Novartis

Staying vital forever

Why Novartis leadership took the long view

Buy a ticket for the first flight to Basel next Wednesday, don’t tell anyone where you’re going and meet me at Heathrow at 7am. I’ve never considered my roles – creative director, brand strategist and communication consultant – remotely clandestine, but when the managing director refused to give more than scanty details on the flight, I started to feel like I was part of a covert operation. In Basel, we were ushered into a boardroom the size of Manhattan, with five men talking in hushed tones at the other end of the room. I sensed this was not going to be an ordinary meeting.

After introductions, Daniel Vasella1 explained that only five people outside this room knew about the topic of this meeting and that a successful outcome would require a heightened level of confidentiality for at least six months, possibly longer. Given that what was at stake was the largest corporate merger in history, he hoped we would comply.

The turning point

The impetus for a new story at Sandoz, the Swiss chemical and pharmaceutical conglomerate established in 1886, had been brewing for several years. Many cite the Rhine River disaster in 19862, as a turning point. Caused by a fire in one of its factories, 30 tons of pesticides turned the river red and ignited an environmental disaster in four countries through which the river runs. Business as usual was not an option.

Following a strategic review under the leadership of the Chairman, Dr Marc Moret, Sandoz reversed its century-old approach of diversification toward one concentrating on core life sciences, and selling businesses that were not strategically relevant. Sandoz had already engaged my team to create the brand identity for the successful spin-off and IPO of its specialty chemicals business that we named Clariant. Little did we know that this was driven by a vision looking far into the future of a changing industry.

The big idea

Sandoz had realized that the existing methodology of “…focusing innovation on vertically separated areas”3 was being thwarted by the rapid development of biotechnology as a cross-functional technology. They were convinced that a new approach was needed. “‘Genetic engineering and the use of biotechnology will lead us to a better understanding of those mechanisms that cause diseases. (…) The understanding of genetic information on [sic] molecular level is a great progress that can be compared with the leap from mechanics to electronics.”4

Dr Moret’s comments signaled that Sandoz saw the increasing need for a heightened commitment to R&D. Partnerships and an “innovation friendly and supportive internal environment”5 would ensure long-term success. This was not short-term thinking. And a new story was needed to help explain this vision.

Merger of equals

Across town, Ciba-Geigy, the chemical giant with roots extending back to 1758, had been following a similar trajectory. While its industrial chemical activities were on a larger scale than Sandoz, it too had begun to rethink the structure of its pharma and heath care units to address the increasing need for an integrated approach to innovation.

By the time we met with the Sandoz team, the merger was already being mapped. Our work on the Clariant brand had been recognized as fundamental to its successful dual IPO on the New York and Zurich stock exchanges and the result had established our professional credibility. But much more was at risk with the Sandoz-Ciba merger. Secrecy and laser-sharp execution of a story that would redefine the industry were critical to success.

New skills in the science of life

Returning to London, I remember the excitement and panic. There were no rulebooks on shaping a story to express such a vision and compact it into a brand strategy, name and logo. The strategic and creative options we explored were exhilarating and exhaustive.

To address the requirements of secrecy and speed, we parallel processed naming and design, adding an extra layer of complexity to our work. One of the proposed names on our shortlist – Novartis, two Latin words combined meaning new skills – caught the eye of the client. I remember hearing someone on the client team saying, “We are building new skills in science of life”. It was one of those rare moments when brand storyteller and a client click, and where the creative result makes the vision tangible. The simple, modern logo – an abstraction of mortar and pestle together with classical letterforms of the name – invoked both companies’ distinguished scientific heritage and the innovation that their combined capabilities would make possible.

The merger took the industry, analysts and the financial community by surprise. On completion the market value was over $80 billion. “The merger of Ciba and Sandoz into Novartis had a lasting effect on the pharmaceutical industry, …set[ting] the stage for a new wave of mega-mergers. Several huge deals with European involvement followed, such as Astra/Zeneca, Hoechst/Rhone-Poulenc, Glaxo/Smithkline.”6

Vision + Story = Endurance

Today I see that our ability to help Dr. Vasella and his team tell the story relied on the vision that present success is not possible without factoring in the distant future—what has come to be known as “the long now.” As he has demonstrated over the years, staying true to that vision is why Novartis remains the most respected company in the industry.7 “The men and women running public companies … become preoccupied with short term ‘success,’ a mindset that can hamper or even destroy long term performance,” he told Fortune. “It may sound trite, but I truly believe my ability to keep shareholders’ faith in our company depends not on whether I make the quarter but on who I am, what my guiding principles in life are, my behavior.”8

Very few brands in rapidly changing industries remain the same. This is significant not least because of the enormous cost it takes to change, implement and protect such intellectual property. The Novartis name, logo and the brand story that underpins those assets has remained as we designed it seventeen years ago. The reason that the Novartis story has endured is due to the clarity of the vision and the storytelling that brought this vision to life. The lesson is simple: the power and endurance of any story is rooted in the foresight and universal truth that inspires it.

1. Dr Daniel Vasella, Chairman of the Board of Directors for Novartis AG

2. BBC News – 1986 Rhine River Disaster

3. Schmidt, Sascha; Rühli, Edwin, Prior Strategy Processes as a Key to Understanding Megamergers: The Novartis Case, European Management Journal Vol. 20, No. 3, pp. 223–234, 2002. 2002 Elsevier Science Ltd

4. Moret, M. (1992) Biotechnology – a pioneer technology. Sandoz Bulletin 27(98), 26–28. Remarks made by Dr Marc Moret, President of Sandoz board of directors, at the 3rd International Symposium for New Chemistry in Tokyo, October 1991

5. Schmidt, Rühli pp 231

6. Schmidt, Rühli pp 224

7. Novartis rankings and awards

8. The book on Daniel, Pharmaceutical Executive October, 1, 2009