Bayer boss beats the drum for new operating model

Bayer CEO Bill Anderson is promoting the pharmaceutical and agricultural company's new operating model.

This model, with which Anderson wants to reduce hierarchies, streamline structures and accelerate decision-making processes, is already bearing its first fruits, said the American, who has led the company since last June, on Friday. It is a fundamental reorganization, from the CEO to the customer. However, this also involves a considerable reduction in personnel, as Bayer already announced in January - at the expense of many managers. Dismissals for operational reasons in Germany are only ruled out until the end of 2026.

Sebastian Guth, head of Bayer's pharmaceuticals business in the USA, said that the number of managers there had already been reduced by 40 percent. Decisions that would have taken three to six months in the past would now be made almost immediately. In the over-the-counter healthcare business in Southeast Asia - a key growth market for the division - the team managed to bring forward the launch dates for new products by five to nine months in less than three months after the model was introduced. "This will generate an additional two million euros in value this year, an increase of 30 percent," said Anderson.

Just under four weeks before the eagerly awaited Capital Markets Day - at which Anderson intends to present his plans for the future of Bayer - he thus gave an initial insight into the new, simplified organizational model. Twelve levels between him and the customers was "simply too many", Anderson had already complained in November. The internal set of rules comprises 1362 pages. Anderson has resolved to reduce this by 99 percent. He also wants to switch from annual to 90-day budgeting cycles and give teams more freedom when making decisions.

He draws inspiration for this from the management bible "Humanocracy" by US economist Gary Hamel. Anderson has already tried this out at his previous employer, the Swiss pharmaceutical company Roche. There, for example, he cut fixed budgets in the pharmaceutical division. As a result, expenditure fell and performance increased, Anderson concluded at the time.

The pressure on the American is high. Investors expect him to review the Group structure - demands have already ranged from a spin-off of the over-the-counter healthcare products business to a complete split-up of the Group, which still includes the pharmaceutical and agricultural businesses. However, according to insiders, Anderson first wants to concentrate on introducing the new operating model.

Above all, however, he also needs to regain the trust of investors, which has been severely damaged by the billion-euro takeover of glyphosate developer Monsanto and the wave of US lawsuits over the weedkiller's alleged carcinogenic effects. Bayer recently lost a series of glyphosate lawsuits and was recently sentenced by a jury to pay a record fine of 2.25 billion dollars. Nevertheless, the company remains resolutely behind the herbicide, Anderson replied when asked whether Bayer was planning any changes to its litigation strategy.

On the stock exchange, the former most valuable German DAX company has lost more than 70 percent of its value since the purchase of glyphosate manufacturer Monsanto in June 2018. Bayer is currently worth a good 27 billion euros - much less than it once spent on the 63 billion dollar Monsanto takeover.

(Report by Patricia Weiß. Edited by Olaf Brenner. If you have any queries, please contact our editorial team at [e-mail] (for politics and the economy) or [e-mail] (for companies and markets).)