Merck`s Transformation

Merck`s Transformation

Simplicity Driven Transformation: An Interview with Tom Hall, Executive Director of Corporate Strategy at Merck

Tom Hall has worked closely with Merck executive management to support the execution of Merck`s transformation efforts since the monumental Schering-Plough merger of 2009. Schaffer`s Daniel Dworkin spoke with Tom in April to discuss Merck`s change vision and how he and his team are turning simplicity into an engine for growth.

What is Merck`s transformation vision and how has it evolved?

Our transformation vision is to become the world`s leading healthcare company. Our Executive Committee went through a very active process to develop this vision, an effort that began well before the Schering-Plough merger. As we approached the combination, the leadership came up with a clear merger intent and a number of practical steps to ensure we were on track to achieve our goals. We`ve adapted our vision in response to changes in the global environment. Specifically, we embarked on an effort about a year ago to drive simplification efforts throughout the business. By taking work out of the system, we aim to continue to fuel growth, improve productivity, and achieve cost savings.

How did Merck determine its transformation strategy and objectives?

When we started to go down the path, we engaged in a collaborative process driven by the Chairman and CEO to reach out to senior executives throughout the company to get their sense of where the business needed to go. We relied heavily on their feedback, as well as the input of the broader employee population. We also looked at our business from the outside in to ensure we understood where the market and the world were going, and how to position Merck most effectively to compete.

How would you describe Schaffer`s contribution to Merck`s transformation?

Schaffer has played an important role in helping us achieve our transformation vision – particularly around how to speed up the process. They`ve brought real, practical skills in the simplification arena that helped us determine the right levers to pull to move forward. Together, we identified and executed a series of enterprise level priorities that had a meaningful impact in a short period of time. In parallel, we embarked on an effort to build simplification capability within the organization. Schaffer was instrumental in getting those skills in place for our teams.

What role has cross-silo collaboration played in supporting your transformation efforts?

Cross-functional collaboration has been a real enabler. Merck has talented individuals with incredible work ethic. But real power comes from collaboration. It`s critical to ensure we get the best answers to the challenges we face, and to do that we all have to be on the same page. We`re taking a number of steps to break down barriers. For example, we`re changing our incentive structure to ensure we`re rewarding the right behaviors. We`re also working hard to ensure we`re pulling in the right teams to address the challenges at hand. There`s a training component involved too – you have to teach people how to get the best out of one another.

In the end, it`s all about finding a way to make it happen – providing employees the right opportunities and making effective collaboration a part of what we do every day.

What role has innovation played in driving Merck`s transformation?

Innovation has been a lynchpin of Merck`s success going back decades. As a research-based organization it is easy to think of innovation solely in terms of scientific innovation. We`re pushing to expand how we frame up innovation to also include how we think about the business. We approach it by creating test environments, experimenting with options to improve processes, and determining what works to pull through. Giving employees the freedom to fail is key. We do this through communication, and through frequent check-ins with leaders to discuss progress and get rapid feedback on ideas that we`re pursuing.

What`s the single most important lesson you`ve learned in helping to push Merck`s transformation forward?

There needs to be a willingness to challenge the status quo – even at a time when your company is doing well. Transformation is pretty straightforward when it`s change or die. Merck is not in that position. We`re doing well, but we`re trying to do even better.

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