Corporate Accountability

Summary

Fred Hassan, CEO of Schering-Plough talks to MeetTheBoss about corporate accountability

"This company was looking at a big cash burn, and something had to be done about it very quickly." 

Fred Hassan, the Final CEO of Schering-Plough talks about corporate accountability and the logistics of going through mergers and acquisitions.

Watch more world business leaders sharing their thoughts on corporate accountability at MeetTheBoss - CEO Education online.

Fred Hassan

Fred Hassan is the former chairman and chief executive officer of Schering-Plough Corporation. Prior to his arrival at Schering-Plough in April 2003, Hassan was chairman and chief executive officer of Pharmacia Corporation. He received a bachelor's degree in chemical engineering from the Imperial College of Science and Technology at the University of London and an M.B.A. from Harvard Business School.Fred Hassan's Wikipedia entry.

Fred Hassan

This is a very common problem with people who come in in a hurry and try to make some big moves.  It’s relatively easy to get the bottom line to go up by slashing costs.  It is very difficult to make customer touch and make a good customer experience so that you can grow the top line.  And what I feel is that the math is very clear. 

If you’re growing zero percent or one percent, and your cost structure is facing an inflation of three percent or four percent, you might be able to in the short term keep your bottom line okay by reducing costs.  But long term, you have to beat inflation when it comes to the top line growth if you’re going to make the business prosper.  So wherever I’ve gone, I’ve certainly worked on the cost structure. 

But I’ve simultaneously worked on building the top line, on making good advances with the customer experience.  If one can do that well, even as one goes through adversity, then one emerges a lot stronger once you come out of the difficult time. 

Johnny Spragg

As an organization gets larger through either acquisition or mergers, there can be a tendency for the institution to dampen the inspiration.  Is that something you agree with, and, if so, how do you prevent that from happening?

Fred Hassan     

This is always the challenge with bigger companies.  Many companies are rising stars for a long time, and ultimately they start to run into difficulties.  So managing bigness is really a challenge, and I think it takes – it almost takes a reinvention cycle inside a company every five or six years to make it happen.  Otherwise, companies drift towards complacency and sometimes even to arrogance just because they have been so successful in the past. 

It doesn’t have to mean a new CEO every five or six years, but it certainly needs a new sense of urgency, a sense of reinvention in the company every five or six years.  The other way to deal with the bigness is to create a sense of a small company and a big company.  In other words empower people in smaller groups to innovate, to drive the business forward while still taking advantage of the financial strength and the infrastructure of a larger company.  That’s not easy, but that’s the job of the CEOs of larger companies.