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Leading the Largest Foreign Investment into Cambridge, MA — US $4.0 Billion

Leading the Largest Foreign Investment into Cambridge, MA — US $4.0 Billion

Mr. Gonzalez joined Novartis in March 2000 after 9+ years at PepsiCo. After a year in the Consumer Health Business, Dr. Dan Vasella asked him to become Head of Human Resources for Research and Development — the epicenter, as Dr. Vasella put it, of Novartis's success. Dr. Vasella even asked Mr. Gonzalez to write his own compensation offer for the role, an option he chose not to take.


Situation

Dr. Vasella had commissioned McKinsey to guarantee Novartis would keep its top spot in drug discovery and development. Their recommendation: move the R&D group to the US, to either the West Coast or the Boston area. This was complicated by the fact that Novartis needed to preserve its Swiss tax status — a 10-percentage-point advantage over its US competitors.


Actors

  1. Dr. Dan Vasella
  2. Board of Directors of Novartis A.G.
  3. Head of Research
  4. Head of Development
  5. Head of Pharma
  6. Head of HR, Novartis
  7. Head of HR, Pharma
  8. Every R&D department head who would have to relocate
  9. President of Harvard
  10. Mayor of Boston
  11. President of MIT
  12. City Manager of Cambridge
  13. Senator Ted Kennedy
  14. Senator John Kerry
  15. Swiss Government
  16. US IRS

Solution

Mr. Gonzalez had previously moved Novartis Consumer Health from the US to Switzerland, and had built a relationship with the head tax lawyer for Novartis US in New York — so he resolved the tax questions first.


As Head of HR for R&D, he built the staffing plan to hire the 1,400 scientists needed to staff the new Novartis Institute for Biomedical Research. The initial plan called for only 400 scientists, which would have made Novartis a "me too" player in Boston — but the staffing work required was the same whether the number was 400 or 1,400, so the only real change was the size of the investment: from $400M to $4.0 billion.


Once the scale of the project was set, no executive at Novartis wanted to take it on. Mr. Gonzalez recognized it as career-defining, weighed every actor's agenda, and concluded he was the right person for the challenge. He went to Dr. Vasella and volunteered — becoming COO for Research and moving to Cambridge while his family stayed in Switzerland, commuting back and forth to Basel as needed.


He built his staffing team in Basel and used it remotely to scout the market for talent for an institute that didn't exist yet, while simultaneously negotiating city and state tax incentives to reduce costs. On one return trip to Basel, he learned the President of Harvard and the Mayor of Boston had come to Basel to ask why the Company was choosing Cambridge over Boston. Dr. Vasella, a Harvard graduate, declined to meet them — leaving Mr. Gonzalez to manage a conflict with real staffing implications, since Harvard was a major sourcing ground for the Company. He met with both dignitaries and sent them home without a change of plan — Boston lacked as strong a location, and the move to acquire the historic Necco Factory building in Cambridge would also block the expansion of Millennium, then the area's largest biotech company. Boston offered none of these advantages, and Cambridge was still just across the river from Harvard and the city's major medical centers.


This was the largest game-theory project Mr. Gonzalez has handled. He began by mapping every actor's agenda, then continually sought the Nash equilibrium at each step: turning the Board from a $400M to a $4.0 billion decision; convincing Dr. Vasella to bet on him rather than bring in an outside mega-project manager; managing internal turf battles with other HR executives; securing the support of the Head of Pharma, even though it meant losing the Research Group and significantly changing his own role; managing the President of Harvard and the Mayor of Boston; bringing Senator Ted Kennedy to the announcement of the $4.0 billion investment — the very same day the Catholic Church publicly acknowledged its role in the Boston child abuse scandal; securing a favorable ruling from Swiss and US tax authorities to retain Swiss tax treatment over compounds discovered in Basel; and relocating key scientists from Basel to Cambridge with relocation packages built to make the moves non-contentious and maximize each person's output.