You can't Discipline Innovation

A visitor to Millennium Pharmaceuticals’ headquarters in Cambridge, Mass., would have a hard time missing the company’s new motto. The words “We Aspire to Cure Cancer” are plastered everywhere around the corporation’s headquarters, setting a goal as deceptively simple as it is ambitious.

While the mission statement appears lofty, it is actually a lot more modest than the company’s original objective, which was to cure, well, just about everything. The entrepreneur Mark Levin founded Millennium in 1993 at the cusp of the genomics era. By using supercomputers to home in on disease-causing genes, Levin aimed to develop treatments for all sorts of maladies, from diabetes to heart disease. After a session with the high-energy Levin, early investors may have believed Millennium would soon turn the world into a disease-free environment.

The company is a lot more realistic these days about what it can and can’t do as it transforms itself into a more staid version of its earlier self. And under the leadership of the current chief executive, Dr. Deborah Dunsire, Millennium is aging more gracefully than many had expected. “Mark was one of the world’s most prescient visionaries,” Dunsire, his hand-picked suc-cessor, said in an interview with Briefings. “But the early vision wasn’t mature.”

That’s partly because of the science. Drug development turned out to be a lot more complex than just linking a single gene to a single disease. Scientists eventually realized that almost all diseases are caused by a number of genes interacting with one another in unpredictable ways. Researchers also rediscovered the importance of environment, which influences how genes act in the body. But Millennium’s immaturity was not only due to gaps in scientific knowledge. It also stemmed from a corporate structure that was better suited to a start-up than to a large pharmaceutical group.

Since she became the CEO in 2005, Dunsire’s job has been to take Levin’s vision and turn it into a disciplined approach for getting drugs to market. When I arrived at the company’s headquarters for an interview, Dunsire was not in her office. She explained that she spends little time there, preferring instead to walk around the building for impromptu exchanges with employees, who number 1,100.

Dunsire exudes a down-to-earth practicality, a shift from the big-dreaming Levin. Her friends say she is the type who comes over for dinner and insists on doing the dishes. This get-it-done mentality spills over into recruiting at Millennium, where Dunsire confesses to turning away big-talking job seekers in favor of quiet achievers.

Dunsire is a quiet achiever herself. Born into very modest circumstances — her parents were lower-middle--class Scottish immigrants in what is today Zimbabwe — Dunsire learned to dream big by degrees. After the family moved to South Africa, she aspired to becoming a nurse, but decided to become a physician when it turned out she was near the top of her class. On a whim, whilewaiting for her specialist program to start, she answered a want ad in the newspaper to oversee clinical trials at the pharmaceutical group Sandoz. Eventually, her career led to Novartis, where she headed the oncology group. From there, she moved to Millennium.

People in the industry praise Dunsire for her incisive mind. As a board member of the biotechnology company Allergan, she is known for asking the right question at the right time. “Deborah doesn’t speak up that often; but when she does, everyone listens,” said David Pyott, Allergan’s CEO. “She’ll ask the one question that gets right to the point of where the weakness lies in any argument.”

Transferring the creative, but at times inefficient, energy of the young Millennium to the more focused, mature corporation that Millennium is today has not been easy. Many managers stumble as their star start-up morphs into a bigger operation. And Millennium’s transformation was accelerated after its purchase, in 2008, by Japan’s Takeda Pharmaceuticals for $8.8 billion.

Yet Dunsire has met with success. When she became CEO, sales of the company’s only drug, the cancer treatment Velcade, were slipping. Worse, the product was facing a new competitor: Celgene’s Revlimid. Dunsire realized that the company’s future relied on Velcade’s success, and she worked to improve its sales. Her efforts have paid off.

Under Dunsire, annual sales of Velcade have jumped almost 40 percent, to $492 million last year. Takeda has given its subsidiary oversight of nine new cancer compounds that were discovered outside of Millennium, a sign of its faith in Millennium’s drug development program. Perhaps most reassuring to investors is the company’s robust pipeline. Millennium now has seven oncology drugs in late-stage clinical trials, targeting pancreatic, lung and ovarian cancers, as well as lymphoma and other conditions.

“I don’t think you can discipline innovation,” Dunsire said. But it may be possible to discipline the managerial structure surrounding innovation, which is what Dunsire tries to do. Being part of a big operation like Takeda was not something Dunsire aspired to. Dunsire says she loved the energy and camaraderie of the old Millennium. But she also realized that the deal was best for shareholders. Takeda’s offer was 13 times Millennium’s annual revenues, a 53 percent premium over its share price.

At the time of the negotiations with Takeda, Dunsire was reading “Built to Last” by James Collins and Jerry Porras. The book had a big influence on her decision to stay with the company and take it into a new phase. “I went around talking to people and tried to avoid the tyranny of the ‘or’ and instead looking for the ‘and,’ ” she said. “After a while, we all began to see that we can be innovative, cohesive and be part of a big company.”

Rather than fret about what Millennium was giving up by making the transition from small biotech to “big pharma,” Dunsire tried to focus on three things: what workers would like to keep from the old Millennium, what they would gain, and what they would rather leave behind.

Even the most beloved organizations have weaknesses. In the “better left behind” column, Dunsire placed Millennium’s old practice of making every decision by consensus. “There was this idea that everyone was holding hands at the table, because every person in the company had such a big stake in its future,” she said. At the new Millennium, Dunsire has instituted a clear decision-making structure. “We want to hear all voices,” Dunsire said, “but we are not a democracy.”

Another “good riddance” item was the tyranny of quarterly earnings announcements. Like other young companies, Millennium had limited resources and needed to show investors every three months that it was producing results. That, according to Dunsire, made it harder to concentrate on long-term investments. Because it can take 10 years to move a drug from laboratory to the doctor’s office, the short-term approach made it difficult for Millennium to fill its pipeline with promising new medicines.

The “have to keep” column was longer. At the top of the list was maintaining Millennium’s entrepreneurial spirit. Dunsire admits that is tough for a larger company, which can often drown innovative impulses in a sea of bureaucracy. The key, she said, is to set up an organization that is simple enough to “read,” but doesn’t just throw huge groups of people together. “The human mind can’t deal with too much complexity; the span is too large, so it’s tempting to just lump things together,” Dunsire said. “You have to resist that, because it won’t facilitate adaptability. Innovation happens best in small groups of people that can move rapidly on the science and respond very fast to emerging knowledge.”

She decided to organize Millennium into small, cohesive teams that would take charge of specific projects. In doing so, Dunsire concedes, she was taking a page from the book of Glaxo, the largest pharmaceutical company in the world, which has met with success in recent years by breaking the company into units of a few hundred people, and teams of a few dozen. “It made the people in each team hungry to succeed,” Dunsire said. “Big organizations are not stupid, but their scale can make them slow.”

Yet breaking things down is not enough. It’s also important, Dunsire says, to create connections between groups, both to avoid doing the same work twice and to increase synergies. For instance, someone in each group keeps tabs on what’s happening at the home base in Japan, to see if some of the research done there can be imported to Cambridge, or vice versa.

The entrepreneurial spirit of the project-based organizational model has had an impact not just on the company’s scientific side. Sara Tong Benyamini, a learning and development specialist in the group’s human resources division, said she was inspired by the small-team approach to take on a challenging project: grabbing a spot for Millennium on Fortune magazine’s list of the 100 Best Places to Work.

Benyamini came up with the goal back in 2007. At first, she thought it was just a matter of waiting for Millennium to grow a little, then filling out the forms. The minimum number of employees for the Fortune list is 1,000. At the time, Millennium was 100 workers short of that. But once the company did get to the magic number of 1,000, Benyamini found that its purchase by Takeda once again made it ineligible for that year’s Best Places to Work list. Not until 2011 did the company finally pull it together. “Making that list is a lot more complicated than it sounds,” Benyamini said. “It involves hundreds of workers filling out forms and all sorts of requirements and deadlines you need to meet.”

The project came to the attention of Dunsire, who is grateful that Benyamini took charge. “Being on that list makes it so much easier to recruit the people we want to recruit,” she said. “And talent is what we’re all about.”

Maximizing Opportunities

The main advantage to being part of a large operation is clear to Dunsire: capital. But big companies actually have such an abundance of resources that it is difficult not to waste them. Dunsire is constantly asking herself if resources are appropriately divvied up. She keeps certain guidelines in mind, but does not draw a line in the sand. “We try to spend about 30 percent of our resources on research,” she said. “But in any given year, the actual spending can be 28 percent or 34 percent, depending on the specific circumstances.”

For a pharmaceutical company in particular, financial resources are critical. Laboratory research is one of the cheapest stages of drug development. The real investment comes in drug development, especially clinical trials. Underfinanced young drug companies often falter at this stage, which means they can’t pursue a key strategy in Dunsire’s playbook: maximizing opportunities.

Brand-new drugs are few and far between, which makes it essential that when a new product does come along, it is milked for all it’s worth. “Biotech companies weren’t really good at this, because they thought after they’d done all this great science, people should just buy the drug,” Dunsire said. As a physician herself, Dunsire knew that things don’t just happen like that.

When Dunsire took the reins at Millennium, the company had one drug on the market: Velcade. But the use of Velcade was limited to just some of the people suffering from the blood marrow condition called multiple myeloma: patients who had tried another drug and not improved. (This is often referred to as a second-line treatment.) In 2006, Millennium got Food and Drug Administration approval as well for patients suffering from mantle cell lymphoma, an aggressive form of the blood cancer non-Hodgkin’s lymphoma. In 2008, Velcade was also approved for use in multiple myeloma patients who had never taken any drugs before, granting it first-line treatment status.

The new indications for Velcade have raised sales of the product, and Millennium is hoping for even broader use in the years ahead. But Dunsire says that approvals are not enough; the company needs to get the word out to physicians about the product as well. “Having been a doctor myself, I know how busy they are,” she said. “If you haven’t synthesized your information to tell them about your product in an efficient way, you’ll fall to the bottom.” Dunsire decided that the marketing material for Velcade was just too wordy, and she ordered that it be cut down.

While Dunsire aims to imbue all the divisions, from marketing to human resources, with a sense of creativity, Millennium remains primarily a science-based corporation. And Dunsire doesn’t pretend to be scientist. In fact, Dunsire goes out of her way to avoid making scientific decisions, giving her chief science officer, Joe Bolen, complete responsibility in that area. She often excuses herself from scientific discussions at the company, preferring to sit in the audience instead. “I do try to learn as much as I can, so that I can ask the right questions,” she said.

Dunsire’s questioning is meant, in part, to get her staff to prioritize and focus. It’s an extension of the “Aspiring to Cure Cancer” motto. The motto is effective as a marketing tool for Millennium, Dunsire says, as well as serving as a motivator for nonscientists in the company. The mission statement also gives management a self-disciplining tool. When Dunsire took over at Millennium, the company was just as interested in diseases involving inflammation as cancer. Dunsire decided that Millennium couldn’t afford to do both, and cut inflammation research.

Yet focus should not kill flexibility, Dunsire says. In reality, drug discovery is a lot messier than Millennium’s mission statement implies. The messiness sometimes works in favor of a drug, and sometimes against it. For instance, Millennium had high hopes for using Velcade in treating colon cancer. Yet experiments in that area failed. “Now we need to find out why,” Dunsire said. But recently, Millennium began receiving letters from doctors saying that they have been able to use Velcade effectively in transplant patients to damp down the immune response that often causes patients’ bodies to reject new organs. It’s not cancer, but Millennium plans to look into it further, in order to maximize Velcade’s use.

“We may end up passing that, in a later stage, to Takeda,” she said. “But that’s what my job as CEO is all about. I’m a connector. I listen to the doctors and pass the information to the scientists at our company. I listen to the scientists and communicate the research to our headquarters in Japan.” To strengthen ties between Tokyo and Cambridge, Dunsire travels regularly to Japan. Takeda’s top executives also made a pilgrimage to Massachusetts in March 2010 for the group’s first board meeting held outside of Japan.

While Takeda provides plenty of financial resources to Millennium, Dunsire says one resource remains in short supply: her time. She confesses to micromanaging tendencies, and has had to learn to step back and let others get on with their work. Dunsire cultivates an image of an open-door CEO, regularly scheduling time to walk around the company’s facilities and talk with researchers and other workers.

Millennium still faces serious challenges. Velcade remains its only product, and the company under Dunsire has yet to prove that it can move a brand-new drug from the laboratory to the doctor’s office. And while Dunsire has done a good job of maintaining Millennium’s independent spirit, the final decisions over the company’s future rest in the hands of its parent company, Takeda. Millennium’s subsidiary status means Dunsire often has to take a lower managerial profile. But it’s a role that comes naturally to her. “I am like the conductor of the orchestra,” Dunsire said of her CEO style. “I may not play the violin or oboe, but my job is to bring great musicians — in this case scientists — together and get them to play the symphony.”

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A long-time correspondent for The Financial Times, Victoria Griffith covers business from Boston.