When “Innovate or Die” Is More than a Pithy Phrase — Emma Walmsley, CEO GSK
The Industrialist’s Dilemma — January 9, 2020
When we designed the fifth year of The Industrialist’s Dilemma we worked to bring in guests from outside of North America to explore how the rise of data and digital has become a global phenomenon. On this year’s schedule over half of our leaders hail from Europe, the Middle East, South America or Asia, and we will see their global perspectives on how the combination of digital and physical products and services are driving change in their company’s product development practices and organizational activities.
Our first guest, Emma Walmsley, is nearing the completion of her third year at the helm of GSK, a company with an over 300-year history. A leader in prescription medicines, vaccines and consumer healthcare products, GSK is confronting the challenges and opportunities of how information and data are transforming the way its largest and most successful products are discovered and developed. The company is also actively shaping a reshuffling of the OTC consumer healthcare market, all while navigating an increasingly complex global business environment with different rules and business imperatives across geographies. Walmsley, who has spent her career living in China, the United Kingdom, Continental Europe and the United States, shared a uniquely holistic perspective to the issues facing the company — and was thus the perfect leader to lead us into this year’s course.
It’s Not Just a Bumper Sticker
The phrase “Innovate or Die” has spawned more than its share of business books, bumper stickers and motivational wall posters in large corporations around the world. But the reality of this existential challenge for GSK came into focus when Walmsley highlighted that in the pharmaceutical industry, where annual revenue on a medicine can drop overnight from billions of dollars to almost nothing when patents expire and a generic version enters a market, having a successful pipeline of new, innovative medicines is the most important variable in maintaining leadership and growth. This imperative has led Walmsley to transform an organization that previously took a more conservative approach both to operating and also to product discovery and development, into a more innovative and forward-looking mindset towards pipeline development. Examples of these changes can be found in the company’s hiring of new skillsets across the world (including in Silicon Valley) and its investment in 23andMe to partner on drug discovery and development based upon both the genetic resources and advanced data science skills from 23andMe and also the medical knowledge and commercialization expertise of GSK.
Walmsley shared how the combination of biology, genomics and IT are transforming the productivity of drug development unlike anything prior, which is forcing those in the industry to change in ways that they have not had to for decades. The availability of wide-scale health data along with demographic changes such as people living longer (which creates the need for new medicines to address issues such as dementia and Alzheimer’s) has led to an alteration in the behaviors and actions of companies to address the new market landscape.
It’s Complicated
But product development is only one part of the upheaval facing the healthcare industry. Due to ever growing economic pressures in healthcare systems, governments are increasingly engaged on healthcare pricing and access. This varies geographically, and companies must navigate this global complexity supported by a common culture and based on a strong foundation of values.
Walmsley talked about some of the similarities that exist between GSK’s medicines/vaccines business and its OTC healthcare business — similarities that were not obvious to the students initially. Both businesses are regulated by governments, which actually creates some stability in the products that are sold to consumers around the world — new entrants do not arrive over night with the sudden release of a new app on a smartphone. Additionally, manufacturing high-quality products, and the regulatory requirements around the manufacture and sale of healthcare products, can act as a barrier-to-entry for new upstarts that might want to enter these markets. So, even as consumer tastes and behaviors change, GSK can lever its various competencies to react to these new changes provided it has the conviction to do so and maintains a bias for action.
Pattern Recognition Regarding Trust
As Walmsley discussed GSK’s activities in today’s global environment, a few trends came up that were consistent with what we have heard previously from other leaders from different industries. For example, the sheer size of the opportunities in China, balanced with a substantively different set of norms for doing business, sounded remarkably similar to those challenges facing the global automotive industry as shared in previous years by the leaders of Ford and Daimler.
But one thing that stood out was Walmsley’s comments on the imperative to not compromise on the trust that must be built with patients and customers. This echoed statements from Walt Bettinger at Schwab which he applied to the financial services industry. The very nature of many of these Industrial incumbents — whether they are in healthcare, mobility, or finance— require a heightened need to build and maintain confidence with the assurance that the products and services being delivered will not harm customers.
During last year’s course the themes of privacy and the need for data protection came up repeatedly in our sessions, and our students were often skeptical not just of large established companies but also of the many Silicon Valley disruptors using data not just for product development, but also in ways that are not always aligned with the desires of the people using the various goods and services. Walmsley’s comments on the importance of trust reinforced that the incumbents in these critical industries have a head-start in understanding the bond that exists between company and customer, where trust is a requirement for an economic relationship — that a medicine or vehicle or financial firm will take care of those things that are some of the most important items at the very core of customers’ lives.
The various industrial incumbents visiting our course have had the chance to nurture and build upon this trust, and they should be able to use this as an advantage against disruptors seeking to attack their market position. Conversely, the disruptors must learn from the incumbents and their histories — and will need to adopt a trust mindset into their cultures when creating connections with their customers, whether these companies are entering markets that bring physical risk to customers, or even if they are only using data to be monetized in some capacity.
