Friday, April 8, 2011

An inside view from Big Pharma on how MBAs killed innovation

Hat tip to Lambert at CorrenteWire for pointing to Riverdaughter blogging about her last day at work doing research modeling at a big pharmaceutical company. Those of you who are in IT might be grossly offended at some of what she writes, but I want to spotlight one paragraph:
Here’s my theory about how it all went south since the 90′s: It’s the 401K. Yep. It puts the whole dismal phenomenon in the proper framework. But how could something that appears to be so innocuous bring the country’s scientific and industrial framework to a screeching halt, you ask? Think about it. MBAs and executives are hired by corporations to “increase shareholder value”. Before the rise of the 401K, that meant building a better mousetrap and finding a better aspirin. Now, the only thing that matters is pleasing the finance guys who rate your stock from buy to hold to sell. And those same finance guys have a stake in the outcome. They set their own terms of compensation as well as service large institutional investors and mutual funds that we get to choose from in our 401K plans. Corporations are now driven to serve the finance industry and the shareholders, which are us. They’re not in it for the new products anymore. And once you start hiring executives whose goal it is to optimize the ROI, well, it doesn’t matter where the money comes from anymore. It’s just money, numbers on a spreadsheet. It doesn’t matter if those numbers represent people with families and caloric intake requirements and 10,000 hours of expertise. It doesn’t matter if there are fewer products to sell. Once the patent is dead and the money is gone, the investors will follow the money to the next hot thing. There’s nothing mysterious about this. It’s not personal. It’s just the reward system we have set in place since pensions became too old-fashioned for those up and coming 30 somethings in the 90′s (um, that would be us). We’re like rats pushing a pellet bar for another shot of cocaine. We can’t help ourselves and will keep doing it until we die from the pure pleasure of getting that next teeny bump to our retirement accounts.
Read the entire article.

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