Using Simple Rules as an Innovative Approach to BioPharma Category Management

I once supported an executive who challenged me to make the complex simple. At the time this directive seemed counterintuitive. How could I make something that was inherently complex into something that was functionally simple? From that day forward I began searching for ways to make the complex simple. Every time I was faced with a complex situation, I would ask myself how I could simplify matters? I designed organizational experiments and implemented them as part of my day-to-day work with project teams. I would take what I learned from every completed project and search the literature for models to explain what I was observing.

Many of the models that I found partially explained my observational data, but none of the models provided a complete solution that I could use consistently. I started to outline my own model for making the complex simple when I discovered complexity theory. Since then I have been reading everything I can find related to complexity theory and complexity management. One of the resources that I found and would highly recommend is a book titled “Six Simple Rules: How to Manage Complexity without Getting Complicated”, by Yves Morieux and Peter Tollman.

In summary, Morieux and Tollman describe how organizations are ineffective at driving productivity and employee engagement. The root causes of these productivity and engagement issues are outdated management practices and incentivizing the wrong behaviors. Both contribute to complex organizations becoming overly complicated. Their solution is to enact six simple rules. The first three rules promote knowledge gathering and empowerment and the second three rules promote cooperation and accountability. The six simple rules described by the authors are:

  1. Understand What Your People Do
  2. Reinforce Integrators
  3. Increase the Total Quantity of Power
  4. Increase Reciprocity
  5. Extend the Shadow of the Future
  6. Reward Those Who Cooperate

My business partner and I have developed an Agile Category Management ™ (ACM) methodology that helps us manage complexity and that implements our version of the simple rules outlined by Morieux and Tollman.

  1. We always start by understanding what people do by conducting stakeholder interviews. We ask team members three key questions:
    1. What is your role?
    2. What is currently going well?
    3. What needs to change in the future?
  2. We reinforce integrators by identifying them early in the process and engaging them in the design solution. This is critical to ensuring a successful implementation.
  3. We multiply the total quantity of power by clarifying decision rights and appointing decision making to the individuals or teams responsible for the specific processes and/or deliverables.
  4. We increase reciprocity by developing a shared accountability model built on transparency and cooperation.
  5. We develop an engagement practice and contracting model that ensures that both business partners are accountable for managing the budget. This helps us clearly assign accountability when change orders occur. For example, the party who controls the decision leading to the change order pays for the change order.
  6. We work with business partners to develop a reward system based on collaboratively improving productivity. This leads to cost savings in the form of improved quality and delivery and improved profitability in the form of reduced waste.

We can attest to the power of the six simple rules that Morieux and Tollman describe. It is our hope that through our blog and the work we do within the industry that we will promote complexity management and encourage others to learn and apply principles like simple rules in their organizations. The beauty of simple rules within complex adaptive systems, such as a biopharmaceutical company, is that they promote seamless coordination and synergies that benefit everyone.

 

Serial Femtosecond Crystallography

My Simple Rules

In our first blog we introduced the concept of complex adaptive systems and the use of simple rules to manage complexity. As a brief recap, complex adaptive systems are characterized by the following attributes:

  • These systems are made up of many diverse and interrelated elements
  • Each element has the ability to make independent decisions and are influenced by other elements
  • The dynamic interplay among elements leads to decentralized control, self-organization and the emergence of unpredictable outcomes

Complex adaptive systems are all around us and we operate in them constantly. By recognizing this we can begin to see that we are already prepared to manage complexity and that we already have experience developing simple rules that allow us to manage complexity with ease. Let’s start with looking at our families. Families are most definitely complex adaptive systems. Within our families, we are each a unique element that is interacting with our other family members who themselves are other unique elements. We all independently make decisions that influence one another and this results in the emergence of unpredictable outcomes. In turn, to manage these outcomes we create simple rules that we live by and that guide our decision-making and subsequently our behaviors within our families.

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When I take a look at my own family, I see that over the generations there have been many emergent outcomes. Both positive and negative outcomes have shaped me and have influenced my thoughts, feelings and behaviors.   Looking at this interplay from the lens of complexity shows me that I have developed simple rules to manage this complexity and that I use these rules to guide my decision-making. Of course this is not something that if asked spontaneously I would have been able to identify, but with inspection I was able to identify the simple rules I use to manage the complexity of family. My simple rules are:

  1. I will be my best
  2. I will do my part
  3. I will play the “we game”
  4. I will own my behavior
  5. I will own my happiness

Where I see these rules most clearly is when I look at my parenting. I see that these rules influenced my expectations of my daughter’s behaviors and that the rules guided the important decisions I made for my child and family. These simple rules were broadly applied whether in my expectations for my daughter’s academic performance, the values I wanted to impart on her, or how I was going to balance work and family.

I am fortunate enough to now be a grandmother and I see how my simple rules have influenced my daughter into adulthood and now as a mother herself. She has adopted some of these rules while others she has adapted based on her individual world-view and experiences. This shows me that simple rules are transmitted in complex adaptive systems through modeling and consistency.

Using family as an exploration into complex adaptive systems, I hope that you can see how experienced we all are in managing complexity and the power of simple rules. How simple rules can guide a broad range of decisions and be transmitted within a system. Just like within my family, a leader’s simple rules can leave a lasting impression on teams and organizations of all kinds and sizes.

BioPharma’s Growing Economic Challenges

Today’s Biopharma industry is faced with unprecedented economic challenges.   Demand for innovative, safe, and efficacious drugs that address unmet patient needs is growing faster than supply. While demand is increasing the current climate is more complex than ever. The cost to bring a drug to market is at an all time high, R&D budgets are being squeezed, there is pressure to adopt new business models, and the regulatory environment is constantly changing.   Together, these factors are pushing the biopharmaceutical industry to evolve in order to manage the complexity associated with drug development.

One approach that we see as promising to help manage current economic challenges is to adopt principles of complexity theory. The work done in this field provides a framework for how to think about the current challenges and strategies for how to manage many diverse matters in order to drive innovation while maintaining an organization’s long-term sustainability. One part of complexity theory is the concept of complex adaptive systems. A few common examples of complex adaptive systems include: the stock market; an ant colony; the human body; or a corporation.

Complex adaptive systems have three characteristics:

  1. Nonlinear systems that consist of many diverse parts
  2. The parts act independently, although they are interconnected, and therefore influence each other in a dynamic manner that lacks a central point of control
  3. The interactions between the parts and the isolated decisions result in self-organization and the emergence of unpredictable outcomes

For us, this sounded so similar to what we observe working as procurement professionals in the biopharmaceutical industry. In order for our work to be successful we had to adopt a more holistic view of the system. We had to look at the whole rather than at individual parts or the impact of our projects was greatly diluted by decisions made elsewhere within the organization.

Complexity theory offers executives a new approach to managing the challenges they face and provides a competitive advantage in the market. The key factor to managing complexity is setting simple rules of governance. These simple rules of governance orchestrate the actions of groups while maintaining their independence. An example of a simple rule of governance is defining decision-rights. We view decision rights as the clear assignment of who is accountable for the results of a specific process or project. The assigned individual or team is then empowered to make decisions regarding how a process or project is executed and can make necessary changes in priorities.   In our experience having clearly outlined decision rights allows a decision to be driven down to the lowest level possible, which improves organizational agility by accelerating the decision-making process. Further, effective establishment of simple rules of governance, like decision rights, empowers individuals at a local level with the information needed to grow an organization’s collective knowledge and intelligence.  Companies that exhibit agile decision-making; empower their people; promote high performing teams; and encourage collaboration and cooperation will have a competitive advantage in today’s market.   This competitive advantage is fundamental to driving the innovation needed to increase the supply of new molecular entities in the market.

As you can see, complexity theory can offer a new way to evaluate the challenges faced by the pharmaceutical industry and provides a new way to frame solutions. In subsequent posts we will continue to explore the use of complexity theory principles and other frameworks that can be catalysts for innovation.