Generics drug major Dr Reddy's Laboratories Limited is re-architecting a part of the organisation to handle disruption of existing business as a way forward to build its future business, according to its co-chairman and CEO G V Prasad.
While answering the question as to how does he build for future, not knowing where the next big challenge could come from, Prasad told global consultancy firm McKinsey that they have started thinking about that.
In an interview to McKinsey on the business, opportunities and the change needed in the organisation, Dr Reddy's CEO said they do not believe that the existing business was capable of building for the future.
"We do not believe that our existing business can do this; you can not expect people to focus on increasing market share, growth, and driving the business while also disrupting the world. So for the disrupt part, we are re-architecting our organisation. This has to be outside the mainstream. We have a couple of initiatives going on-a new-ventures group, as well as someone in the US who looks at emerging technologies. We will invest in start-ups. All innovation that cannot be done internally, we have to do it externally or partner with someone or invest," he explained.
Either R&D or collaborative R&D outside the existing core business of the company or by acquiring technology platforms was what the innovation stands today for the company. Dr Reddy's was going to have another leg where its leadership will focus on small companies, universities, and ideas and back people from outside and inside to build businesses, according to him.
Taking a cue from what he believes constitutes the future business, Prasad sees a big shift in Dr Reddy's business model in next ten years.
Dr Reddy's will be a much more global company. The business model will have changed; a large part of it comes from generic drugs today, and in ten years much of it will come from innovative products: "We are living in the time of great changes in digital health, genomics, and personalised medicine. Companies like ours will probably be more resilient than a traditional pharmaceutical company(to handle the change),"he said in this interview.
While Prasad believes that the management was largely on track in terms of building the organisation for future, he, however, finds some gaps and things that need to be achieved as they seek to move ahead to become a global company in letter and spirit.
"There are some things that we have done well. Building technical capabilities and our people practices are certainly among those,"he said adding that where they have not done very well was bringing discipline to performance and bringing accountability for results: "I we can build this, I think the company can be in a much better place."
Prasad wants the company to be much more agile, which he aims to achieve through speed and simplification of processes. "We are still a very Indian organisation and are more comfortable managing individuals. The ability to manage globally diverse leaders is needed," he said.
Dr Reddy's CEO was also somewhat critical about how the company handled the innovation research and took risks in the past. The innovation in the early days was very science focused and that led people living in their own world without understanding the realities while being entrepreneurs they inclined to take excessive risks on businesses, he thinks.
"I think some restraint is required for highly entrepreneurial people like me. I have learned that we need to be careful about not seeing just the opportunity but also the downsides," he said.
Dr Reddy's president and global head for HR Chandrasekhar Sripada, who was also interviewed by McKinsey, has talked about an ongoing programme where the company plans to build a team of 400-500 leaders in the company.
"We are teaching our managers that the ability to influence others is linked to achieving visible, verifiable business goals...This is the foundation of our leadership programme.,"he said. Over the past year and half the company has crated a critical mass of about 100 leaders who share this thought.
They do not learn this in a vacuum but in the heart and fire of a business situation, he says. Every participant in the company's Leadership Academy chooses a breakthrough project which has verifiable financial objectives with a time line. Within the ten-month -long programme, about six to eight months is spent implementing his project, according to him.
