A Reinvention of Leadership at Johnson & Johnson

When he took over as the CEO of venerable Johnson & Johnson in April 2012, Alex Gorsky brought much more than years of experience in the pharmaceutical industry and an impressive track record. He brought a jolt of fresh energy in the form of strong new commitments to innovation and collaboration that allowed this West Point graduate and Army veteran to transform the company so that it acts, as he has put it, like a “135-year-old startup.”

As he explained in a conversation, one key to Gorsky’s many years of success is how he reconceptualized and oversaw the role of talent at the company and fostered a sense of accountability and collaboration. That took, he says, a new kind of leader. He rewrote the company’s Talent Playbook to make it more suited to a changing world and rapidly shifting, highly competitive markets.

What has he done differently?

He pulled his leadership team out of its traditional silos and encouraged the executives to think in a more integrated way about the intersection of critical functions rather than in isolation from each other. As a result, Johnson & Johnson scientists think more about the commercialization of products, and commercial leaders are urged to learn more about the science behind drugs and devices and how they are developed. This mindset is pushed deeper into the organization, with executives thinking horizontally about the company’s overall success, not just their own divisions.

This reinvention has changed the traditional paradigm of scientific leaders at the company. Gorsky said he has urged them to “think of themselves as occupying a dual role that is equal parts research and strategic leadership.” This has contributed to the erosion of the traditional boundaries between the business side of the company and the R&D side.

One concrete step he initiated was to join the research and development leaders and commercialization leaders as co-heads of key divisions, because of the acceleration in the speed of changes in markets and the needs for new drugs and health products. This “two in a box” approach is not new, but what made a difference is getting the two operating in a harmonized rhythm. This model has unlocked a stronger sense of accountability and collaboration across the enterprise.

“We’ve seen more innovation in the past five years than in the previous thirty combined,” Gorsky says. “To keep up with this incredible pace of transformation, we developed a high-performing co-leadership structure that aligns the R&D and commercial functions.”

This model was implemented at the top, and also cascaded deeper into specific divisions, such as therapeutics. “If you look at our therapeutic areas such as immunology, we have an R&D head and commercial head who work in tandem and have achieved great results,” Grosky says. “Across our entire family of companies, this model has unlocked a new spirit of entrepreneurship, innovation, and accountability that is driving enterprise-wide growth.”

In the “two in a box” model, the R&D and commercial leaders share joint accountabilities and must appreciate and rely on one another to drive the success and growth of the unit. “To make this work,” Gorsky explains, “we had to create the right environment, set the right expectations and incentives, and implement the right development systems.”

Gorsky has focused on recruiting and developing talent that is capable of looking beyond boundaries. He has transformed the traditional pharmaceutical approach of seeking only innovative new products from in-house research, and instead has encouraged the organization to be just as aggressive in pursuing new ideas acquired from outside sources. He explains:

“We are deeply committed to our internal R&D, but at the same time we prioritize creating the most robust innovation ecosystem we can, be it through organic growth and innovation, partnership, or acquisition. We call it being ‘innovation agnostic,’ and that allows you to focus on the best possible science and innovation regardless of source. The science is developing so quickly that in order to thrive you need to be agile, capable of identifying interesting, promising, differentiated new platforms.”

This new philosophy has required developing and promoting leaders with a different mindset from the past, Gorsky explains. They must be nimbler, have a deeper understanding of multiple subject areas, and be comfortable working across disciplines. They must love working with great new ideas without concern for where the ideas originated, and they can no longer just be subject matter experts in a single field.

“Today’s environment is more dynamic, demanding, and diverse than ever before,” he says. “To seize this incredible moment in healthcare, our leaders need to be as good at partnering externally as they are internally. What we are looking to create are situations where all sides realize significant return and significant roles, so everyone is truly invested in success.”

Another element in Gorsky’s approach is an intense focus on execution. Leaders at Johnson & Johnson cannot just delegate the execution of plans to lower-level executives, as they might have in the past, but must immerse themselves in all details of implementation.

“Gone are the days when leaders only set the strategy and rely on their teams to execute,” Gorsky says. “The environment is changing so fast, you need constant situational awareness. Otherwise, a strategic shift will leapfrog you, or an executional failure will suddenly put your entire strategy at risk. For any leader, placing a dual emphasis on strategy and execution is vitally important to success.”

Importantly, Gorsky has developed an operating rhythm that encourages his leaders to seek and provide feedback to their peers, even on issues that might fall outside their specific areas of responsibility or expertise. Gorsky himself challenges those leaders and gives them timely and direct feedback. Managers incentivize their teams to think horizontally across the company to build better coordination and collaborative thinking.

Adapted from Talent: The Market Cap Multiplier with permission from Ideapress Publishing.