Magazine Article | April 1, 2014

Merck Serono's CEO Belén Garijo – Enabling Risk And Refusing To Play It Safe

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By Rob Wright
Follow Me On Twitter @RfwrightLSL

Sitting on the secondlevel balcony of the grand ballroom in the historic New York Waldorf-Astoria, my vantage point provides a bird’s-eye view of the floor below. Today, the room serves as a central meeting place for attendees of the sixteenth BIO CEO and Investor Conference. I wonder aloud to my table guest, Belén Garijo, M.D., as to the uniqueness of being interviewed in this venue. Garijo, president and CEO of Merck Serono, the biopharmaceutical division of Merck KGaA, leans forward and peers over the railing — taking a moment to survey her surroundings. Laughing, she replies, “It’s a theater, right?” in English adorned with a Spanish accent. Gesturing expansively with her hands, she says, “Why do you think this — unique?” revealing a witty side to a personality I would soon discover to be as dynamic as the company she leads. Leaning back in her chair, she smiles, declaring, “It’s fantastic! Probably the most beautiful place I have ever been interviewed.”

A 25+ year industry veteran, Dr. Garijo joined Merck Serono as its COO in 2011. Just two years later she was named president and CEO — an unprecedented move by the $6 billion entity. Despite having more than 15,000 employees and operating in 66 countries, no woman had ever held this high a position of leadership within Merck Serono or even Merck KGaA — the world’s oldest pharmaceutical and chemical company. I asked Garijo to describe how it felt being named CEO. “I feel the responsibility on my shoulders,” she states. “My challenge is to build a team under the new leadership. Make sure they understand the expectations and how we are going to work together.” What about being the first woman CEO at Merck Serono? “I never felt I was developing in any role because I am a woman,” she replies. “I don’t believe in that. I don’t practice that. I prioritize talent versus any other force that may come from politically led initiatives, and expect to be treated the same way.” Her answer is bold. Yet it aligns with the company’s recent penchant for embracing new ways of thinking and making game-changing decisions (e.g., announcing plans to build a new pharmaceutical plant, its second-largest, in Nantong Economical Technological Development Area of Greater Shanghai). Garijo’s approach to changing Merck Serono starts with developing people, enabling risk, leading by example, and most interestingly — refusing to play it safe.

A Risk-Sharing Approach To Developing People
When asked what best prepared her for taking on the position of CEO, Garijo shares a variety of experiences, such as relocating to different areas of the globe or taking responsibility for different therapeutic areas. “At one point I made a firm, irrevocable decision that I wanted to get commercial experience,” she reveals. “But I had no track record. Someone had to give me the chance to show that I could be successful.” In 2002, Garijo was given the chance, or should I say, earned the opportunity, and was appointed Spain’s general manager at Aventis Pharma. However, it is neither the commercial exposure nor the diversity of other experiences to which she attributes being prepared as a leader. Rather, it was the experiences of leaders being willing to take risks on her throughout her career. “There are a number of leaders who are able to trust you more than you trust yourself,” she explains. “When you are given the confidence and realize some leaders are ready to take risks to develop you and help you succeed, you learn this is something you must do if you want the organization to succeed.” This realization resulted in a new philosophy for her as a leader, and it has served as a guide throughout her career. She says if you want to become a better leader, take a risk-sharing approach to developing people.

Such an approach requires being innovative in how you assess talent profiles. For example, don’t get overly enamored of a person’s experience or lack thereof. Instead, Garijo advises to assess potential, as experience can be learned. She uses multiple means to determine potential. The first is what she describes as having a real “gut feeling” for assessing people, the result of her physician training. Another way she assesses potential is through performance. This requires three things — a willingness to take risks, a readiness to share risk, and preparedness to actively mentor. Garijo explains it this way, “When I see potential in leaders lacking experience, I try to see how much responsibility and accountability I can put on them. In this way, I become a mentor.” According to Garijo, the combination of potential and mentoring is extremely powerful, because it creates shared responsibility and shared risk. “In my most recent experience at Merck Serono, I had a person in mind I wanted to serve as the president of Merck Serono Japan.” Garijo is referring to Paris Panayiotopoulos, who at the time did not have any previous Japanese in-country market experience. This fact did not prevent her from seizing the opportunity to implement her risk-sharing approach to developing people. Garijo admits making the move required more than just a willingness to take a risk. It also required trust on the part of company leadership. Panayiotopoulos spent 18 months as the president of Merck Serono Japan. This past November, he was appointed president and managing director of EMD Serono, and will be responsible for driving the strategic direction of the company’s commercial organization in the largest pharmaceutical market it the world — the United States. Garijo is energized by successes such as Panayiotopoulos, and believes others are as well. “When the organization and teams realize how committed you are to giving opportunities for developing people internally, you become much more effective in retaining talent, as well as recruiting people who aspire to really develop and change organizations,” she affirms.

Merck Serono’s CEO leads by example when it comes to developing people. But she can’t do it alone. To make real, lasting, organizational change requires more than championing a philosophy and practicing what you preach. To Garijo, it requires every member of the executive committee being willing to implement a risk-sharing approach of developing people consistently across the organization. “It’s about how much of your own risk you are willing to put in the game,” she says. How do you get people to be willing to take risks? Garijo says stop playing it safe.

My aspiration is to have an organization that is functioning by itself without the leaders having to intervene in each and every decisionmaking step.

Enabling Risk Requires Not Playing It Safe
As Garijo explains her leadership philosophy, she places herself within examples of what not to do and why. For example, “If I position myself in such a way that, no matter what, I have to be safe, protecting and managing my image in such a way that people believe I never make a mistake, then they [members of her leadership team] will never take a risk. This is not how I operate organizations, and this is not the way I want my executive committee to operate this company.” She continues, “It is only through giving opportunities and being prepared to give support, rather than focusing exclusively on yourself, that you succeed in being convincing, succeed in enabling risk, but most importantly, you succeed in making people successful.”

Garijo’s approach to being an enabler of risk starts with active mentoring. This involves more than providing guidance, support, and coaching, but a willingness to recognize your own areas of improvement in front of your employees. For example, Garijo admits one of her developmental opportunities involved communication. “I used to be very aggressive, maybe a bit abrasive at times.” While speaking, she drives her index finger into the table on every other word. The gesture makes an audible “thump” — exemplifying her point. “I saw this in myself. This style doesn’t work when you intend to really influence and build a network.” Garijo recommends when you see someone struggling with something you yourself struggled to overcome, share your past weaknesses and challenges. “This creates credibility,” she affirms. “Which you need to have if you actually want to be listened to.”

But don’t simply operate with reckless abandon. Garijo advises gaining a deep understanding of the level of risk to the organization, as well as the consequences of failing. “You have to find a way to give responsibility and accountability, not be invasive of their space, yet position yourself to challenge the head of R&D or manufacturing as you would any business unit in your organization,” she explains. “To be able to engage in very constructive and active dialogue with diverse business unit leaders, you have to put forth the effort to be educated and have a deep understanding of each business unit, so you can challenge at the required level.” The process does not involve coming to Garijo with a project or problem and expecting her to make the decision. When this has happened she is quick to point out, “This is not the way we work. First, I don’t have all the answers. Second, you are the experts. You have to take me through this.” Garijo’s challenging approach involves asking three questions: What are the scenarios? What are the options? What are your recommendations and why? She advises to keep the conversation going until you feel fully satisfied that you understand what is going to happen beyond just a financial perspective. The process of challenging has multiple benefits beyond just staying educated on the various aspects of your business. It helps everyone anticipate the various risks and understand the consequences of failure. “Once you understand the consequences of failing, you become an active participant in setting that person up for success,” she explains. In addition, Garijo believes this process translates to people having higher accountability. “My aspiration is to have an organization that is functioning by itself without the leaders having to intervene in each and every decision-making step.” Another key to enabling risk — make sure there is alignment between encouraging the risk-taking behavior you want and how employees are assessed.

When I see potential in leaders lacking experience, I try to see how much responsibility and accountability I can put on them. In this way, I become a mentor.

Feeling Risk-Enabled Leads To CEO Sharing Her Passion For Leadership
Weeks prior to my meeting with Garijo, I had put together a list of interview questions. However, none of those questions had anything to do with leadership, enabling risk, or developing people; instead, they focused on executing operational excellence in emerging markets. As it turned out, I didn’t ask even one of my preplanned questions.

Instead, our conversation evolved out of some unscripted “ice breaker” questions around what it feels like to be the first woman to hold such a high position of leadership in this company. I knew this pinnacle might still be fresh in her memory, and frankly, I was curious. I asked similar questions such as, “What’s it feel like becoming a CEO?”

She was plainspoken and candid with her answers, sharing her experiences of first arriving at Merck Serono and implementing the necessary operational initiatives of organizational restructuring, creating strategies, improving financials, and accelerating R&D. Throughout our conversation, though, one underlying theme emerged — people make the difference in how you execute as a leader.

The second part of this story (on page 30) is about one of those people who was fully risk-enabled by Garijo — Annalisa Jenkins, EVP and global head of R&D for Merck Serono.


A Game-Changing Approach To CRO Collaboration

During my face-to-face meeting with Merck Serono’s EVP and global head of R&D, Annalisa Jenkins, I was pleasantly surprised at her candor. She shared with me her opinion as to the state of Merck Serono when she joined the company in 2011, which I found to be most interesting: It was an organization that took a decidedly Euro-centric approach to manufacturing, R&D, and business in general. She said that despite the company conducting business in 60+ countries, the owners and leaders of Merck KGaA recognized that for Merck Serono to truly be a global R&D player it needed more access to global talent and R&D innovation. That would require Jenkins to be willing to make some game-changing decisions. But she also needed a CRO willing to help rewrite the rules of collaboration.

"We were building an innovation model, so we also needed to take feedback from the CROs on how they would build this model."

Annalisa Jenkins
EVP & Global Head of R&D at Merck Serono

Redesigning The Sponsor/CRO Model
In April 2012, Merck Serono announced it was closing the Geneva headquarters of its pharma unit. Jenkins says, “It wasn’t a cost thing, because we placed resources elsewhere,” citing the company now operating four R&D centers — one in each of the four largest global pharmaceutical markets (i.e., Beijing, Boston, EU's Darmstadt, Tokyo). “It was more about achieving a cultural shift and becoming more of a global, culturalembracing type of company.” Around the same time, Jenkins had what some might describe as an "aha" moment. “We had no new drugs from the pipeline for years, we were closing a major R&D hub where many of the company’s studies were being run, and we had a major restructuring and a failing model,” she says. In other words, it was the perfect time for new leadership to do something really innovative and interesting.

The company was working with a multitude of suppliers and providers. According to Jenkins, “We had not applied any good managerial business processes and approaches to clinical study, design, and execution.” At a previous company, she had experienced going from multiple CROs down to three. But questions always lingered as to if that number should be even smaller. With that experience, as well as the belief that the company’s current CRO partnering model was not working, Jenkins decided to change the game. She redesigned the CRO model to be more of a biotech partnership rather than a basic client/ service provider relationship. And most surprisingly, she created a model that included only one CRO. But to do so required a different approach and a new set of rules.

Changing The CRO Collaboration Game
Before this plan could be implemented, Jenkins needed buy-in from her team. She started by challenging them to look closely at their assumptions about CROs. “Let’s assume the ideal CRO has data, information, and knowledge we do not have. It brings specific skill sets to the table that we don’t possess, and it is operating at above traditional benchmarks,” she states. “Then why would we feel we couldn’t construct a partnership with this CRO with a common vision, purpose, and shared goals?” According to Jenkins, when developing this type of collaboration, you also would want to make sure the CRO has a seat at the decision-making table. After gaining internal agreement, her next step was to find a CRO willing to participate in such a different type of collaboration.

Don’t try to take a service model and apply it to a partnership model. It won’t work.

After speaking with some CEOs of pharma companies and CROs, she was convinced that her idea could be the future model of CRO-sponsor relationships. “Many of them were also looking at their own business models and finding much of their work was becoming extremely commoditized, renting CRAs or just data management,” she recalls. In fact, many of the people Jenkins spoke with believe the current serviceprovider model might not be sustainable for the next 10 to 15 years.

Not Your Typical RFP Process
Her next step was to scope out an RFP, inviting all the big companies to bid for a single-source model that would be end-toend — starting at protocol concept all the way through to filing and registration. “The CRO would have to set up its own unit to manage our portfolio,” Jenkins explains. “There would be very high-level governance from the most senior levels of the CRO, and the financial model would incentivize both parties around the common goal.”

The RFP process lasted six months and involved many major outsourcing players. Eventually, two full-day, off-site meetings in Paris were scheduled for the final four potential CROs. According to Jenkins, this was not your typical RFP process. “We wanted it to be collaborative,” she says. “We were building an innovation model, so we also needed to take feedback from the CROs on how they would build this model.” In fact, during the discussions, the CROs frequently needed to be reminded of being willing to share their opinions. But Jenkins says on the Merck Serono side, they too had to change their thinking regarding how an RFP process was supposed to transpire. They had to forget about the traditional “just tell them what to do” model and the notion that there was a hierarchical order. When creating this type of collaboration, Jenkins advises, first and foremost, to ask questions of your CRO partner to find out what they think — don’t just tell them what you know or want.

And The Strategic Partner Is?
On May 15, 2013, Merck Serono announced it had selected Quintiles as its singlesource CRO strategic partner. According to Jenkins, Quintiles was selected for three attributes. “Their scale and scope will give us geographic flexibility. Second, we felt they had a broad volume of experience in the areas in which we are interested — MS, oncology, and immunology. And the third reason was their sophisticated IT informatics systems.” Of course, Quintiles’ willingness to develop a very innovative financial model also played into this decision.

When making such a game-changing move, expect a lengthy transition phase, the result of long industry cycle times and previously signed deals. You’ll need to operate in both the old and new models, which can be difficult since people tend to revert to what is familiar. Jenkins stresses patience during this phase, and to expect that, at first, not everyone (on either side) will fully understand how to operate in the new model.

Measuring The New Model
From the beginning of the collaboration process, both companies agreed on the need for a governance structure equivalent to the type Merck Serono would have with any other pharma or biotech company. To achieve this, Quintiles established a Merck Serono business unit. Merck Serono established a similar unit dedicated to Quintiles. These operating units handle the dayto- day management of the partnership. Above that sits a joint steering committee. “Kathy Ford, who’s my global head of clinical operation, is always on the phone to Paula Brown-Stafford of Quintiles,” Jenkins shares. The final level of the governance involves direct communication between herself and Quintiles CEO, Tom Pike.

In addition to having the right governance, Jenkins has the following advice if you create this type of collaboration. Put the work in up front to set a clear, shared vision, as this will be used by both companies to engage and energize people as to why the new model makes sense. Make sure the company cultures have the potential to come together. According to Jenkins, “Cultures eat strategy for breakfast.” Be brave on the financial incentives between organizations. “I can’t share with you the details of the financial model,” she states, “but both parties are highly incentivized to achieve the common goal.” Set the right expectations internally with your management team using language they understand — don’t give them the expectation that just because a deal has been done everything is going to be nirvana in six months or so. Her final tip: “Don’t try to take a service model and apply it to a partnership model. It won’t work.”

To measure the implementation of this new model, Jenkins has “three biomarkers of success” — operational, people, and financial. “With operational, make sure you measure cycle times throughout the process,” she states. “Start from the beginning protocol concept, to the final stamped protocol, to first patient in, first visit, 30 percent of your sites opened, and so on.” These should be at or above industry benchmarks, and if not, be sure you understand why. “You’ve got to measure the basics,” she says. Jenkins admits the people biomarker of success is more difficult to measure. “We conducted an employee survey at both companies, beginning with the people most heavily engaged in the new model,” she states. This survey focused on employee feelings, behaviors, and culture. Jenkins intends to repeat the survey so they can track this metric throughout the partnership. For the final biomarker, she stresses that you understand the financials of your old model so you can benchmark your starting point. “For example, we have a good understanding of per-patient costs in the old model. Looking at these up front, we can get a pretty good sense if our per-patient costs in the new model look competitive, better, or worse than in the old model,” she explains. But she counsels not to focus too much on costs. “I’m far more interested in timelines and quality.”