Reinventing big pharma: Bayer’s shift towards Dynamic Shared Ownership
There have been murmurings of excitement in the new ways of working field over the past few months because Bayer, one of the largest pharmaceutical companies and biomedical companies in the world, has announced it is undertaking a ‘fundamental redesign’ of its organisational model.
Inspired by organisations like Haier and GE Appliances, both of which have enjoyed stunning results thanks to their implementation of self-organising micro-enterprises (RenDanHeYi), Bayer has developed its own model which it’s calling Dynamic Shared Ownership (DSO).
I recently attended a webinar about this move which included an opening talk by Gary Hamel about shifting from bureaucracy to Humanocracy, followed by a number of presentations by various leaders across Bayer about the DSO initiative and how it’s going so far.
CEO Bill Anderson shared that he has been keenly studying and experimenting with new ways of working for the last seven years, and has never seen a transformation initiative with this scale and scope being rolled out. And the numbers so far are impressive:
- 170 teams and 4,000 people are currently involved in the DSO initiative
- 70 design teams are working to redesign key processes such as performance management in line with DSO principles
- The plan is to scale DSO so that every layer of the organisation is working in this way by the end of 2024
What is DSO?
According to Bayer’s press release:
“Through DSO we are actively and intentionally shifting our focus from internal processes to meeting customer needs and radically shifting decision-making power from managers to the people closest to our customers — because they are the ones who understand their needs the best and can make a direct, positive impact.”
In practice, this means focusing on three things:
- Entrepreneurial culture — empowering people closest to the customer
- Decision-making speed — moving from annual to 90-day working cycles for faster innovation and response time to customer needs
- Impact-guided talent flow — reducing silos, and allocating resources and talent to where the greatest impact can be achieved
Much like Haier, this means that functions (like finance, HR, procurement) become “more entrepreneurial and service-focused, shifting from policy enforcement to facilitating talent, funding, and information flow. Our goal is to provide better, faster, and more efficient services.”
Michael Lurie, formerly a partner at McKinsey and global co-leader of
Aberkyn, joined Bayer as Chief Catalyst in October 2023. He is leading a global team of coaches and catalysts and working closely with the Management Board. He spoke about “a new approach to leadership” and “helping people learn simple practices to become aware of limiting mindsets and beliefs, shifting into more enabling mindsets that allow us to work together and seize opportunities.”
We also heard from Heike Prinz, Board of Management member and Chief Talent Officer & Labor Director, who described how they are moving to a “Talent Marketplace”, a platform that collates skills and not just education and CV data: “Rather than being defined by your position description or place on an org chart, people can make use of all their skills and do work that matches their interests and the business needs.”
She spoke more to the shift in leadership capacities:
“A key prerequisite for this is shifting leaders from managers that command and control to 𝘷𝘪𝘴𝘪𝘰𝘯𝘢𝘳𝘪𝘦𝘴 that guide teams in defining the outcomes to deliver on our mission “Health for all, hunger for none”; from planners to 𝘢𝘳𝘤𝘩𝘪𝘵𝘦𝘤𝘵𝘴 that shape a value-creating system to unleash the passion and energy of our people; from directors to 𝘤𝘢𝘵𝘢𝘭𝘺𝘴𝘵𝘴 that remove roadblocks to facilitate connection and collaboration; and from controllers to 𝘤𝘰𝘢𝘤𝘩𝘦𝘴 that help teams learn and build the capabilities needed to create value for customers and stakeholders.”
Early results of the DSO initiative
After launching DSO principles in autumn 2023, here are some of the results so far:
- After just 60 days of experimenting with DSO principles, the Consumer Health Team in Southeast Asia was able to move launch dates forward by 5–9 months, shortening internal processes by 60% and resulting in a 30% increase in value (worth 2 million Euros).
- In U.S. Pharmaceuticals, they have moved from four standalone franchises to 68 customer squads — entrepreneurial units of 15–20 people. Decisions that previously might have taken 3–6 months are being taken almost on the spot. By reducing unnecessary bureacracy (like limiting the number of expense reports managers review), they’ve reclaimed 50,000 unproductive hours that can be redirected to the customer. All of this has led to an expaded footprint in the U.S.
Questions I’m left with
- Headcount reduction – Bayer has decided as part of this transformation, it’s necessary to lay off a number of people in management roles that are no longer needed in the new model. In the NER model (which I wrote about here), nobody is laid off. Instead, former managers are supported to spend time looking for a new ways to contribute to the organisation, crafting a new role for themselves. However, the organisations K2K Emocionando supports are significantly smaller and perhaps in an organisation as large as Bayer, the organisational debt and layers of management are simply too big for this option. I heard Jos de Blok, founder of Buurtzorg, once say that if they acquire other organisation, he prefers not to take the managers because it’s simply too difficult for them to ‘unlearn’ their management habits that are detrimental to a self-managing teams. It does seem the case that when many organisations shift to self-organisation, between 10 and 20% of people end up leaving (see Zappos, where 18% of employees chose the buyout option rather than adopt Holacracy) because they are unable or unwilling to adapt. I’m left wondering: is it more compassionate to layoff certain management roles if it’s going to be painful for them and they might ultimately leave anyway?
- Human skills – for those who remain, especially in leadership-type roles, I’m curious about what support they are getting in terms of human skills development. In my experience, it’s not enough to reinvent structures and processes because our internalised system of top-down, patriarchal dynamics is so ingrained. We need to practise new ways of being together if we want to enable truly empowered teams, and not just another hierarchy of coercion in disguise. When Michael Lurie talks about shifting to more ‘enabling mindsets’, I’m interested in how they are supporting people to do that. Do the coaches work in a similar way to the Buurtzorg model, for example?
- Decision-making – is the increased decision speed just because they have reduced the need to go ‘up the chain’, or are people also learning decision-making protocols more conducive to self-managing teams, such as the Advice Process, or consent-based decisions as in Sociocracy or Holacracy? Again, I find many professionals are not practised in the art of conscious decision-making and tend to default to either autocractic, majority vote or consensus.
- Role model? – there has been a lot of backlash over the last few years regarding self-organisation, especially in the mainstream media, leading to some organisations reverting to more traditional top-down models after self-management experiments ‘failed’ (Medium, Buffer etc.). However, the Haier model seems more enduringly popular and it’s difficult to deny the results. Could Bayer’s announcement invite more backlash (a la Zappos) or could they become a shining example that emboldens other organisations to finally bust their own bureaucracies?
If you enjoyed this blog, you might also enjoy my podcast, Leadermorphosis, for which I’ve interviewed nearly a hundred pioneers of new ways of working, or my book Moose Heads on the Table: Stories About Self-managing Organisations from Sweden. Also check out Tuff Leadership Training, where my colleagues and I train people in the mindset and skills needed for self-managing teams to thrive.
