By Irene Silber, journalist and communications strategist
Peter Hecht has served as the CEO of Ironwood Pharmaceuticals since co‐founding the company in 1998. Under his leadership, Ironwood has grown from a small group of scientists to a commercial biotechnology company.
Ken Banta founded and leads The Vanguard Network, which works directly with CEOs and develops senior executives through Vanguard Forums. In advance of the next Forum for Healthcare Leaders on November 28 and 29 in New York City, where Peter will be on the faculty, they discussed the forward-looking role of the CEO.
What should top leaders do to anticipate trends and set a course for the organization in such a prolific period of innovation?
Peter: We’re focused on creating new medications and the hardest part of drug discovery is good taste and judgment along critical decision points. Selecting real candidates from the array of contenders is very difficult. It always comes down to people – not tech.
It helps to be an inquisitive person and have an inquisitive organization. You must hire and develop fabulous people to build the organization around you. You and your team need to be open to challenging dogma and exploring new ideas.
Ken: Peter exemplifies that the higher you are in an organization, the more humility is needed. Sadly, it often goes the other way. People drink their own Kool-aid, become detached and don’t listen to what others have to say. The litmus test of top leaders versus those who fail is curiosity and openness to change. Hire people who force you to change.
Peter: As a leader, you need to be open to learning from everywhere. I meet new employees within their first two weeks at Ironwood. I always acknowledge the incredible talent and diversity of experience arrayed around the room, coming from big pharma and little biotech. My message is: “Don’t be scared of me. Teach me. I’ve been here 18 years and need to learn from you guys.”
How much of a CEO’s bandwidth should be devoted to looking forward versus managing current strategy?
Peter: The best thing about being CEO is that there are no pre-defined job specifications. Great CEOs shape the job around what they are good at. Figure out what you do really well and do a lot of it. Build a leadership team to complement your strengths.
One of my great advantages is that I have no functional domain expertise. No core competency where I’m tempted to dive in deep and overrule the functional leader. I only make three or four decisions a year. Instead, I listen and hold people accountable.
Ken: It’s very situational and the CEO must be focused on what matters. Sometimes leaders think it’s just about strategy, but it’s just as much about execution. Great CEOs sometimes dive in like a seagull and other times look far in the future.
Looking at the next five years, what are the critical trends in healthcare that top leaders must deal with?
Peter: We’re in a fabulous position with great assets, a lot of talent and interesting choices to make. More broadly, the biotech space and even pharma are seeing an increase in productivity and success in innovation. Science is coming to fruition. There will be some exciting therapies coming through.
But pricing and value will get a real reality check. It will be a big deal. Very sobering.
Ken: Some of the drivers will be cost and willingness to pay and affordability to society. Some CEOs don’t get what this will look like. They are justifying based on the value the therapies can bring. At some point, they will be told that even if it’s valuable we can’t afford it. This is already happening in Europe but it’s new here.
Senior leaders need to acknowledge the convergence of healthcare and other sectors. Google and Amazon may well disrupt pharmacy; may become the new system. Leaders need to be out there with real people to know what’s going on. They need to anticipate what Amazon might do.
Many healthcare CEOs come to their roles with a background in science. And yet, they are required to shepherd hundreds or thousands of people. What is a good balance between IQ and EQ?
Peter: There’s no good job description for CEO and each is different from the others. All, or almost all of the best biopharma CEOs have background in science. It helps to be able to play ball with your R&D teams. In the drug development phase, it’s an advantage to be able to sense both the excitement and the BS. Beyond that, there’s no model.
Ken: Really successful CEOs have deep self-knowledge – they know what they are good at and what they are not, and they hire for areas where they are weak. In a lot of healthcare, science knowledge is critical. The CEO does not need to be a scientist, but she must get her hands into it and learn it.
Peter, you have stated that you founded Ironwood to explore “the idea of working with a team of people who challenge, inspire and humble me.” What role does the human factor play in leadership?
Peter: You need to know what you are good at what you are not, combined with knowing what you love to do. Focus on what you are great at, and surround yourself with a complementary team. I’m relentless at getting better myself and ensuring that we are getting better. My charter for that is to hire people better than me.