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EF: What was your mission when you were appointed to your present position in 2019?
MS: My mission was to fix a large, complex corporate group with too much debt, with some companies losing money. My first step was to understand the purpose of the business, and with the management team, we aligned on the purpose of ‘making tomorrow healthier’. A couple of trading businesses didn't meet the purpose test so we moved those out and focused on about ten profitable companies located around the globe. We also had a financial crisis on our hands: a balance sheet crisis, not just a humanitarian one. The good thing about a crisis is that they offer good opportunities to make changes quickly as people are very receptive to new input. I have learned that energy and influence are much better in this environment than ‘command and control’, particularly when operating during a pandemic where we don't have all the answers. You have to remind people to stick to what they can control, keep their health intact and focus on what is essential. Because the pandemic was such a shock in itself, many of our lenders forgot about how bad our balance sheet was and were willing to help us fight the pandemic, and we managed to raise R300m new money for ventilators, high nasal flow devices and other items that helped people in late-stage Covid and to manage the disease. In a crisis, we learn to focus on priorities and in our case, we focused on liquidity and caring for the patient. The combination of factors, some lucky and some deliberate, and working collaboratively served us very well to the point where we recapitalised the group and came out a lot healthier than we went in.
EF: What was Ascendis's role during the pandemic?
MS: In Cyprus, we manufacture antiretroviral and oncological drugs; in Romania, we have a nutraceuticals OTC business. We supply the very high-end chronic need of the healthcare space, kept production going, and made sure we had sufficient API supply. To ensure we could service our global network of patients who needed the ARVs and oncological drugs, we mobilised planes from the Israeli government to pick up APIs from India to remain in stock. Additionally, while our competition in Romania was avoiding doctors and pharmacists, our sales force met with them to create meaningful dialogue. The value of human connectivity cannot be underestimated at a time of a crisis designed to keep people apart. We also play a vital role in the immunity space (vitamins, minerals, and supplements) to keep people strong and Covid resistant. I think there will be a structural change in the market where people will look to manage their own health instead of being told what to do by a doctor. On medical devices, we supplied a lot of ventilators, nasal high-flow devices and all the corresponding consumables. In South Africa, the economy is very dependent on getting minerals out of the ground (gold, uranium, zinc, coal), and during Covid, people still had to go underground to mine and had to be Covid-free. We set up testing sites at the mines and tested every day doing early detection through our diagnostics business. Some business areas were however impacted negatively; for instance, elective surgeries as all beds in hospitals were allocated to Covid. We had to start thinking innovatively about additional revenue streams, extending into different hospitals or new geographies to keep going. Covid taught us how to focus, hustle, and cope with an unprecedented new environment. When speaking to my management team, I stress the opportunity a global pandemic offers -a one in a hundred-year event- and how we respond to the challenge will define us. We played a meaningful role in a global pandemic working on keeping people alive and healthy, reacting to circumstances as best we could. Our earnings from 2019 -when I arrived- to 2021 grew 32% per annum compound over that period while dealing with a balance sheet crisis and the worst health crisis the world had seen in a century. The message to my management teams was to stay focused, stay healthy and do the best they could with what they had. Coming out of Covid, the results have been extraordinary, mainly due to the value-based partnerships that have been created with all our stakeholders.
EF: What were the lessons learnt from managing through a pandemic remotely?
MS: Respecting boundaries is critical. A number of our staff experienced fatigue and mental burnout from working through the pandemic. We found out from our people calling our mental health assistance centre that the pandemic affected the status quo, as it was an unusually stressful environment. Hence, it was necessary to respect boundaries, not send e-mails after 6 pm or during the night, to give people time with their families and to be focused within a finite period of time. Productivity definitely went up, although the downside of increased productivity was increased stress and aggravation for employees as Covid lasted longer than people initially thought it would. Indeed it is still not entirely over and we are all yearning for renewed face to face interaction.
EF: If you had to create a Master in Pandemic Administration which two courses would be mandatory?
MS: The first is that energy and influence are better than command and control. As we don't know the answers, having never been through this situation before and we have little credibility in telling people what to do. You undermine your ability to lead when you pretend to know the answers, and a leader must be open and transparent. The second factor is don't panic but do nothing. Act on data and fact-bases to arrive at solutions, 60% or 70% of the results will be down to the fact base and the rest will be down to 'gut', and remember that your actions need to always align around a common purpose of making tomorrow healthier.
EF: You mention focus, purpose and data. Did you have to introduce new KPIs to manage at this time?
MS: We had strategic priorities: I asked each person to give me three things different to what they did last year, for example:
i) Cut down the numbers of SKUs -60% of the SKUs make 90% of the profit, get rid of the rest.
ii) Liquidity (or access to cash) was scarce and money has to go where it served the humanitarian crisis best and then to keep the balance sheet from tipping over.
iii) Cultural improvement, leadership must create an environment for their teams to succeed (not personal gain or CV improvement).
We set values of ‘innovation’, ‘energy’ and ‘resilience’ and measured our teams against these. I wanted to measure resilience, innovation and energy because we never had to work in this environment before. The cheapest part of a Ferrari is the battery (energy) but without it, the car will not move forward and without the engagement of our people, leadership cannot mobilise meaningful engagement. On the numbers side, we measured three factors specifically to know that our capital allocation was correct and showed a return on the invested capital, a matter our shareholders care about a lot.
EF: Could you elaborate on your portfolio evolution? Are there new trends for the future or a shift over the past year?
MS: From the pandemic, we learnt: i) don't be wrong for long –move and where you need to change do this as fast as possible. We had two or three businesses that consumed too much capital, or lost their route to market or didn't align with our purpose of making tomorrow healthier, so we sold them. Once the decision is made, execute and follow up repeatedly. ii) The importance of diagnostics and devices will become increasingly important. A device strapped on a person's chest in the middle of Congo can immediately be diagnosed by a physician in Switzerland who can give instructions to people in other parts of the world to help the patient. The concept of in-vitro diagnostics, external devices to create interventions remotely and digitisation across the medicine world will achieve more and better data. The future of medicine will design appropriate devices that can be applied remotely to patients without a doctor's intervention. As medicine evolves, its impact will be huge.
EF: What is your message or advice to business leaders on restoring investors' confidence to invest in healthcare, particularly in South Africa?
MS: The best way to restore investor confidence is to deliver results. In Africa, there are very few public-private partnerships and Covid has taught us and given us a fast track exercise in collaboration between public and private sectors. We were surprised at how well it worked, proving that when there is a crisis and no alternative, we can work together, and it is a fantastic platform to broaden access in the healthcare space.
It is important to have a clear and easy to understand strategy: We set out a three-pillar strategy: 'Stabilise’ or the balance sheet, ‘Optimise’ or execute better, and finally ‘Monetise’ or create value. Make it simple for people to understand and deliver consistently against that strategy
EF: Why did you decide to return to the healthcare space after working in other areas? Why Ascendis after a career in pharma and retail?
MS: This is my third turnaround. I have been involved in turnarounds before and 90% of the solution is not making the same mistakes that got the business into the mess in the first place. Figure out what they are and stop making them. Turnarounds are the same across the different sectors; people have lost belief; customers and suppliers have lost faith, but there is always a way through the problem if you have good businesses and good people. Relationships with the different stakeholders are critical, the lenders, the customers, suppliers, shareholders, regulators and employees; when those relationships are compromised, operating a business becomes very challenging. The fact that the industries were different is perhaps less relevant than the lesson learned in a turnaround that is predicated on winning the hearts and minds of all stakeholders. More than half the job is rebuilding trust, ensuring you have done the homework first and having the conviction that it can be rescued. A good business with a bad balance sheet can be remedied, whereas a bad business and bad balance sheet can't.
EF: To what extent do you think the pandemic has shifted the skillset needed for employees in the future, and what are the new soft skills you expect from your staff?
MS: I believe in bringing people along the journey rather than telling them what to do. In a war, one must tell people what to do otherwise, they run the risk of being killed but in a business, this is seldom the case. Authentic leadership is generally about bringing people along the journey with you, and I set the same standards of energy and influence for myself. To do this, people must know why they are given a specific task and its context, keep them focused and not distracted, and be rewarded. Reward is not just about money; it is being part of a winning team or being publically acknowledged. People need people; I tell my people there are five lessons I carry with me i) be grateful, have a gratitude diary and once a week write down something you are grateful for, ii) get out and do some exercise, iii) have authentic relationships -not a thousand Facebook friends- real friends and people to count on when the going gets tough, iv) simplify your life, the digital life is unfortunately always on, so the ability to decompress is difficult and v) accept pain and suffering as a normal part of human life, it is not about being a victim, the universe isn’t conspiring against you, it is part of life so accept it. I believe with those five points you can have a shot at happiness.
EF: As a leader who navigated a pandemic, what would you like your tenure to be remembered for when you look back to this period in your career?
MS: I would like to be remembered as someone who left a place better than I found it, and somebody who created an environment for people and their teams to be the best version of themselves, whether clearing roadblocks or helping get stakeholders on board or mobilising money or providing coaching or mentorship. Create a nurturing environment for people to feel they belong, that their contribution will be valued and whatever we do will remain true to our purpose of ‘making tomorrow healthier’
