David Holveck builds and executes his corporate vision at Endo Pharmaceuticals by encouraging collaboration and grooming leaders Featured

7:00pm EDT December 26, 2010

When David Holveck became the president and CEO of Endo Pharmaceuticals Holdings Inc. in 2008, he arrived in the cockpit midflight.

The pharmaceutical manufacturer had built up an immense amount of momentum in the previous years, surpassing $1 billion in revenue in 2007. With the company achieving new levels of revenue growth each year and employing more than 1,000 people, any leader in Holveck’s position would have had a difficult time convincing the management and work force at Endo that anything needed to change or continue evolving.

Yet that’s exactly what Holveck set out to accomplish.

“From a leadership standpoint, it was a matter of recognizing our success but not allowing that success to be the driver for the future,” Holveck says. “How do you take that formula for success and translate it into a new vision point?”

Holveck knew that inertia becomes a kind of self-feeding monster, allowing companies to coast along on the current wave, losing its collective grip on the survival-of-the-fittest mentality that made the company successful in the first place.

Holveck needed to pull Endo out of its comfortable groove and force the company to once again focus on creating and innovating for the future — but do it in a way that still leveraged Endo’s established success.

To drive the company forward, Holveck needed the engagement of his management team and employees in forming a well-defined vision for the future. That meant focusing on strategizing and communication and making the future a personal matter for all Endo employees.

“The more that we can translate the elements of change relative to the personal side of the employee, the better off we are,” Holveck says. “That takes a period of time, and it means that you really have to be involved and in the mix, not just doing ceremonial presentations. Access and involvement throughout the company is a critical element.”

Set your sights

The first thing Holveck did after arriving at Endo was to form his leadership team from a combination of holdovers and new hires, then work with them to construct a timeline for the ensuing three years, five years and the period beyond.

Holveck wanted to quickly set definite goals and milestones for achievement, giving Endo’s employees not just a structure for the future but proof, over time, that the plan is working.

“It was important that we established what we wanted to see occur in those first three years, and do it in a way that was broad and clear enough that people could see change,” he says. “Over time, as we moved through those first sets of milestones at the end of ’08, the end of ’09 and now up to the end of 2010, people can refer back to what we said we were going to do. We reinforced those metrics, and over time, we sharpened the focus so that more specific metrics are more functionally broken down on an individual level.”

Holveck started out using revenue goals as broad-based metrics that gave everyone in the company a universal target.

“In the initial outlay of change, you want to say that in year one, we want to see X,” he says. “When I came in, sales for ’07 were a billion dollars, so I said the next year I wanted to get to $1.25 billion, then $1.5 billion. By the end of the third year, we wanted to be at $2 billion. So then it becomes a question of how we are going to get there. That is the question you hear from the employee base. The more questions people share, that is an indicator of how involved they are. They want to know what it means for them and for the overall company.

“By setting up a plan that is, in many cases, not overly descriptive but is still measurable, it forces people to step into these conversations with questions. From there, you’re educating people on both sides of the table.”

Become a teacher

Holveck started out with a broad vision for constructing Endo’s future. But the vision would never come to life if he didn’t continue to encourage the involvement of his employees.

Without employee involvement, a vision is just a set of words. Your managers and employees bring it to life. Getting employees to take ownership of your vision begins with rolling the vision out, but it really happens through months and years of consistent communication that allows employees to stay plugged in to what is happening at the 30,000-foot level of the organization.

Holveck says the best kind of communication usually happens on a smaller scale. He tries to reinforce his vision on a personal level, in group meetings of 25 or less.

“I give my view of what is going on in the company in that point in time, and then I throw it open for questions,” he says. “It has been very successful, because when you get a venue of that size, people feel like they can ask questions. Over time, those individuals are kind of informally deputized to speak to their colleagues about what they heard at these smaller meetings. Then the dialogue starts to happen, information starts to flow and you get people who are more interested and involved.”

Ultimately, employees will feel engaged with your plan and empowered to take ownership of it when they feel a strong sense of trust in management. That can be a longer process. It’s one thing to get your employees to understand your vision. It’s a completely different level of involvement when they are willing to trust and follow you.

“That is why it’s so important to have those meetings in smaller venues,” Holveck says. “It’s the trust factor that gets established between leadership and the employees, to the point that what you hope will occur over time is they start to own that strategic direction because they believe in it and are a part of it.”

If the process had a 100 percent conversion rate, it would be as simple as keeping your message in front of everyone. However, your message, even repeated multiple times in different venues and forms, isn’t going to be the magic spell that converts everyone to your line of thinking.

If you’re the new leader coming into a successful situation like Holveck was, you will likely encounter some resistance to change. It could be a great deal of resistance, depending on how entrenched the culture of inertia is.

“You have to accept that you won’t win all the people over,” Holveck says. “People who have been successful aren’t always open to change. Given the economic environment that we’re in, you try to be very direct in the explanation but very firm in the fact that we’re going to change. The elements of change are going to occur, we’re going to be successful at it, and it’s not an infinite period of time that people will be given to accept the change and work with it.”

You will have to walk a balance beam between your vision and your employees. You must communicate that change is inevitable, but you need to give stragglers and those who resist an adequate amount of time to change their tune and jump on board. You largely have to proceed based on your feel for the situation and whether there has been any progress in bringing the stragglers along.

“You do try to give every opportunity to come to terms on both a direction and a reason for the change, but at some point, you have to find some kind of definite conclusion with each person. If no change is evident, I find that people make their own decisions and move on because it’s an environment that may not suit them.”

Encourage accountability

You need to have all of your employees — particularly at the management level — on board and promoting your vision because you need to be able to hold them accountable for carrying it out.

Holveck calls it “distributed leadership.” Essentially, it means he wants his leaders at every level of the organization to shoulder the burden of accountability for the decisions they make. While Holveck is the author of Endo’s vision for the future, he pushes decisions and action down the ladder.

“We want change that is built on distributed leadership and action orientation,” he says. “We really want to see people take the ownership on decisions. We don’t want them to hide behind organizational hierarchy and flow charts. In doing that, they are accountable for the delivery, not only for their action but for having a backup plan for that action. It’s accepted that not everything is going to work, so everyone needs to have that Plan B in their back pocket and be ready to act on that.”

On an action level, Holveck was trying to break what, he says, is a long-held tradition in many industries — a tradition in which managers tell their subordinates, “Do what I say.”

“We want to break that tradition, and to do it, you need people who have the understanding of what you’re doing, clear transparency on your goals and also making sure that they are empowered to act on the elements that are going to be put in place to achieve that strategy,” he says.

To build a sense of accountability into your organization, you need to go back to the basics of good communication. You need to continually dialogue with the managers to whom you have delegated power. You need to check in on their progress, facilitate discussion with them and ensure that they have the resources to perform at a high level.

“The whole distributed leadership idea is to make it very clear that you’re empowered to do it, but you will be asked to have that next strategy ready to go,” Holveck says. “Like all companies, we have formal reviews, annual and midyear reviews, but what I really try to stress is to use the word ‘conversation’ in the form of regular dialogue. You want people constantly discussing and moving forward but also going through a dynamic review process.”

Holveck’s vision has been coming to fruition over the past several years, with Endo continuing to experience revenue growth. The company generated $1.46 billion in 2009 revenue.

“We’ve been able to stay on track with double-digit growth, top line and bottom line,” he says. “Those basic metrics have been made. The problem is if you only looked at that, you can establish some degree of satisfaction and success. But the thing that really is the measurement is what I see today in terms of the office parking lot being filled early and emptying later because people are more involved. The elements of distributed leadership are taking hold in the sense that the strategic direction was set forth, but we’re now finding new ownership taking hold and new ideas starting to be brought into the fabric of the strategic plan.

“That’s the development of the ‘factor X,’ that is the part where now you’re getting people to own it, believe in it, and now they’re carrying it further than the original game plan. The reward is the excitement that you can feel, where people are starting to say, ‘This is my strategy; this is my company.’”

How to reach: Endo Pharmaceuticals Holdings Inc., (800) 462-3636 or www.endo.com