Biotech C-suites must cultivate a healthy friction

Practical advice for achieving a high-functioning biotech C-suite

A high-functioning executive team is the linchpin to success in biotech. Members of the C-suite must acknowledge and learn from common friction points amongst senior leaders and think beyond their domain expertise to fill in the spaces between and across functions.

That may seem obvious, but TD Cowen’s research found that these traits or lack thereof are among the biggest differentiators between successful and unsuccessful biotechs based on our conversations with dozens of biotech CEOs, executive leaders and board members about what makes a successful team.

The results were published in our Feb. 24, 2023 Ahead Of The Curve/Inside+ Series report entitled: “The Biotech Executive: Bold, Tenacious, And Accountable.”

Innovative science is the bedrock of biotech, but the crux of day-to-day operations and ultimate success — regardless of how great the technology is — will ultimately rest on the key leaders who are on the executive committee. This importance of a having a successful team in the C-suite is made greater by the moribund bear market that has beset biotech over the past two years. Companies must now manage their cash burn to weather through leaner times.

Our report tackles the myriad characteristics that beget a successful biotech team, with a CEO-driven culture of honesty, humility, collaboration and accountability. Where members share a sense of urgency but compensation metrics are based on success, not just delivering on timelines. The report includes a guide to help investors assess whether the biotech leadership at a given company is built for success.

Ultimately, we find that executives in biotechs must be risk-tolerant, entrepreneurial and nimble. They must work harder with fewer resources and be willing to roll up their sleeves to learn from and collaborate with their counterparts. This also requires a willingness to question their colleagues around the table to foster healthy debate, flesh out blind spots or biases, and make the important decisions.

According to the executives we spoke with, the avoidance of these uncomfortable debates and preference to “stay in your lane” results in barriers, lack of coordination, missed opportunity to troubleshoot early on, and seemingly small issues growing into large elephants that can derail a biotech. 

You’re in everyone’s lane now

In our conversations with successful executives from across all function areas, an important theme emerged. Being a successful executive is not about being a dependable chief of your functional area. Rather, it is about scaling up to be one of the leaders of the company.

Executives who are solely technical experts in their functional area and who do not seek to broaden their intellectual curiosity, speak up, or work beyond their areas of expertise are unlikely to succeed in the C-suite.

Being an executive is about having a broader aperture to zoom out and see how your function area fits within the strategy and operational imperative of the company as a whole. This will allow an executive to navigate their functional area, be a partner in other areas to make other executives successful and avoid pitfalls. By working together across reporting lines and being attuned to areas that are beyond their expertise, executives can break down walls and improve communication. Together, this will help the team to explore different options that can steer the company towards success.

As such, first time C-suite executives often make the mistake of trying to continue being the technical experts that got them the promotion in the first place. They stay in their own lane, do not ask broader questions about what the company can do better, do not try to foresee problems before they arise, and typically refrain from speaking up when they see an issue. Instead, they look inward to their own functional area, sometimes becoming hyper-focused on meeting their own personal performance goals/metrics and walling themselves off from responsibility for the broader success of the company.

But we heard from executives that the opposite is the more likely path to success. These individuals must work together, beyond their area of expertise, to share responsibilities across functional lines. They must take ownership as a shepherd of strategy and execution and speak their mind about key decisions that affect all business lines.

Healthy friction

Open dialog amongst the executive committee will reveal differences of opinion. This push-and-pull is natural in any management team, but options can be examined, concerns discussed, and small decisions debated to ensure the ultimate choices are well-vetted. Perhaps more importantly, it ensures that everyone had a chance to be heard and leads the team to align around the decision.

Our interviews with CEOs found various strategies to encourage discourse while also managing differences in a respectful and professional manner. All executive committee members should be engaged in problem-solving across functional areas. This will help everyone to understand the levers that are important in other areas of the company. Asking questions and debating ideas amongst the executive committee can help break down walls that might exist and ensure that any solution reached is the one that is best able to address the needs of all functions. This is a critical way to get to the best solution and promotes free thinking and creativity. In biotech, autocracy from the CEO or founder does not work.

Many successful companies have put in place formalized bull/bear discussions. In other cases, a successful CEO is partnering up two executives (two-in-a-box management) to tackle cross-functional challenges to ensure that they co-own the solution. And another we spoke with highlighted the use of a Devil’s Advocate scenario.

Bull & Bear Case Debate: If members of the executive committee disagree on a key decision, the CEO could ask each to take the opposite side, developing an argument against the decision they prefer while offering supportive debate for the decision they oppose. The outcome can often lead to multi-dimensional problem-solving. But more importantly, it helps each party to see the problem from the vantage point of another function line.

Two-in-a-Box Management: Two members of the executive team are paired up to make decisions together. For example, the head of R&D and the head of commercial would attend every meeting together, keep each other keenly updated on project timelines, status, etc., and ultimately make decisions together. This management tool helps each party understand considerations on both sides of the product lifecycle and cultivates accountability and mutual respect amongst the pairs. This should eliminate any future finger-pointing and align both function lines as they jointly work to solve the challenge.

Devil’s Advocate: Prior to a meeting, one person is appointed to be the devil’s advocate for key decisions. As deliberations are under way, the person appointed as the devil’s advocate would outline the potential risks against a course of action or decision. This alternative point of view and discussion enrich the group’s thinking about a particular issue and help to uncover unanticipated or overlooked consequences that they could then work to resolve.

Anticipate & manage friction points

Breaking out of your lane, helping others think through challenges in their lanes, and getting to win/win situations with your partners is the best way to work towards success. Beyond these above-mentioned exercises to foster healthy friction and debate, natural friction points will emerge. Executives who can anticipate and work through these differences should be more successful.

In biotech, decisions will need to be made based on imperfect information and things are never going to be perfectly lined up. But articulating what you need, laying out the course of how you can help others achieve their goals, and asking for common ground in a practical way is the right course of action. It is much easier said than done and not everyone buys into that mindset.

Some friction is healthy and can serve as a check on assumptions and provide balance to the views. There are also going to be important places to give and compromise. At times, you will have to take one for your colleagues or the team.

In management teams, there are always the executives who seek to accumulate power, responsibility, and resources. They are rarely the executives who deliver the most value. If you need a huge team to do your job, then you may want to consider whether you are actually helping the company or are just trying to shore up your own stature. From our conversations, we surmise that your colleagues are actually observing your actions and intentions. It is most prudent to think about what is best for the company as the guiding principle in your decisions.

Below we provide some examples of the more common friction points amongst and within the executive committee of a biotech.

Yaron Werber is a managing director and senior biotech analyst at TD Cowen, and Erin McCallister is a director on the health care equity research team at the firm.

Signed commentaries do not necessarily reflect the views of BioCentury.