This chart created by Merck’s CEO helps the pharma giant set its long-term strategy

  • Merck & Co. CEO Kenneth Frazier spoke at the CECP’s CEO Investor Forum in February, stressing the importance of creating long-term value.
  • He said this comes from considering the desires of all stakeholders, not just investors.
  • He oversaw the creation of a corporate responsibility matrix of these desires and their potential impact on success, and has used it to help guide big-picture strategy.
  • This post is part of Business Insider’s ongoing series on Better Capitalism.

When Kenneth Frazier became CEO of Merck & Co. in 2011, he knew from the outset that consideration of all the company’s stakeholders – customers, investors, employees, and society at large – was going to be crucial to the success of his tenure.

As head of the pharmaceutical giant, Frazier oversaw an assessment of which issues are most important to each of these stakeholders, and weighed them against how significantly each impacts performance.

The resulting matrix includes 41 issues across four categories: access to health, environmental sustainability, employees, and ethics and transparency. It was completed in 2014 and is based on both internal and external research and surveys.

At the Committee for Encouraging Corporate Philanthropy’s (CECP’s) CEO Investor Forum in February, Frazier said, “we focus in our matrix where we can have the greatest business and societal impact,” and explained that it’s proven beneficial in board discussions amongst themselves and with investors over Merck’s strategic direction.

He said that the board considers the following chart alongside an assessment of risk when making big picture decisions.

Merck & Co. has used this

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Merck & Co. has used this “Corporate Responsibility Materiality Matrix” since 2014 and plans on updating it this year.
source
Merck

From January 2011, when Frazier became CEO, to January 2017, Merck’s stock rose from $36.39 per share to $62.07 per share.

Frazier was Merck’s general counsel during a string of lawsuits following the recall of its drug Vioxx in 2004, experiencing firsthand the effects of his company losing trust among its stakeholders.

He’s won back that trust, he demonstrated at the CEO forum, by focusing on the once-controversial statement that landed Merck & Co. founder George W. Merck on the cover of Time in 1952: “We try never to forget that medicine is for the people. It is not for the profits. The profits follow and if we have remembered that, they have never failed to appear.”