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Make a Decision! Now More Than Ever, Alliance Decision Making Is Critical. Game Theory Can Help

Posted By Michael J. Burke, Tuesday, May 26, 2020

Most of us have probably worked on teams and within hierarchies where decisions were hard to come by: slow to be made due to fearful, indecisive leaders, or requiring multiple hoops to jump through to get approvals. It can have a crippling effect on projects and partnerships, and everyone becomes frustrated when things don’t move forward in a timely manner.

Now, with so much uncertainty due to the COVID-19 pandemic, it can be even more difficult to get decisions made. With teams spread out and working remotely, it can be challenging even to pull key decision makers together, much less to formulate a coherent strategy. But for every challenge there’s an opportunity, and for every problem there’s a potential solution. It turns out that game theory may hold some of the answers to this dilemma.

“How can we best make decisions?” Harm-Jan Borgeld, PhD, MBA, CSAP, asked in a recent ASAP Netcast webinar. “There is now an opportunity. Now is the time for alliance leadership.”

Borgeld is vice president and head of alliance management at Merck Healthcare KGaA, based in Darmstadt, Germany, and he copresented the webinar with Professor Stefanie Schubert, PhD, CA-AM, professor of economics at SRH University Heidelberg. Titled “Decision Making Beyond COVID-19 Times: Leveraging Your Capabilities by Employing Game Theory,” the May 5 presentation examined how decisions should be analyzed using game theory, how to make decisions more efficiently, and the important steps needed to move from thinking about a decision to implementing it and aligning around it.

Just Decide, Please

Even in the absence of a crisis, Borgeld noted, it’s more important for leaders to be decisive than to actually make “the right decision.” He even cited an article showing that of those CEOs who were fired, one third were let go for making the wrong decision, while the rest—the vast majority—were sent packing for their indecision. The bottom line? Alliance leaders, like other executives, can’t afford to be indecisive.

This becomes even more true under the conditions of COVID-19, according to Borgeld, given the following factors:

  • There is a greater need for speed in decision making now than ever before.
  • The usual ways of “informal influencing,” such as hallway meetings and watercooler conversations with key stakeholders, are currently unavailable.
  • Decisions are now often being made alone or in small groups of two or three.
  • There’s a very uncertain future ahead.

In effect, Borgeld argued, alliance leaders need to do the same things:

  • Negotiate
  • Communicate
  • Influence
  • Look ahead
  • Align
  • Implement

These actions will no doubt be familiar to alliance professionals in every industry, but in COVID-19 times, they’ve all become more challenging. Take alignment, for example. Before the pandemic, aligning with key stakeholders and team members could often be informal, taking place during a coffee break or over lunch, Borgeld said. But “now we need to align in a different way.”

Games People Play

How could game theory assist in this process? Schubert emphasized that “game theory is actually the science of strategic decision making”—a critical skill at any time, but all the more so during a crisis. In addition, the principles of game theory provide “a structured framework for deriving optimal decisions,” she said. This helps avoid situations where decisions are made on the fly without benefit of proper analysis, or conversely, where decisions are not made at all due to organizational paralysis and lack of leadership.

In brief, the application of game theory to a decision means asking these questions:

  • Who are the decision makers?
  • What are their options?
  • What is the timing?
  • What are the payoffs?

Borgeld and Schubert presented a fictitious case study involving Sandra, an alliance manager for Sapphire, a biotech based in China, and Michael, an alliance manager for Diamond, a US-based company. Sapphire licenses a drug product to Diamond under a codevelopment and cocommercialization agreement, and the two companies had planned to conduct Phase II clinical trials beginning on July 1, 2020. But once COVID-19 hit, the timeline for these trials became very uncertain, and the costs the two companies had budgeted for could be way off the mark. So what to do? How can Michael and Sandra make a good decision and align around it?

Schubert showed how, from Michael’s point of view, he needed to look at his options and Sandra’s preferences and decide on the best option based on the potential outcomes, or payoffs. Given this information—and the uncertainties—he and his company prefer to wait six months before deciding, by which time perhaps they’ll have a more accurate sense of how much the trials will cost and whether they can be carried out properly. Thus he needs to steer Sandra toward this decision and convince her to accept it, even though it is not her or her company’s preferred option. It’s not her worst option, either, so with this compromise perhaps they can agree to move forward.

If the outcome is not the one you prefer, as in Sandra’s case, you may need to “change the game you want to play,” Schubert noted, being creative about options and the timing of moves. She also stressed that this represents a simplified version of game theory application; to perform a more detailed analysis, you would need to calculate eNPVs—estimated net present values—including for situations where payments are uncertain, as with COVID-19.

“When you want to apply game theory, you have to focus on the aspects that are really important,” she explained. That also means you need to “put yourself into someone else’s shoes,” figuring out what their preferences will be before you can make your own decisions, taking both their preferred outcomes and yours into account.

Game Theory and Practice

Borgeld also had some tips for how these game theory principles could best be applied in actual alliance management decision-making practice. These include:

  • Look at all options at the same time instead of sequentially, the way you would when buying something on Amazon or eBay.
  • Go to the decision makers, present them with three options and their pros and cons—including one non-COVID option—and get approval for the option you recommend.
  • Be more efficient in conference calls and virtual meetings by paring things down to a “perfect agenda,” using strict time management and making sure to include one “context” slide before giving the options.

“Where you can really shine as an alliance leader is when you put the context there,” Borgeld noted. “And especially in these times when people are [spending] eight, nine, ten hours a day on conference calls, they are really happy when you end early. So try to limit it. I would never recommend a JSC call go on for three hours.”

In addition, Borgeld recommended monitoring the financial status of biotech partners, reviewing the contract’s force majeure clauses (“What could be the consequences? What could happen to us? Also, what could happen to the partner? Discuss it with the partner, and don’t wait too long”), and staying “two steps ahead” by looking at the short-term, midterm, and long-term horizons.

Schubert stressed that “Life is very complicated, and you have to find out what aspects are important, what are the decisions, and who are the players, the decision makers?” Approach the right people in order to decide together, she advised, based on a clear analysis of payoffs and outcomes.

One final thought from Borgeld: Get the meeting minutes out on time! Alignment and implementation are critical, so it’s important once decisions are made to communicate those decisions and send minutes out immediately—the same day if possible to avoid foot-dragging. “If you wait two weeks, people sometimes have second thoughts.”

All in all, it looks like applying game theory to alliance decision making could be a winning strategy.

Tags:  alignment  alliance leaders  alliance managers  decision makers  decision-making  decisions  Game theory  Harm-Jan Borgeld  informal influencing  Stefanie Schubert 

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Pharma Alliance Leaders Making Adjustments to a Virtual, Stay-at-Home World

Posted By Michael J. Burke, Tuesday, April 28, 2020

During the COVID-19 crisis, it’s been heartening to see how many pharmaceutical companies—including a representative number of ASAP members—have stepped up their efforts to work toward vaccines and medicines to treat the virus, including partnering with one another and with government to speed up the processes of research and development, all while trying to keep regular manufacturing and supply operations going so that lifesaving drugs continue to reach patients who need them.

But as is true for all of us, the coronavirus has thrown significant obstacles in pharma companies’ path as well: Almost everyone is working from home, supply chains have been interrupted, sales reps can’t see physicians, and some companies in the biopharma ecosystem are already feeling the pain of financial distress.

So how are pharma alliance management groups coping with COVID? How are their teams communicating internally, reaching out to partners, and moving projects forward in the face of these hurdles?

Different Times, Different Strategies

That was the subject of an April 21 ASAP Netcast Webinar, “Alliance Management Practices in a Virtual World for Pharmaceutical Executives.” The four panelists were among the crème de la crème of big-pharma alliance leaders: Harm-Jan Borgeld, CSAP, PhD, MBA, vice president and head of alliance management for Merck Healthcare KGaA; Mark Coflin, CSAP, MBA, vice president and head of global alliance management at Takeda; David Thompson, CSAP, chief alliance officer at Eli Lilly and Company; and Steve Twait, CSAP, vice president of alliance and integration management at AstraZeneca. The webinar was moderated by Michael Leonetti, CSAP, president and CEO of ASAP.

As Leonetti noted at the outset, “We are in very different times, and different times require different strategies.” Accordingly, the four alliance leaders shared their strategies and thinking in a number of areas, from keeping their teams humming along internally to communicating with partners to monitoring supply chain and manufacturing issues.

Thompson observed that we’re currently living through a “worldwide inflection point,” a phenomenon not seen “since probably the 1930s and ’40s, where the entire world is experiencing something at the same time.” Twait concurred: “This is my 20th year in the alliance management space and I can say I have never seen anything quite like this before. COVID-19 is providing us with challenges I don’t think any of us ever anticipated.”

Buddies, Backups, and Break Times

Borgeld said one of the first things he and his colleagues at Merck in Germany did was to look at what would happen if alliance managers could not fulfill their duties, for whatever reason. So they created “a buddy system, where every alliance manager has a backup—even me. A member of the leadership team is my backup in case I would not be able to function. Also the partners have been informed of this backup system, so they know there’s always someone to contact.”

In this new world, alliance executives and their teams have had to figure out how to hold internal meetings virtually—and how often and for how long—how to carry out alliance governance, and how to interface with partners when everyone is working remotely and none of these activities can be done in person. Some of what they’ve done has changed over time already—going from two meetings a week down to one, for example, having shorter meetings, or making the meetings last only 45 minutes instead of an hour, both to give people a much-needed break that they might have formerly used to walk down the hall and “grab a cup of coffee,” as Twait put it, but also to allow for some “unstructured chat” time, in Thompson’s words.

In addition, half-day or full-day meetings across multiple time zones around the world have in many cases been condensed down to one- or two-hour videoconferences, which allows greater focus and prevents “virtual meeting burnout” while being “respectful of time zones,” as Coflin phrased it—especially important when partners and/or team members may be spread out across the globe.

There’s good and bad in this virtual situation, according to Thompson. “The upside of course is there’s a time savings, the downside is you’re not getting that human interaction,” he said. “You have to be more cognizant of how you’re going to structure your agendas for the meeting to get the most out of it.” Another positive that Twait has observed is that videoconferences today give us a window into each other’s lives—including children, pets, decorations in home offices or other rooms—and these help to build “interpersonal trust” in a way that wasn’t necessarily done pre-COVID.

Borgeld emphasized that while some of the same problems and issues arose before the virus took hold, now it’s even more critical to anticipate and address them, whether it’s coworkers who are trying to multitask and get work done while managing children at home, or partners who may be experiencing financial distress. In the latter case, he recommended, “Seek the dialogue early—it’s not important that you open the books. Focus on the alliance itself: what do we need to do? Come early, discuss it, and try to find a solution.”

Problems, Solutions, and Opportunities

Solutions can be hard to come by, especially where coronavirus is concerned, but more than one of the panelists mentioned the resourceful, flexible cooperation and collaboration between various biopharma organizations, leading to more partnerships and, hopefully, effective treatments and vaccines down the road.

“One of the things that’s very encouraging is the number of partnerships that are springing up all over,” said Twait. “Not just between pharma and pharma—we’re all working together, and many of those interests are around COVID. I’m seeing pharma to biotech, pharma to academia, pharma and others to nonprofits—partnerships of all types.”

Coflin backed up that assessment: “In this current environment where we’re looking for solutions on an urgent basis for humanity, there’s a lot of external innovations and partnerships that are rapidly forming, amongst companies, together with regulatory authorities, NIH, you name it. Everybody’s pulling together to find some solutions.”

Twait emphasized viewing the crisis as a chance to potentially change how things are being done for the better. “I try to look for the opportunities that are coming out of this, and it feels like now is the perfect time,” he explained. “What COVID is allowing us to do is to ask the question: Can we move faster, and are there ways to accelerate? It’s a great opportunity to use this burning platform and the urgency that we have to really challenge inefficiencies and change some of those internal and external processes.”

Shining Examples

Thompson advised looking at alliances with an eye toward contractual obligations, as well as the risks that may be triggered if those are left unfulfilled. “I would really recommend to everybody,” he said, “to do a thorough read of each contract: to go back through and with the lens of the business, human, and legal uncertainties and risks, foresee what’s in the contract, identify and begin to engage with the partners in a discussion now. To me that has been one of the most helpful exercises we’ve done, and also has allowed us to engage in productive discussions, because we’re identifying early the things that the contracts are pointing to. Regardless if you’re in or out of our industry, anybody who’s got a contractual relationship with anybody, that is worth doing.”

Coflin also mentioned being aware of potential supply issues, which can be dicey at a time like this. “The supply continuity is critical to the patient,” he acknowledged. “These are lifesaving medicines in some cases. So we look very carefully at the supply chain, and have since the very beginning of COVID-19, looking not only at the current inventory but also…where it’s sourced from—in some cases China, [or] Italy, and others where we’ve run into a very challenging situation with logistics. The amount of flights is less than it used to be, including cargo, so it is something that requires constant evaluation of risk and constant discussion with our partners.”

Asked for final thoughts, Borgeld gave this exhortation: “Focus on your team. Make [it] so that they can shine in this difficult environment. It’s an environment where there are challenges, and that has to be recognized. Focus on the team, make sure that the team feels that [its] needs are addressed.”

After the four panelists had answered a number of questions, both from Leonetti and the large audience sitting in on the webinar, Leonetti thanked them for sharing their insights and experiences. “You are a shining example of our community, our willingness to collaborate with each other, and our willingness to help share best practices that ultimately make us better partners and better future partners,” he said. “I can’t thank you all enough for bringing this forward and helping to keep our ASAP community alive during these virtual times.”

Tags:  academia  Alliance Leaders  alliance manager  AstraZeneca  best practices  biotech  COVID-19  David Thompson  Eli Lilly and Company  Harm-Jan Borgeld  manufacturing  Mark Coflin  Merck Healthcare KGaA  partnerships  Pharma  Pharmaceutical Executives  Steve Twait  supply chain  Takeda  virtual 

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Morphing Your Partnering Philosophy in a Changing World of Digital Drivers (Part Two)

Posted By Cynthia B. Hanson, Thursday, March 29, 2018

Key sectors of the economy are struggling to adapt to disruptions from digital technologies, such as the cloud. The change is resulting in new business models and service sector opportunities in areas such as security and supply chains. This article continues our coverage of the 2018 ASAP Global Alliance Summit session “Partnering with Change in a World of Ongoing Disruption.” Presenters Joe Schramm, vice president of strategic alliances at BeyondTrust, and Morgan Wheaton, senior director, global partner alliances & channels at JDA Software, addressed the considerable transformation in company culture that is needed to better enable new partnering models. The first part of the session covered emerging industry paradigms needed to succeed in today’s fast-paced, partnering-oriented ecosystems. These additional insights and excerpts are gleaned from the second half of the session.

Wheaton: JDA had a new CEO come in a year ago, and instead of replacing people he created a team of JDA employees to create a new culture. The culture at JDA is about three key concepts. Results—JDA is obsessed with delivering customer value. Relentlessness—we relentlessly drive new learning and innovation. Teamwork—we candidly and respectfully collaborate. So what kind of cultural change is needed to better enable new partner models? [The first change is] TEAM, which stands for Together Each Achieves More, a gradual change that takes time.

Schramm: Next on the list is [that] executives need to walk the talk: High-level executive alignment is critical.

Wheaton: Celebrate mutual success: Nothing gets more attention than selling a deal. It’s so very important to get the word out when we close a deal.

Schramm: Re-educate and reinforce. This is a big one as we go after new and different partners. We need to educate ourselves on what the win is with a new partner and why to go after them.

Wheaton: Compensation matters. I’m a coin-operated machine. Salespeople do what you pay them to do. Figuring out how to drive the right behavior through compensation is important.

Schramm: Transparent, open communications. Partners are in for the whole ride, and we need to include them.

In terms of the cultural change specific to BeyondTrust, there are lots of items. We emphasize passion—approaching each day with energy and enthusiasm. Teamwork—we work together and act as one. Customer and partner focus—the most important consideration, we are 100 percent committed to meeting the requirements of our customers and partners. Innovation—we work relentlessly to improve our products and processes for the benefit of customers, partners, employees, and the company. Integrity—we are honest and consistent in our actions.

Wheaton: So can alliance leaders design “future proof” alliances that accommodate ongoing disintermediation, otherwise known as cutting out the middleman in connection with a transaction or series of transactions? My crystal ball may not tell me what future technology will be like, but I know we will be involved in partnering. You need to put metrics in place. Sometimes you can’t future proof all alliances, sometimes you need to pull the ripcord and get out. Sometimes the pesky market shifts.

In summary, Schramm and Wheaton agree on implementing these key principles:

  • Listen and survey—be aware and anticipate changes.
  • Build a culture of “partner first.”
  • “Semper Gumby”—always be flexible; be ready to change things on the fly.
  • Execute today, but keep an eye on the future—monitor what’s coming while keeping an eye on the distance.

Tags:  alliance leaders  BeyondTrust  collaborate  collaboration  cultural change  Digital drivers  ecosystem  flexible  future proof  innovation  JDA  JDA Software  Joe Schramm  Morgan Weaton  Morgan Wheaton  partner first  partnering  partners  Semper Gumby  strategic alliances 

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