Isolating the Leadership Gene

Bob Hamm arrived at Biogen for a job interview in the fall of 1994 with a vivid sense of how vast hierarchies operated. Hamm was fresh from a career that included time with the Air Force, the National Security Agency, and Mobil Oil, where his last job was to supervise the company's gasoline supplies for the United States. In those days, Biogen, the biotech pharmaceutical company that's based in Cambridge, Massachusetts, was anything but a vast hierarchy. It had about 400 employees and sold no products. One of the first people Hamm interviewed with was a 36-year-old guy named Jim Mullen, who was then Biogen's vice president of operations.

"I sat down in his office," says Hamm, "and the phone rang. He picked it up and listened for a few seconds. He looked rather annoyed. Then he said, 'Wait, wait, wait. Stop! Is this a fact, an opinion, or a wild-assed guess?' He listened another moment. 'Okay. Uh-huh. See you later.' Then he hung up."

Hamm asked Mullen who had called. "That," said Mullen, "was the CEO" -- Jim Vincent, who still serves as chairman of Biogen's board. Hamm laughs. "I thought, Okay, that's the way he talks to the CEO. I can work with this guy."

Less than six years later, Mullen himself was made CEO -- and was chosen by Vincent. At 43, James C. Mullen is running an operation that may never be a vast hierarchy, but that has become one of the small handful of the world's grown-up biotechnology companies. In an industry filled with as much hype and hoopla as the dotcom world in its heyday, Biogen is a company with products, revenues, profits, and prospects. It has one market-leading drug with nearly $1 billion in sales, a second drug awaiting FDA approval, and the wherewithal to spend $1 million a day on research and development. It has research or clinical trials on treatments for a range of diseases, from congestive heart failure to Crohn's disease and cancer.

In Mullen, Biogen has a CEO with a crisp, incisive, analytical leadership style that is perfectly captured by his impertinent question to his then-boss: Fact? Opinion? Or wild-assed guess?

"Jim has a lot of guts, but no illusions," says Hamm, now vice president of Biogen's international operations. "It's clear at Biogen that the people who are the most objective have the most opportunity to influence what happens. That means we end up managing by facts, not by people's perceptions. And that allows you to get to the right answer more often."

In developing new medicines, "getting to the right answer" is harder and chancier than outsiders realize. Biogen, despite being 24 years old, and despite having already won the U.S. National Medal of Technology in part for developing (and then licensing) the vaccine for hepatitis C, remains a company with more potential than performance. If the FDA approves Amevive, which was developed to treat moderate to severe psoriasis, it will only be the second time Biogen has had to launch and sell a product. Its first medicine -- the pioneering multiple-sclerosis drug Avonex -- came out in mid-1996. Since then, the company has spent more than $1.2 billion on R&D -- about $20 million a month -- without yet producing another salable product.

It takes at least 10 to 12 years to develop a new drug. Often, drug "ideas" don't fail until the middle of human trials, two-thirds of the way through a very expensive process. Indeed, at best, only one in five new drugs makes it out of "the clinic," as the human-testing stage of drug development is called.

Running a company in such a high-stakes, high-risk setting -- where you know that four-fifths of your R&D and four-fifths of the efforts of your MDs and PhDs are going into ideas that are doomed by the mysteries of human biology -- can turn the principles of leadership on their head. Biotech research is at once so complex and so specialized that making decisions often means taking a leap of faith.

Mullen's senior vice president of research, Michael Gilman, was until not long ago a working research scientist. With only slight exaggeration, he says of the research he supervises, "I am completely ignorant about three-quarters of the stuff that goes on. And my colleagues on the senior management team? They are 98% ignorant."

Such are the challenges facing the CEO of a mature biotech company -- extreme versions of questions facing executives in most industries: How do you make the right strategic bets when you know that many will be losers? How do you solve problems that are, by their very nature, too complex for you to understand more thoroughly than the people who work for you? How do you convey confidence and command when so many factors in your business are beyond your control?