Skilled incompetence in the management of R & D

DRUG DEVELOPMENT RESEARCH 35:l-6 (1995)

Preclinical Research

Venture Capital Enabling Technology

Commentary

Preclinical Development Clinical Development Toxicology, Formulation Phases 1-111 Postmarketing Drug Delivery, Regulatory, Quality, Phase IV Pharmacokinetics Manufacturing

Skilled Incompetence in the Management of R & D Ivan Jensen, Stig Jorgensen, and Alice M. Sapienza

Ole Dissing MPsych, Novo Nordisk AIS, Bagsvaerd (/./.), and Coloplast AIS (S./.), Humlebaek, Denmark; Graduate School for Health Studies, Simmons College, Boston, Massachusetts (A. M.S.)

Key Words: skilled incompetence, research management, research and development

INTRODUCTION

Skilled incompetence is a term used by Argyris [ 19901 to describe the persistence of skillful “behav- iors that are [nevertheless] counterproductive to our intentions.” Based on our experience in the pharmaceutical industry, we believe that skilled incompetence is prevalent in the management of R & D. Sci- entists who are technically competent are often promoted-as a reward for that competence-to a managerial position for which they are not competent. In this management position, they then receive inad- equate or inappropriate feedback (or none at all) on the root causes of their incompetence.

Consider the following case (this is a composite from our experience and will be used throughout to illustrate the discussion):

The scientist-manager of R & D in a large, multina- tional pharmaceutical company was concerned with the speed of drug development. Upon review of the progress of all projects in R & D over the past 5 years, it became clear to the manager that, on average, each project was delayed by 6-8 months per year. Com-

pared with their competitors, the company was generally 3-4 years slower in bringing out new com- pounds. As a result, the company achieved no more than fourth or fifth place in market share rankings.

The manager described their project decision-making process as “awkward and slow, requiring frequent correction and rework. ” We, however, observed that decision-making was slow because the manager in- sisted upon being involved, even in minor issues, and effectively made most of the project decisions for the team. The manager admitted to being involved but explained that it was because of the high monetary cost and visibility of project failure.

We concluded that the manager was involved because of a belief that her past experience constituted the

Received December 21, 1994; final version accepted Jan-

Address reprint requests to Ivan Jensen, Ole Dissing

uary 10, 1995.

MPsych, Novo Nordisk A/S, 2880 Bagsvaerd, Denmark.

0 1995 Wiley-Liss, Inc.

2 JENSEN ET AL.

most important decision criterion (she freqiieIitly referred to her own knowledge and skills during project meetings). Members of the project team were dis- turbed hy the manager‘s implied lack of trust in their knowledge and skills and hesitated to make decisions she might reverse. In an attempt to iinprove the situation, the team imposed even strictcr criteria on their project decision-making.

In this example, the manager had no lack of feedback on her own involvement. But she did lack feedback on the root cause of her behavior-her belief that her own knowledge was the most important decision criterion, manifesting itself in lack of trust in the team’s capability. What emergcd in R & D was a vicious circle, in which the manager intervened because team members appeared to lie hesitant to make decisions she would reverse, and the stricter decision criteria imposed by the team slowed decision-making even more.

The situation just described exemplifies what Argyris [ 19901 termed single-loop Learning. Single- loop learning entails taking action to solve the presenting issue-in this case, protracted development times-without addressing “the more basic problem of why these problems existed in the first place.” That is why, as in our hypothetical company, people soon find themselves in the vicious circle of proliferating actions that in fact compound the presenting issue. They are being, in effect, skilled in their incompetence.

When people move beyond the presenting issue to question assumptions (c.g., were the above manager’s knowledge and skills applicable to project management and superior to those of the team?) and to probe what Argyris [ 1 ~ 0 ] called their “governing values,” they engage in double-loop learning. They no longer take their customary solutions-such as imposing stricter project decision criteria-for granted; rather, they make tacit assumptions explicit and seek feedback on the truth or falsity of those assumptions.

Our discussion in this commentary focuses on skilled incompetence in the management o fR & D, a situation that, we contend, is paradoxical, prevalent, and costly.

First, it is paradoxical because scientists are trained in the use of closed-loop feedback and control systems, in which they continually challenge their own findings by testing the truth or falsehood of their hypotheses (i. e . , engage in double-loop learning). Yet, when they are promoted to management, they appear unwilling or unable to translate these skills and experiences from the bench (“hard science”) to management (“soft science”).

Second, skilled incompetence is prevalent because most manager5 of K & D (at least in the pharmaceutical industry) are scientists.

Finally, skilled incompetence is costly. Once es- tablished, the situation tends to persist and to in- crease the cost of drug development (because of in- creased time and rework) and to cost the firm lost revenues (because the drug is late to market and cannot attain large market share).

The purpose of this commentary is to elucidate the reasons for the paradox and prevalence of skilled incompetence, to describe how such skilled incompetence can be diagnosed, and to recommend interventions to correct and, hence, reduce its costly consequences. To emphasize the importance of the subject, we begin by discussing briefly how skilled incompetence can add to the cost of R & D.

POTENTIAL COST OF SKILLED INCOMPETENCE

Developing new chemical entities (NCEs) is, nndonbtedly, a long and expensive process [U.S. Of- fice of Technology Assessment, 19931, The global average time from discovery to sales is approximately 10-14 years, although some companies are able to do better consistently. Because f e ~ 7 NCEs marketed by a company actually result in a positive net cash flow, there is a very strong incentive to improve the time and cost profile of drug development projects.

In our hypothetical company, as in all pharmaceutical companies, R & D consists of literally thousands of activities that are interlinked in a complex and dynamic fashion. Many of the transitions between individual activities are controlled by formal project management decision processes. Thus, it is hardly surprising that it is often this decision-making-rather than the experimental work-that is one of the most time-consuming elements in drug development. Waiting for the manager to return from a trip, ap- proval of equipment purchases, some project review meetings, etc., are activities that do not add value to the development process.

The manner in which pharmaceutical companies manage project decision-making has major competitive impact. Delays can amount to hundreds of thousands of dollars, per day of delay, in terms of lost revenues. We believe that much of that loss can be attributed to skilled incompetence. To make matters worse, a less than optimal decision-making process is rarely unique to one project. Thus, the impact of skilled incompetence is likely to be compounded across the company’s entire project portfolio.

SKILLED INCOMPETENCE IN MANAGEMENT OF R & D 3

PARADOX AND PREVALENCE OF SKILLED INCOMPETENCE

No matter what the discipline, every scientist is trained to construct and test theory. Simply put, a theory is a “provisional explanatory proposition, or set of propositions, concerning some natural phcnom- ena.” More importantly for our discussion, every scientist is trained to understand that “if there is 110 way of testing theory it is scientifically worthless” [ Marx, 19701,

Theory testing is a closed-loop feedback and control process of double-loop learning, and the scientist’s goal is to understand the phenomenon as well as possible. Assumptions (propositions, hypotheses) are tested to determine if they reliably explain and/or predict what is observed. The scientist makes specific efforts to disconfirm hypotheses as well as to uncover the probability that the theory is true as constructed.

During the scientific discovery process, feedback is crucial. Diiring the managerial process, feetl- back is also crucial. We define this type of fcedback as the immediate, uncensored, and honest communica- tion of feelings about, and reflections upon, observed behavior. Unfortunately, many scientists cannot make the connection between the necessity for feedback in both the scientific and the managerial realms:

The scientist-manager in our case study was trained in systems thinking and feedback control. In fact, she earned an international reputation for work on a par- ticular chemical synthesis, based on a theory of ion exchange. Her cxpcriments to test that theory wcre designed to provide ample feedback on the truth or falsehood of her assumptions.

She gained great satisfaction from seeing the state of science advanced because of her work, and the company rewarded her technical success by promoting her to director of R & D. In this role, however, slie was no longer dealing with the phenomena of chem- istry and ion-exchange systems hut with the phenomena of human behavior arid orgariizational systems. But she was unable to discern the applicability of feedback to test her assumptions about the “awkward and slow” project decision-making processes. A s a manager, she behaved as she would never behave at the bench-she acted as if her “theory” were true and her propositions confirmed.

As scientist, our exemplar first studied the fundamentals of her discipline. When slie began working on the ion-exchange experiment at the company, she engaged in a rigorous effort to learn what was then state-of-the-art. As manager, our exemplar assumed that she knew the fundamentals of management and made no attempt to learn a h i t organizatioiial behavior or behavioral (as opposed to technical) issues in

project management. In fact, she disdained those who studied the “soft sciences,” proudly proclaiming that she never had taken, and ncver would take, a management course. (We doubt that she would have made such a statement about, e.g., electron microscopy.)

As a manager, this scientist constructed norma- tive theories about the world: how people in discovery and development teams should act, how project operations should be carried out, what decision criteria should apply, and so forth. But she had no training in the relevant disciplines nor did she seek feedback on her theories. The vicious circle emerged because the manager continued to act on the basis of untested assumptions (e.g., “I am the person to make project decisions hecause of my past experience,” “my staff lack the capability to make good project decisions”).

Needless to say, we do not believe our case example is unique. Few scientists are trained in management before they actiially manage. Few scientists test their theories of human or organizational behavior as they would test their theories of, say, ion exchange.

Moreover, the usual isolation of R & D, physically and metaphorically, from the largcr corporation tends to preserve skilled incompetence. R & D facil- ities are rarely integrated physically with other corporate activities. And, even if‘ they occupy the same campus, R & II activities ;ire perceived as so different (by the scientists arid nowscientists alike) that scientists are generally isolated from the “real world” of commerce. Such isolation, of course, prevents an optimal flow of feedback to the scientist-manager about herihis performance as a manuger. The isolation also buffers the manager from any contact with the ulti- mate customers.

Compounding the problem of isolation is the length of time in which scientists and managers of R & D are involved in drug development. Although at one end of’thc continuum, our hypothetical company was faced with standard durations from 10 to 15 or more years from discovery to sales. This length of product development titnc further buffers scientist-managers from feedback about their performance as managers. Although our case study company was late introduc- ing products on the market, corporate management could not state with any degree of’ accuracy where along the cycle improvements could be made. They also were not close enough to the problem, nor were they dealing with a duration they could monitor in “real time,” to be able to give appropriate feedback to the manager. They had to accept her explanations at face value.

As we rioted in the Introduction, the paradox of skilled incompetence in the management of R & D

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arises from the fact that scientists arc trained in the use of feedback to test assumptions but rarely seek it as managers. The precabence of skilled incompetence in the inanagemcnt of R & D arises from the fact that most managers have been promoted from the ranks of scientists. The following section continues our hypothetical case study by describing how skilled incompetence ariscs (etiology and pathogenesis) and can be diagnosed in R & D.

ETIOLOGY AND PATHOGENESIS Siiccessful scientists, those who have produced

tangible innovative achievements, have generally been successful because they were in control of their experimental environment, were perfectionists, and were unwilling to admit failure. These criteria for success are perfectly understandable at the bench, but they do not translate effectively to management. When the successful scientist is promoted to manager of R & D, all appears well as long as the organization continues to produce the desired results. But when failures occur-as inevitably they will-the scientist- manager tends to engage in single-loop learning, such as our exemplar who became even more insistcntly involved in project decision-making. It is important to understand that the latter behavior, which is clearly qualitatiuely inappropriate when viewed from the outside, is experienced by the manager as quantita- tively insufficient. The scientist-manager, thus, tends to do more of the same:

Thc manager of our hypothetical company had noted earlier, as did others, that development projects were delayed. Because she was obviously doing her best, she believed the problem to be one of insufficient control and responded by intervening more and more insistently in decision-making. Members of the project team were aware of delays but ascribed the manager’s intervention as lack of trust, so they i n - posed even stricter decision criteria. But neither the manager nor the project team members asked what conditions, “governing values,” or assumptions permitted the clelays to arise in the first place. The absence of feedback into root causes (i.c.,

double-loop learning) is an explanation of how skilled incompetence arises in the R & D organization, but it does not explain why it persists in light of the obviously counterproductive “solutions” and the cost of its consequences. The fact that our hypothetical manager acted on the basis of untested propositions about human and organizational behavior was a necessary pre- requisite to the persistence of skilled incompetence, but the members of R & 1> also contributed to the persistence of the situation.

Why? What prevents a group of highly trained,

intelligent people from asking the pertinent clues- tions? We believe that there is often a “silent contract” within scientific organizations about not chal- lenging the managerial competciice of the manager- who, in turn, will not challenge the scientific competence of the staff. As long as this contract is honored, a stable although dysfunctional system is maintained:

The project team in our hypothetical company suf- fered under the interventions of the manager. More and more restrictions were imposed on their freedom to act in the interest of the project, and even minute details had to be referred to the manager. Morale began to sag, and progress in development nearly ground to a halt. Yet, at no time did members of the team, individually or collectively, confront the manager with the inappropriateness of her conduct. In fact, the team coiitribrited to the proltleni by suggest- ing stricter milestone criteria, which they knew were increasingly unrealistic. The manager, for her part, ricver questioned the compctence of the team during formal project reviews nor of team members during performance appraisals. In this way, both were hon- oring their part of the silent contract.

SYMPTOMS AND DIAGNOSIS The symptomatology of problems within any or-

ganization is relatively limited: low staff moralc, delays, less than optimal quality, a n d poor economics. In R & D, not all of these problems will be caused by skilled incompetence; yet, because of its prevalence, skilled incornpetence should he suspected as the diagnosis (corresponding to thc clinical dictum that “common things arc coniinon . . .”). Skilled incompetence should be suspected particularly in contexts involving many decisions, such as driig development. Once suspected, the “diagnosis” can be confirmed b y observing untested assumptions, or ruled out by observing effective feedback mechanisms about assumptions. The diagnosis can be substantiated ex juvanti- bus, i.e., by administering feedback on “governing values” and noting the consequences:

The first externally observable problem in our hypothetical company was delayed product introduction. Although a common symptom, as described above, its occurrence in H & D raised the possibility of skilled incornpetence as a cause. We tested this assumption by investigating whether anyone was asking pertinent double-loop questions, such as “what permitted the problem to arise in the first place?” When we asked team members, they immediately responded that the manager did not trust their decisions (hence, compe- tencc). They described her belief that her own knowledge arid experience were indispensable for project decisions. Arid members also admitted that they im-

SKILLED INCOMPETENCE IN MANAGEMENT OF R & D 5

posed stricter decision criteria in order to prevent the manager’s reversing decisions they might otherwise make.

When we reviewed the feedback mechanisms avail- able to this organization, we discovered these “governing values”: only formal feedback should be sought or oflered, and only explicit, numerically quantifiable feedback was appropriate project infor- mation at regular project reviews. Informal feedback, or qualitative feedback on behavioral (as opposed to technical) performance, was perceived to constitute “backstabbing” and thus was never sought or offered.

INTERVENTION: MINDSET AND METHODOLOGY

Although we contend that skilled incompetence in the management of R & D is prevalent, simply applying the deficient factor-feedback-would not be the sole cure unless and until that feedback en- abled people to understand what conditions and what attitudes permitted the problems to arise in the first place. The cure for skilled incompetence requires both a mindset and a methodology. The mindset can be described as one in which people in the organization recognize that skilled incompetence persists because of some sort of collusion. Given this mindset, the first question people must ask is: “How do I con- tribute to the occurrence and persistence of skilled incompetence in this organization?’

To achieve the appropriate mindset involves a cognitive process which creates new knowledge about the state of the system/organization. This new knowledge is gained by feedback and the double-loop learning that can only emerge from retrospective analyses of, e.g., “which conditions and attitudes permitted this situation to arise in the first place” and analyses of “which conditions and attitudes are appropriate for the future” [Senge, 19901. On the basis of systemic insights, appropriate changes can be designed, but it is the mindset that is most important. In the case of skilled incompetence, change should involve a funda- mental redefinition of norms and values through action, beginning with top management. Simply stated, each person should live the culture that is desired. If you want to encourage double-loop learning, you must start by asking for and offering feedback on assumptions and governing values yourself.

In terms of a methodology for intervention, six general guidelines will be applicable to most organizations (there is no universal recipe):

1. If organizational problems are more than moderate, outside help should be sought. It is extremely difficult, if not impossible, to

deal with silent contracts in which one is involved.

2. Ensure that top management has committed to the nature and scope of change and that they accept their responsibility for the persistence of skilled incompetence.

3. Train scientist-managers in giving and receiving appropriate double-loop feedback. One way may be to temporarily assign peer coaches who are responsible for asking such questions as “what permitted this to arise in the first place?” at regular intervals and for visibly encouraging appropriate feedback in R & D.

4. Make double-loop feedback an accustomed part of project and performance reviews.

5. Facilitate the type of communicating-honest, candid, transparent-throughout the organization that supports double-loop feedback.

6. Ensure that double-loop feedback is rewarded and not punished.

To conclude our discussion, we offer two endings to the hypothetical case study. Both are possible; one is more probable:

Version one. At the end of their patience, project team members finally worked up the courage to confront the manager with some feedback on her behavior. After a number of attempts to defend her actions, the manager accepted the feedback in the spirit in which it was offered and arranged a %day offsite meeting with an outside facilitator. During the rather stormy initial sessions at this meeting, the entire project team was able to talk through and describe most of their problems with the manager. A plan of action was drawn up and agreed to that involved two major items. First, roles for the manager and team members would be clearly defined. Second, clear and mutually agreed upon success criteria would be artic- ulated. Some months after this meeting, the project team began to notice progress. After a somewhat fal- tering start, the scientist-manager and team members slowly began to build confidence in each other in giving and receiving appropriate feedback, both formally and informally.

Version two. During a portfolio review meeting, the CEO was presented with yet another admission of drug development delays. The CEO told the scientist-manager to “shift into overdrive” and do what- ever was needed to reduce the expected time to market. Acting upon this instruction, the scientist- manager really dug in and worked frantically to control every detail. The project team lost interest, and one of the star members applied for transfer to another part of the organization. Six months later the

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project was formally closed down because the company had already lost out to the competition. Funds and scientists were transferred to other projects in the portfolio. The scientist-manager, “because of‘ her scicritific eminence and management experience,” was put in charge of another of the company’s strate- gic development projects.

One day, the manager realized that the project decision-making was awkward arid slow, requiring frequent correction and rework. . . .

SUMMARY

In this commentary we have described skilled incompetence as a paradoxical, prevalent, and costly situation characterized by a mismatch between technical and managerial competence and caused by in- adequate, inappropriate, or missing feedback on the root causes of managerial behavior. Skilled incompetence can be found in any organization; however,

based on our experience with the pharmaceutical industry, we believe it is especially likely in the management o fR & D. Uying a hypothetical case study as illustration, we have discussed the nature, einer- gence, persistence, symptoms, and treatment of skilled incompetence. The reader is urged to decide which of the two “endings” to our case study would be likely in Iiisiher own organization.

REFERENCES Argyris C (1990): Overcoming Organizatiorial Defenses. Boston:

Allyn and Bacon. Marx MH (1970): Learning: Theories. London: Collier-Macblillari

Ltd. Senge PM (1990): The leader’s new work: Building learning orga-

nimtions. Sloari Manage Rev 7:7-23.

U.S. Office of Technology Assessment (1993): Pharmaceutical R & D: CostT, Risks arid Rewards. Washington, DC: U.S. Govern- merit Printing OKice.

Skilled incompetence in the management of R & D

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