CEO Leadership, and the relationship between Boards and their Executive Teams in Pharma, Biotech, and Healthcare

By Charles Moore , Jeff Boyd , Maria Konat , Yahya Khan

As leaders in the Pharmaceutical, Biotechnology, Medical Devices, Diagnostics, and Healthcare sectors, your role in addressing the core ongoing leadership and talent themes is crucial. These themes, which often tax the minds of Boards and CEOs, are not just challenges but also opportunities for growth and innovation.

Executive succession, cross-sector talent transfer, recruiting leaders from corporates into scale-ups, and functional relationships with their executive teams are issues that boards in every industry should be aware of—but for organizations in the health space, they encompass specific challenges.

During a recent dinner in Boston, attended by Chairs, CEOs, and Board Members, we delved into these themes from the unique perspective of the Pharma, Biotech, and other healthcare industries. The engaging and comprehensive discussion we had provided valuable insights and addressed crucial concerns, some of which are the basis of this article.

Assessing CEO talent moving from big pharma to small biotech

We’ve all observed instances where executives from big pharma have struggled in small biotech companies. Attendees at the dinner agreed that the ability to adapt quickly, make decisions, and manage risk at the speed and level of detail required in smaller companies can be challenging for executives incoming from multinational pharmaceutical companies.

To ensure success, companies need to understand where potential executive hires are coming from in more detail than they might in other situations. Plotting the course of their past experiences, such as international moves, transitions from scientific to commercial roles, and rapid career advancements, can outline critical indicators of their potential success in a new role at a scale-up.

The discussion also covered whether and how internal talent acquisition functions and external talent partners can effectively leverage AI to identify markers for a successful biotech CEO. The consensus was that AI could undoubtedly be a valuable tool in this area, and Heidrick has done some exciting work on utilizing AI for leadership development, providing a sense of confidence in the effectiveness of these strategies.

While there’s no perfect indicator of an excellent executive fit, as in any other leadership role, combining an experience review, adapting interview techniques, and assessing for desired characteristics provides a well-rounded picture of a candidate’s potential to thrive in the biotech C-suite.

By distilling the practical insights shared by our esteemed attendees, we have developed a framework that can guide executives transitioning from big pharma to small biotech.

Experience indicators:

? Adaptability: Look for experiences demonstrating quick adaptation, such as international moves, leading diverse teams, and managing unexpected challenges.

? Decision-making: Assess past roles where they made impactful decisions with limited information and at a fast pace.

? Risk management: Analyze how they handled risk in past ventures. Did they take calculated risks with positive outcomes in a fast-paced environment?

Interview techniques:

? Scenario-based questions: Present hypothetical situations mimicking biotech challenges, such as tight budgets, clinical trial delays, or competitor threats. Evaluate their problem-solving approach and risk assessment.

? Culture fit: Biotech environments are often scrappy, so candidates must be resourceful, adaptable, and able to work with limited resources. Assess their comfort level with ambiguity and a lack of established processes. Ask for examples of similar situations in which candidates have worked.?

? Vision for the future: Evaluate their understanding of the company’s specific biotech field and their vision for its future in that landscape.

Additional considerations:

? Passion for innovation: Big pharma often focuses on established products. Look instead for evidence of the candidate’s passion for cutting-edge science and innovation.

? Teamwork: Biotech CEOs must collaborate with scientists, investors, and regulators. Assess their ability to build and lead high-performing, diverse teams.

? Coaching and support: Early-stage interaction with an independent coach is invaluable, and a regular cadence should be established for such coaching. A seasoned biotech CEO is the ideal coach; regular contact with them will help the new leader navigate the sector’s unique challenges and build confidence.

The relationship between the Board and the Executive team

A thought-provoking thread running through our discussion was the role and composition of the board and their relationship with the CEO. Communication improves if everyone comes from the point of shared knowledge, creating a question of “quantity versus quality” in the sector regarding board membership. Is it better to keep the board small, expert, and focused, or should external perspectives from outside the industry be added, even if they lack sector experience?

One of the key takeaways from the discussion was the importance of fostering a collaborative relationship between the board and the executive committee. This mutual respect and understanding of each other’s roles are crucial for the organization’s success. To facilitate this, the following factors need to be considered:

? The challenge of intervention: There’s no one-size-fits-all answer to when the board should step in. Every situation requires careful consideration.

? The importance of communication: Open communication, a cornerstone of trust and confidence, is vital for building a solid bridge between the board and the executive team.

? Striking a balance: The board should empower the C-suite to make decisions and lead effectively, while the C-suite should keep the board informed to avoid surprises and leverage the board’s experience and expertise.

For an in-depth exploration of these themes, see Heidrick & Struggles’ thought leadership on boards and governance, along with our articles and podcasts on leadership in the biopharmaceuticals sector. Please feel free to contact us to share your thoughts or ask any questions about issues raised in this article.