BIOGEN-IDEC

Group 2-Members:1. Abhinaya2. Berengere3. Dinesh4. Kanwarjeet5. Pali6. Indira7. Ramya8. Srivenkatesh9. Jyotsna

About the organization-Biogen-Idec

Biogen Idec was formed in 2003 due to a merger between Biogen, founded in Switzerland and Idec, founded in San Francisco. It is headquartered in Cambridge, Massachusetts.

The merger has been one of the most successful mergers in history with a good strategic fit, both benefitting from each others synergy.

The research centers of excellence are located in San Diego, California and Cambridge.

The international commercial and administrative center is in Zug, Switzerland.

The international headquarters are located in Paris. Approximately employees 3400 people worldwide. Known for innovation and strategic alliances. Direct presence in Western Europe and access to Latin America,

Central and Eastern Europe through distributorship.

What they are known for?

A global biotechnology company which develops products and capabilities in oncology, neurology and immunology.

Has two major drugs used to treat cancer and multiple sclerosis.

Core competency lies in drug discovery, R&D, bio-manufacturing and commercialization.

Biological bulk manufacturing facilities, with one of the world’s largest cell culture facilities.

Vision, mission and values of Biogen-Idec

The problem(s) at hand

The prevailing culture in European operations is that of a relatively centralized controlling style with many decisions being made at the headquarters. Due to such bureaucratic process, decision making was rather slow and onerous

Decision making was not aligned with the business culture that the company wanted to prevail in European operations.

Due to absence of direct operations in many emerging markets, the company was not competitive enough to launch new products there.

THE OD PROCESS FOLLOWED

Entering into an OD relationship

Clarifying the organizational issueThe issue in this case is reassessment of business strategy by reviewing the location of the centers of excellence and select the best location

Determining the relevant clientThe relevant clients are the employee representatives of the organization.

Selecting the Change AgentThe project team inside the organization takes the role of the OD practitioner here.Also for complex matters which the company didn’t have internally , the company asked for specialist support

Developing a Contract

Mutual ExpectationsThe project team is expected to select the best location for the headquarters Employee rights were very rigorous in France and so the company involved employee representatives in the decision-making process Consulted them on the current and future organizational structureTold them how it would impact the employeesSupport from the top management which was extremely essential was given.The employees were expected to give their full support.

Time and ResourcesAmple time and resources were given to the project team

Ground RulesOpen mindset is necessary for this to be a success.

Diagnosing

Data gathered from internal and external sources From multiple well accredited sources Employees were involved in the through out the

decision making process. In-depth analysis of the location Biotechnology and healthcare industry,

employment and recruiting, infrastructure, transport, education, language, social and cultural aspects

Method of Data collection Mercer Human Resource consulting quality

of life survey Improves decision making and increase

organizational flexibility

• Feedback Extremely positive results of a corporate

employee survey in which more than 90% of all the employees participated.

Designing Interventions Strategic issues are concerned here so the company

needs strategic interventions. Purpose: Revisit and reassess the business strategy. The intervention that the company focused on was

technostructural in nature.

This involves: Finding best locations for the centres of excellence. Developing more effective relationships with affiliate

firms in Europe and headquarters in the USA. Giving more control in decision making to the affiliates.

Planning & Implementing

Planning

Two Stages :

1st Stage: Data gathering Refers to relocation and outplacement as staff can be

either relocated or laid off. Decisions should be based on industry and regional

practices.

2nd Stage: Distribution of functions and allocations of resources

Create 3 centres of excellence. Empower affiliates (self-sufficient).

Redifine the role of headquarters.

Implementation

1st Stage - Data gathering.

- Look at potential sites through an in-depth analysis (several cities).

- Examination through several criteria: biotechnology industry, business environment, infrastructure, transportation, education, languages, employment, and so on.

- Data drawn from multiple and well-accredited sources (from both internal and external sources).

- Use of the Mercer Human Resource Consulting’s Quality of Life Survey - evaluation of over 30 quality of life criteria (e.g. social/economic factors, safety, transportations).

- Mapped the locations against these criteria.- Employees involved.- Switzerland was choosen.

Implementation (contd)

2nd Stage - Affiliate & culture change.

- Clearly define key roles, responsibilities, and processes.

- More resources and control given to management teams over their local organization.

- Heaquarters set the strategy and affiliates operate by themselves.

- Both formal and informal lines of communication, authority, and responsibility are shifted.

EVALUATION OF THE CHANGE PROCESS

Criteria for good change:

1. Get the specialist support from the beginning

2. Support from top management

3. clarity of Direction

4. clarity of decision making

5. leadership

Institutionalizing change

The staff at the Zug office was extremely supportive to the change process.

Current employees in Paris were encouraged to visit the site at Zug in case they expressed interest in potential relocation.

Risk assessment was done in order to prevent any loss of talent and to ensure that benefits exceeded any perceived risk.

Severance pay and benefits were given to employees who decided to move on to other companies.

New staff was recruited in accordance with the requirement at the new centers for excellence.

Existing culture:An analysis of the company values and assumptions: There is a focus on excellence There is a focus on innovation Bureaucratic style of management

The company culture in the European operation was ‘centralized controlling’ style

This is evidenced by the top down decision making. The decision making was slow

This led to a compromise on the value of speedy delivery of products to their customers

This also led to competitors gaining on them ‘Team’ is given a lot of importance

Change in culture

Competing Vales approach – Quinn, Rohrbaugh – Biogen Idec current position in terms of culture

Stability and control

Flexibility and Discretion

Internal focus and Integration

External focus and Integration

Competing values model - analysis

The company follows a ‘rational goal setting’ or ‘market’ model of culture.

The focus is on goal setting and planning with productivity and efficiency being the end results.

The Headquarters control of affiliates is very high.

This approach is sometimes seen as shortsighted and achieves regular short term successes.

The company is more externally focused as it needs to stay ahead of competition at all times.

Culture Change Desired

Focus on a change in the organization structure: Change from a centralized web culture to a more

networked or matrix structure. Empower the affiliates with more decision making

authority so as to increase employee morale and guarantee continued stellar performance.

Involve employees in all decisions made including this change

Dotted line relationship between affiliate heads and their HQ bosses.

Make excellence more ingrained in the company culture.

HQ to only play a role in setting ‘Best practices’ and leaving the rest to the affiliate discretion.

Competing Vales approach – Quinn, Rohrbaugh – Biogen Idec desired position to be achieved in terms of culture after intervention

Stability and control

Flexibility and Discretion

Internal focus and Integration

External focus and Integration

Competing values model - analysis

The company will now follow a ‘open system’ or ‘Adhocracy’ model of culture.

Readiness and flexibility are stressed on and the end results of growth and resource acquisition are seen as valuable

The Headquarters may lose the high level of control currently held over affiliates. But in the long term this would make them more effective and boost employee morale making ‘individuality’ and ‘creative thought’ company values.

This approach is sometimes seen as an approach that harnesses the company’s combined ability to create and often leads to a breakthrough.

The company continues to remain highly externally focused as it needs to stay ahead of competition at all times.

The Cultural change was successful

Reasons for success:

There was an extremely clear strategic vision or high clarity of direction

There was support from the right specialist from the beginning.

There was support from the top management all through

There was firm and decisive leadership throughout the process and there was clarity in decision making.

The company leaders internalized the change and practiced it themselves.

Final shift in the organization

Biogen became more adaptable to cultures and thereby was more flexibility in handling cultural differences.

The organization structure became flatter as more number of CoE sprung up to give rise to multiple decision making points rather than a centralized structure.

FORCE FIELD MODEL

Force-Field Analysis

Driving forces for the change ranked according to their strength

1. The change will allow the company to launch new products and grow its direct presence in emerging markets.(10)

2. The change will allow the company to grow faster than its peers and do justice to its pioneering ability of drug discovery, research, development and manufacturing facilities. (9)

3. The change will bring decentralized decision making, which will increase the companies response to localized threats and will make way for quicker decisions. Eventually making the company more competitive. (10)

4. The change is sync with the mission statement of the company, which emphasizes on global development , manufacturing and commercialization. (8)Sum Total of Driving forces -

37

Force-Field Analysis

Resisting forces against the change ranked according to their strength

1. The change involves relocating employees, providing newer contracts and outplacing those who choose to part away. This will add to expenses for the company and will be difficult to execute owing to strict legal process. (8)

2. New organizational structure may lead to unhappy employees which would lead to applying newer interventions to counter them. (9)

3. There is a high risk of loss of talent because of relocation. (7)

4. Till now the organization has been centrally controlled. The idea of decentralized decision making may not go well with some of upper management members (8)

5. The legal process in France is extremely rigorous with employee rights so terminating and issuing newer contracts will have to be carefully done. (6)

6. The re-organization will lead to massive change in organization’s culture, adjusting to it may prove to be a daunting task . (8)

Sum Total of resistive forces: 46

Countering resistive forces

To counter the resisting forces; To counter the effect of loss of talent due to relocation,

local talent can be hired. Lucrative Packages were also offered to the employees who relocated

The loss of morale due to change in organizational structure can be countered by proper internal communication and support from the top management.

To counter the change due to culture, the organization should employ the right OD process for it to be smooth and not cause friction.

To counter the negative effect of decentralization, top management must be provided training on how to handle such changes and they must lead by example.

• Resisting forces for the change ranked according to their strength

1. The change involves relocating employees, providing newer contracts and outplacing those who choose to part away. This will add to expenses for the company and will be difficult to execute owing to strict legal process. (4)

2. New organizational structure may lead to unhappy employees which would lead to applying newer interventions to counter them. (3)

3. There is a high risk of loss of talent because of relocation. (2)4. Till now the organization has been centrally controlled. The idea of

decentralized decision making may not go well with some of upper management members (4)

5. The legal process in France is extremely rigorous with employee rights so terminating and issuing newer contracts will have to be carefully done. (6)

6. The re-organization will lead to massive change in organization’s culture, adjusting to it may prove to be a daunting task . (3)

• Driving forces – 37• Resisting forces – 22

Steps taken The inquiry was done by the Headquarters

appointed project team. They checked all the potential centers for

excellence and found out the best practices of each.

Zug was, in the end, was found to have maximum amount of good features in terms of employee welfare, infrastructure and best practices and was also hence convenient for change to the Commercial and Administrative headquarters.

The best practices in Zug was to be replicated to other branches.

Positive Model

Stakeholders and Change

The key stakeholders were identified as staff at other regions, senior management, affiliates, staff in France, regulatory and tax authorities and the US Corporate.

Their ability to be a part of change and the control was mapped. How much they need to change and how much they have a control over that.

The reasons for change was demonstrated in simulations for the interested employees.

Stakeholder mapping

Transformation

Zug was extremely cooperative. It was visited and studied by people who were

potential workers there. Also by people who wanted to replicate the best

practices in Zug. Heavy severance pay, comprehensive

outplacement and new contracts. – minimized loss of key talents.

Through authoritative model of implementation Prior thoughts about who stays and who goes.

This made the employees’ transition easier. New staff recruited wherever required.

Positives

The organization and the project team in particular, had a clarity in direction.

The data gathering was a smooth process because of the cooperation of employees and other affiliates.

Cooperation of all the stakeholders who could be change agents with the project team.

Employees had a chance to ‘touch and feel’ the prospective environment. This reduced fear of change and displacement.

Flexibility of the organization and the hierarchy as such.

Comparative Analysis of the interventions done

EARLIER

Global HQ was in Massachusetts and International operations HQ in Paris, France

The international affiliates directly reported to the International HQ which in turn reported to global HQ.

Decision making was slower due to centralization of power and authority

Paris HQ had responsibility for finance, legal, HR and commercial activities

Regulatory affairs, drug safety and logistics were locally divided.

Global HQ at Massachusetts 3 Centres of Excellence (CoE) were established and

the International HQ (Commercial and Administrative functions) moved to Zug, Switzerland based on Mercer’s report on Quality of Life and factors conducive for doing business.

Regulatory affairs and drug safety functions were moved to London, UK because European Regulatory Authority was present there

Logistics functions was moved to Holland because packaging operations were done there.

The affiliates were empowered to make decisions to operationalise the strategy set by the global headquarters.

The affiliates now did not have a direct reporting relationship to the international headquarters but a dotted line relationship.

International HQ would share the best practices among the affiliates and report to the global HQ on the needs of the affiliates

NOW

Issues in the Intervention process

They did not employ an external OD consultant. He/she could have brought in an impartial third party view to the problem.

There was no strict time limit imposed for the change process to take effect. (Phases not clearly outlined)

The conflict in the cultures of Switzerland and France was not analyzed before going in for the change.

Questions??