As companies and industries climb up ranks of innovations through the ladder of technological and digital advancement, one thing that has consistently fueled their progress remains to be a sound internal organizational infrastructure.
Over time companies have realized the importance of peeking into the conventional methodologies that seemed to be ‘working well’ for them but are, in fact, the hurdles keeping them from achieving optimal success. That’s where an eliminative and iterative approach like zero-based comes in with the potential to drastically cut costs on wastage and scale performance.
Through this blog, we will take a clearer look at what this approach holds in store, particularly concerning the immensely overlooked pharma sector.
Understanding The ‘Zero-Based’ Approach: Budgeting, Productivity, and Redesign
Where the term Zero-Based finds its origin is still a matter of debate, however, what it stands for and how it impacts an organizational functional structure is as articulate as it can be.
What Is A Zero-Based Approach?
Technically, the zero-based approach refers to a no-nonsense, specialized, and targeted strategic approach wherein organizational designs are linked to strategic priorities and reiterable efficiency optimization takes place.
Simplistically, no one solution fits all problems in a business. All activities that are unnecessary for optimum utilization are eliminated and everything, right from organizational structure to the management and accountabilities are fine-tuned to meet the needs of the consumers.
What Is The Scope?
Widely perhaps the first thing that pops up in the mind when we talk about a ‘zero-based’ approach is budgeting. Since zero-based budgeting accounts for every dollar that is spent on a useful purpose, it is considered to be one of the best methods for transcribing organizational finances.
However, the crux of its principles has facilitated the adaptation of the module into several formats including zero-based productivity, and above all, the comprehensive zero-based redesign. In most successful models, an efficient balance is established between zero-based redesign and budgeting.
What Is Zero-Based Redesign?
The zero-based redesign is about reshaping a companies priorities to maximize the potential that blows up among customers the most. ZBR gives companies a competitive advantage because it is a one-time effort that ensures you deliver the best of what customers value the most about your company in that niche. From a bird’s eye perspective, here’s what you can expect:
- Over 20% of cost savings.
- Laser focus on profitable activities.
- Increased productivity.
- Increased shareholder returns.
Why Does Pharma Need A Zero-Based Redesign?
Up until now, there has only been a case study on implementing the zero-based redesign approach on pharmaceutical R&D. The insufficient discussion of ways to advance and reshape pharma is itself a problem. However, a comparative analysis with other industries brings to light the following key areas where pharma lack:
- The pharmaceutical industry has always been conservative about integrating innovation mixes in their business models. The rigidity can ruin productivity.
- A similar rigidity is observed when it comes to funding. Budget allotment needs to be shuffled and seen in a different light to save costs and maximize investment where it’s actually needed.
- Team management is another example of a rigid allocation of responsibilities. A staff that is not empowered or invested in can only produce substandard results.
Another major problem with pharma is that most companies are saddled with a performance that fails to align with the business strategy. And the cause is the rigidity in the structural and functional approach. Zero-based redesign helps to unwind just that.
How Zero-Based Redesign Can Reshape Strategic Pharma Development
A zero-based redesign model, in most instances than not, goes beyond the typical incremental improvements that most performance enhancement procedures used in pharma promise. The losses and inefficiencies anyway creep back in with the latter.
Shifting to this approach in pharma would mean taking a bold decision to function on a new operating model that empowers employees while at the same time enables the shuffling of the staff spending to better areas. Here are some of the salient factors of the zero-based redesign approach, which when established, can bring a major constructive change in the pharma industry:
Resilient Organizational Superstructure
Revisiting the organizational superstructure is the most fundamental step to ensuring that the core engine of the company runs smoothly. As far as the pharma industry is concerned, most companies operate best with two senior management functions at the most senior executive level. The roles should cover three core areas: directional advisory, internal and external communications, and scientific supervision.
The greater the transparency in allotment and expenditure in a company, the greater the management can understand the overall budget. This also facilitates the accurate deduction of which processes need a redesign, which activities need to be eliminated, how shared services can be implemented, and how cost reduction can be automated.
A strategic optimum is the cumulation of activities that are supportive of function-level strategies. This principle aims to face pharma’s problem of misalignment of goals and business strategies with their internal functional infrastructure by reinstating activities that are critical to the business.
It might seem to be talking survival when the objective is scaling, but determining the organizational capacity that is needed to keep the wheels of a business running can help gain foresight in crucial decisions pertaining to resource management, commitment planning, and profitability goals-setting.
Exercises that test the company’s resilience in times of crisis, whether technical or external, should be conducted to ensure the redesigned superstructure withstands stress. Pharma is an industry with every consumer being a stakeholder, and a company halting activities due to minor stress can not be tolerated.
The Roadmap To ZBR Implementation In Pharma
With technological tools like Virtual business-process assistants, Cognitive systems, Business-process management systems, and more taking the center stage in ZBR models, it’s only fair to expect the roadmap to ZBR implementation to be digital.
However, when a focused ZBR effort integrates with technology, the potential can be overwhelming. Companies might feel at a loss when it comes to determining which technology and what kind of manpower need to be invested in. That’s when the cycle becomes mutually dependent, where the experience of veterans and intuitive expertise of fresh minds needs to be integrated with a view to creating a balance.