THE BUSINESS REQUIREMENT

Our Client, a large generics pharmaceutical company, sought to expand beyond its purely North American market to become a major global generics company. The Selling Company, wanting to concentrate on branded pharmaceuticals, agreed to sell all of its generics businesses in more than 20 countries in Europe and Asia to our Client. All of these businesses, including their IT systems, had to be completely separated from the Selling Company and operating under our Client’s ownership within one calendar year, under terms of a Transition Services Agreement (TSA).

The cultures of the various businesses varied considerably and differed also from the Selling Company’s parent culture.  All of them diverged from our Client’s culture which was insular and without any previous international exposure. Each of the individual business IT systems was uniquely designed. Most were based on obsolescent, highly customized SAP technology interfaced with unique local applications. IT infrastructure had to be segregated and, in most instances, physically relocated along with physical moves of generics business people from the Selling Company offices to our Client offices at new locations. Technical and business operating knowledge had to be transferred in many cases from the Selling Company to the individual businesses and to our Client corporate personnel.

THE PROBLEM

Our Client had initially engaged a consulting firm which attempted to establish a traditional project organization to manage the work. It quickly became evident that this approach was inadequate. Coordination was haphazard, communications were ineffective, and the entire effort was spiraling out of control. As it became obvious, that achieving the separation within the contract period was in jeopardy, our Client turned to Clarkston Consulting for help.

THE HOM-BASED SOLUTION

Clarkston applied its Holistic Organization Model (HOM) to this crisis situation. Clarkston led our Client in quickly organizing and classifying the multiple problems within the HOM framework. It soon became obvious that the global organization had a very simple organization, whereas some of the larger local organizations (countries) to be acquired had very complex organizations.In order to make these very inconsistent and disparate organizations work together efficiently, Clarkston applied the following findings from the HOM analysis for the project organization:

Clarkston delivers:

• Formulation of a clear mission (purpose) for the project: Ownership transfer with little or no business disruption was paramount; process, technical, and security improvements were out of scope, unless the functioning of the future organization was threatened.
• Creation of a matrix organization between the individual countries (horizontal) and global works
  • Assigning strong, country-specific Execution Project Managers (EPM) for all work to be performed for each of the countries in order to adequately address the more complex local requirements, especially the local cultures and languages
  • Formation of six globally coordinated work streams (SAP, non-SAP applications, IT infrastructure, Genesis, Human Resources/Payroll, and the Selling Company) to provide consistent business and technical guidance to all projects.
• Establishment of a three-person project management office (PMO) to provide strong overall governance for multiple country-specific projects. This ensured that the coordination
• Conducting a weekly series of closely facilitated coordination teleconferences to ensure timely communication and resolving any issues that arose from different working cultures and complexity levels in the following sequence:

1. Classical team meetings with the participation of work stream leaders, EPMs and the PMO for progress monitoring, issue resolution and decision requests.
2. Issue resolution at the PMO level with participation of the project sponsors for timely decision making.
3. PMO coordination with our Client and the Selling Company management to resolve any issues between the parties.

Overall, the result of applying the HOM model was to achieve appropriate alignment among our Client, the Selling Company, the individual businesses, and the work stream and project teams.

BENEFITS

• All the businesses were successfully operating without perceptible business disruptions under our Client’s ownership by the expiration of the TSA.
• No other method would have brought this situation under control so quickly and so effectively. 
• The HOM model enabled our Client to quickly asses the fact that we were dealing with a highly heterogeneous project environment and to design a highly effective project organization accordingly.
• It helped executives see interactions and potential conflicts that would result from proposed actions with remarkable clarity. It also provided a framework to continually measure and improve performance.
• The Selling Company’s CIO offered this conclusion after successfully separating the operations on time: “This carve-out can be seen as a benchmark in terms of reliability of the plans and in terms of accuracy of the implementation under complex circumstances.”