In case I wasn’t clear yesterday on why Obama is not a people person, allow me to explain by giving an example of how things have worked in the pharmaceutical industry when it comes to picking corporate CEOs.
Jeffrey Kindler was a Harvard educated lawyer who ran McDonald’s partner brands (Boston Market? Chipotle Grill?) before someone recruited him to be a chief council at Pfizer. He worked his way up to CEO and continued the rampage of buying and merging that his predecessor started. By 2010, the bloated behemoth that was Pfizer, and all that it had swallowed, had lost 35% of its stock value. All of my former colleagues at Wyeth were laid off in one fell swoop in 2009 and only a handful were hired back. That was 19,000 people at Wyeth alone. It was brutal and indiscriminate. There were dedicated and excellent scientists who lost their careers in the middle of the Great Recession. They did nothing wrong. They were simply in the wrong place when a former McDonald’s executive decided to perform a little exploitative profit mining by absorbing the Wyeth pipeline, but, ehhhh, not all the research people who, you know, did all the work.
The pharmaceutical industry is full of stories like that. There are many executives who know next to nothing about the industry they are managing. Their minions have the idea that the research staff are like day laborers whose jobs can be broken down into a series of burger flipping tasks, taking all of the curiosity and spontaneity out of the experimental process in order to save money. It’s short sighted, destructive and shows a profound lack of understanding of the scientific method. But that’s not why the big executives were recruited. They were recruited to make the shareholders money and right now, monetary incentives are not in the area of investing in science and research, which can be expensive and unpredictable. Incentives run towards “get rich quick” schemes and extraction of value.
The damage has been done to many pharmas but the extraction will continue to the point of no return because the executives who are running these businesses don’t really understand the nature of the companies they run. But that’s not why they were hired. If they were hired to run research organizations, it wouldn’t be done this way. And the people that are hired to be executives are really not that much different than the people who run Wall Street. They have an academic pedigree. These people are snobs. It’s like an aristocracy. There’s a level of ass-kissing but probably not as much as you think. It’s more cutthroat than that. More dog-eat-dog. It’s a lot less glad handing than back room deals and “strike first” maneuvers. What’s missing in all of the power grabbing is good management.
This is the world that Barack Obama comes from or could fit into easily. He’s got the right pedigree, the right degree of ruthlessness and he’s more interested in “winning” by striking the right deal than driven by well-crafted policy. The fact that he was African American was just icing on the cake to his recruiter. It made for good theater and it gave them a hefty cudgel of racism to bash anyone who dared to criticize him.
This is not a world that values good management. Day to day management and good stewardship gets in the way of the power game and winning. Just look at the way Obama’s administration is planning to roll out the PR offensive for 2014. It’s going to be about issues the administration’s brain trusts think will distract the Republicans. It’s not about jobs or the economy. It’s going to be about gun control. Granted, gun control is important but it’s not going to put food on the table or fix what ails the economy. And it could be a giant miscalculation. But mostly, it’s game playing that is disconnected from the boring tasks associated with serving the people and governing well.
This is what the MBA/bonus/corporate lawyer class has been up to. Given the disaster that the pharmaceutical industry is in, with layoffs a constant feature, a permanently underemployed research sector, perpetual restructuring and concentration of projects in cancer and orphan drugs to the exclusion of almost everything else, I’d have to say that they don’t know what they are doing. These are not very imaginative people. They’re not creative. They follow trends and do what all their friends do just like brainless lemmings and I don’t mean to offend lemmings. Once they get it into their heads to extract a wealth, they have to come up with an excuse for doing it. Then they decorate that excuse with biz speak and hypnotic memes so that before long, everyone is repeating the same damn things without any clue what it all means.
They can’t be trusted with their own checkbooks much less running big organizations or branches of government. And in this environment, where crafting deals behind closed doors is where the real work takes place, glad handling and cultivating political relationships is a tedious, boring process done for show. Pretty soon, we won’t need politicians at all.
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I found this while I was searching for more Tony Robinson’s documentaries on youtube. This sums up 5 years of anger and frustration. I couldn’t have said it better myself:
Filed under: General | Tagged: back room deals, bankers, Barack Obama, Bonus Class, CEOs, Jeff Kindler, pharmaceuticals, tony robinson |
The Confluence 
Executive management is REALLY detached from the ground level these days, and not merely in terms of pay. The level of copycat behavior is puzzling..my company will implement processes just because they see it used somewhere else…in a completely different industry. No one asks the employees- the one’s who actually do the work- for opinions or an honest appraisal of a major shift in policy or implementation of a technology. Anyone who suggests the new proposal is a suspect idea, gets labeled a malcontent and risks retaliation.
Obama is the perfect CEO/President. He’s more interested in developing his “brand” than he is at actually governing. It explains why he has a first-rate PR machine, but a second-rate policy shop. He’ll give a speech, he’ll strike the chords he think will resonate with the audience but it goes no further than that. There’s no serious attempt to solve public problems, only to engage them superficially then spin them as if they were solved.
I checked out the board of directors at several “local” companies recently… I was surprised to see that every one of them had members representing investment firms. That is a change from the “olden days” when the CEO was grown from within and the board of directors were actual people representing their own investments.
I think having investment firms represented on the board of directors is where the wall street conformance comes from.
obama thinks speech == done.
RD, great article.
Your article is an example of the PR scam the elite US pols/media push of a “STEM skills shortage” (Scientist/Technologist/Engineer/Mathematician).
The STEM pros working at a pharma company are easily among those that are the most productive/innovative/intelligent in any activity under the health care & life sciences industry group. For example, a biochemist working in the lab on a idea to fight cancer, a statistician or computer scientist computer-simulating the biochemist’s ideas, electrical engineer or physicist designing radiology equipment, etc.
These STEM pros face a lower pay & much lower chance to actually work in their occupation until retirement age (65 or whatever the Obama/Boner/ReaganJr 0.1%er PR hack pol complex raise it to).
Faced with the variety of tactics to flood the STEM labor market to reduce labor cost (permanent layoff culutre – layoffs not only during recessions anymore, offshore outsourcing to low labor cost nations like India, use of H-1B immigrant worker visa, age discrimination to exclude workers over 50 or even 35, etc), how many STEM workers will be able to work in their occupation until retirement age or even age 50?
From a risk-adjusted pay perspective (higher pay & lower unemployment), it sadly seems obvious that the rational survival-minded goal is to take an easier, intellectually simpler, more routine, less-innovative, yet NOT-“free market” PROTECTED oligopoly/cartel job in the industry group that uses SOME STEM skills, like a physician, pharmacist, medical physicist that calibrates radiological equipment at a hospital, patent lawyer, health insurance actuary, etc.
In other words, Hardcore/innovative/Real non-protected STEM is screwed, protected Soft pseudo-STEM is lucrative (at least for now).
Of course on the society level this ensures that the US sadly will be a less innovative nation, but as a USian individual in a non-civilized nation with weak-to-no (depending on the Obama/Boner Grand Bargain/Grand Ripoff) Social Insurance, an individual has “gotta do what they gotta do” to survive.
Again, great article, RD.
Wall Street has become a place for out-sourced STEM workers who grind numbers. In the movie Margin Call, the number grinders included a literal PhD “rocket scientist” and an engineer who used to build bridges but now was assessing risk.
The obsession with this quarter’s numbers means that R&D and production costs are simply something that reduces the “profit” for the current quarter and the succeeding quarter. No product ion the pipeline? Buy another company and sell their products.
Everybody has known this secret for at least 50 years but it has only picked up steam in the last 30 or so. It was actually derided by the professors at Harvard Business School in the 1970s. I don’t know what they teach now.
In the 70s, the object lesson for this was the conglomerate which kept buying companies cheap and killing them off. Now the ITT and Gulf+Western (no ampersand) are actually operating companies and the haha derision we had to Britain is focused inside.
Question: What was it that was derided at Harvard in the seventies?
The view that R&D reduces this quarter/next quarter profits?
Or the continued existence of R&D in defiance of the view that it reduces this quarter/next quarter profits?
two things: 1 – Tony, it’s bad enough they’ve stiffed you. Don’t give them the satisfaction of hearing you object to what you cannot affect. and 2 – As a PUMA, you have lived through this with Obama when you KNEW he was a lazy, untested, frat boy rush, and this is just another lap around that track where anybody who objects, no matter how legitimate, is dowsed with ridicule and dismissed. As with the Bush Administration, it’s not the White House that has failed, it’s you the Have Nots who have NOT been invited to the ranch to watch him wield the chainsaw. Don’t get a vicarious thrill out of seeing pretty boy play golf with Tiger? Too bad.