In the business world we often find that the most successful companies are not the most complicated. Success usually comes down to knowing what business you’re in and relentless focusing on that. Relentless execution becomes the propellant.

Fortune magazine recently published an interesting article on Johnson & Johnson. “What’s frustrating about J&J’s imperatives for success is that you probably could have thought them up yourself,” wrote Geoffrey Colvin and Jessica Shambora in the article. “The secret turns out to be not the rules but rather the company’s extraordinary insistence on following them all the time.”

It’s that kind of discipline that enabled Johnson & Johnson’s sales to increase 4.3 percent last year, during a period where the overall U.S. economy declined. In addition, its profits increased 22 percent while during a period where the overall profits among the Fortune 500 dropped by 85 percent.

Johnson & Johnson achieves that kind of success by relentlessly focusing on five strategic imperatives. First, J&J diversifies within only one industry — health care — with one group in consumer products, a second group in medical devices and diagnostics, and a third in pharmaceuticals. This strategy keeps the company both focused and diversified.

Second, J&J bets heavily on the future, always thinking a decade or two out while at the same time playing it conservative by creating substantial cash reserves for hard times.

Third, J&J is decentralized, so managers can run their own businesses and, if successful, rise to the top.

Fourth, J&J stays very financially disciplined. Always. The company refuses to get caught up in bidding wars, as evidenced by its recent refusal to outbid Boston Scientific for Guidant. As soon as it became clear that it was not possible earn an acceptable ROI, J&J withdrew its bid.

Fifth, J&J famously has “a purpose beyond profits,” as expressed in its Credo: “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services.”

Johnson & Johnson is a great example of corporate focus and strategic discipline. As with all business rules, the secret isn’t really in talking about it, but rather in actually believing it enough to take action on it.

Client executives often refer to M Squared Consulting as their management “secret weapon”…a ready resource to help them execute on critical projects or initiatives by deploying seasoned experts from our Consultant Network. Over the years we have proven ourselves to be a true talent-on-demand partner that enables our client to focus on their core business, while we help them solve critical business problems.

Last week I attended the BayBio IMPACT 2009 briefing in San Francisco along with a few team members from the Life Sciences practice at M Squared Consulting. We heard life sciences leaders present the BayBio strategic action plan for 2009. The full report, geared towards California state leaders, details proposals to increase treatments, therapies, and technologies in five categories:

• Workforce and education
• Tax policy
• Infrastructure
• Regulatory affairs
• Federal policies

While this specific presentation was presented by the Northern California based BayBio and intended for a California audience, I think this kind of industry-led thought leadership is vital and serves as a model for other regions (and industries) to emulate.

A little background…

The life sciences industry has a significant impact on the economy (and on healthcare). There are more than 8,500 life sciences companies in California, employing over 250,000 workers, with an annual payroll of more than $23 billion. In 2008 California life sciences companies brought 1,294 products to market. There are currently 210 treatments and cures in phase III in California’s pipeline and companies are expected to invest $50 billion in new facilities, equipment and employees. This year the National Institutes of Health (NIH) is expected in invest an additional $3.2 billion.

Maximizing this investment and leveraging this unprecedented opportunity requires a conscious effort by investors, industry, and California’s state leadership.

California State Senator Leland Yee was the first speaker. He observed that in the current budget crisis state legislators should be talking about how to grow the economy instead of how to carve out more taxes from the existing (or declining) revenue base. He noted that the life sciences industry has been very resilient during the recession and acts as a “stabilizer” for the California state economy. His goal is to make it easier to do business in California through better planning, educational investment, affordable housing, and tax incentives.

Pierre Cassigneul, the President and CEO of XDx, Inc. noted the deficiencies in the educational system. Businesses like his are required to use California Certified Lab Scientists (CLS) to perform their diagnostic tests. The lack of qualified workers is limiting their ability to grow. He also pointed out that California is ranked 48th out of 50 states in 8th grade science student achievement. To put this in perspective, the United States was recently ranked 11th by a group of Boston College researchers in a global assessment of 8th grade science and math achievement.

Hoyoung Huh, the President and CEO of BiPar Sciences shared some of his insights about the life sciences business. The first challenge for the industry is that it is not like any traditional business model. Unlike a 12-18 month technology lifecycle (idea-to-market), the life sciences industry requires 15 years and $1.2 billion to develop the average product. He worried that the current tax and policy climate, along with negative investor sentiment, will force many companies to consider other locations in pursuit of cost savings.

Conclusion

The life sciences industry faces a daunting array of regulatory and economic forces. In addition to a long and complex process to bring products to market, the life sciences industry is subject to the same economic and labor market challenges as other industries. It is not unique in its need for highly skilled and experienced professionals. A wide range of positions - from product discovery to production to marketing - require expertise that is increasingly difficult to find. At M Squared Consulting we work with our life science clients on a broad range of engagements. Our on-demand talent model helps them to engage the expertise they need to deliver results while controlling costs.