Lose The Sale, Not Your Integrity

It's a common adage that "nothing happens unless someone sells something." There is a lot of truth to this point. Revenue generation and its steady growth thereof are among the key manifestations of a company's economic health.

At the same time, it's very important that the selling culture should be long-term centered -- and not just be for that short-term "hit-and-run high" that comes from closing a sale. Long-term-centered selling involves generating customer delight and thus customer loyalty and, subsequently, the customer's willingness to invite the salesperson back in, and then for that loyalist customer to keep on repeat purchasing into the future. A lateral analogy in the online selling space is the Amazon platform's highly successful "subscribe and save" program for sellers to build higher LTV (Life-Time Value) for each of their customers. Long-term-centered business-building programs capture much larger lifetime value from the customer than just simply making a sale.

Good selling cultures are a key component of sustained organizational health. Sustained organizational health and sustained customer relationships help contribute to good economic health for the organization.

Organizational health can greatly benefit from internal role-modelling, cascading down from the top. Living that desired culture and messaging it powerfully is, first, the job of top management before it becomes the job of the frontline managers who directly lead and motivate their teams of frontline workers. Conciseness, candor, clarity and consistency in messaging can work wonders in getting people on board. Schering-Plough is a good example to illustrate this.

When I took over as CEO of the global pharma giant Schering-Plough in 2003, I had already built up a reputation of being able to turn around broken companies and make them successful for the long term. I was hired for that purpose in my previous company and, before that, in my previous company, and now I was being ushered into the severely challenged Schering-Plough for that same reason.

Coming in, I noted that Schering-Plough's severe challenges included open-ended issues of unmeasurable dimensions around the federal authorities investigating sales, marketing, tax and disclosure practices, and also severe issues regarding manufacturing and R&D practices. For example, the FDA had previously "put the company in jail" via a Consent Decree until it resolved, by the FDA-assigned time deadlines and to the FDA's satisfaction, 212 action programs in manufacturing and R&D that were its identified deficiencies. Coming in, I had to take personal accountability by signing my name to get these done on time.

Compounding these was the downward sales cliff stemming from the exclusivity loss of Schering-Plough's main product, Claritin. This was creating growing apprehension around the company's financial health. In fact, the cash flow hemorrhage was draining the balance sheet at such an alarming rate that it was creating a scramble to find financing remedies. It is rare in Big Pharma to see a company heading for liquidity or even solvency challenges. Fortune magazine carried an article that it would be "miraculous" if the company survived.

We set about working on multiple fronts, starting with the extremely challenged organizational health. We worked hard as a cohesive, unrelenting team. Early wins gave us courage to keep pressing onward. Out of adversity, we emerged stronger. It turned out to become an exhilarating turnaround and transformation.

For 17 straight quarters, our revenue grew at a double-digit rate. The frighteningly large annual cash burn rate of $1 billion got turned around to a positive annual cash flow rate of $2 billion. Organizational health upgrades kept driving strong results. The biggest organizational health upgrade was the improvement in the moral fiber of the company. This upgrade helped build a unified sense of purpose, of belonging, of team spirit and pride in punching beyond our weight.

Here is a vivid example of the unfolding drama at Schering-Plough, a few months after I took over as CEO.

We were assembled in a massive convention room in Atlanta in October 2003. There were more than 3,000 people in the room. Our entire U.S. sales force was present as well as our internal sales and marketing team and our senior management team. There was a sense of great apprehension in the air because people had been buffeted by a flow of negative news on Schering-Plough for more than a year. This would be the first time most people would be seeing their new CEO, who happened to be me.

The sales force arrived with the hope that I would announce something that would be seen as a popularity-winning "present" for them. Morale was very down and maybe a "happy announcement" would give it a lift. Maybe a special bonus? Or yet another hyper-payout commission plan?

Initially I spoke about why I took on the Schering-Plough challenge and my belief that, together, we could find our way out of the darkness. I talked about our published leader behaviors, which included shared transparency and accountability; continuous listening, learning and improvement; coaching and helping others; and business integrity.

In discussing that last leader behavior, business integrity, I slowed down. I looked even more intently at my colleagues assembled before me, and then I said, "if you are faced with the opportunity to make a sale and which also compromises your values, then, as your new CEO, I am saying to you ... walk away from that sale." My saying those last five words with deliberate emphasis involved risk because there were members in the sales force who boasted of buying larger-than-customary cars and houses from the super commissions they had been making during the previous heydays of a hard-sell culture. Now, their new CEO was telling them that was no longer going to be the case.

I said what I wanted to say, then I paused. It felt like an awfully long and awkward pause. I feared a "fall flat" response. Then, mercifully, an applause started in the front part of the hall, then it traveled to the middle and back parts of the hall. The applause went on and on. The entire room stood up on their feet and kept applauding. This was their catharsis moment! Yes! People want to be part of a team that has good values. Yes, they were being told that they were respectedas ethical human beings! They kept applauding with a sense of being liberated and validated.

People want to be told by their leaders to do the right thing. I was telling them to do the right thing. I was signaling my faith in them and my faith that they would sell ethically and with a customer loyalty-building mindset. Just sensing the energy, the electricity in the cavernous room, I knew at that time that Schering-Plough was not only going to make it, it was going to make it big time!

By 2005, we had cleared almost all the inherited "overhangs and demons" and announced a decisive "Turnaround." In 2006, we announced the start of the "Build the Base" phase. In 2007, we bought the Dutch national pharma champion Organon Pharma. The Organon acquisition was executed as part of our "Breakout" phase. Organon turned accretive in its first full quarter as part of Schering-Plough and later yielded Keytruda, which will be the largest selling drug in the drug industry in 2023 as a $20 billion-plus blockbuster.

During my tenure of six and a half years, Schering-Plough stock rose 62% versus a drop of 24% for the unweighted basket of the six peers in my proxy statement. The credit for these astounding results belongs to the people of Schering-Plough and their determination to work together, root for each other, have a sense of purpose and focus on doing the right thing.

This formula of getting people to work on earning trust, whether it is earning trust with customers or earning trust with each other, worked for me in my six turnaround transformations, one of which was the Schering-Plough story.

Business integrity is a winning strategy even beyond the sales force. In 2002/2003, I was chairman of the pharmaceutical trade association (PHRMA), and I got my CEO colleagues from other companies to agree to voluntary guidelines, for the first time, on ethical promotion practices and clinical trials disclosures. This action was made possible by convincing my CEO colleagues on the PHRMA board that our bond with society would be stronger if what we did was based on a uniform code of ethics inside the industry.

Personal role modeling and authenticity by the leadership is very important. Living the speeches day in and day out is what embeds the new behaviors in the culture that one is trying to create. If there is a culture of passion, courage and tenacity coupled with customer care and business integrity, then it is very likely that company will succeed in the long run. This formula worked for me again and again and I am very confident it'll work for other CEOs as well.

Author of CEO-read bestseller Reinvent, A Leader's Playbook for Serial Success, Fred Hassan is a director at the private equity firm Warburg Pincus. His board memberships include Precigen, Prometheus Biosciences, Theramex, IntegraConnect and Vertice. He is also the chairman of Caret Group. His experience in the pharmaceutical industry includes serving as CEO of Pharmacia Corporation and Schering-Plough.