Leadership 5th Edition by Larry Siegel, Robert Lussier, Robert Lussier, Christopher Achua, Christopher Achua

تمرين 13

The opening case featured Citigroup, a company that was clearly in crisis mode when its new CEO took over. This end-of-chapter case features Merck, a pharmaceutical company that was doing just fine when it brought in a new CEO. We selected Merck because it operates in an environment where learning and knowledge management are critical for success. Also, unlike the Citigroup case, where a leadership change was triggered by a crisis and poor performance, Merck's change in leadership was the result of an orderly succession plan. Merck's outgoing CEO Richard T. Clark was stepping down after reaching Merck's mandatory retirement age of 65.
Merck is a global healthcare leader that employs 100,000 people worldwide, 42,000 in the United States NJ is part of USMerck operates in more than 140 countries to deliver innovative health solutions. In 2009, Merck spent $41.1 billion to acquire rival drug maker Schering-Plough. This mega merger made the combined company the second-largest healthcare company in the world. Merck's leadership saw a lot of synergistic benefits in the merger. They rationalized that both companies are strong, science-based companies. Both have a common mission-and passion-to improve health and well-being around the world. And both share a long-standing commitment to putting customers first and to being there for people in times of need. Drug research is a high-risk and time-consuming process. Only 1 out of every 5000-10,000 compounds screened becomes an approved drug. It takes an average of 10 to 15 years at an average cost of more than US$1 billion to develop a successful medicine. 120 Therefore, knowledge management and the organizational learning are what a company like Merck is all about.
On November 30, 2010, Merck announced that its Board of Directors had elected Kenneth C. Frazier to be its next chief executive officer (CEO) and president, as well as a member of the board, effective January 1, 2011. Mr. Frazier succeeded Richard T. Clark, who had served as Merck's CEO since 2005, who would continue as chairman of the board.
Mr. Frazier received his bachelor's degree from The Pennsylvania State University and holds a JD from Harvard Law School. Prior to being appointed president, Mr. Frazier served as executive vice president and president, Global Human Health, from 2007 to 2010. Frazier is the first African- American to lead a major U.S. pharmaceutical company. Mr. Frazier grew up in North Philadelphia, where his father raised three children on a janitor's salary after the death of Mr. Frazier's mother when he was 12. Mr. Frazier made his name in Merck as the lawyer who masterminded the company's strategy of defending the pain drug Vioxx. Patients were claiming that the drug was responsible for heart attacks, leading to the deaths of many who had been on the drug. From Wall Street's perspective, Vioxx was nothing short of a crisis. Frazier was the strategist calling the shots, initially deciding to defend the company against thousands of lawsuits by fighting every case separately instead of as a joint action. He eventually structured a $4.85 billion settlement to resolve the remaining lawsuits. Wall Street had expected that Merck would have to pay even more. "He managed the Vioxx litigation extraordinarily well, and there were a lot of doubting Thomases, especially on Wall Street," said Barbara Ryan, an analyst who follows drug companies for Deutsche Bank. Mr. Frazier has maintained that the pillar of Merck's strategy will remain innovation, with a focus on emerging markets led by China and Brazil. "The most important thing is to continue on the strategy" that Mr. Clark established, Mr. Frazier said. 121 Richard Clark, Ken's predecessor, said Frazier demonstrated his leadership skills during the merger of Merck and Schering Plough. "Ken spent time in the field understanding the customer needs of our markets in a way that I hadn't seen done before," Clark said. "It showed you his dedication and enthusiasm."
Speaking on behalf of Merck's Board of Directors, William B. Harrison said, "During the board's succession planning process, it became clear to us that Ken Frazier has the strategic vision, operational experience, and passion to lead Merck. Ken is a proven executive who has played a key role in shaping Merck's business strategy. With his understanding of the global health care environment, the board is confident in Ken's ability to take the helm at Merck and guide the continued implementation of our long-term strategy."
Supporters of Ken Frazier believe he has the strategic breadth and depth to advance Merck's innovative strategy and make it a competitive player in the highly competitive pharmaceutical industry.122 Others, however, are more skeptical. While Frazier's legal experience is extensive, his experience running the operations of a company is limited and may cause doubt for some investors, observed Bowe, an industry expert. "Does leading a big pharma company in a very challenging and changing environment require more operational experience?" Bowe said. "That's the question." 123 This question is raised because Mr. Frazier is not a scientist and his experience at Merck and other places were in the legal department. Only the future will tell!
GO TO THE INTERNET: To learn more about Ken Frazier and Merck, visit www.merck.com.
Support your answers to the following questions with specific information from the case and text or with other information you get from the Web or other sources.
1. In what way(s) has Ken Frazier demonstrated his effectiveness as a crisis leader?
2. Given our discussion on the distinction between a traditional and learning organization, what type of organization is Merck? Support your answer.
3. Mr. Frazier has maintained that the pillar of Merck's strategy will remain innovation. Suggest some ideas he can institute to enhance innovation.
4. Describe the strategy that Ken Frazier has articulated for moving Merck forward.
5. What are some of the supporting factors that the Merck Board of Directors used in making the decision to appoint Ken Frazier Merck's next CEO?
6. Drug research is a high-risk and time-consuming process. What evidence is there to support this assertion?
7. What specific personality and leadership traits does Ken Frazier possess that align with leading a learning- and knowledge-driven organization like Merck?
C UMU L A T I V E C A S E Q U E S T IO N S
8. What is CEO Frazier's source of power? Also, what type of power and influencing tactics has he been using, and is it the appropriate power type? If not, which power type should he be using (Chapter 5)?
9. Chapter 6 discusses communication, coaching, and mentoring as ways to develop the leadership skills of underlings by senior leaders. What is the evidence from the case that Mr. Frazier is a beneficiary of effective mentoring and coaching?
10. Strategic leadership is about having a vision that aligns with future environmental trends and working with and through others to realize it (Chapter 11). What evidences is there that Ken Frazier is an effective strategic leader?
C A S E E X E R C I S E A N D R O L E - P L A Y
Preparation: Put yourself in the position of Ken Frazier. There has been a major incident involving one of Merck's drugs. Patients using the drug have been experiencing some serious side effects. The law suits are beginning to mount. You and the crisis management team are getting ready for a news conference with the media on the crisis. Prepare a list of questions you anticipate the media will be asking and what your response should be. What other preparations do you have to make prior to the news conference?
In-Class Groups: Break into groups of four to six members, and discuss the preparation questions.
Role-Play: Taking turns, one group will represent the crisis management team led by Mr. Frazier. Let another group play the role of the media. They should select no more than three questions from their prepared list to ask. The rest of the class should listen and judge the performance of the Merck crisis management team in addressing the media. Each group should take turns role-playing the media, the Merck crisis management team, or the judges. Each team playing the role of the media should ask a different set of questions, so the same questions are not repeated during each round.
Observer Role: As the rest of the class members watch the role-play, they should judge (1) the opening remarks of the crisis management team-their demeanor, body language, tone, style, and substance; (2) the quality of questions that the media team asked; and (3) the quality of responses given by Mr. Frazier and his team-how honest and truthful they are with their answers. Did Mr. Frazier take a leading role or did he stay in the background and let others do the talking? Use the guidelines for effective crisis communication as the tool to judge Merck's crisis management team performance during the news conference. Look for things that the person playing Mr. Frazier did well or did not do well during the news conference.
Discussion: After the role-plays, the class votes for the crisis management team that did the best job addressing the news media with its opening remarks and responding to questions. The instructor should weigh in with his or her opinion on which team did the best job in the questioning and which team did the best job in responding to the questions. Which team member playing Mr. Frazier did the best job and why? Where did the others fall short?