Novo Nordisk
During the last decade, it seemed no matter where we looked we found evidence of the erosion of business ethics and the basic concepts of right and wrong. Respected corporations and individuals who spent years building their reputations of integrity seemingly lost theirs overnight-perhaps forever. But some companies hold themselves to a higher set of standards and recognize that their business practices have lasting and worldwide effects. Let's look at one example.
Headquartered in Denmark, Novo Nordisk is a company whose concerns run beyond the financial bottom line. Novo Nordisk not only manufactures and markets pharmaceutical products and services, it realizes that responsible business is good business.
One of the world's leading producers of insulin, Novo Nordisk also makes insulin analogs (genetically engineered forms of insulin), injection devices, and diabetes education materials. Its products include analogs Levemir and NovoRapid and the revolutionary FlexPen, a pre-filled insulin injection tool. In addition to its diabetes portfolio, the firm has products in the areas of blood clotting management, human growth hormone, and hormone replacement therapy.1
Today, diabetes is recognized as a pandemic; and only half of all people with type 2 diabetes are diagnosed. Novo Nordisk works with policy makers and social influencers to improve the quality of life for those with diabetes, to find a cure for type 1 diabetes, and to help prevent the onset of type 2 diabetes. The company has framed a strategy for inclusive access to diabetes care. The ambition to ultimately defeat diabetes is at the core of Novo Nordisk's vision. This vision puts the company's objectives in perspective and inspires employees in their work. It is a beacon that keeps everyone's focus on creating long-term shareholder value and leveraging the company's unique qualities to gain competitive advantage.
In making decisions and managing their business, Novo Nordisk's Triple Bottom Line business principle balances three considerations: Is it economically viable? Is it socially responsible? And is it environmentally sound? This ensures that decision-making balances financial growth with corporate responsibility, short-term gains with long-term profitability, and shareholder return with other stakeholder interests. The Triple Bottom Line is built into their corporate governance structures, management tools, individual performance assessments, and rewards.
Novo Nordisk strives to manage its business in a way that ensures corporate profitability and growth, while it seeks to leave a positive economic footprint in the community. Its environmentally sound decisions acknowledge the company's concern for its impact on the world as well as the bioethical implications of its activities. As part of Novo Nordisk's ambitious non-financial targets, it aims to achieve a 10% reduction in the company's CO2 emissions by 2014, compared with its 2004 emission levels. In 2009, the company announced that it had already reduced CO2 emissions by 9% and water consumption by 17%, even as production and sales increased!2
Novo Nordisk adopted the Balanced Scorecard as the company-wide management tool for measuring its progress. As part of their payment package, individuals are rewarded for performance that meets or exceeds the financial and non-financial targets in the Balanced Scorecard. Financial performance is guided by a set of four long-term targets focusing on growth, profitability, financial return, and cash generation. Non-financial performance targets include job creation, the ability to manage environmental impacts and optimize resource efficiency, and social impacts related to employees, patients, and communities.3 Novo Nordisk deeply considers the people who rely on the company's products and its employees, as well as the impact of their business on society.
Corporate sustainability-the ability to sustain and develop business in the long-term perspective, in harmony with society-is an ethos clearly practiced by Novo Nordisk, and the company believes that it drives their success in business. Surveys indicate that ethical behavior in business today is the number one driver of reputation for pharmaceutical companies. Any company that is not perceived by the public as behaving in an ethical manner is likely to lose business, and it takes a long time to regain trust.
For Novo Nordisk, a business with integrity and innovation, its commitment to corporate sustainability has always been based on values. In this case, it's clear that doing the right thing makes a direct return on their bottom line.
Review Questions
1. What leadership style dominates at Novo Nordisk? Cite examples to support your opinion.
2. How does Novo Nordisk's leadership influence its organizational design and shape its competitive strategy?
3. Describe Novo Nordisk's philosophy in relation to transformational change, planned and unplanned change, and the strategies it has used to create change.
4. In what ways do you think Novo Nordisk employees might be asked to utilize self-leadership techniques to improve the effectiveness of the culture of shared leadership?
5. Research Question: Check up on the strides Novo Nordisk has made for diabetes recently. Have they made any progress and garnered the attention of influential people or organizations? How might cultural expectations and leadership enhance or limit their success?
What leadership style dominates at Novo Nordisk? Cite examples from the case and specific information from the text to support your opinion.
How doe Novo Nordisk's leadership influence its organizational design and shape its competitive strategy?