From Startup to Operational

One of the most perilous phases in the life of a company is the transition from startup to operational enterprise. Many ways of operating that make a startup successful (including the essential all-hands-on-deck “I’ll do everything” mentality) can be fatal in the operational phase, where significantly different working methods are required for success. It is also important to build up the key attributes of the startup, such as agility and urgency, that are vital to operational success.

As we found in our work on Radius Health, where Ward was CEO and Banta was an advisor, engaging all employees early in a purposeful evolution in culture can help avoid transitional failure, while accelerating the path to high performance. (Our critical shift was from developing a major new osteoporosis treatment, TymlosTM, to commercializing it.)

Contrary to conventional wisdom, we found strategy and structure are not the most critical factors, and in fact can become a distraction to the essential focus on culture. What really matters is driving an evolution in how people think about their roles and how they behave. We were disciplined in describing the change as “evolution,” and aimed to retain the enduring aspects of Radius the startup, while layering in new dimensions critical to becoming operational. We found that by doing this effectively, many other dimensions of the change take care of themselves. We also confirmed that the CEO must personally lead this work (versus HR or Communications), because it requires aligning and then mobilizing the executive team to make the change happen.

Timing is Critical

A critical aspect is timing. Organizations typically realize they must change gears when it is too late. So we began the culture shift throughout the two years leading up to the launch of the first commercial product. This was especially notable because Radius was coming off its first year as a public company, having delivered the highest total shareholder return of any IPO since 2014. It took a lot of grit and foresight among all our people to focus on change.

The effort began with an employee-led project team to craft the language that expressed how our purpose had driven high performance. After talking with many of their colleagues, the team came up with some distinctive language that captured a vibrant motivational drive, focused on health outcomes: “We unleash the power of science to add more life to life.” Employees explained that this combined sustaining the strengths of a startup with the results-focus of an operational team.

Then, building from that sense of purpose, the executive team and employees together identified values and behaviors that were driving performance and how these could be focused as the company became operational.

Getting Everyone Together

A key word was “together.” This was intentionally a bottom-up process, with a majority of the employees engaged through different steps from brainstorming through the drafting itself. Not involved: The usual large teams of consultants. Virtually all the work was done by Radius employees. This was efficient, cost-effective, and most important, “sticky.” By helping to define our new way of operating, employees owned it.

When most companies go operational, they begin with a traditional sales goal-oriented approach. Instead, our employees, when asked, wanted to begin with values. So the key question we asked the leadership team, and all employees was, “What are the right values we need to be effective as a much larger team with customers to serve?” Five values included “Improve Human Health,” and “Grow Together”—the latter based on many individual recommendations to move from an individual contribution focus to helping teams develop each other.

We then identified a short list of behaviors expected of everyone, from Ward to the sales force. Behaviors are critical in driving the shift to an operational organization. Agreed behaviors set concrete expectations about how people work together. They are also observable and measurable.

In a startup, for example, it is critical to reward individual initiative. But in an operational company, it becomes important to also encourage teamwork and greater focus on core capabilities—without losing organizational agility and speed.

Changing Team Behavior

Once again, we asked employees exactly how the behaviors would change, through a combination of group meetings, interviews, and online polling. The evolution in desired behaviors was striking—from “self-reliance” and “individual initiative” to a set of five new “operational” behaviors. One of them: “Build credibility through reliability” (which combines earning trust with colleagues, and having a compliance mindset in both sales and marketing.) Another—“Win with others,” which meant putting a focus on teamwork, as well as individual initiative.

The direct impact on performance was substantial. As we grew from 25 employees to more than 500, the focus on a high-performance operational culture attracted high talent, including more than 13,500 applicants for 250 sales positions, with almost all applicants citing our culture as a key to joining.

The new way of working enabled us to achieve an FDA first-pass approval of TymlosTM with an internal program team of only 25 people, less than half the typical team size. We attribute the team’s effectiveness to how they employed the performance-driving behaviors.

The success of this program validated our approach to reinforce our existing startup sense of urgency—with a new focus on collaboration.

The employee-generated values and behaviors also had a direct impact on early commercial success. Focusing on the core value of “Do the right thing,” and our key behavior, “Be courageous,” our market access team created a pioneering Responsible Pricing Program for TymlosTM. This included flexibility on patients’ cost based on ability to pay. The program resulted in early access and reimbursement for TymlosTM —a big benefit to patients and a big win for Radius.

Driving Transformation Successfully

We have often been asked, “How was it possible to drive this successful transformation in the absence of the usual burning platform such as a product failure or other corporate disaster?”

One key: Placing employees at the center of the process to create the new operational culture. While many organizations call on outside teams to execute change, we involved the executive team collectively, along with the employees. In this way, our people came to realize the need to make the company an effective operational organization to avert a crisis later. They called out the need to act early, with urgency.

The other critical factor: The leadership of Ward and his top team. Ward’s direct reports involve almost every detail of the process, with a pragmatic focus of turning Radius the startup into Radius the operational machine.

Perhaps most importantly, Ward and the executive team were visibly committed to manifesting the new culture. This had direct impact on those among us who matter most in an operational company: The frontline sales people. As one sales manager said, “For the first time in my career, I felt we were getting ahead of the curve in company evolution—and we had the employees on board.”

Leadership by example can be a very powerful force for change. We believe that our example shows how other companies can successfully transition from startup to operational through a values- and behaviors-based approach championed by top management, but owned at the frontlines.

  • Robert Ward

    Bob Ward is Chairman and CEO at Eloxx Pharmaceuticals, Inc. Previously the CEO and President of Radius Health, Bob held a series of progressive management and executive roles with established companies such as NPS Pharmaceuticals, Schering-Plough (Merck), Pharmacia (Pfizer), Bristol-Myers Squibb, and Genentech. 

    • Ken Banta

      Ken Banta is Principal at the Vanguard Group for Leadership. Through the Vanguard Group for Leadership, Ken advises CEOs and other top executives on leadership and organizational transformation. He is also the Founder of the Vanguard Forum, a leadership-development program for next-generation CEOs. He was a member of the leadership teams that turned around Pharmacia, Schering-Plough, and Bausch + Lomb. 

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