Identifying and Influencing Key Stakeholders
By Allan R. Cohen
Identifying and managing critical stakeholders – beyond physician and payer – will lead to better decision outcomes; not doing so can be deleterious.
A key issue for life science and health care companies is identifying and managing the multiple stakeholders who can affect business outcomes. These stakeholders can include internal managers and scientists, regulators, university scientists, sources of financing, Wall Street and financial analysts, legal experts, patient and other advocacy groups, scientific experts in particular fields, the Food and Drug Administration (FDA), and so on. Each stakeholder or stakeholder group has its own vision, set of objectives, concerns, and hot buttons. Even when identified, it can be difficult to appropriately influence them. And, failing to identify critical stakeholders can lead to extremely negative consequences and large financial losses.
Let me cite an actual example—disguised but accurate—that set a new biotechnology company back several years and millions of dollars.
HemoSeptrix was created in 2001 to use the mapping of the human genome to develop a cure for a deadly blood disease that had no good treatment option. As with all such companies, everything was pointed toward eventually getting FDA approval for the drug. The entire process, from early stages of discovery to clinical trials to market launch, can take up to 12 to 15 years.
The company had been founded by Dr. Desmond Baker, a brilliant but extraordinarily difficult and irascible researcher in hematology, and Dr. Walter Beckman, a former professor and prominent venture capitalist. Baker’s discoveries at Case Western University showed promise of being able to stop the course of sepsis in postsurgical patients, and, if it worked and was approved by the FDA, would become a blockbuster product surpassing $1 billion per year in sales.
Through some of the early difficulties, Baker had become even more difficult, and publicly attacked a young researcher who dared to question some of his research findings. As a result, he was thrown out of his own company.
After overcoming many challenges, HemoSeptrix made it through Phase 3 trials after four more years, with good but not great or unambiguous results. The 10,000-page application went to the preliminary advisory committee of the FDA, which wrestled with it (at least in part because of the controversies about the data analysis), but finally sent it to the FDA with a positive recommendation. This kind of recommendation results is typically followed by FDA approval.
Nevertheless, two key opinion leaders (KOLs), who had been infuriated by the behavior of Baker, mounted a campaign against approval even though Baker was long gone. The two were known to the company, but ignored because of the excitement of the advisory committee recommendation. As a result, the decision was delayed for two years, calling for more studies that cost many millions of dollars.
In retrospect, company insiders acknowledged that they could have done a great deal to mitigate the reactions of the KOLs. They might have talked with them about the reasons for Baker’s dismissal, provided them access to the data, listened hard to their objections and shown willingness to address them, and so on. None of this would have been inappropriate, and the skills required were well within the capacities of the executive team if they had been paying attention.
As this case suggests, the ability to influence powerful stakeholders is critical. Like all influence, it involves a form of exchange and reciprocity, in which the targets gain some of what they care about in return for what is desired. This kind of “currency” exchange happens at all levels, but it is difficult when the influence target is very powerful. When there are large power discrepancies, the powerful usually care about things that are quite different from those who are less powerful. They may have longer-term concerns, think more broadly, underestimate the potential and value of lower power players—or as in the HemoSeptrix case, have personal concerns about the influencer(s) that might even override the specific science involved, or color it.
Ironically, most powerful stakeholders display very visible evidence of what they care about, through speeches, blogs, printed materials, conferences, and so on. But if the party desiring influence doesn’t even identify the stakeholders, or knows what they care about but disagrees with that particular set of concerns, potential influence may be reduced or completely lost.
It isn’t always simple to manage a complex set of stakeholders, but sophisticated organizations figure out how to do it. For example, John Maraganore, CEO of Alnylam, talks about managing 10 large pharmaceutical partners, each of which may have different concerns and styles. Two of those partners are Novartis and Roche. With Roche, the partnership was struck with the CEO, Franz Humer. With Novartis, most of the negotiations were done with Mark Fishman, the head of science. Their different backgrounds, ages, and nationalities—older Swiss businessman and younger American academic scientist—require different approaches. Alnylam takes partnerships with major stakeholders so seriously that it has
“an internal head of alliance who is part of our management team; she attends weekly meetings, reports what’s going on, issues, gaps” with all of their partnerships. “We give each of our employees the responsibility to do whatever they need to do to nurture a specific relationship—dinners, breakfasts, lunches, whatever—since we are the junior party and they are the senior party. Over time, our counterparts begin to see us as peers; we develop relationships based on mutual scientific, business, and human interests.”
Learning to diagnose the interests and currencies of myriad stakeholders, the style of interactions they prefer, and find legitimate ways to respond and to sustain relationships as peer-like partners, will be an ever-increasing component of organizational success.
Professor Cohen holds the Edward A. Madden Distinguished Professorship in Global Leadership at Babson College.
This article is adapted from Allan R. Cohen and David L. Bradford, Influencing Up, (Hoboken: Wiley, 2012).