2002 Alumni Achievement Awards:

“To seek to make a contribution trusting that the rewards will follow.”
– Raymond V. Gilmartin, Chairman, President & CEO of Merck Co, Inc.

Each year the HBS community is drawn together to honor a select group of alumni who have been recognized as extraordinary representatives of the HBS community. The Alumni Achievement Award is the greatest honor that is conferred by the school and is given exclusively to individuals who embody the highest standards of professional accomplishment. While past recipients have represented a wide range of businesses and backgrounds, they have all achieved exceptional professional success coupled with an unparalleled commitment to community involvement.

The Alumni Achievement Award was first launched in 1968 and each year since the HBS community nominates alumni who are striving to make an impact in the world. The administration then reviews all recommendations and Dean Clark makes the final decision.

2002 marks the first year that HBS will announce the Alumni Achievement Awards in the fall rather than the traditional summer reunion period, as part of an initiative to increase the involvement of students, faculty and alumni to honor this year’s recipients. A forum, hosted by the Leadership and Values Initiative, will take place on October 3rd at 3 PM in Burden Hall and will give students an opportunity to hear directly and ask questions of this year’s recipients, with a reception to follow on the Spangler/Aldrich Lawn.

As expected, this year’s recipients follow tradition as clear representatives of outstanding achievements in the business and social sectors throughout the world, ranging from pharmaceuticals to executive search to coffee beans.

The 2002 Alumni Achievement recipients include:
 Raymond V. Gilmartin – Chairman, President & CEO, Merck & Co, Inc, MBA 1968
 Orin C. Smith, President & CEO, Starbucks Coffee Company, MBA 1967
 Marjorie M.T. Yang, President & CEO, The Esquel Group, MBA 1976
 Egon P.S. Zehnder, Founding Chairman, Egon Zehnder International Inc, MBA 1956

Raymond V. Gilmartin, Chairman, President & CEO joined Merck in 1994 and has since overseen an unprecedented growth in revenues and has expanded the company’s strong history of community involvement through a myriad of innovative social programs. The Harbus recently had the opportunity to catch up with Gilmartin and he shared with us his knowledge and experience in fostering leadership and ethical values within an organization.

What do you remember as the most valuable lesson with regard to leadership while you were here at HBS?

I learned early on through the interaction and debate with my classmates within the framework of the case method that it generated additional insights and ideas that are very difficult to come up with on your own. A critical aspect of leadership is the ability to orchestrate the experience and knowledge of those around you to advance everyone’s thinking. As a leader you should not think of yourself as having to have all to come up with all the answers. Rather, being able to establish a process in your organization where everyone can contribute their ideas collectively will result in a better product than if you set yourself up as the expert.

What aspect of your personal management style do you believe has been critical to your success as CEO?

Since I must rely on other people a great deal, I learned early on that it is important to surround yourself with people in whom you have a lot of confidence and trust. One of my first tasks when I came to Merck was to select my management team. I chose to name individuals from within the company to key management positions who were not only recognized for their competence and their abilities, but also for how well their values and conduct matched Merck’s values. The benefit of selecting of people of high ethics and integrity was not only that I could trust and rely on them, but that they would also inspire confidence and trust throughout the entire company.

How has your role and responsibilities changed if at all after the recent scandals of Enron and WorldCom?

The situation with Enron and others has been an important reinforcement of what we already had in place at Merck and for what we are very conscious about. The ability for a leader to inspire confidence is based fundamentally on behaviors that adhere to the highest standards of integrity. In 1997 Merck kicked off a major initiative on leadership because we felt we needed to be very conscious in developing and describing the types of behaviors we expect in leaders. At Merck, we select and evaluate our employees not only their business performance but on their leadership attributes as well. The successful development, evaluation, and succession of Merck leaders is why this program was launched.

We also have a Chief Ethics Officer who functionally reports to me and briefs me on a quarterly basis. She undertook the establishment of a world-wide company program to establish a code of conduct and launched extensive ethics training courses for our employees that use case studies specifically centered around the kinds of problems and dilemmas that we felt our employees may encounter. These initiatives allow us to clearly reinforce at all levels of our organization the need to conduct oneself at the highest levels of integrity.

Certainly CEOs and senior executives can make a big difference in their companies as a result of undertaking these types of activities. You really have to go beyond saying, “We are an ethical company – here is our code of conduct – we select ethical people and we just tell them to do the right thing.” You have to do those things for sure, but you have to go beyond that and actually provide people with the training to recognize when they are in an ethical dilemma, how to sort it out, and how to do the right thing. It is often the situation that good people end up doing bad things, and often in the mistaken belief that they are doing the right thing for the company. It is important to provide people with the background and training to recognize how easy it is to get off the track and how to avoid that.

How has the new Sarbanes-Oxley Act personally impacted you as a CEO and your company?

The Sarbanes-Oxley act just codifies what a lot of good companies are already doing. In some respects it is simply formalizing and making more explicit the need for greater documentation, formulating charters, committees, etc. It also does establish an environment where companies who are not doing that, should be doing it, and therefore will be doing it.

Why is Merck’s fundamental philosophy to “treat important medical needs, and profits will follow” an effective strategic approach in a very competitive marketplace?

That approach is driven off a statement from a 1950’s speech in which George W. Merck, son of the company’s founder, stated that “medicine is for the people, not for the profits. If we remember that the profits will follow.” That statement does frame our fundamental value system within Merck. It also translates to how we spend our research dollars.

What Merck does is translate cutting-edge science into breakthrough drugs. We go after unmet medical needs where there is new knowledge about the pathway of the disease so that we can come up with a novel drug that represents a true advance in patient care. This has been the key to Merck’s success and will be the key to our success and growth in the future.

As the Chairman, President and CEO of Merck to whom is your primary responsibility?

Our primarily responsibility is to the patient; to come up with breakthrough drugs that result in true advances in the health of that patient. If you do that successfully, the profits will follow, and the shareholder will benefit. We certainly care about the share price and how fast we grow. But we know that those are outcome
s that occur because of our focus delivering a breakthrough drug to that patient that is safe and convenient.

Why did you decide to distribute the drug Mectizan to the world’s poorest countries free of charge? Was that a difficult decision and did you encounter any resistance?

George W. Merck also stated that “we can not rest until our finest achievements are available to everyone.” As a result, Merck has always been an activist in terms of defining what we do as discovering breakthrough medicines but also being very active in the world in ensuring that people have access to our medicines.

In particular with Mectizan, once we were able to demonstrate that this drug was able to kill the parasites that cause river blindness, we first tried to generate some funding and support from various organizations that are concerned with the world’s health to help us get this drug to the right people. Since there was no funding available, Merck made the decision to offer the drug for free to serve as a catalyst to get this drug to the people who needed it.

When Merck initially made this decision, it was very controversial, not so much from the perspective of our shareholders, but interestingly enough, from the world health community, who questioned our motives and whether this was the best approach. Despite these obstacles, Merck moved forward with the initiative, and I just had the pleasure of traveling to Tanzania to commemorate the fifteenth anniversary of giving Mectizan away for free.

During my trip we delivered the 250th million dose and through our program we have reached 33 million people in 33 different countries who are afflicted with river blindness. One of the things that does happen once you start giving away a drug is that people begin to worry about when you are going to stop giving it away. Therefore, every time I give a speech on this topic, it is always important for me to reinforce that we will give this drug away as long as it is needed and everywhere it is needed.

We also have a partnership with the Gates Foundation and the Republic of Botswana where the Gates Foundation and Merck each contribute $50 million dollars a year to attack HIV/AIDS in a comprehensive way. It’s actually relatively easy for us to give away the drug, when you compare it to what the government organizations we fund and partner with have to do to effectively deliver the drug. Some of the initiatives this partnership is working on include launching a new clinical laboratory, establishing an AIDS treatment and counseling center, and providing training for doctors, nurses, pharmacists, laboratory technicians, and hospice caregivers. Our joint partnership has extended far past enabling basic distribution of our drugs to actually developing comprehensive services to care for the affected community.

What is your best advice to current HBS students re-entering the workforce on how they can develop into highly successful and ethical business leaders?

To seek to make a contribution trusting that the rewards will follow. Treat everybody you work with with dignity and respect, particularly when you are in positions of responsibility. Conduct yourself according to the highest standards of ethics and integrity. This is a highly successful way of approaching your career because you do inspire confidence and trust on the part of others, and you will be rewarded for that. In addition, when you get in trouble, which you are likely to do from time to time, people will come to help you, and often in ways that you do not know about. Even when you are not in trouble, people will help you advance in ways that you have not known about. Seek something that you think you are going to enjoy doing.

Finally, no decision is irrevocable.