we’re trying to develop and hopefully, by doing both of those things we can get to a better equation.
Over at Syngenta there were people who would be working on molecules that would never make it to market and they might never have worked on something that actually found itself on the market, and I guess it’s the same here. You’ve got 24,000 people in R&D?
Something like that and if you think about it, a fraction of the molecules our scientists work on get into a human being. Of the ones that get into a human being, only 5-10 will ever get all the way to the end of the development process. So, if you take all of that together, yes, the odds are, if you’re a research scientist, you’re not going to work on a medicine that’s going to actually get to a human being, so motivating in that environment-
Well, that was my question. How do you do that? How do you maintain that level of curiosity? And we’ll get to the change piece in a minute, but what does that look like?
I think what’s interesting to me is the passion in general in our company for helping other companies in our industry, just to impact human health, is so strong that most scientists in our company, I think, they’re humble in the face of those odds but still very ambitious in believing they can come up with something bold, and I think one of the key things is they have to believe we’re a company that will be consistently investing if they do find one of those breakthroughs. I think one thing we’re proud about is we’re willing to take bold bets whether it’s cell therapies or gene therapies, or transforming difficult conditions in cardiovascular disease or oncology, we’re willing to take the bold bets and because they know if they find something, we will make the bold bet, I think that gives them hope. But I think it is hard to fail 100 times to get maybe the one chance to have a huge impact.
I think you talked about the discipline with which you apply the criteria. That’s part of the success because it’s always been talked about in the industry as a strong portfolio. You’ve now got, I think, ten blockbusters coming out in the next two years?
Yeah, hopefully, ten and then we have 26 potential blockbusters in the late stage portfolio, so quite fast.
And many of those are based on decisions made a decade ago, I guess?
Yeah from a science standpoint a decade ago, from a development standpoint about 3 to 5 years ago.
What are some of the common misconceptions about innovation in the industry? Lots of people talk about the eureka moments. I’m just curious as to what you find yourself having to explain to people to address these misperceptions?
I think a couple of things. I come back again to how hard it is. One of my favorite stats is that if you look at the FDA in the United States, they’ve only approved 1500 new molecular entities in the entire history of the FDA over the last 100 years and if you account for the fact that many of those are in the same class of drugs and not really a breakthrough, my guess is there’s probably fewer than a thousand we’ve ever found, and then many of those probably weren’t that efficacious, so if you do all of those cuts – it’s on my list of things one day to do that – you have only a handful of significant medicines we’ve found. So, one, it’s really hard. Second is the importance of serendipity. In the end, despite lots of smart people and lots of our efforts to understand human biology there is a fair amount of serendipity that we happen upon a finding and in my mind, it’s incredibly important that you’re open to serendipity when you see it and not just say, ‘It doesn’t fit into my model, therefore, I’m going to reject the finding.’ I think the third is the importance of people. In the end, it’s such a complex task to find a new medicine. I often find myself looking into the eyes of our researchers, our development people saying, ‘These are individuals who have a track record of having the drug hunter’s mindset.’ They can smell a drug and when I see those individuals tell me, ‘Look, I think there’s something here,’ you have to listen and you have to follow those instincts because it is such a complex task that you have to rely on great people who have great instincts otherwise you’re going to miss something big , and I think we’ve been able to collect people. One of the things I’m very proud of that we have very long tenures in our R&D organization and people stay at Novartis. They accumulate lots of experience and then you have to trust those people, unleash their energy, and go with their instincts.
And we come back to the challenge of organizational change in the future, reimagining medicine, which is how you talk about the new strategy or the evolution of strategy. What does that actually mean?
We try to switch more now than ever into what I like to think of as a focused medicines company powered by data science, and by these new advanced therapies and breakthrough innovation. Reimagining medicine in my mind is to keep re-imagining the standard of care for all of these conditions. It comes back to, can we achieve a new standard for treatment in many of the most burdensome diseases on the planet? It also means reimagining what is a medicine and that’s becoming an increasingly big part of the story. If you think about it, for the first 50 to 100 years of this industry we all thought it was primarily chemical, small molecules, then we believed that moved on and we thought large molecules, antibodies, and actually interestingly, when antibodies first came out most people thought those companies were crazy. Now, they’re the largest medicines in the world, those monoclonal antibodies, and this is really over a 25-year period. Now, we enter a world where we can take human cells and reprogram them, put them back into the body and dramatically impact disease, sometimes cure it, we can insert genes into children and hopefully, cure some pretty terrible conditions.
This is leukemia?
So, one is leukemia. Our cell therapy would be in leukemia, our gene therapy would be in a condition called SMA but likely many others using similar technology. We’re entering a world where people are certainly exploring things like xenotransplantation, can we grow human organs in animals or in vitro and then solve the transplantation problem? So, you have all these new ways. We’re thinking about what is a therapeutic, even a digital therapeutic? We launched with our collaborator Pear the first FDA approved digital therapeutic which is actually just an app and the app is the drug so to speak. So, I think reimagining medicine also now is increasingly reimagining how do we impact disease?
Can we now move to market access because I know that’s a topic that you’re very passionate about and in the past you’ve worked in some medical hotspots if you can say that, and I’m just really interested, 2 billion people without access to medicines, and I think the company supplies products to about a billion people for Novartis. So, we talked about it earlier on, these are the non-consumers to use a Clayton Christensen term. How are you thinking about market access and how’s that evolved over time, the way to think about this?
It’s really been an evolution and I think that’s the important part of the story. For much of Novartis’ history, a lot of this was done through drug donations, also donations of other things. Novartis was a pioneer. Ciba was a pioneer in DDT which was one of the technologies that enabled many parts of the world to live malaria-free, but it was really about drug donation. One of our biggest donation programs started in the 1980s for leprosy medications, so we started out thinking about donations, then in about 2000 with our introduction of the first new combination for malaria, a drug called Coartem which now is, I think, one of the most if not probably the most widely used malaria medicine in the world, we moved to a model where we sell at cost and invest in the infrastructure to actually get the medicines to the people who most need them. So, this was a switch for us and over the last 15 to 20 years we’ve now almost reached a billion patients with Coartem. Then our evolution went to another step and we said, ‘That’s not enough. How do we actually build local communities’ capacity to take on medicine?’ So, we started a project called Novartis Social Business. This involved reaching about 40 million people through village health workers where really it’s bottom-up, trying to build a capacity for people to use to get diagnosed and then use very basic medicines, hypertension diabetes etc. That took about a decade but eventually got to break even as a sort of social business. Along the way, we also launched a program called Novartis Access to get medicines to patients around the world who needed non-communicable disease medicines but again these were older medicines. So, if you think about it we go from donations to starting to invest then to really investing, but the theme throughout all that time is that new innovations were not coming, and the big step we took last year was to say, ‘That’s not enough.’ Our mandate now as a company has to be, ‘How do we find ways to get our newest innovations to the bottom of the pyramid much, much faster?’ We set a goal for within the year. That’s, of course, ambitious, but we now ask every launch team to come forward and tell us how are we going to approach this problem. Right now, we have over 100 brands now launched with our emerging market brands program which gets these innovations to patients. That’s a huge focus now, how can we say a new medicine, like Entresto medicine for heart failure – we actually did pretty well, we got it into sub-Saharan Africa within two years of launch – for each new innovation, how are we going to get there? And a big part of that story is going to be how do we support health care systems to be built up to tackle some of these non-communicable diseases? That is what I see is the next wave in Access for us.
You’d need to be very patient to do this kind of work, of course, and I suppose you’d need a different skill set as well because it’s not just about coming up with a new product. What does that look like from a resource allocation perspective in the company?
Yeah, we commit a lot of resources I think relatively speaking on the R&D side, hundreds of millions of dollars for tropical medicine but from an access standpoint, we also are investing a lot in healthcare infrastructure locally. I think what we can do realistically is do catalytic investments. So, if you think of an example in Kenya, we made early investments into transplantation in Kenya to enable Kenya to build up its capacity to do kidney transplants as a model project. Eventually, the government took that on and scaled it nationally. Some more effort we’re doing now in Ghana in sickle cell disease. Again, we make seed investments to try to help the government do screening for sickle cell disease hoping that that will become a national program. We’re doing that in hypertension, heart failure etc. The challenge for us is we simply don’t have the resources to take on the whole mass of the problem. I think our focus will continue to be these kinds of catalytic model projects and then we have to advocate with the governments that can they really take this on and scale it?
And you’ve also got the generics business as well which enables you to at least keep prices competitive for some of these marketplaces.
Yeah and that will remain. When you think about Novartis Access or many of our other projects, they are our generics portfolio that we really enable access to. What I’m interested in is how do we get the new innovations more rapidly in, so I think the key for us has been the emerging market brand program where we can basically enable some of these brands to be launched at very locally relevant prices in a locally relevant way to try to get uptake more quickly, because if you think about it, if you get new innovations into these countries and get physicians to understand the latest innovation, if you get clinical trials so then there becomes a culture of inquiry, you start to build up students, you start to build up capacity. What I’ve observed, I was recently in Gabon, it was remarkable to see how research investment and bringing new innovations in creates a virtuous cycle where actually, the health care system starts to mature much more quickly, and then you can reach many more patients with even basic care and I think that’s a big opportunity for us.
And potentially you can leapfrog with some of these new technologies. I think you talked about Zipline, you can leapfrog some of these infrastructure jams as well with this sort of thing.
Yeah, Zipline is a great example where the distribution of blood is a huge challenge. I think Rwanda pioneered it where you basically use drones to provide the supply of blood. Zipline now have expanded to Tanzania, now they’ll move to Ghana where they’ll also now distribute medicines and actually, we’re looking to potentially also have some of our Novartis medicines distributed through Zipline. That’s one example. Others are just simple technology to do supply chain management so that any depot in the healthcare system can quickly fly that they’re out of a medicine, a simple thing, but before, that’s unknown and that’s rapidly sent through an online system, so that program was called SMS for Life. We developed it and now deployed it to just allow supply chain management within these systems. I think technology has a big role to play and I think actually, what I expect in the next decade is the startup community in Africa and Asia is going to take on many of these problems which didn’t have a lot of traction for many years and really tackle them at scale. So, that’s one thing we’re investing in, and others are investing in. We invest through startup health as well as our own individual investments to try to invest in entrepreneurs who are taking these things on.
The other end of the spectrum, I think in your recent results you talked about a 5-billion-dollar product, Zolgensma, 5 million dollar product. I’m curious, there’s no judgment here, but how do you reconcile these two positions in the price spectrum if you like?
So, the first thing I’d say is people always ask me, ‘Are you about rare diseases or about highly prevalent diseases?’ and I just say, ‘We’re about improving the human condition,’ and it’s not about how many people have the disease, it’s can we transform the care of this disease? So, yes, we will be probably one of the largest cardiovascular drug makers in the world making hundreds of millions of doses of malaria medicines for hundreds of millions of people, producing 60 billion doses of generic drugs and also, yes, we will also do gene therapies to cure children of deadly diseases. I think we can be both. I think we need to be both if we really want to deliver on our strategy to reimagine medicine. I think from a price standpoint, I think about it as value and in the end, the value that we’ve been able to demonstrate with gene therapies is quite remarkable as a one-time therapy. Now, it does require a paradigm shift in how we think about medicine to come back to reimagining medicine. We’re used to medicines that people take in chronic diseases for decades, pill after pill, month after month, paying for all of that and now suddenly we show up with technology where it’s a single infusion to address the disease, and that change is a whole paradigm shift and we need to get, of course, paid, but then also the system needs to reimburse it. I actually see it more as a fiscal challenge and what we need are new models that allow payments over time but if you look at the cost effectiveness of cures or cost-effectiveness of radically improving patient outcomes, it’s actually quite cost-effective. If you take the example of our cell therapy, Kymriah, the cost-effectiveness analysis suggested it was cost effective particularly because children are cured of their cancer in many instances at $800,000 to $900,000. We priced it at 50%, so 50% of the ‘cost-effective price to society’. The tricky thing here is explaining this and the dialogue. The rationales are all clear to health policymakers and we can explain. I think, obviously, to the public, to explain is one of the challenges I have to tackle.
Yeah, and from a personal point we had a fantastic experience with Novartis products, and it is genuinely transformative for our life, actually, and until you’ve sat in that seat or experienced that it’s very difficult to fully understand what you’re saying because people jump to the sticker shock without fully understanding the context of it.
It’s interesting in the case of SMA, we get letters from patients who had their children’s lives transformed by this single infusion. Many of them want to join Novartis, many of them join the company actually because they want to be part of that journey because they actually see the miracle of being told their child might surely die, having a single infusion of a medicine, and suddenly their child is developing normally. I mean, that is truly miraculous.
Extraordinary. Can we move to a more prosaic subject, AI? You’re obviously investing a lot of resource in this. One of the things that struck me, I think I heard you saying that the hype’s there but you’re forecasting, for instance, is improved by AI and you said the reason being that it doesn’t have biases. I’m interested in this area of bias. How big a problem are biases in a company like Novartis? What are the biggest ones that you find yourself tackling?
The potential for human bias is quite significant just because of underlying human motivations. So, if you take the example of predicting sales, every single individual, from our most local brand manager up through the country, region, all have, of course, an incentive to manage expectations, or not overcommit, or see risk in a certain way, and that all introduces biases into the forecast. So, when you have lots of people doing that, that builds up and then you have a pretty significant bias. What’s interesting with AI, particularly in instances where you can create a really clean learning dataset, and I think one of the keys with AI as experts know is AI can introduce biases, it can propagate the biases if you’re not careful. I think the nice thing in sales is for many of our products we have 5 years or 10 years of data that’s very well cleaned and in general, a post-product launch period, AI is pretty good at predicting where the sales are going to go based on trends that it’s seeing. So, that’s what we’ve seen. Another area where we again tried to do this is in our operations in clinical trials. A classic challenge we have is a team will come and say we believe our trial is going to enroll on time. You look at the enrollment curve, hard to judge, right, because it’s a two to three year endeavor, very complex, countries all over the world and you can’t tell, so now we’ve built a system called Sense that looks and predicts for all of our 550 clinical trials in the 50 plus countries we operate, will the trial enroll or not? And so, the great conversation happens with the team coming in, and the algorithm is saying this, and the team is saying this, and we can explore where are the differences in opinion and decide do we need to take action? Because in the end, we tend to be over-optimistic in that case. So, in the case of sales we tend to be pessimistic, in trials we tend to be over-optimistic, so these are the kinds of biases I think AI can give us a lot of insight. One area I’m very interested in is in our supply chain. So, can we actually use AI in a very complex global supply chain to better predict where really is demand, where do we really need to build up inventories, and get much, much smarter. We’re a company with $5 to $6 billion dollars of inventory that’s just in the system. If we got even a little bit more efficient at looking at that, that has a big return financially for the company. So, these are the places where I think AI has a lot of power to take out bias but there are other places where there are significant limitations as well, so I think you have to look at both sides.
You touched on the R&D heritage of the company going back many, many years, and within that body of knowledge, I guess there’s a level of ‘not-invented-here syndrome’ and I’m curious about how do you go after that? How do you overcome that for instance?
I think on multiple dimensions we’re working on AI and research and how it can help us find new molecules and where there’s great traction, I think, for us right now but we still have to see if it’ll pay off is, can we mine large clinical data sets? Because we run a huge number of trials to find either new patient populations, new drug targets etc. Where we have to be humble about this is, again, the training data set is not that strong. We don’t understand actually that much about how the human body functions, so there’s a lot of chance for a kind of spurious hypotheses to be generated but we’ve seen enough examples where we think that that’s got a lot of potential. However, I don’t think it’s going to suddenly solve drug discovery. I think many companies are out there perhaps saying that AI can just eliminate the need and suddenly we’ll be fine. I don’t believe that to be the case because the systems are just so complex. There is a bias of ‘not-invented-here syndrome’ I think particularly in companies that have a long R&D history. One of the things we have to keep reminding our researchers, and we don’t have any magic around this, we just have to keep saying, ‘We’re agnostic as to whether or not the innovation comes inside or outside,’ and we have to just find ways to get the next wave of medicines to patients in the areas we work in. Easier said than done. Huge bias and unfortunately, there is no, yet that I know, AI algorithm that helps us solve that challenge. In the end, there are a lot of emotions, a lot of cajoling I guess to try to get people to be open to external and internal innovation.
So, that gets us into the big topic of culture transformation and there are three words associated with it, being curious, inspired, unbossed. Can we talk about each of those and how did you land on those three words as well? And I should say I’m an anthropologist so I’m really interested in this area.
One of the works that had a huge impact on me was Daniel Pink’s Drive in 2009, and what Daniel Pink talks about is, in the end, human beings – and I believe this just intuitively – are ultimately motivated by purpose, autonomy, and mastery. A sense of purpose that you’re part of something bigger and trying to move something bigger as part of this great human project, autonomy, a sense that you can be self-directed, and mastery, a sense that you can learn and grow in your role and that in the end, you have to pay people enough to take money off the table but money will not actually motivate a knowledge organization. So, that stuck with me, and as I led different organizations at the company, I tried to put that into practice as best I could believing that this was the kind of right way forward. So, when I became CEO, I had that in the back of my mind and we as a team sort of asked ourselves, ‘So, maybe not those words. What really, really speaks to us?’ and so I think inspired is inspired by a purpose to reimagine medicine. We want our associates to come to work every day and feel inspired about their work. One of the important nuances there is, and Dan Pink talks about this now, is there’s ‘big P’ purpose and ‘little P’ purpose. I think the ‘big P’ is reimagine medicine and cure and impact disease, but for most of the 125,000 associates you also need to connect that down to a ‘little P’ purpose of, ‘If I do my job really well in product safety, I make our product safer for a child or for a patient,’ and I’ve learned that you have to connect both to really have the impact, so that’s kind of on the purpose dimension. We’re very fortunate because we have the purpose in spades, I think, here.
But making the connection between the individual and the bigger purpose is a challenge for some I guess?
It is and we have to keep trying to link a vast company. If you’re in business services and you’re working on payroll processing, how do you link back up to the purpose? I think that’s, of course, a challenge for every one of our leaders. I think emotionally everyone immediately gets connected to the idea that we’re part of this effort to reimagine medicine but then making it real every day is something we’re working on. When I think about curiosity, that really came from the sense of mastery, the growth mindset. If you think about the work that’s been done on how do we create a growth mindset in companies, that was something I felt like was very important because if we were going to be great innovators in every part of the organization we needed a lot more curiosity about the external world, about what one another are thinking, how can we improve and less of the feeling that we have all the answers. I think Microsoft has done this well with their switch from the ‘know it all’ culture to the ‘learn it all’ culture and I think a similar thing is what we need at Novartis, a much, much bigger focus on curiosity.
And how does that look? What are the things that leaders need to stop doing? Because the company has been a machine for generating CEOs, some amazing CEOs have come through the company, and it’s a performance ridden company as well, and I’m just curious as to how do you bring curiosity into that mix because it has worked pretty well to date?
It has. I think we entered an era where there’s a lot more complexity and competition, so I think having a much more open mind is going to be pretty critical. The biggest thing is I find is reprogramming leaders as to what is their role, and that’ll get to unboss in a second, but if a leader takes the view that the role is to get the best ideas out of the room and not have the answer but find the answer in the room or in the environment, that’s the expectation and moving that, and I’ve been in the company since 2005, it used to be you needed to show up and have all the answers and now, we try to encourage teams to really understand. Actually, we know that there is often no right answer. We have to navigate in the ambiguities but also, I think just symbols, and one of the big symbols we’re focusing a lot on is learning. We’re basically trying to say how do we create a learning environment, invest more in learning programs, invest more in massive online learning. We had a big launch of a digital, as we go big on data and digital, a digital platform to just say we want every single associate to have the opportunity to learn about what is all this data digital, what do these words even mean? And it was incredible to see the response. We had, I think, 30,000 associates show up on the platform to start earning badges on their own time to just get smarter about data and digital and we have, I think, thousands now that are, I forget the name, like super, have earned the kind of highest levels, the top status on these badges and they do it on their own. There’s no measurement, there’s no tracking. There actually is no reward other than the self-reward of learning and growth but having seen that now we want to apply that on a bigger scale. So, I think a huge dividend if you actually invest in people’s opportunities is to be curious. Now, on the third, the kind of autonomy, servant leader, unboss was an interesting story. I had a book left from one of my coaches and facilitators on my desk about a week after I was named CEO and it just said, Unboss, and the book was written by Lars Kolind, coordinated by Lars Kolind but it was kind of a crowdsourced book from various leadership thinkers around the world, and the book really nicely describes the concept of servant leaders, and accountable associates, and owners, and how do you create this in a company. So, we thought about how we could use words like servant leader or empowerment but everybody kind of rolls their eyes when they hear that, but it was interesting, using the word unboss started a massive conversation in this company because it’s kind of a strange word. ‘Does that mean we don’t need bosses?’ or ‘What is an unboss?’ and ‘What is he even talking about?’, and it created I think… I mean, if you go to any spot in Novartis they’ve heard about unboss. They’re talking about it, they’re debating it, and in my mind just the fact we talk about it and debate, ‘How do we lead?’, and ‘How do associates show up at the company?’ was already a huge victory because it wasn’t even a conversation before. Now, the hard work begins of how to teach people what we expect from unboss leaders. That’s hard. Also, I’m learning what’s important is teaching our associates to say, suddenly in a world where they’re used to be waiting to be told what to do, now we’re saying, ‘Here’s the goal, here’s the objective, this is what we want to accomplish. I’m here to remove obstacles for you, good luck.’ That sometimes leads to paralysis. That was not how it worked for the last 20 years, so now what do I do? And that’s having, also, an important element, as important as how the leaders behave is also how our people really take on this new accountability we’re giving them. So, it’s a journey. We’re year one in, I’d say we’re in the start but that’s kind of how we got to the three words.
And what does it mean for you as a leader? What have you stopped doing and what have you started doing?
I think a lot of it came down to there was such a premium, at least in old leadership theory, that the leader is the one who walks in the room and knows the answer, who gives the direction, tells everybody what to do, gives everybody the marching orders and leaves the room, and this is the kind of model of a great leader, and that was built up from the days of Frederick Taylor in the 1920s and 1930s up through today. Now, I think that model of leadership frankly is really old. It goes back to the Tao Te Ching 2500 years ago and the thing about servant leaders is to actually walk in the room and ask open-ended questions, to actually rely on your people to do the work and say, ‘You are here to remove obstacles, you’re going to ask the questions.’ One of the big things in my role, I’ve realized, is you have to have tremendous clarity though on direction and clarity, on where do we want to go and what do we want to accomplish? Because without that this unboss doesn’t work. It just creates anarchy, chaos, but if you have that clarity of the direction, clarity on your priorities, clarity on where you want to go, you create that framework. It’s kind of like, as one of my colleagues said, you kind of paint the lines on the tennis court and say, ‘Let people play. This is the lines of the tennis court, this is what we want to accomplish, but just play now. I’m just going to sit back and if you need my coaching I’m here to help but I’m not going to sit here and try to micromanage and do the work for you,’ and that was the learning for me. I think I started that journey about 10 years ago and it’s very uncomfortable at first because you feel like you lose control, but what I’ve observed is organizations outperform in those settings, as long as you keep bringing them back to the why, and where is the strategic direction we’re heading? So, that’s how I try to run our leadership team at the top and then hopefully, flows down through the company.
And 50% of the company are millennials now. How do you think they’re feeling the new strategy now? How do you think they’re experiencing it, or how would you like them to?
I think many of them are very excited. I think they like the concept of unboss, they like the culture change we’re on. I think as important as the culture change, they also like the symbols of us really showing what do we stand for. So, things like the access principles I talked about. That shows that we talk about having a purpose and then we’re really trying to act on it, or commitments to malaria and leprosy, or our commitments to carbon neutrality in the environment or equal pay with the United Nations, or things like LGBTI workforce rights. All of these elements sort of create a surround sound of almost proof points that the company is really here to stand for something that matters because I think that’s very important for this next generation of the workforce. So, that’s been incredibly important. I think one of the things though that’s also clear is there’s impatience about making the change happen and I have to keep trying to remind everyone that again, in companies where we’re sitting today in some form or another, 250 years, it’s a long journey. Many leaders in this company have been hugely successful with a very different model of leadership and it’s not like a light switch that you just flip and suddenly everybody changes how they lead. So, this is a long journey and that’s, I think, the biggest challenge with our younger workforce is they love the direction, they love the symbols, they want it to happen, it can’t happen fast enough, and you have to just remind everyone that it takes time.
I think you said five years, right?
That’s the benchmark I’ve put out. There’s no science to that though, it’s just an arbitrary number.
Well it would be bad probably declaring too soon as well, right?
Yeah, and that you really have to protect against because you can feel very good as a leader standing in front of town halls, in front of lots of cheering crowds but, of course, you’re having the subset of people at a huge organization who are bought in. There’s a group of people who are probably still not showing up, sitting at their desk saying, ‘This is all crazy nonsense,’ or ‘I don’t agree,’ or ‘This isn’t actually changing anything for me,’ and I think you’re always going to have that in a huge company like this but hopefully, we get to the point where 70% to 80% really believe that it’s a very different environment.
Yeah, these are echo chambers and you have to be cautious. Let’s just begin to wrap up with diversity because this touches on the curiosity piece. I noticed you recently brought someone in from the outside into procurement from a low margin industry to help you look at your cost base and driving the margin expansion, and I found that kind of interesting because the industry in the past has recruited people from within the industry. How do you think about the topic of diversity? Because I have a definition around cognitive diversity versus gender diversity, I’m just interested in how you think about diversity?
I agree. I think the most important diversity we need to have is diversity of mindset and diversity of experience and of the ability to look at problems in different ways. I think in some ways gender diversity, LGBTI diversity, are all markers of a place that’s open to diverse ideas and creates an environment where anyone can succeed, and so they’re important in that sense but ultimately what we want at an innovation-driven company is diversity of experience and I actually place a huge premium on people who can come from other places and apply, laterally, knowledge they’ve developed someplace else in here. If you think about our Head of Novartis Business Services comes from Syngenta, I think a much lower margin business than ours. Our Head of Procurement comes from Adidas and again a different mindset. Our Head of Ethics, Risk and Compliance comes from Siemens. Our Chief Digital Officer comes from Consumer and also earlier than that, Amazon, and so you try to bring in these individuals to really challenge our thinking and I think it’s quite remarkable to see, at least for me as the leader, when I see how they look at something that we’ve looked at for a decade and we have a kind of group think around it and then they come in and say, ‘What are you guys thinking? There’s actually a whole other way to look at this problem’, it shows you the power of actually having that diversity of minds. One of the most important things though I think comes back to leadership. The diversity in perspective and diversity in all dimensions only matters if the leader leverages that diversity, has an openness to ask the questions and runs the team in a way, again, servant leader unboss to actually get the best ideas out of the room. If you flip back into the old-style Novartis leadership where the leader just shows up and says, ‘I have the answers,’ you can frankly have robots in the room, it’s just following orders, and so that’s very important to leverage diversity.
And within that I guess, you touched on learning, it’s been written there are two barriers to learning. One is ego, you touched on humility, and the other is fear and I guess the diversity model that you outlined only really works or is powered up by creating a safe environment for people to ask questions that might appear to be ignorant and potentially make mistakes as well.
We’ve done a lot of discussions here internally on psychological safety, Amy Edmondson’s terminology, and creating these safe environments. I love these leadership thinkers. Simon Sinek would say that the leader’s role is to make people feel safe and that’s when people run through walls for the leader regardless of the setting. We have a long way to go in that dimension. I think there’s still a perception, fair enough, that there’s a lot of judgment inside the company and that if you challenge, or ask a question, or admit vulnerability or not knowing the answer that there would be a judgment passed as opposed to feeling safe to say that’s an opportunity to grow and learn. Something we’re working on. I think it will take time, we have to go step by step. So, we work on our top 300 leaders in a much more deep way on self-awareness on these topics, then we’re going to get to the top 1000, the top 2000 and I hope over time it builds a momentum, but I think to have leverage diversity you do need the safety to have open discussions.
Yeah, the anthropologist in me thinks about observation without judgment. Are you able to observe something without jumping in to judge or to answer the question? You’ve got to create that space which it sounds like is at the heart of the cultural transformation piece?
I think so. I think there’s the ‘observe without judge’, there’s the task conflict, first personal conflict which is so important. I think far too often task conflict turns into a personal conflict in our settings and I think separating those two out. Also, I think there’s just a fundamental compassion and empathy that you need to have towards other people in your teams, in your organization so everyone here shows up coming to work trying to help, trying to do a good job. We have an organization filled with knowledge workers. I think 99.9% of the people at this company show up every day trying to do a good job and trying to help and if you have that as your mindset as opposed to a more negative mindset on human behavior, you come to different conclusions, I think.
It’s growth versus fixed mindset, isn’t it? Just beginning to wrap up now, Vas, we’ve got a couple more minutes. What have you changed your mind about recently?
Yeah, I change my mind on lots of things on an ongoing basis. One thing that comes to mind in this experience of CEO over the last year, even more so than perhaps I’ve had in the past is the importance of appealing to hearts over minds, and I think you need to do both but there’s a lot written about this concept of logos versus mythos. I would have not believed how much you can inspire and motivate a huge organization by appealing to hearts, words like magic, words like mystery, words like miracles, and I’ve learned over the course of this year that appealing to hearts through language, that really evokes mythos, and actually has a bigger impact than all of the number charts that you can possibly show.
Interesting, interesting. Second question, where do you go to get fresh perspectives to help you solve problems and make decisions?
Yes, I’m a heavy reader of periodicals that have nothing to do with Novartis. I’m kind of a die-hard reader of The Economist, National Geographic, I try to read Nature and Science and always trying to look for where I could learn something – Harvard Business Review, MIT Business Review – and so I’m always trying to look from those periodicals to look for perspectives that are different than mine. I’d also say the other place is interestingly nature. I find that disconnecting from the problems and just spending time either in nature near the rivers or running or walking has the ability to open up the mind to make lateral connections that you wouldn’t otherwise make, so maybe it’s a combination of both of those things that helps.
That’s a common answer from previous guests, just getting out, and just changing their environment and being open to it, and just pausing, and stuff comes at you. Third question, what’s been your most significant failure or low, and what have you learned from it and how have you applied that learning?
I think in my mind, still, we worked on building a vaccines company. I stayed with it the entire time, it was at Novartis from acquisition to ultimately selling it to GSK, and so personally at that moment in time I felt like it was a failure that we weren’t able to make this into such a successful business that Novartis wanted to keep it. So, I remember at that moment feeling like this was in some ways a failure because it was a large effort and I had many leadership roles in that business. I would say what I take from that and learn from that though is one, interestingly those vaccines do extremely well in GSK’s hands and so sometimes you’re not the right owner and you have to have the humility to realize when you’re not the people with the right position but if you do the right things ultimately, good things will happen, and I think the other lesson I learned from that, there was actually a moment in time after that where I had no idea where my career would go and if you had asked me four years from that moment in time would I be CEO of Novartis four years ago I would have said, ‘There’s no way.’ Anyone who would have said that to me I would have said, ‘That is completely crazy,’ and so, I also sort of take a lesson in, again, serendipity and how careers and life work. If you keep trying to go to places where you’re going to learn, grow, and have an impact, things somehow show up.
Wonderful, wonderful. Thank you very much, Vas. This was exactly what I had in mind. Hope you’ve enjoyed the conversation as much as I have.
It was great. I have. Very good. Thank you very much, appreciate it.