C.J. Prince

C.J. Prince is a regular contributor to Chief Executive and other business publications.

Ferring U.S. CEO: Leadership Is A Perpetual Journey

Paul Navarre had top jobs at bigger companies, but the ability to drive change and create a culture that values employees was what attracted him to Ferring Pharmaceuticals.

How One CEO is Changing Culture In A 157-Year-Old Company

In this second part of a two-part interview, CEO Marianne Harrison shares how she introduced more diversity, and more authenticity, to John Hancock's traditional culture.

CEO Harrison: Insurance Can—And Must—Transform

In the age of disruption, no company is safe from a scrappy startup with a new idea. CEO Marianne Harrison talked with CE about John Hancock's strategy for success in the new digital age.

Knox Financial CEO Isn’t Afraid Of Recession

The serial entrepreneur's latest real estate venture is poised to benefit if the housing market goes south.

Sonnenfeld On Expedia Firings: Barry Diller And The Board Are “Lost”

Analysts are skeptical about whether the management shakeup can cure what ails the online travel company.

TherapeuticsMD CEO Robert Finizio Finds A Niche In Pharma

After Robert Finizio sold his medical technology company, Care Fusion, to Cardinal Health in 2006, his plan was to put all the money into bonds and leave it there to grow. For his next job, he figured he'd find a nice, safe product category or a business that was mostly sales focused. The one thing he definitely did not want to do was start another R&D-heavy company that would require a huge personal investment, recalls Finizio. "I really didn't want that pressure again." Then a new neighbor bought a house down the street from Finizio's in their Boca Raton development, and all of that changed. Brian Bernick, an obstetrician-gynecologist who had served women for a quarter century shared Finizio's entrepreneurial mindset. "Most OB-GYNs aren't interested in that type of thing, so that was surprising," says Finizio. The two hit it off and were soon exchanging ideas about the large, unmet need in women's health and how they might meet it if they put their heads together. Before long, they had founded TherapeuticsMD with the goal of offering pharmaceutical products designed for the full lifecycle of women's reproductive health—from contraceptives to prenatal vitamins to menopause. "Basically I put all the money I made on Care Fusion back into this company and did the exact opposite of what I thought I would do," says Finizio. But the effort and investment has paid off, he says. In 2018, after more than 10 years of clinical development, TherapeuticsMD became the first company to get three new drugs—Annovera, Bijuva and Imvexxy—approved by the FDA in one year in a single specialty. And in just the past year, Imvexxy has taken 10% of the market in a product class that has been around for more than 50 years and is well genericized, says Bernick. Chief Executive sat down with Finizio and Bernick to talk about the opportunity they found in a once crowded space and why, despite a Street that hasn't quite recognized their progress, they see much growth ahead. [caption id="attachment_73339" align="alignright" width="280"] TherapeuticsMD Co-Founder and CEO Robert Finizio[/caption]
What was it like entering this field as a startup competing with established pharmaceuticals?
Finizio: In the last five or six years, the larger pharmaceutical companies, even the midcaps, have really left this space. In pharmaceuticals, supply chain will take about half of the drug's cost—it's gotten so exorbitant, the large pharma companies have left most of these areas, especially women's health, and moved on to rare diseases, oncology, areas where the price points are very high, so that even though the patient population is low, they can have a much more profitable run. The high-volume, low-cost areas, even though it's a bigger population, have seen a real lack of innovation across the board, women's health being most deficient. And then if you look at the generic industry, they have price-fixing going on, they have issues with taking products that are difficult to get and upcharging them 3000%, 5000%—so there has been a lot of abuse in the system. Our company has taken the price-at-parity approach to all our products and we haven't charged these exorbitant premiums that a lot of people have done.
What made you focus specifically on this space?
[caption id="attachment_73340" align="alignright" width="280"] TherapeuticsMD Co-Founder and Director Brian Bernick[/caption]
Bernick: We had identified these chronic conditions that women spend a long period of their life with. When you look at reproductive health, contraception and family planning, a woman's going to spend the better part of 30 years in that state.They could go on a contraceptive product for literally up to 30 years or they could be trying to get pregnant and need to be on a pregnancy related medicine, like our prenatal vitamins—and then there's menopause, where women will spend well over 30 years in that state and will want to use our products. So it's an opportunity to capture women in these conditions and keep them on product for a long time, which is really rare. Most medicines, as you know, treat a disease state and then it goes away. These are disease states that stay with women for a very long time. So we took my experience for 25 years, my patients' experience, my colleagues' experience and we went out and we designed products that offer comfort, convenience and really fit well with the modern day woman, how she lives her everyday life, and we did so with a big commitment to being affordable.
What kind of response are you getting from providers and patients? Bernick: From both the medical community and the women themselves, what we're hearing is almost like a thank you—thank you for being committed to women's health, where everyone else has abandoned women's health for these more attractive, high-dollar products. They're also saying, what took so long for companies to bring these products [to market]?
The time to market in pharmaceuticals is obviously much more protracted than, say, technology, so you can't quickly innovate to avoid disruption. How do you deal with that? 
Finizio: So your barriers become your strengths and your weaknesses become your strengths when compared to a technology company. CareFusion was largely focused on medication safety technology, so I know the software world very, very well. When you're in a heavily regulated environment like we are now, for someone to compete with you, they have to go through the same regulatory process unless they're generic. When someone wants to compete on a branded basis, they have to go through a 10- to 15-year development time cycle and the average drug development cost is $1.2 billion. So someone has to be really, really sure and have a lot of time to come after us. Whereas the software, you can turn on a dime, you can make a new hardware device, you can make a new software application and if you have enough developers you can move things very quickly. Here, there is a long process of each phase and each phase has to be met with statistical significance, safety and efficacy at a certain population amount. it's a long, slow process with this much regulation, so although it's very difficult and expensive to get there, it provides a lot of barriers to entry that don't exist in normal product areas.
Do you feel frustrated that your share price doesn't seem represent your recent successes?
Finizio: We think it will definitely work itself out. What's happened is that specialty pharma launches, from an investor standpoint is, have gone from most doing very well to most not doing very well. What you're seeing a lot of success with is biotech oriented, products that are not looking at day to day life satisfaction and comfort, but at disease states that are threatening like cancer or rare disease with a small population and very high dollar, or that are wildly scientific like genetics, genetic therapies, those are stocks that are still doing very well. You go back to 2015, '16 even part of '17, spec pharma stocks like us and dermatology and neurological companies, were doing well. So the exodus as been very clear away from spec pharma and into biotech. Now that that's happened, companies that can get out, take rapid market share and turn a good profit, those companies will be the new set of winners since these changes have happened. And I believe these changes in market perception are due to payer rebates, or the amount of money you have to give back to an insurance company to cover your product, and due to supply distribution costs being 10% to 12% for a small company. So it's taking so much of the apple, there's not much left for the company. Our strategy takes all of those factors into account and our only goal is to become profitable and not be dependent on the market for capital. We're very unique in an area where there's a huge unmet need, not a lot of innovation and very little promotion going on with current products. I don't have to spend a lot on marketing to get the attention of doctors. We can leverage one single sales force [for all three products], so the efficiency here is significant and the ROI we believe will be pretty strong. These markets are also growing and underserved, so there's room to grow all of these markets, significant room, because no one has been there for a while, right? I think we're a victim of a macro pharmaceutical trend that's going on. Given all of the things we talked about, uh, that are negative headwinds, like the politicking—[saying] "Medicare for all," "everybody will be priced like a generic," "we're gonna take all the pharmaceutical money away"— the mutual fund generalists have left this space. The only spaces they're in now are the high-tech genetic spaces, or high-tech cancer spaces. So that leaves only the pharmaceutical specific funds and indexes, which leaves less people to buy your stock. I think assuming we continue to do what we've done, which is clearly execute and get market share with these three products, our ability and our focus on becoming profitable will definitely turn that share price around—assuming we're successful, which is our only intention.
How much time do you spend talking to investors vs. on talent strategy?
Finizio: I manage all of the investor relations here and I spend probably four weeks a quarter out with investors; the other eight or nine weeks per quarter I spend focused on internal initiatives. Brian has less of a role with investors and more of a role with customers. But the only way we're going to be really successful and it's very, very clear in every business I've been in or that I've observed is, you have to get the best people around you that you can. My goal is not to be the smartest guy in the room.  My goal is to have the people around me that have done what we need to get done before, and they're good at it. So, in essence, the adage of the company is to take a 12th grader and put them back in third grade to do it again—it just might be a little bit different this time. So we've tried to take that trend, whether it's on sales, marketing, clinical development, accounting, you name it, and get them to help re-establish these products in their capacity with women, re-establish these products with OB/GYNs and reestablish the connections in markets and in the media—and I think so far we've been doing a great job.

Talent Summit Roundup: Leading Culture Change

At the CEO Talent Summit coverage, Synchrony Financial CEO Margaret Keane, Lord Abbett Managing Partner Doug Sieg and Avanoo CEO Daniel Jacobs share the secrets of transforming culture and creating a lasting bond with both employees and customers.

Talent Summit Roundup: Creating A Culture That Never Quits

At the 2019 CEO Talent Summit at West Point, attendees learned what it really takes to hire the best of the best in a fiercely competitive job market.

CEOs Meet To Advance D&I Goals

[caption id="attachment_72897" align="alignnone" width="640"] Yum! Brands Chief Diversity Officer James Fripp interviews Kamau Bell of CNN's United Shades of America at CEO Action's Closed Door Session in New York City.[/caption] Approximately 125 CEOs gathered to attend a "closed-door session" in New York City yesterday to talk about advancing diversity and inclusion initiatives. The meeting was sponsored by CEO Action, a coalition launched in 2017 that now has nearly 800 CEO signatories who have pledged to change their cultures by having difficult conversations with employees, educating their teams about unconscious bias and sharing D&I practices. One of the coalition members, Cardinal Health CEO Mike Kaufmann, said the event encouraged leaders to get out of their comfort zones, which is always a good thing. “I’m a guy that believes you can’t make any progress without having uncomfortable conversations,” he told CE.

The CEO's Role

[caption id="attachment_72890" align="alignright" width="300"] Cardinal Health CEO Mike Kaufmann[/caption] Kaufmann said that if the CEO isn't leading conversations about D&I, nobody else will take it seriously. "In my opinion, it has to start with the CEO—and I don't mean just saying the words and periodically having meetings, but literally making themselves vulnerable and authentic and talking about where they got something wrong. If you don't do that as CEO, nobody is going to take time away from their busy schedules to attend an event or take money out of their budget to bring a speaker in or to fund unconscious bias training. If CEOs aren't engaged, you can see it across the company—it's really just happy talk." Kaufmann added that incentives tied to D&I metrics should definitely be in the mix. "We do that in our compensation program," he noted. "Sometimes in the beginning, incentives might feel more like softballs, but at least it gets the conversation going. You're encouraging people to to at least look at their numbers, to have diverse slates, to do things that will start leading the organization in the right direction. And over time, you have to assess things like putting metrics out there and real numbers on representation." Those goals have to be based in reality, he cautioned. "You can't say I'm going to increase female leadership by 10 percentage points when your turnover is low and there's no way to do that without firing 30 percent of your people. So you have to be careful about how you set goals. But organizations have to tie some portion of compensation to making progress in this area."

A Life-Changing Experience

Kaufmann first became interested in the topic a decade ago, when the leader of the company's women's initiative left the company and Kaufmann asked Cardinal's then-CEO George Barrett if he could run it. It was an experience that led to a lot of uncomfortable conversations that ultimately changed his interactions with women from then on. "It was the most important thing I've ever done in my life." It also led him to believe that the only way diversity initiatives can move forward is when white men, like himself, get involved. "And I mean really involved, so they're in uncomfortable situations and you're making mistakes and you're willing to make them." CEOs also have to surround themselves with "truth-tellers," he added. "They will say to me, 'Hey Mike, when you said that, that could be kind of offensive to women,' or 'Mike, that choice of words wasn't quite right.'" While he acknowledges that the company's employee resource groups are intended to give space to like-minded people of similar backgrounds or cultures a chance to commune, he said he routinely encourages male employees to join the women's ERG, white employees to join the African-American or Hispanic ERGs, and so on, so each can get exposure to the other's viewpoint. "I get really frustrated when folks say—and particularly white males—that they feel like they're being discriminated against. Because that's not what we're trying to do at all. We're really just trying to level the playing field," he said. "I know it feels uncomfortable when you're used to having a 30-year start in a hundred-yard dash and now everybody else is only 10 yards behind you, but that doesn't mean we're discriminating against you. We're just trying to remove the barriers for others." Kaufmann also gets impatient with those who can't see the business case for D&I. "That thinking is really outdated now," he said. "If you were a CEO 20 years ago, there really wasn't a lot of data available. But today there's plenty of scientific, reliable data that will tell you that companies that are more diverse, both in gender equity and people of color, perform better." And if you don't trust the validity of the data, he added, "just look at the workforce. If you're not a company that can attract talent from all groups, you're going to be limited to a really small group of people. How can you get the best talent if you're only choosing from 30-40% of the population? You have to be able to choose from 100% of the population. There's evidence—not just from the returns but the demographics of the country. If you can't see that, you're just not looking. Or you're ignoring it. Because I think it's there."

C-Suite Study Finds Market Leaders Prioritize Trust

There's no question that companies need to get a better handle on data—how to get it, how to mine it and how to use it to make better decisions internally, engage employees, excite investors and offer innovative, customized solutions to clients. "But that is not sufficient unless each one of your stakeholders actually trusts the data you're providing and what you're doing with it," says IBM Managing Partner Jesus Mantas. Mantas is one of the coauthors of a new study, conducted by IBM Institute for Business Value (IBV) in cooperation with Oxford Economics; the study found trust to be at the heart of what divides the leaders, or "Torchbearer" companies, which make up just 9% of the companies, and the laggards, or "Aspirationals." Mantas's team collected data from more than 13,000 C-suite executives who oversee leading brands across 98 countries and 20 industries and found big differences between the two categories: • Torchbearers have identified customer trust as their defining issue: 82% say they have turned to data to strengthen the trust they earn from customers, compared with 43% of Aspirationals; • Torchbearers have created a culture of "data-believers": 78% say their C-suite executives rely heavily on data for quality and speed of decisions, compared with just 34% of Aspirationals; • Torchbearer C-suites trust their data: 69% say the C-suite "has extensive access to accurate and actionable 360-degree customer data" vs. just 22% of Aspirationals. • Torchbearers are using that data more often to develop new business models (70% vs. 33%) and to enter new markets (66% vs. 31%), and are planning significant investments in AI or machine learning (72% vs. 40%).

Perhaps most importantly, the Torchbearers outperform their peers in revenue growth and profitability:

Mantas sat down with Chief Executive to discuss the findings and how CEOs can use them to move their companies from aspirational to torchbearer.
How is trust something that ultimately leads to better performance?
So the world is becoming more and more regulated. In Europe already, now you have regulation about what data you get to keep based on the transparency you provide your customers. Your customers now get to decide if all that data—whether you're trying to collect or you already have it—can be used by you to help them. So the Torchbearers use their data with a specific purpose to increase trust on the part of their clients, through transparency or making it very clear how they're using the data. As a result, those companies get to keep that data and use it and so, because of that customer trust, they get to outperform others. Conversely, organizations that don't have that trust, even if they have collected the data, in a world that is becoming more regulated, if your clients don't trust you, they may not let you keep the data. In our study, the difference between the Torchbearers and the Aspirational companies is almost double—91% more Torchbearers use data to strengthen customer trust. [caption id="attachment_72820" align="alignright" width="300"] IBM Managing Partner Jesus Mantas[/caption]
We don't yet have that level of regulation in the U.S. Why should CEOs of U.S.-based companies care?
Well, Europe is the more visible example because they have already created a now well-known regulation, [General Data Protection Regulation (GDPR)], but that is probably going to come to every country in the world in some shape or form. But even without the regulation, when you ask consumers, "Are you concerned with what companies are going to do with the data they collect?"—that level of concern has almost doubled in the last year. The same can be said of the use of algorithms. Some states and cities are now regulating whether you can or cannot use visual identification algorithms and for what purpose. I think CEOs in the U.S. know that most companies are global in nature anyway so most of the U.S. companies also operate in Europe.
The report notes that Torchbearers say their C-suite teams "have a data mindset." What does that mean? And how can CEOs get their teams to adopt a "data mindset"?
I think the simplest way to describe it is to basically replace the natural habit of making decisions based on experience with a new learned habit of making decisions based on the data first and the experience second. What's interesting is you see that behavior very well in the new generation of millennials. If you or I were asked, "what is the capital of France?" we'd say Paris because we've learned that. But if you ask a millennial, the first thing they'll do is Google it to get the data. It's a very simple habit, but you have to learn that in the corporate world, to first query the data and then impose opinion and experience. There are many ways to do that—it all comes back to what you do with the data and how you present it, and how do you modify workflows to make sure that data-based truth is presented before a decision is made. The GPS is actually the perfect example of a data-driven tool that, as consumers, we have accepted without any problem. So the C-suite needs to embed more GPS-like interfaces in every one of their processes. The other thing that has to happen is a change in culture. That also correlates more with cultures that are more flat, where leadership moves more to the edges, because at the end of the day, you have to distribute the decisions to the places where all that data can be taken into account in a better way to make decisions. It's interesting, because all of these different trends collide in the sense that organizations that are more agile tend to be more "data first."
Most culture changes have to start at the top, with the CEO himself or herself. Does that mean CEOs have to do a better job of making decisions based on data first?
Most CEOs would tell you they do that by definition. It's just the magnitude to which they do it and magnitude to which they implement transparency. So if you were to ask a CEO, "Do you make data-driven decisions?" they would say, "Of course." But if you asked a different question—"is the data you make decisions with transparently shared across the entire company?"—very few have actually implemented that level of transparency. The problem with many C-suites is they do make decisions based on data, but that data is almost created for the purpose of that decision and it's then not transparently shared. So it may represent an alternative reality.
When you say transparency, do you mean all the way to your front line?
Yes, all the way to your front-line people, whether it's a budget, status of a project, stats of an order, NPS data, you want to make sure you have a foundational data platform, so whether you're a person in front of the client or you're the CEO, you're looking at the same data.
What are the economics of that for mid-size companies who don't have the budgets of large multinationals?
The economics of that have changed a lot because of the cloud. One of the trends that really is democratizing the data is the hybrid cloud. You can have the data and algorithms programmed once and it can be run publicly, very inexpensively, or it can be run privately, secured, with permissions. Hybrid cloud makes that a lot more portable, so whether you're a startup, a midsize, a large corporation, you can access these. Because of cloud, the economics of using data, using AI and being able to implement it in processes have massively changed.
The study notes that the Torchbearers excel at sharing data with partners throughout their ecosystem. Aside from the privacy element, how can CEOs get comfortable with the idea of sharing proprietary data without fear of losing competitive edge?
The Torchbearers really have discipline around data ownership, it's very clear. They manage that data like a resource, as they would any other resource. The good news is that technologies like blockchain, when you strip down the hype, blockchain is just a distributed database that can be permissioned. So even though you have transparency, that doesn't mean everybody sees everything; you can have transparency but permissioned differently for every person, so you can basically have your cake and eat it, too. Everyone sharing the data knows that no other party can manipulate it so there is trust there.
So you think that companies will get more comfortable sharing with partners and even competitors?
I think we're going to see in the next two years an evolution on that. We're going to see data that, in the past, companies were reluctant to share that they will now start sharing because the transparency will give them more benefit than not sharing. Like pricing data—that's something that almost every company would say is pretty confidential—or employee compensation data. You can see platforms springing up, like Glassdoor intermediaries aggregating the data and sharing it. So some companies are saying, let's remove the intermediary and just be more transparent. The interesting thing is, if you're a really great employer, then it's to your advantage to share it. If you're a really bad employer, it's not to your advantage. So I think we're moving to a world where, if you don't share the data, then maybe you're not that good at it. There's actually an interesting dilemma between companies and consumers—as consumers, we are all demanding better protection and privacy of our data but at the same time, we're all demanding more information from companies. when you look at the torchbearers, they seem to be managing that balance better. My expectation is that over the next two years, the role of brands as the proxy of trust is going to shift to the data you share. the more you share, the more you'll be trusted.
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