CASE STUDY Leading a Transformation at Merck ${?}^{10}$

After global pharmaceutical giant Merck announced that Kenneth Frazier would become its new $[$now former$)$ CEO, Frazier wasted no time in transforming the company. Within months he had stated, "For Merck to be a leader in the future, we must continue to adjust our operating model and achieve a level of transformation never before seen in our industry." Product development life cycles in the pharmaceutical industry are very long, taking an average of twelve to fifteen years to bring a new drug to market. Merck's financial model is based on twenty$-$year patents, after which time the company loses exclusivity. So$,$ if Merck doesn't regularly replace its products with new ones, it won't be in business. Frazier thus saw his job as ensuring that the company's decisions don't make sense only for the short term.

Frazier stabilized the company and focused on bolstering Merck's research and development function. Merck had been focused on chemistry and vaccines, but is now into the biologics field as well. Human genetics now has a big impact on what they do as well as computational sciences. Frazier focused the company on going where the science leads and using the tools that will best help ask and answer the most important medical questions. Frazier made it a priority to seek out the right scientific talent and create an environment that enables breakthrough research that will help make a difference in the world. Frazier believed that the most significant levers CEOs

have are $"$to put the right people in leadership positions and to ensure that the incentives inside the company are aligned so that people are working toward a common purpose." Frazier reflected, "What I've learned is how important it is for companies to be purposeful and to think about the welfare of your people all the time. My job is to reinforce that every chance I get."

Frazier's strong performance as a transformation leoder earned him the $2021$ Eisenhower Citizenship Award in recognition of his accomplishments in the areas of social responsibility and sustainable development. He also received Chief Executive's $2021$ CEO of the Year Award in recognition of his leadership at Merck, driving its transformation and growth to help produce impactful results for patients, stakeholders, and society.

Questions:

Explain how Frazier might have exhibited a transformational leadership style in his role as CEO.

Which of Fiedler's leadership styles do you think would be most appropriate in the situation Frazier found herself when she became CEO?

If you were Frazier, how might you use the information you learned in this chapter to continue to transform Merck into a high$-$performing, innovative and ethical company with engoged employees?