Leading the Way

NGP. You introduced Target 2010, The Toyota of Pharma Vision three years ago. What was the thinking behind the concept?

SD. The point that we wanted to make was that we were going to completely change the way we run our operations. We said that we were going to eliminate all functions, meaning we were going to build all the teams around the process of making medicine.

So the quality control group, HR, finance, packaging, processing, maintenance, production planning, and the supply chain management function group all disappeared and became part of the process teams. People needed to change the way they were thinking: stop thinking silos, and start thinking process.

NGP. Didn’t that create confusion to start with?

SD. It did, because people didn’t know what it meant. We therefore decided to run pilots. Over a four-year period, we transformed 18 manufacturing plants. All work was embedded into the processes. Then, when we said we were going to eliminate the supply chain function, we were telling the global organization now it’s time for you to change.

We did this on the local level, but we knew that the whole process won’t work unless it is completed on a global level. We went through a series of business process reengineering activities to define what the global supply chain operation was and how we were going to embed it down into the process teams. Then, in early 2007, we went through the reorganization. We set up the new global processes and designed the organization around that. The new process oriented structure is nearing completion globally.

NGP. What were the main challenges you came across?

SD. The biggest challenge was that nobody in the pharma industry had done this to the extent that we envisioned. There wasn’t a book we could pull off the shelf. There wasn’t somebody we could call up. We had to create it, and a lot of it had to be done on faith. People want to have all the answers before they do something, but we did not have clear answers until we had completed it. That was the less comfortable part for people.

NGP. Sounds like you took a ‘no risk, no fun’ approach.

SD. In order to enable big change it is often necessary to take risks. While this can create initial feelings of discomfort, once the rewards are seen, these feelings rapidly disappear. In the organizations where we have implemented these big changes the overwhelming majority would never go back to the old way of working.

NGP. But you do need the support from senior management and from the rest of the company. You need a culture that is open to an approach like that.

SD. You need to give people permission to do this, and if they do it and it’s not completely successful, that they are still in a safe place.

NGP. What made you come up with Target 2010? Was Novartis going through a difficult time? Did you need a new direction?

SD. The opposite, we were on top. We had launched many new products in three years, which was more than any other company had done. But still we said, ‘This is the time to change’ because we wanted to avoid ever being in a situation of having to cut costs without having the time to change the process.

Target 2010 has a timeframe of five years. It’s not an initiative, it’s a strategy, and this is really important.

Source: Target 2010, The Toyota of Pharma by Tom van Laar

NGP. Why do you want to be the Toyota of the pharma industry?

SD. Toyota has come from making sewing machines and looms for making cloth to making trucks, and today they outsell everybody in the world on cars. They didn’t do that by accident. There’s something in their DNA that they worked to create this. I’ve visited Toyota in Japan and their plant in Kentucky, and I’ve studied what is it about them that Ford, Chevrolet or any other automaker hasn’t figured out.

It’s somehow the climate that they work in, and that’s what we wanted to create. We didn’t want to create a flare for a moment. We wanted to really culturally change the way people think. That’s what our Toyota Vision was about. Also, they have 14 principles that they work by, and we have adopted those 14 principles as our way of achieving operational excellence.

NGP. They apply to medicines as well as cars?

SD. It is not about medicine or cars, it is about how you manage the process of what you make. One of the principles is not to be comfortable with where you’re at. Every day, look at continuous improvement all the way down to the shop floor. We’ve embedded this thinking all the way down to every operator, so it’s not just a management philosophy, it has become an operator philosophy.

Another principle is if there’s an error or a flaw, stop everything and fix it. Don’t let anything go through if an operator sees there is a quality issue. Toyota have a lanyard. When the operator pulls it, the whole plant stops and people focus on that issue. They don’t start it up until they solve the issue and this is how you attack the quality problems. Too often, people see a quality problem and they let it go, and somewhere along the line, it sticks its head up and creates a problem, so the idea is that people have the permission to stop and get it right.

It is transferable, and what we’re hoping for is that 10 years from now, the automotive industry says that they want to be the Novartis of the auto industry [laughs].

NGP. For your first facility, it has now been about five years since you’ve introduced the Target 2010. Could you summarize the experience?

SD. For me, it was an emotional event. I gave up my job as engineering head to help map out this process. The most amazing thing was the very first day that we launched one of the pilot projects. I stood up in front of my 80 direct reports of my process team and described our vision to them. To truly empower all employees, we have eliminated all supervisors and managers and left only two layers, the process team lead and the team.

I came to the session with two rules to demonstrate a clear shift from command and control to one of coaching and empowerment. I wasn’t going to tell anybody what to do, and I wasn’t going to answer any questions. That was the most difficult thing I’ve ever done in my life, because I knew every process in the plant. I knew exactly what I wanted people to do, and I could answer all of their questions, but I wasn’t going to do it because my role was no longer their manager. My role was their coach and that was the key, the paradigm shift.

NGP. How did the people react?

SD. After a brief introduction to the new team and the products that they were responsible for, I told them to go to work. There was dead silence. People looked at me cross-eyed and then finally somebody raised their hand and said, ‘Well, Mr. Dreamer, what do you want me to do?’ I said, ‘I don’t know. What did you do yesterday?’ He answered, ‘I worked on the bottle line number five, I am a filling operator.’ I said, ‘There’s a pretty good chance that’s what you are going to do today.’ And so we had some discussions around that.

I tried to disengage myself from the center of the conversation and let them talk to each other. One of the operators raised his hand and said, ‘Mr. Dreamer, I work on the packaging line five. Sometimes, we have labels that don’t stick to the bottle. I used to go to my supervisor, so should I come to you now?’ I said, ‘I don’t know anything about labels and bottles. Who could help you with this?’

And then the packaging engineer raised his hand and said, ‘We have these communicators, so just buzz me when you have an issue. I’m on your team. I’m here to support you.’

Things then started moving where somebody would ask a question and somebody else would answer it, and I made it through the whole session without telling them what to do or answering a question. At the end, people said that they thought they understood. And then somebody boldy said, ‘Mr. Dreamer, what do you do? You stood up here and you haven’t told us anything. You haven’t answered any questions. What’s your job, what kind of manager are you?’

And I said, ‘My job is to set the vision, to support and make sure that you have everything that you need to get your jobs done. I’m your coach. I’m going to be there with you every day on the floor. Your job is to make medicine’ The next year was a very good journey for me and for all the people. We all learned together. I’d been in the industry for 28 years, but that moment, my life changed and I can never go back.

NGP. How many people were affected by the change?

SD. Around 10,000.

NGP. 10,000? And it worked?

SD. It worked. I mean, we’re in various stages. We have approximately 10,000 people in the department Technical Operations of Novartis Pharma AG, and all of our plants are going through this transformation, but they’re not done. Some of them started six months ago, so they have another four and a half years journey before they’re really there, but people understand it, and they’re working with it. The first plant that I was in was in Suffern, New York. The Europeans said, ‘Well, those are the Americans. They can do that. It’ll never work here.’

And so we picked the largest plant in Europe, which is in Switzerland, and we converted it. Then the Italians said, ‘That’s Switzerland and America, but it’ll never work here. We have a special culture.’ So we went through each one of these and everybody made their way through it.

Everybody has a hundred reasons why it won’t work. But this is top-down driven. It’s mandated. There is no other way and if you’re not interested in doing this, we’ll find somebody who is, and people got onboard.

NGP. Are people naturally opposed to change, or do you think reluctance is something that is prevalent in the pharma industry?

SD. It was created by Napoleon, actually. It’s the hierarchical thinking in the military where you have a chain of command. You start off at the bottom and you work your way up. But process orientation has nothing to do about a ladder. It’s more like a picket fence.

It’s not about climbing. It’s about gathering additional depth in your knowledge and capabilities. People have a hard time with that because they think success is how many people you manage, they think it’s about power. We’re trying to get completely away from that. For us, it’s about collaboration. It’s about networking and it’s about influencing and coaching. People get rewarded for what their teams do.

Most people don’t know that world, and that’s the hardest challenge. It’s prevalent in pharma, but it occurs in many other industries as well. It’s probably prevalent in the home life and in most anything people do. It’s the way we are raised.

NGP. What have been other challenges that are particular to pharma?

SD. People say if you do this, you’ll lose quality and end up with regulatory issues. Having self-directed teams, however, is not about sending people off to do what they want. You fix the process. The process then tells the people what needs to be done. But people can be quite skeptical, and one of the biggest challenges is to overcome that.

Some products are easy because they’re big products, and they have dedicated equipment. Some products are small, so you may have equipment that runs 15 or 20 different products. That was a challenge. We have multi-market sites and single-market sites. Every plant and every process is different, so there’s no single way of implementing this change. You have a core model. In each one, you have to adopt it to the local culture, local people and local processes, and that’s a real challenge.

NGP. And what has been the biggest benefit?

SD. One of the biggest benefits is the cultural buy in from the people. We used to have people that were sometimes not happy with the style of management. We have eliminated these problems now. People seem to have a sense of ownership and pride in what they’re doing.

On top of that, we’ve increased our customer service level from 98.5 to 99.7 over a two-year period. We’ve reduced our cycle times by 70 percent and our inventory by 25 percent. These are all tangible benefits that show up on the bottom line.

NGP. Once you have reached your Target 2010, what will you be focusing on next?

SD. We are looking into developing new technologies that could replace the conventional batch-based system of manufacturing in the pharmaceuticals industry. Batch-based systems have been around for hundreds of years, and people are comfortable with them. It’s what they learned in school and it’s the way the FDA looks at it. But moving forward, Dr. Vasella (Novartis’ CEO) challenged us to look at new ways of doing things.

We recently announced a joint project with the MIT (Massachusetts Institute of Technology) that looks at the chemistry from the absolute basics on the molecular level, redesign the way we make products and then look at technology that would support that.

This is something that no one has really looked at, and it’s hard to imagine in two years we’ll have an initial bench scale unit. Due to the very good cooperation with MIT, more and more people are beginning to believe that it can be a reality, where there was a lot of skeptics in the past.

Source: Target 2010, The Toyota of Pharma by Tom van Laar 

NGP. Why hasn’t anyone else tried to come up with a new concept?

SD. People are risk averse. If you launch a new product that you hope is going to be a blockbuster, you go with conventional technologies. Everybody wants short-term results, so they’re not willing to invest. We said this is going to take 15 to 20 years, and we are willing to invest in that future.

NGP. You are not expecting quick results then?

SD. We’ll have a pilot in two years and we’ll have a process that we might be able to take to manufacturing in 10 years.

NGP. What new technologies are you planning to utilize, and how will they improve manufacturing processes?

SD. First, you look at the process. The process will tell you what technology you need.

NGP. And how will this revolutionize manufacturing?

SD. The traditional manufacturing batch approach takes about 300 days on average to make a product from end to end. In a lean world, it’s approximately 100 days. In a continuous manufacturing world, it’s less than 10 days. It reduces the complexity of your supply chain and strategic planning. It eliminates a lot of things.

We have to go out and build new plants, so there’s consequences that come with it, but the benefits, if we can achieve this, are absolutely great. The cost of a new facility will be significantly reduced. It should improve quality because you have eliminated many of the steps and because you understand how your processes interact. It should improve yield and so there’s a compelling business case on why to do this and then, ultimately, it should reduce product cost.

Source: Target 2010, The Toyota of Pharma by Tom van Laar

NGP. What are the main challenges and difficulties involved in this project?

SD. The difficulty is nobody’s ever done it. There are 11 work streams that are being worked through and you have to go through a certain sequence to get this right. It’s a lot of bench work.

We think it’s probably going to be 2017 by the time we finish this project, so we’re in this for the long haul. We started this program in 2005, and we knew we were going to have some tough years. The industry is going through change. Novartis is going through change. But for technical operations, we’re still on track to realize our Target 2010 vision.

This is a good story for our people, because we’ve challenged every process we have and have already taken out unnecessary costs. We have a mindset now to do this on our own in a continuous way. So we’ve been given permission to keep doing what we’re doing.

NGP. Carte blanche?

SD. Yes.

NGP. Good luck.

SD. Thanks.

About Steve Dreamer, Novartis

As Head of Novartis’ Global Pharma Engineering & Innovation Quality Productivity, Steve Dreamer is responsible for providing technical and project management for the major capital investments, and for building Operational Excellence capability for the TechOps organization to achieve Target 2010, The Toyota of Pharma Vision by embedding LEAN, Process Oriented Organization (POO) and other re-engineering processes.