This is a summary of a recent conversation with Hein Knaapen and Tripti Jha discussing the spin-off of Sandoz from Novartis.
Hein Knaapen is the Managing Partner at CEO Works | Europe, a boutique consultancy focused on value creation and talent decisions. Tripti Jha was previously the Chief Talent and Transformation Officer at Novartis, leading the talent strategy and pandemic response. More recently, during its spin-off from Novartis, Tripti took on the role of Chief HR Officer for Sandoz. Hein and Tripti discuss the intricacies and challenges of spinning off a large healthcare company like Sandoz and establishing it as an independent entity in this discussion. They provide insightful commentary on culture, performance, and priorities for the new company as it separates from Novartis.
Priorities During the Spin-off
"A spin-off is not for the faint-hearted," says Tripti. During the complex process of divesting from Novartis, Tripti had to continuously balance multiple priorities and determine what was truly important versus just needing to happen.
She focused on a few areas that required direct involvement and could not be delegated. First, Sandoz's core business performance metrics were defined and tied to executive incentives and performance management. These foundational decisions impacted shareholder value and the company's future strategic direction.
Second, Tripti prioritized managers' critical role in transforming the culture and executing the spin-off successfully. She ensured clear, regular communication between leadership and managers on company strategy and provided managers with the support and tools needed to strengthen their capabilities.
Finally, the Sandoz Chief People Officer spent considerable time working closely with the CEO on the executive team's effectiveness and the broader talent agenda. This included assessing the top 30-40 roles driving value creation and making decisions to nurture and deploy talent optimally for Sandoz's performance.
Though many tasks required attention, Tripti remained disciplined in her focus on what matters most as an independent company. She had to balance running the operational business effectively while rewiring the organization for speed, agility, and execution. Tripti embraced the mindset of "enjoying the joy of missing out" rather than chasing each issue out of fear of missing something important. This ruthlessness enabled her to focus energy where it would have the greatest impact.
Speeding Up Decision-Making
The former Novartis executive discussed how speeding up decision-making is critical for Sandoz's success as an independent generics company competing on execution and margins. She emphasized ruthlessly prioritizing what decisions require discussion vs. what can be delegated.
These are a few critical ways Sandoz is working to accelerate decision velocity:
-
Identify the most painful bottlenecks to focus simplification efforts - don't try to overhaul everything at once. Look at where time to make decisions is slowing down the core supply chain and business processes.
-
Clarify decision rights - who takes each decision and who needs to attend relevant meetings. Remove unnecessary participants from meetings.
-
Dramatically cut down the volume of topics for senior leadership review to only what's truly material to the company. There's massive filtration of what makes it to the executive committee agenda.
-
Make expectations clear across the organization that speed is required to compete and survive as an independent generics player. The culture needs to change to decide and execute rapidly rather than having months or years to deliberate.
-
Reduce temptation to showcase achievements and focus executive time on what matters most for driving performance and culture.
She emphasized that transforming the speed of decision-making takes time when coming from a large company but requires continually challenging and rewiring established processes and mindsets.
Strengths to Retain from Novartis
Tripti emphasized several strengths she wants to retain from the Novartis culture as Sandoz spins off into an independent company.
She wants to maintain the local nuances and customer proximity within each country, even as Sandoz operates globally. When visiting Sandoz sites in Germany or Italy, Tripti notes it feels like a German or Italian company due to the deep understanding of those markets. The global/local mix provides a key advantage.
Further, Tripti wants to retain the stability and continuity provided by long-tenured general managers in each country. On average, GMs stay 4-5 years in the role, allowing them to grow the business locally. This drives excellence in customer service, proximity, and execution.
Finally, Tripti highlighted Sandoz's rich 200-year legacy and reputation as a leading global supplier of critical medicines like antibiotics and biosimilars. This history and Sandoz's role in providing affordable access to healthcare is core to the company's identity and purpose.
Challenges Facing the New Company
As a newly independent company, Sandoz faces some critical challenges as it establishes itself separate from Novartis. Some of the significant challenges include:
Adjusting the business model: Sandoz now operates in a much lower margin business than innovative medicines at Novartis. It needs to compete on both cost and quality with other generics companies. This requires adjusting the business model to focus on operational excellence, speed of decision-making, and lean processes.
Materiality: Coming out of a large company, Sandoz needs to reassess what is truly material and focus resources only on what matters most as an independent company. There is a temptation to continue doing things simply because they were done at Novartis.
Simplification: The urge is to simplify everything except one's area. However, Sandoz needs to simplify thoughtfully across the company to eliminate unnecessary complexity. This requires the courage to stop non-essential activities.
Employee expectations: Employees may expect things to continue operating as they did within Novartis. There is a need to reset expectations and shift the culture to that of a more entrepreneurial generics company.
Global business: Sandoz operates globally, which brings complexity to the supply chain, currency fluctuations, and regional needs. It must balance global mandates with local accountability and execution.
As a newly independent company, focusing on overcoming these key challenges will be critical for Sandoz to compete and deliver value in the generics space.
Driving Performance Through Managers
Tripti views managers as the primary drivers of the company's performance. She explains that while investors, employees, and HR professionals have important roles, managers directly impact day-to-day operations and strategy execution.
Tripti emphasizes the importance of enabling and equipping managers to drive performance. In response, Hein references research showing that the manager drives 70% of the variance in employee engagement. Boosting manager capability and effectiveness is critical.
Some important points Tripti makes:
-
Managers are responsible for driving business performance and executing strategy. This is their primary role.
-
HR's role is to support and enable manager impact.
-
Regular communication between leadership and managers is essential - "there is no such thing as too much communication."
-
Ongoing training and development for managers must be a priority. This talent segment should be the first to experience new leadership development programs.
-
HR business partners need to apply the same business rigor to people decisions that finance applies to financial decisions. Insights and analytics are crucial.
-
Managers are "multipliers" who shape organizational culture, which drives performance.
Tripti is laser-focused on the manager's role in delivering results. Everything connects back to enabling managers to drive business outcomes. This underscores the strategic nature of people management.
Watch the Full Webinar
The interview goes deeper into these topics with additional examples and advice. Tripti shares more details on simplifying processes, retaining Sandoz's strengths, and applying analytical rigor to talent decisions.
If you found this summary valuable, be sure to watch the full webinar to gain further insights from these experienced HR leaders. Learning from their expertise and advice can help enhance your own HR practices and leadership capabilities.
