Dr. Know

 Charlie Stiefel was in Madrid meeting with senior executives during his company’s first global strategic planning session. He put a PowerPoint slide entitled “corporate values” on the screen, which listed communication, respect, integrity and excellence.

“I asked anyone if they could guess what company espoused these corporate values,” says Stiefel, chairman, president and CEO of Stiefel Laboratories Inc. “No one really knew. Then I showed them it was from the 2000 annual report of Enron.

“My point, and they got it right away: It’s pretty easy to write words down on a piece of paper and say these are our values, but it’s quite a different thing to live your mission statement, to really live the values.”

But Stiefel is well aware that a one-time presentation isn’t enough to guarantee that the nearly 160-year-old family-owned pharmaceutical company will continue to grow. And grow the company has.

For the most recent fiscal year, Stiefel Laboratories, which makes dermatology products, posted sales of $530 million, the first time it broke the half-billion dollar mark. That’s more than double what sales were five years ago when Stiefel took over as the company’s leader.

If he wants Stiefel Laboratories to continue to grow, Stiefel knows it will take more than just attention to values. His leadership doctrine includes a commitment to innovation, assembling the right team and an emphasis on communication.

Find ways to innovate
Stiefel Laboratories lists a number of “firsts” on its Web site, and each of those ties directly to its growth.

“Every one of those firsts has resulted in significant increases in revenue,” Stiefel says. “If you looked at a graph showing our historical sales growth, you wouldn’t find a straight line going steadily upward. You’d find a little bit of a plateau, with a slight upward trend, and then a huge burst upward, then another plateau and another huge burst.

“Each of those upward bursts, typically, is the result of some sort of product innovation.”

Innovation comes from carefully examining every idea, even if, at first glance, it seems unfeasible.

“By embracing even screwy ideas, there might be ideas that, at first, aren’t widely accepted, even if they’re not thought of as screwy — maybe ideas that sound too expensive or difficult to tackle — after investigation, proved doable,” he says.

That was the case with what became the company’s best-selling product.

“Our biggest product in the world is a product called DUAC Topical Gel — an acne product — that contains two active ingredients that chemically were considered incompatible,” Stiefel says. “When we were in a new products committee meeting several years ago, and this idea was first suggested, some of the scientists in the room suggested that it was scientifically impossible; it couldn’t be done. We explored it a little more and decided to try it.

“Eventually, our product development chemist did come up with a stable formulation, which we could patent. That product last fiscal year was the first product in our corporate history to enjoy sales exceeding $100 million in one country.”

While DUAC was a success, there have also been a number of failures. Innovation may lead to enormous opportunity, but it can also lead to failure. A company that strives for innovation must learn to tolerate failure and mistakes, whether they are in R&D or at the management level.

“Everyone on our senior executive team is going to make not only one mistake but probably multiple mistakes,” Stiefel says. “What I stress to them is, first of all, it’s part of business. You’re going to make mistakes. Whenever a mistake is made, the corporation will always try to identify the cause of the mistake, not to punish the person responsible but to learn from the experience and not make the same mistake twice. In the history of our company, no one has ever been fired for making a mistake.”

The problem doesn’t come when mistake is made, it comes later in the person’s response to that mistake.

“(It is) probably the concern of every CEO that a mistake is made somewhere in the organization, and the person who made it tries to conceal it for fear that his or her job might be jeopardized,” Stiefel says. “That can really compound the number of problems that emanate from that mistake.”

Find the right people
No matter how good Stiefel’s vision for the company is, or how well it gets communicated, it is still up to the employees to carry it out. And good people bring good ideas.

“It all comes down to the people you have,” Stiefel says. “I try to recruit the best people in the industry at every discipline — marketing people, salespeople, research and development people. A lot of creative product ideas come from the marketing side rather than the research side, which might sound surprising.”

First and foremost, the key to bringing in top talent and keeping them is to pay them well. Even though Stiefel is not among the largest pharmaceutical companies, he says his salaries are competitive. He likens it to a baseball team that consistently makes the playoffs.

“There are certain teams, like the Yankees, for instance, who are competitive every single year,” he says. “The reason they’re always competitive is they buy the best talent. In college sports, you’re limited by the number of scholarships that you can offer. In pro sports, you’re limited, to some extent, by the pro draft and salary caps.

“In our industry, there’s really no reason a company couldn’t hire the absolute best person at every single position. That’s really what I’m striving to do.”

The benefit is clear.

“If you have the best people in line, and you try to foster an environment of creativity and reward creativity, then hopefully we’ll continue to be fast on our feet, and we’ll continue to be innovative and creative.”

Become a better communicator
With 3,000 employees in subsidiaries spread across 30 countries, communication is essential to the future of the company.

Stiefel improved communication by hiring a COO to handle some of the day-to-day responsibilities and reduce the number of direct reports Stiefel himself oversees, freeing him to practice his laissez-faire management style.

He says that now, he can “ask questions rather than dictate answers, seek input from all stakeholders, search for best practices, build consensus and drive the decision-making process.”

Having those clear lines of communication also allows conversations both up and down the management chain.

“I do solicit feedback from our senior executive team on anything that I propose to do,” he says. “My management style is not dictatorial. It’s more consensus building. I repeatedly encourage all of our senior executive team to offer opinions about what I’m proposing to do. Oftentimes, they have valuable suggestions. It can alter what the original plan was.”

While Stiefel can influence his direct reports, the key is making sure the rest of the employees are working together.

“I push very hard to create a corporate culture of mutual respect,” Stiefel says. “Everyone in the company is treated with respect, with dignity. During strategy meetings, no matter what ideas are presented, the rules of engagement are that no one insults or speaks negatively about someone else’s idea.

“Even ideas that, at first blush, seem to be ideas that lack potential, we’re still willing to at least explore those ideas and give the advocate a chance to champion the idea. Hopefully, no one ever feels that a creative suggestion is going to be scorned. A company can do things like that that help encourage people to bring creative ideas forward.”

During his presentation in Madrid, Stiefel spent a great deal of time talking about communication. It’s a message he wants managers to send down to every layer at the company.

“There’s a lot of reassurance that has to be given,” Stiefel says. “We don’t play political games here. We want complete transparency, and we want communication that’s completely open, with no hidden agendas.”

HOW TO REACH: Stiefel Laboratories Inc., www.stiefel.com

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