Digital Transformation: A Journey, Not Just a Destination

Amgen board member and serial CEO Fred Hassan talks about the three levers Fortune 500 C-suites should consider as they position their firms from pilots to enterprise-wide digital transformation.

In this installment of the Harvard Business School Healthcare Alumni Association (HBSHAA) Q&A series, Michael Wong speaks to Fred Hassan, Amgen board member and serial CEO, about the three levers Fortune 500 C-suites should consider as they position their firms from pilots to enterprise-wide digital transformation

Michael Wong: You have previously explained how employees’ engagement, especially the front line, was crucial to a C-suite’s transformation success. With today’s pandemic, don’t CEOs have a burning platform to help their teams quickly transform a firm’s digital pilots to production-level solutions?

Fred Hassan: Yes, COVID-19 has accelerated the ongoing shift to enterprise-level digital transformation across Fortune 500s. And as a Board Member and CEO for over 25 years across many industries, I can honestly say that the impact of digital in helping transform the customer experience or to improve efficiencies, is now a bigger factor in the rise and fall of corporations. Astute C-suite executives recognize the opportunity to not only enable, but to also empower their teams to quickly embrace digital as a differentiating tool.

Especially for your US-based readers, speed is crucial since other countries have leap-frogged us in terms of jumping headfirst into adopting digital platforms, such as China’s online sector jumping past brick-and -mortar retail outlets. While cashless/contactless payments are now the rage here in the US given the pandemic, these have already been adopted in China for years. And it was no surprise to me when in 2019, for the first time, a total of 129 Chinese companies made the Fortune 500 list in 2019, more than any other country.1

But this speed of transition to digital must be accompanied by sustainability. As I have shared with others,2 sustainability means taking your people with you in the change journey. In this instance, it means actively energizing the entire organization so that people internalize the digital mindset to help empower their customers, their own company and themselves, as individuals. Dithering around scaling past the initial digital pilots, is rapidly becoming an unacceptable option. These points of internal engagement can be via a steady stream of consistent internal messaging including town halls, and through active role modelling by the CEO and the senior management team.

Earlier this year, some research pointed to how “…in about 40 to 65% of cases, doctors prefer virtual settings — and not just during the pandemic.” Their findings estimated that post-pandemic, “…at least one-third of physicians will say “Stay virtual, even if you come back in person, stay virtual.”3 Unlike 2000, when a few pharmas participated in e-detailing (pilot programs where a handful of reps conducted Zoom-type conference calls (e.g. ”eDetails”) with willing physicians), the pandemic has forced C-suites to reconsider their historical playbooks of reach and frequency for their front lines. Instead of a mere smattering of proof of concepts, what three levers should C-suites deploy to have a true uptake in production-level digital transformation for their front lines?

First, craft strategies that are pragmatic for successful implementation. Consider 2010 when EMRs started getting forced upon physicians with little empathy and with inadequate change management programs; the initial impact on many physicians was so intense that many retired early. So, if your company’s current digital capabilities are not that mature, always provide support in enabling change. Start with basic robotic process automation of more mundane areas like expense reporting and then ramp up to intelligent automation, like determining next-best-actions for your reps to consider as they deal with market access challenges.

Second, embed processes that support your strategy. If one looks at the top 20 biopharmas, one hears about the importance of common platforms. Still, if you dig under the surface, often you will uncover how such platforms are not supported, given the “unique” needs of some departments which have shadow systems to retain historical practices. This is where CEOs need to be diligent around identifying who in the organization might be acting in passive-aggressive ways. CEOs may need to make tough decisions regarding some passive-aggressives. Sticks may need to be used along with carrots. I recall reading about Amazon. Back in 2002, Amazon was enjoying explosive growth, but their platform was suffering from non-standard designs. Apparently, Jeff Bezos issued a strong mandate that all new development would follow very stringent guidelines and recalibrated expectations by ending the memo with something like, “Anyone who doesn’t do this will be fired”.4 As you might guess, Amazon’s coherent platform continues to support their phenomenal growth.

Finally, while the C-suite needs to actively lead during a digital transformation, they must leverage the commitment of their middle management to motivate front line management to keep following through with passion, courage, and tenacity. Digital transformation is a journey — not just a destination.

Fred Hassan is a Director at the private equity firm, Warburg Pincus. He is also a Board member of Amgen and Precigen. He is the former Chairman of the Board and Chief Executive Officer of Schering-Plough Corporation. Prior to joining Schering-Plough, Hassan was Chairman and Chief Executive Officer of Pharmacia Corporation. He received his MBA from the Harvard Business School.

Michael Wong is an Emeritus Board Member of the Harvard Business School Healthcare Alumni Association.

Notes

1. Wang Jinye, Meng Na, Xu Lingui, Xi Focus: Xi Jinping and China's New Era, Xinhuanet, Sept 30, 2019.

2. Hassan, Fred, Reinvent: A Leader’s Playbook for Serial Success, 2013.

3. Upton, Julian, The Push to Meaningful Digital Transformation, Pharm Exec, February 15, 2021.

4. Westerman, George, Bonnet, Didier, McAfee, Andrew, Leading Digital: Turning Technology Into Business Transformation, Harvard Business Review Press, 2014.