Episode 022 | July 25, 2022 | 32:53
Guest: —
Published: July 25, 2022
Duration: 32:53
Description
This episode covers how to improve the success rate of sustainability transformations. We look at the three main reasons sustainability transformations fail and how to change each one. We also discuss how to create good analysis, the difference between a goal and a strategy, and how to deploy green transformations and sustainability as a growth engine.
Full transcript
About this transcript
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Making the sustainability transformation is necessary. As human beings, we cannot do the green transition and stop climate change unless we get the healthcare sector on board. A good way to test if your sustainability strategy is on the right path is to ask: does it help provide better treatment for patients? Do we make more money or save more money from it? If you cannot answer yes to ideally all three, you are doing something wrong.
Hello and welcome to the Sustainable Healthcare Podcast. In this episode we discuss why transformations fail. A lot of companies are running sustainability transformations and frankly a lot are failing. The top reasons: mistaking goals for strategies, failing to engage people early and often, and not integrating sustainability into the growth engines of the company. If it is not connected to revenue or profit generation, it is probably going to fail.
What is a sustainability transformation? A transformation is a radical change of business processes, products and services, and even recruiting. We are talking about changing the way the organization functions as a whole. Not just removing some plastic from a medtech device. That is a sustainability improvement but not transformative. This kind of transformation is necessary for all pharma, healthcare systems and medtech companies — it is also their license to operate in the future. Pure business.
It is going to be needed to win tenders, get the best talent, comply with regulation and as a key framework for cost reductions. Unfortunately the healthcare industry is less mature than many other industries in terms of transformation. But it is coming fast.
Main reasons transformations fail:
1. Analysis over process. They fail to engage people early and often. The classic: hire consultants who deliver a fine report, maybe a good analysis, but it stops there. The report does not end up in a drawer literally — there is a lot of talk about it, it gets posted on the internet. But if it is developed without the organization, the managers and the experts who have to live the change daily, it will not be adopted. In sustainability we cannot know everything beforehand. A lot of the solutions come from interaction with people. Good process with imperfect analysis beats perfect analysis with no process.
2. Mistaking goals for strategies. Most large pharma and medtech companies have a sustainability strategy. But often it is just a goal — “net zero by 2050” — with nice wording and buzzwords. A goal is not a strategy because it does not tell you how to get there or how to prioritize. A good strategy needs a clear diagnosis: what does the playing field look like and what is material? Do we have a CO2 baseline? Where are the majority of our emissions? Which will be hard to remove and which will be easy? Companies have limited resources and even more limited attention span. A good strategy focuses resources where you get the most impact.
Sustainability should be deployed as a growth engine. If it is not increasing revenue or profits, it is at conflict with the company’s reason for existence. A common failure: the sustainability strategy becomes a laundry list — we have to do everything. Then it becomes paralyzing and hard to communicate. Novo Nordisk’s “Circular for Zero” tagline does this well: an ambition (Zero) and a means of action (circular) in a five-minute conversation.
3. Not putting it at the core of the business. Sustainability historically was a philanthropic endeavor put on top, driven by PR or communications. One person doing one report a year — the CSR disease of the 90s. Test if your strategy is on track: does it help provide better treatment? Make more money? Save more money? If yes, you get a fast-moving flywheel because resources naturally flow toward these things.
Engage the personnel on the floor. They all have objectively high-priority tasks. They need to see themselves in the strategy. We make it a high priority to talk to people on the floor — what do they see as important — and make that part of the diagnosis. Each individual must be able to answer: how does this help me? If I am an account executive selling MedTech, how do I sell more? If I am a production manager, how do I have fewer failures? If I am running clinical trials, how do I have lower dropout rates? If they cannot answer that, it will not work.
As consultants we will often ask to do more interviews and organizational engagement than clients request. The easy thing would be to focus on analysis over here. But the impact is much higher when clients trust us to engage with their organizations.
To wrap up: focus on process over analysis. Engage people early and often, even with imperfect answers. Have a good strategy that is not just a goal or laundry list — with a clear diagnosis and focused resources. And put it at the core of the business — answer “how does this make better treatment, save or make money?” Thankfully it is doable — every week I see new business cases with circular economy or higher tender win rates. Thanks for listening — please like, subscribe and share your feedback.