Medidata Transformational Change REPORT

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  • TransformaTional ChangeWhaT WorKs anD WhaT Can Doom The iniTiaTiVe

    in assoCiaTion WiTh:

  • ConTenTs

    Transformational leadership: Inspiring change ...........................................................................................2

    Catalysts for change .............................................................................................................................................3

    What does it take to make transformation work? ................................................................................... 5

    Metrics and incentives ......................................................................................................................................... 6

    What can derail a transformation? ..................................................................................................................7

    Types of transformational leadership: Is there a more effective approach? .................................. 8

    Personal transformation: Need to want it ................................................................................................... 9

    Conclusion ..............................................................................................................................................................10

    Acknowledgments................................................................................................................................................ 11

    Survey methodology .......................................................................................................................................... 12

  • 2 | TrANSforMATIoNAl ChANge

    The stakes couldnt be higher. The cost of an unsuccessful business transformation can be catastrophic. Retailers from Borders to Circuit City to the corner hardware store have failed to find footing as the earth shifted beneath them. Steel and textilesindustries once consid-ered too big to failare now a graveyard for once mighty companies in the United States. Even former cutting-edge, high-tech companies such as Kodak that seemed on the cusp of reinventing themselves in the end succumbed to market shifts.

    TransformaTional leaDership: inspiring Change

    In contrast, successful transformation means more

    than merely adapting to change; it means rewriting

    business models or even reshaping your own industry.

    Considering Apples role in the birth of the tablet

    computer industry and the revolution in smartphones,

    for example, it is hard to believe the company was once

    an also-ran hardware maker.

    While the outcome of transformation can mean life

    or death for a company or industry, only half of

    executives say that their organizations adapt well

    to new technologies or processes, according to a

    survey of 106 executives conducted by Forbes Insights

    and Medidata.

    What does it take to make transformation work? In

    the case of Apple, it began with visionary leadership.

    The push for transformation almost always comes

    from the top, while it appears to be largely left to the

    next layer of management to see it through to execu-

    tion, according to our survey. In fact, most companies

    get the vision part right; execution is the hard part.

    The 106 executives from across the business and

    industrial landscape who responded to our in-depth

    transformation leadership survey cited leadership

    limitations as the biggest barrier to success.

    Specifically, these executives named conflicting visions

    among executive leaders or decision makers together

    with a lack of internal talent to spearhead or execute a

    transformation as the main obstacles by respondents.

    Thats the top-line finding of our survey, but the

    detailed responses, alongside interviews with a

    number of the executives, demonstrate that there

    are important nuances in transformational leader-

    ship. Among those differences are various catalysts

    for change, strategies for making transformations

    work, metrics and incentives for measuring and

    encouraging success, and for understanding when

    things are going wrong.Just half of executives believe their company

    is well versed in transformational change.

  • CaTalysTs for Change

    CoPyrIghT 2014 Forbes InsIghts | 3

    Sometimes catalysts come in the form of earth- shaking events. The financial crisis in 2008, for example, not only reshaped the entire banking industry but also spun through every company that counted financial firms among its customers. It was transform or die for many.

    Evolutionary developments can be just as provocative. Big Data, the advent of the cloud and the decoding of the human genome are catalysts that very few businesses have fully embraced. These applied technologies clearly have the power to revolutionize many industries, yet many companies are still struggling with how to integrate them into their business plans. One case in point: just 60% of the companies we surveyed report that they are taking full advantage of data analytics to better understand customers and to act on that information. The deluge of information these new technologies bring is a double-edged sword a source of tremendous opportunity but also an exponential increase in complexity.

    Take the case of the pharmaceutical industry. With changes in the payer-provider system globally, drug developers are facing tremendous pressures to show greater efficacy and value in the treatments they bring to market. At the same time, advances in genetics and personalized medicine increase the variables that can determine efficacy almost exponentially. Medidata Solutions, a New York-based provider of cloud-based solutions to the life sciences industry, has built its business around collecting and managing data to increase predictability and efficacy and to bring greater productiv-ity to clinical development.

    The issue is not in the amount of data, but in how its used, explains Tarek Sherif, chairman and CEO of Medidata. Big Data is a very dangerous term, he says. Pharma has a data opportunity, but its more like quality data than Big Data because the amount of data is minus-cule relative to some industries like Google. Google has a Big Data challenge; pharma faces different challenges.

    You have to have a very good idea of what youre looking for before you start digging around in it, or youre going to waste a lot of money and time, he adds. If were successful at what were trying to do, then we will help the industry become much more insightful about how to use the data they have.

    In the case of Lockheed Martin, it was federal budget sequestration and defense cuts that catalyzed transforma-tiona change that has proved more profound than the end of the Cold War. The 100-year-old firm now has to look beyond government spending, the source of 90% of Lockheeds traditional business, to international clients and non-defense industries, while continuing to provide innovative and affordable defense technology to its core government customers.

    The new reality is that we live in a very complex global security environment, says Dr. Ray O. Johnson, senoir vice president and chief technology officer at Lockheed. The challenges for us as a nation and our allies, and even our peers, are very complicated, and not getting simpler. At the same time the resources to take on these challenges are under pressure, and we see that through the pressure on the budget.

    Beyond financial crises, sequestration and disruptive technology, most companies are pushed to transform by the pressures that organizations face every day. Regulatory change, increasing competition and chang-ing customer expectations as well as technological change were named as the most pressing issues by respondents to our survey. These may sound like everyday problems for any business, but ignoring them can lead to the kind of slow attrition and deterioration in performance that saps customers and employees. And any of these catalyststogether or alonecan spell the beginning of the end for a struggling startup or a century-old industrial company.

  • 4 | TrANSforMATIoNAl ChANge

    In fact, any company that has been around for more than a few decades has likely undergone some sort of transformation. Would anyone who worked at IBM when it was founded in 1911 recognize the company today? Over the past several decades, many manufactur-ers saw the opportunity to move beyond production and distribution and recast their business as a service provider. Pulling off such a strategic shift without the catalyst of imminent peril is, in fact, far more difficult.

    There is a debate out there: can you really drive transformation without a burning platform? asks John Conover, retired president of Ingersoll Rand Security Technologies. Xerox went through one of the biggest and most successful transformations in recent history.

    Here was a company days away from not being able to make payroll, completely changing the way they went to market. Everybody had to get on board.

    Conover faced a very different problem in the transformation he oversaw at Ingersoll Rand. You take a company that is pretty successful, like Ingersolls security business. We were big, we were profitable, we were doing well, he explains. Trying to get everyone to engage in a major change, people look at you like you have a third eye.

    But you cant stand still while everything around you is changing.

    FigURE 1. Top FivE CaTalySTS DRiving TRanSFoRmaTion

    31%

    32%

    33%

    28%

    37%

    Regulatory changes

    Increasing competition

    New or changing technology

    Changing customer needs and/or expectations

    Consolidation within industry or sector

  • CoPyrIghT 2014 Forbes InsIghts | 5

    WhaT Does iT TaKe To maKe TransformaTion WorK?

    In most cases, it begins with visionary leadership. The push for transformation almost always comes from the top. Executing transformation, however, usually falls to the next layer of management, according to our survey. Most companies get the vision part right; execution is the hard part. Success or failure depends on getting the people right (Fig. 2).

    As a leader, its about having a vision and being able to communicate that vision and then tying it to everyone personally, explains Conover. To that end, your leader-ship team has to be on board, and everything else has to tier down from there.

    Transformation is tied to the culture of an organiza-tion. In that regard, leaders have to make communication a top priority, says Conover. People have to understand why change is occurring, what were going to do about it, and the process were going to use, he explains.

    People will look at the leadership, where are we spending our time, our money and where are we putting our talent, says Conover. At HVAC equipment maker Trane, where Conover worked 32 years, coming

    up through the ranks until he was appointed president Americas, transformation came with a new organiza-tional structure. We hired talent, one-third outsiders, two-thirds insiders. We wanted people who understood the organization, and we wanted people who had already been through a transformation.

    In fact, employee adherence after transformation is described as the real challenge by 48% of respondents to our survey. When youre trying to do a transformational change, you have to be careful you dont ask people to do too much, Conover explains. People get confused, they dont know what their priorities are, and they get frustrated. Then you start to have an unengaged or, even worse, a negatively engaged organization. This can not only affect day-to-day business but can also do permanent damage to customer relations.

    If you just add it to everybodys to-do list, youre not going to drive major change, says Conover. At the end of the day, the average employee needs to know, Whats in it for me?

    FigURE 2. Top FivE gREaTEST FaCToRS in SUCCESS

    80%

    82%

    85%

    78%

    9.5

    Assigning the right employees to implement the project

    The need to appropriate adequate resources from the start

    Gathering data for metrics during the process

    Accurate timely feedback from employees executing the program

    Forming the right executive team to oversee the project

    88%

  • 6 | TrANSforMATIoNAl ChANge

    What gets measured, gets done still holds true. But more than that, what gets measured can be rewardedand that is a major factor behind successful transformation.

    Larry Wash, executive vice president and area director of KONE Americas, has been through a few transformations at old-line industries such as Xerox and American Standard. He sees transformation as a process of building competencies, improving work practices and refocusing corporate cultureall of which can be measured and rewarded. So, while setting the direction of a transformation is strategic, making it happen is generally tactical.

    You cant just say, Okay, now were going to do X, when the company makes its money doing Y. You have to have a path to get there, he says. You have to put a lot of things in place, and then you can start changing the way operational reviews are done and the way the man-agement team conducts itself in its operating cadence.

    The front-line managers, production staff and sales people, who make or break a transformation, will be asking themselves: How do I internalize this? How do I mobilize my people? How do I take this and then put it into action? Unless they have that foundation around direction, situation, rationale and the expected outcome, they cannot drive their organization, says Wash.

    You reinforce all the things that youve been talking about, and you change the agendas of the company, he explains. The management team will realize that not only is this serious, but were managing the company differently, and were measuring our progress differently.

    Performance measures, for example, might include how many technicians have been trained on new safety procedures. Results can also be measured: how many salespeople have written a new service contract, for example. Even behavior can be measured, says Wash. A behavioral measure would be the number of proposals

    generated using a new pricing tool, for example. So now youre changing the behavior of the sales force, he explains. Or it may be a question of how many audits are conducted by a supervisor. Now you are changing the role of the supervisor from being in the office all day to being on the job site.

    For Medidata, the changes go beyond motivating employees and measuring performance. How do you price and articulate value? asks Sherif. If you dont do that well, you can do all the right things internally, but youre going to fail with your customers. Its not enough to tell your customers, Were changing our pricing structure, he says. If you can demonstrate where you are creating value using hard numbers and say, Heres how I can save you money, heres how I can bring your drug to market faster, heres how I can do it with higher quality and a better safety profile, then having a conver-sation about pricing becomes a lot easier, he explains. Its not qualitative, its quantitative.

    To help with the tra...