‘Managed Chaos Allows More Creativity’

Abstract

OVERVIEW: In the biotechnology industry, research projects can take months or decades, new opportunities arise unpredictably, and the competition is intense. Chiron Corp, Emeryville, Calif., has adapted to this environment by cultivating a spirit of disorder or where everyone from researchers up to high-level managers reassess their progress almost daily. Resource limited, the company has relied on partnering to increase its bang for the research dollar and on its ability to attract highly competitive researchers to stay on the fast track. Much of the research in the biotechnology industry is basic, investigating various diseases in hopes of making a discovery that will transform the diagnosis and treatment of a disease, and open up an entirely new market. And basic research, by its very nature, is difficult to manage. Fourteen-year-old Chiron Corp., displays a management spirit best described as or disorder. biotechnology firm is now growing from its entrepreneurial roots to become more structured; last year it expanded dramatically when pharmaceutical giant Ciba Geiby purchased 49.9 percent of the company for $2.1 billion, and the transaction approximately doubled Chiron's staff to over 6000. company now has some 400 researchers in five cities. disorder, however, has taken Chiron a long way. Its researchers discovered a vaccine for Hepatitis B, discovered the Hepatitis C virus, and developed a diagnostic test for this elusive virus. company was also the first to sequence the HIV genome and use that information to make recombinant versions of HIV proteins, including an envelope of core proteins. Currently, Chiron's research is focused on vaccines (a vaccine for genital herpes is in clinical trail); diagnostics (including blood screening and branched DNA probe technology); therapeutics (including cancer treatments); and surgical instruments and devices for vision treatment. Financially, as a start-up research company, Chiron had many more quarters in the red than in the black, and the company recently reported a loss, related to the Ciba transaction, other acquisitions and research deals, and lower revenues from Betaseron, a multiple sclerosis drug. Nevertheless the company is viewed as a success, with a current market valuation over $2 billion. And, said Chiron chairman William Rutter, if you look simply at sales of products generated from Chiron research by Chiron and other companies, ignoring how much revenue Chiron itself realizes from such products, that number is more than $2 billion annually. More Creativity Managed chaos allows more creativity, explained Pablo Valenzuela, a cofounder of Chiron and, until last year, director of all its research operations. (Last year he replaced himself and this year he took on the post of president of Chiron Diagnostics, one of five business divisions that make up the company.) For Chiron, managed chaos has meant that the borders of projects are nebulous. People working on one project may drift over and help with another project if they find it more urgent, letting their own languish temporarily. This is fine with management; in fact, it is the way the company trims projects with less promise. If people feel they are working on a problem that is ceasing to be important, and wish to exchange it for an important problem, they can make that judgment, chairman Rutter said. The appetite for continued funding of a project that is going nowhere is always decreasing; the researchers' enthusiasm wanes. chaos is appropriate for a company such as Chiron, Rutter observed, because opportunities in biotechnology don't come in a predictable fashion. When they do come along, the company must immediately reassess ifs priorities, and have a management structure that allows for frequent disruptions of plans. As one Chiron researcher explained, It seems to me that the company is always in a state of flux, it doesn't seem like anything is hard and fast, although the upper level of the organization appears to have a sense of direction. …