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Becoming a premier partner: Measuring, managing and changing partnering

capabilities at Eli Lilly and Company

Article  in  Journal of Commercial Biotechnology · August 2001

DOI: 10.5912/jcb407

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David Futrell
is a Senior Consultant in
Lilly's Human Resources
Group. His previous
Papers
experience includes

Becoming a premier partner:

Saturn Corporation and
consulting in
measurement and
process improvement.

Marlene Slugay
Measuring, managing and
changing partnering
has worked as an
organisational
development expert for

capabilities at Eli Lilly and

several large
corporations, including
Eli Lilly and Company,
and Boeing.

Carol H. Stephens
Company
is a founding member Date received: 4th June, 2001
of Lilly's Of®ce of
Alliance Management.
Her previous experience
includes David Futrell, Marlene Slugay and Carol H. Stephens
pharmaceutical project
management at Lilly
and positions in USA
west coast companies.
Abstract When Eli Lilly and Company decided to expand its drug development by
entering into strategic `alliances' with other, usually smaller, biotechnology ®rms, the
company committed to becoming the `premier partner' in the pharmaceutical industry.
To implement that commitment, Lilly needed a way to measure how well it performed as
a partner. That seemed like a simple problem to solve. But the actual solution required
Lilly to invent two new measurement instruments that it uniquely combined with an
existing benchmarking instrument developed and administered by
PricewaterhouseCoopers. The three tools serve complementary purposes. The PWC
survey helps Lilly understand how it compares to other large pharmaceuticals as a
desirable partner. Lilly's new survey provides a `®ner-grained' picture of large, individual
alliances by focusing on the factors that make up many of the categories in the PWC
survey. The other new tool, a focus group guide and protocol, allows Lilly to assess the
health of smaller alliances and to probe areas of broad concern identi®ed in the
quantitative diagnostic surveys. Using this unique combination of tools to assess the
`health' of their alliances, Lilly and its partners are not only improving the performance
of the individual alliances, they are also improving Lilly's overall capabilities as a partner.
Dr Carol H. Stephens
Manager of Oncology
Keywords: alliance, benchmark, biotechnology, feedback, focus group, measurement, partnership, survey
Alliances, Eli Lilly and
Company, Lilly Corporate
Center DC 0546,
Indianapolis IN 46285, USA
development and marketing processes for
Introduction
Tel: ‡1 317 276 1446 new drugs by entering into alliances with
Fax: ‡1 317 277 3652
E-mail: stephens_carol_h@ When Eli Lilly and Company made the other, usually smaller, biotechnology ®rms,
lilly.com strategic decision to expand its discovery, the company committed to becoming the

& Henry Stewart Publications 1462-8732 (2001) Vol. 8, 1, 5±13 Journal of Commercial Biotechnology 5
Futrell et al.

premier partner in the pharmaceutical own boundaries, within its partners'

industry. At the same time Lilly recognised boundaries and in the shared space of each
the unique value alliances bring to both partnership. Finally, we will describe some
partners. As Conlon and Giovangnoli put it, of the results of the changes Lilly has made
`No organization ± no matter how big or as an outcome of this measurement and
how smart ± knows as much as two intervention process so that its partnerships
organizations (or as much as an alliance are more productive and successful, for both
1
network).' To implement that commitment Lilly and its partners.
and achieve that value, Lilly created the
Of®ce of Alliance Management (OAM).
OAM was charged with identifying the
capabilities that constituted a premier The tools
partner and then ensuring that Lilly meets
its commitment. Today, Lilly uses three primary tools to
OAM quickly found that it needed to assess its partnering capabilities: the
de®ne excellent partnering from the point of PricewaterhouseCoopers (PWC) benchmark
view of partners and potential partners in survey that PWC conducts annually in the
3
order to measure Lilly's effectiveness at pharmaceutical industry; a proprietary
meeting those standards. For Lilly to be the electronic diagnostic survey to assess the
best partner for biotechnology companies, it `health' of individual partnerships where
must measure how well the company there are at least 10 direct participants from
performed in general and how well it Lilly and from the outside partner; and a
performed in each current alliance. A focus group process for partnerships in
partnership-by-partnership assessment which the number of participants is too
would help diagnose what Lilly needed to small to make the electronic survey
do to improve individual partnerships and statistically meaningful.
improve its overall partnering capabilities. The three tools now serve different, but
The assessment, in short, would make it complementary, purposes. The tools
possible for Lilly and its partners to learn, complement one another because they
which practitioners and scholars alike agree employ the same general conceptual
is the sine qua non of successful alliances.
2 framework to de®ne the primary
Doz and Hamel, for instance, argue that dimensions of good partnering. They are:

Learning is at the heart of successful alliances.

Not all alliances, unfortunately, learn and · strategic ®t between the partners,
evolve. Indeed, most alliances enter a deep including alignment of the partners'
crisis within their ®rst three years. The key to objectives, and relationship qualities such as
longevity and accident avoidance, is learning trust and fairness;
and adjustment, ®rst to each other, then to · operational ®t, including attributes of
changed circumstances, if required. Alliances effective organisation and management,
that succeed go through cycles of learning, leadership, communication and con¯ict
reevaluation, and readjustment over time. management processes;
Through these adjustments, commitments · cultural ®t, including compatible values
increase in size and in scope, allowing the
and ways of working, especially ways
alliance to create more and more value. The
perception of greater value justi®es still appropriate to a `knowledge industry.' The
deeper commitments.' (p. 170) three dimensions are similar to the ®ve key
2
learning areas identi®ed by Doz and Hamel
In this article, we will describe how Lilly has as key to successful cooperation for alliance
adapted and developed the tools to partners: ` the environment in which the
measure, manage and enhance its alliance will operate, the tasks to be
partnering capabilities, and, just as performed, the process of collaboration, the
importantly, how it has learned to use those partners' skills, and their intended and
tools to drive effective change ± within its emerging goals' (p. 172).

6 Journal of Commercial Biotechnology & Henry Stewart Publications 1462-8732 (2001) Vol. 8, 1, 5±13
 Measuring, managing and changing partnering capabilities

The PricewaterhouseCoopers tool

should be. It needed to be the relationship
The PWC annual survey is administered to facilitator between the actual technical,
a broad range of companies in the working partners, a fair broker that would
pharmaceutical and biotechnology always be guided by the question, `what's in
industries, some of which know and work the best interests of the partnership?' rather
with Lilly and some of which do not. than `what's in the immediate, short-term
Respondents are asked to rate their interests of Lilly or the partner?'
perception of the companies in broad But as helpful as the PWC instrument
categories such as their `trustworthiness' or was ± and is ± in assessing the company's
their `track record in partnering.' While the general reputation for partnering among the
PWC survey is that company's own, marketplace of potential partners, OAM
proprietary instrument, its design is soon concluded that Lilly would need to
consistent with research in the ®eld, See, for ®nd, or develop, a supplemental instrument
4
instance, Mirvis and Marks. They cite as to assess the performance of individual
factors in¯uencing organization ®t: partnerships. The PWC survey instrument
organizational shape/structure, systems, was not designed to work with the
operations, marketing, home of®ce (®nance relatively small number of participants who
and administration), leadership and make up the usual alliance. And its
management, human resources, and questions did not probe deeply enough, for
orientation to change.' Lilly, to help the company identify the
The PWC survey helps Lilly understand drivers of the ratings so that it could take
how it compares to other large action to become a more effective partner.
pharmaceutical companies as a desirable
partner, how the total market of potential
The Lilly proprietary tool
partners views its strengths and weaknesses
on the various competencies and The proprietary quantitative survey that
dimensions that constitute `partnering,' and Lilly developed provides a much ®ner-
how Lilly compares with the `norm' among grained picture of individual alliances
pharmaceutical companies for each of these because it focuses on speci®c factors that
competencies and dimensions. make up many of the broad categories in the
The PWC survey provides insight into the PWC survey, as we shall describe later. Lilly
critical success factors for effective uses the in-depth proprietary survey to help
partnerships, the majority of which have assess the relative `health' of larger
nothing to do with so-called `technical' or individual partnerships at a particular point
scienti®c issues. These critical factors in time. The survey captures the differences
include: between the way that Lilly participants and
partner participants view the partnership on
· cultural compatibility;
the dimensions that make up the total
· compatibility of company objectives;
partnering capability. It also reveals how
· leadership from both partners;
Lilly and its partner view the underlying
· effective integration processes, especially
drivers of those dimensions so that the
those that facilitate communication between
partners can see where they need to take
partners at all levels versus those that block
ameliorating action.
or overly complicate communication;
At ®rst, Lilly looked for alternative
· accurate assessment of the market
measurement instruments, including the
potential for the alliance (so that both sides
Campbell±Hallam Team Development
have realistic expectations for the outcome 5
Survey. But it found that none was entirely
of the partnership).
appropriate for measuring the effectiveness
The PWC survey was also one of the of partnerships. These instruments were
sources of learning ± though not the only designed for teams working together on a
one ± that helped Lilly understand what the daily basis and the content re¯ects this,
job of the Of®ce of Alliance Management focusing heavily on group processes with

& Henry Stewart Publications 1462-8732 (2001) Vol. 8, 1, 5±13 Journal of Commercial Biotechnology 7
Futrell et al.

questions such as, `We need a better space instrument asks respondents to rate their
where our team can meet and work' and degree of agreement with speci®c
5
`Team members offer help when I need it'. statements or questions. For example, to
Alliances and partnerships in the measure `commitment' these questions
pharmaceutical industry rarely, if ever, focus on such things as Lilly's `follow
operate as intact teams. They generally through' or `understanding the importance
consist of two, sometimes three, groups of the alliance for both companies.' To
from different organisations or companies measure `knowledge management' the
that normally work independently of each questions probe respondents' views on
other on the same issue or problem. They Lilly's knowledge sharing and utilisation of
may come together at critical junctures to learning practices. Finally, the survey asks a
work together, but not as a daily practice. set of broad `outcome' and `satisfaction'
They do not operate like `normal' corporate questions to assess the global view of
organisational systems. That means, as respondents toward the effectiveness of the
Robert Porter observes, that `the traditional partnership, including whether respondents
measures and control systems of the old believe the alliance is achieving its goals and
'internal' corporation± the 'corporate castle' objectives.
± will miss the mark when applied outside The survey is administered to Lilly and
the castle walls in the 'extended' the partner members of the alliance. The
6
corporation.' data gathered that way creates a rich,
So with no suitable `off the shelf' densely textured picture of the `health' and
instrument available, Lilly created its own. effectiveness of partnership at a given point
The proprietary instrument, called the Voice in time. To assure con®dentially, the survey
of the Alliance, was grounded in extensive is actually administered by a third party,
review of the literature on `alliances' and using web technology. In addition, the web-
`partnerships' (see, for instance, Spekman et based approach offers convenience to all
7 8
al. and Segil ). The development team alliance members, especially when they are
particularly focused on what the research geographically dispersed.
indicated were the critical success factors in Once the data are gathered and analysed,
partnerships ± `the key results that ground the administrator creates a number of
9
the vision in performance.' These factors different reports. These show the rating on
included: values compatibility, which was each question by Lilly participants and
consistent with the PWC survey; goal and partner participants; for instance, 80 per
direction clarity; role clarity; cent of Lilly participants might rate the
communication; and ¯exibility. statement on Lilly's `enthusiasm' for the
Conceptually, the Lilly instrument starts alliance favourably, while 85 per cent of the
from the three-dimensional model of alliance partner participants might rate it
partnering: strategic ®t, operational ®t and favourably. The reports also show the
cultural ®t. It then de®nes 14 dimensions ratings for each of the 14 dimensions by
that underlie those macro categories. For Lilly participants and partner participants;
strategic ®t, the Lilly model uses three for instance, 60 per cent of Lilly participants
dimensions to de®ne the category: might rate `performance measurement'
commitment, strategy, trust and fairness. favourably, while 80 per cent of the partner
For operational ®t, the model uses eight participants rate it favourably. The reports
dimensions: communication, con¯ict then display the congruence between Lilly
management, decision making, leadership, and the partner on the dimensions and
performance management, roles, skills/ individual questions. And, perhaps, most
competence and team coordination. For importantly, they show the gap between
cultural ®t, the model uses three Lilly and its partner on each dimension and
dimensions: organisational values, individual question.
knowledge management and ¯exibility. What has turned out to be the most useful
To measure each dimension, the report for Lilly is a `spider web,' or `radar'

8 Journal of Commercial Biotechnology & Henry Stewart Publications 1462-8732 (2001) Vol. 8, 1, 5±13
 Measuring, managing and changing partnering capabilities

chart, that graphs the ®ndings for both Lilly The normal practice, too, is to use the
and the partner on a circular grid (see survey to evaluate only Lilly's capabilities
Figure 1). Using this graph, Lilly and its and performance as a partner, since a major
alliance partner can very easily see the purpose is to make sure Lilly is the best
dimensions that Lilly and the partner agree partner. But in some cases, the partner will
are strong, the dimensions both view as less request that its capabilities and performance
strong, and the dimensions that they in the alliance be included in the survey as
evaluate differently ± the gaps. well. The data in that case, obviously, are
For example, in Figure 1, Lilly and the much more complex to analyse and report,
partner both give `leadership' an 80 per cent since Lilly and the partner are
favourable rating, making it a dimension simultaneously evaluating each other and
they agree is strong. Both also view `strategy' themselves. But the complexity can be
as a relatively weak area, giving it about a 60 worth the effort because the data can help
per cent favourable rating. But they have pinpoint areas where both members of the
clear differences of view on `trust/fairness', alliance can take steps to improve the
with Lilly participants giving it an 80 per relationship.
cent favourable rating and the partner less
than a 60 per cent favourable rating. If this
The focus group tool
were an actual report from an actual alliance,
the gap on `trust' would point to an area that The third tool is the focus group guide and
required additional discussion and work by protocol. Lilly uses focus groups to assess
the alliance. the health of relatively small but
Lilly uses this formal survey for its larger, strategically important alliances, those
more complex alliances, those with at least where the number of participants is so small
10 participants from Lilly and 10 from the that a quantitative report would be
partner. That size ensures that the essentially meaningless. The focus groups
quantitative results will be meaningful. also provide a way for Lilly to probe areas
While surveying alliances with 20±100 of broad concern identi®ed in the aggregate
members is typical at Lilly, the company has of the quantitative diagnostic surveys or in
used the survey for partnerships with as the PWC survey of the entire market.
many as 1,770 participants, a size that In this approach, OAM staff conduct
allows Lilly to analyse differences among separate focus groups, one for Lilly
individual departments involved in the participants and another for partner
alliance. participants. The facilitator of the focus

Percent Favorable

Operational Fit: Communication

100.0%
Strategic Fit: Trust/Fairness Operational Fit: Decision Making
80.0%
Strategic Fit: Strategy Operational Fit: Leadership
60.0%

40.0%
Strategic Fit: Commitment Operational Fit: Performance Management
20.0%
Partner
0.0%
Lilly

Cultural Fit: Organizational Values Operational Fit: Roles

Cultural Fit: Knowledge Managment Operational Fit: Skills/Competence

Cultural Fit: Flexibility Operational Fit: Team Coordination

Operational Fit: Conflict Management

Fig. 1. Radar chart example

& Henry Stewart Publications 1462-8732 (2001) Vol. 8, 1, 5±13 Journal of Commercial Biotechnology 9
Futrell et al.

group uses a discussion guide that is based the alliance, the ®ndings can be formally
on the survey, but does not follow it presented to:
question-by-question. Rather, the guide
· the alliance leaders from Lilly and the
takes as its focal point areas and dimensions
partner;
that show up consistently in the survey.
· the alliance steering committee, with
These `hot issues' become the springboard
representatives from Lilly and the partner;
for the discussion.
· all the participants in the alliance as a
While the focus groups are not
group;
videotaped or tape recorded, Lilly does use
· Lilly participants and partner
a scribe to record key comments by the
participants, independently of each other.
participants and to track the overall ¯ow of
the discussion. The facilitator and scribe The purpose of the initial presentation is
subsequently analyse the discussion, using to gain acceptance of the ®ndings by the key
pareto charting to identify repeated alliance decision makers and to identify the
comments and themes, and produce a areas and dimensions most in need of
qualitative report that identi®es areas of improvement. `Acceptance' is the ®rst goal
agreement regarding strengths and because the ®ndings frequently point to
weaknesses between Lilly and the partner. areas where performance is less than
As with the quantitative survey, gap areas, desirable and where participants, especially
where Lilly and the partner clearly have from Lilly, were not aware of the
different perceptions about key dimensions, performance dif®culty. Gaining acceptance
are also identi®ed and examined. can be especially challenging in the
The focus group report, of course, does dimensions related to cultural ®t. These are
not provide quantitative ®ndings or provide the `softer' dimensions that highly technical
a ®rm baseline to make year-to-year professionals sometimes ®nd dif®cult to
comparisons. However, the report has the deal with because they seem intangible.
advantage of providing qualitative insights Lilly has found that `acceptance' can be
into the reasons for the evaluations captured improved by following three principles for
in the quantitative survey, insights often presenting the ®ndings. First, acceptance is
presented as anecdotes about what the more likely when the order of the
partner views as typical Lilly behaviour. In presentation of ®ndings goes from `hard'
this way, not only do the focus groups serve dimensions and question responses to `soft'
to improve performance of individual dimensions, from what technical
alliances, they also complement and enrich professionals perceive as going from `facts'
the ®ndings of the quantitative surveys and to `feelings.' Second, acceptance is improved
contribute to improvement of Lilly's overall when the presentation is made by the
performance as an alliance partner. `outside' research consultant; the consultant
is accepted as an independent, objective
authority and, perhaps more importantly, is
often viewed by the technical participants in
Using the tools and results to create
the alliance as another `scientist.'
change
Finally, acceptance is improved when the
Once the data have been collected and presenter can test in `real time' hypotheses
compiled into either a statistical report or offered by members of the alliance who
focus group report, Lilly, working with the sometimes attempt ± consciously or
alliance leadership, generally uses a four- unconsciously ± to discount or rebut the
step intervention process to create change: ®ndings ± literally during the course of the
presenting the ®ndings, identifying the presentation itself. That is possible to do
underlying causes for the problem areas, when the survey sample is large enough for
designing actions to improve performance, sophisticated statistical manipulation ± and
and implementing the change actions. all the data and statistical software are
Depending on the size and complexity of loaded on the laptop computer used for the

10 Journal of Commercial Biotechnology & Henry Stewart Publications 1462-8732 (2001) Vol. 8, 1, 5±13
 Measuring, managing and changing partnering capabilities

presentation. This appears to be a very to ensure it is implementing the changes

powerful presentation technique for and developing its culture to embrace the
technical audiences. improvements.
Once the members of the alliance
understand and accept the ®ndings, they
Is the process working?
can move to identifying the underlying
`causes' of the problematic areas. Normally While both formal alliance management at
they begin by examining the ®ndings for Lilly and the measurement and intervention
individual questions/items used to measure process developed are relatively new, Lilly
the dimension. This examination becomes can already see that they have made a
the springboard for a guided and facilitated difference in a wide range of individual
root-cause discussion and analysis. The alliances. Sometimes the difference is a
analysis can be conducted by the steering simple improvement in the day-to-day
committee, by all the alliance participants working relationship, sometimes it is in
or, in the case of large alliances, by task improving ef®ciencies in an already
forces of subgroups from the alliance. successful partnership, and sometimes the
Based on the causal analysis, alliance difference directly improves project results
members then design interventions, or and outcomes.
change actions, to improve performance in For example, in the case of an alliance
the problematic areas. The `change' design with a small biotechnology company
can be as simple as a mandate or agreement located on the West Coast of the USA, the
from the steering committee to Voice of the Alliance survey uncovered a
communicate to all participants more gap in communication and knowledge-
frequently. In the case of more complex sharing in the alliance. The members of the
alliances and problems, the design phase alliance found that the problems were
can include group problem-solving created by the geographical distance
discussion and brainstorming, guided and between Lilly and the partner and by
facilitated by the organisational information bottlenecks. Key alliance
effectiveness specialist on the team who is members at Lilly and the partner sent
used as a `resource' by the alliance members electronic messages to each other but
so that they maintain ownership of the sometimes did not share those messages
`health' of the alliance and do not shift it to more broadly or in a timely way.
the consultant. To solve this problem, the partnership
The ®nal phase, of course, is to implement decided to add a new communication tool
the changes. These usually entail a change to the alliance, a discussion database
in some activity of Lilly's having to do with software application. The discussion
its part in the alliance and can be as simple database permits data to be shared in `real
as clarifying the roles of its various time' by all participants in alliance,
participants to the partner ± or as profound eliminating the gatekeeper role. With this
as making a change in leadership. tool, everyone in the alliance can access and
Sometimes the change can be made by the respond to data and other information,
partner, such as in the way that it collects virtually simultaneously. For example, one
and reports data used by the alliance. And alliance member can post a research result
sometimes the change is in the processes or other message, and many people can read
used by the alliance itself. In effect, these are and comment on the initial message and any
changes that take place in the `space' of the responses to that message.
between Lilly and its partner, for instance The solution has eliminated the
clarifying all roles of the alliance communication bottleneck that the survey
participants within the alliance. As part of uncovered and it has had additional bene®ts
its commitment to improving its for the alliance. It has increased the active
partnerships and capabilities to be the engagement in the project of the scientists
leading biotechnology partner, Lilly needs on both sides, because the software gives

& Henry Stewart Publications 1462-8732 (2001) Vol. 8, 1, 5±13 Journal of Commercial Biotechnology 11
Futrell et al.

them greater opportunity to comment and alliance and increasing the visibility of and
provide suggestions for the project. It has communication by senior leaders regarding
improved face-to-face videoconferences the importance of the alliance, both within
because the scientists now post and across the two companies.
experimental results on the database so that Finally, the Voice of the Alliance survey
all members of the alliance can review them has produced dramatically improved
before the discussion begins. One indicator project results and outcomes for some
of the success of the tool is that in six alliances. The improvement has been
months alliance participants created 200 particularly dramatic for an alliance
entries, about equally divided between Lilly between Lilly and a leading medical school.
and partner members. The purpose of the alliance is to determine
In the case of a very large commercial which cancer therapies work most
alliance, the Voice of the Alliance survey is effectively with which patients on the basis
being used to improve the working of their genetic type. The project involves a
relationship of a partnership that is already fairly elaborate tracking of cancer patients,
exceeding its business goals. This alliance is therapies and tumours and is heavily
between Lilly and an international ®rm that dependent on collecting and analysing
has entered the US market with a new tissue samples from actual cancer patients.
product. It sought an alliance with Lilly to The Voice of the Alliance survey
market the product jointly . uncovered concerns about the operational
In the early days of the alliance, the teams processes the alliance used to gather and
of both the partner and Lilly were relatively record the data, concerns that suggested the
small. But with the success of the product alliance could be much more ef®cient and
over the past two years, the number of effective. After discussions among the
participants has grown dramatically. Given alliance leadership team from the medical
the rapid growth, both the partner and Lilly school and Lilly, the alliance members
wanted to use the Voice of the Alliance together re-engineered the processes used to
survey to assess progress of the alliance and gather and report the data.
determine the effects of that growth on the The changes resulted in a 96 per cent
relationship between them. reduction in cycle time, from 4.5 hours per
The survey con®rmed the suspicions of patient for data management to 10 minutes;
the alliance leaders. Participants gave high an 18,000 per cent increase in productivity,
marks to the business success of the alliance from 4 specimens and no accompanying
and believed it was producing high-quality clinical data in year one to 720 specimens
work. But participants also indicated that with complete clinical data in the ®rst two
along with rapid growth and success had months of the following year. In short, the
come some inef®ciencies in the work medical school met its entire year's goal in
processes of the alliance and an attenuation just two months, which enabled the alliance
of the sense of connection and mutually radically to increase productivity without
developed goals between Lilly and the increasing cost.
partner.
The alliance leadership team used the
Conclusion
survey results to create a two part
intervention programme. First, the alliance The evidence to date forms a compelling
leaders decided to build on the case that the feedback measures are making
acknowledged successes of the alliance and a difference; they are improving the
to improve the communication of those performance of the individual alliances and
strengths and successes. Second, they they are improving Lilly's overall
decided to implement speci®c action plans capabilities as a partner as Lilly's Alliance
that addressed the perceived concerns of the Managers share individual successes with
alliance participants. The plans included re- each other and replicate them across
instituting regular team meetings across the alliances. Moreover, the implementation of

12 Journal of Commercial Biotechnology & Henry Stewart Publications 1462-8732 (2001) Vol. 8, 1, 5±13
 Measuring, managing and changing partnering capabilities

structured feedback means that Lilly and its 3. Rule, E. (2000), `Global Pharmaceutical Company
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& Henry Stewart Publications 1462-8732 (2001) Vol. 8, 1, 5±13 Journal of Commercial Biotechnology 13
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