What’s the risk in changing industries?
The Blogs of Dave Murphy: What’s the risk in changing industries?
I frequently have conversations with people who are contemplating a change in industry, or changing the market in which they work within a given industry, for example, switching from the pharmaceutical to the medical device industry or vice versa. Sometimes their interest is driven by curiosity or a desire to simply do something different; more often it’s driven by economic conditions and their interest in advancing their career. Of course we should never define success strictly in terms of earnings or wealth-building, but the concept if managing one’s career is often measured by compensation. So a natural question for people considering a change in industry is related to the risk of such a move, and the resulting return.
Most people would agree that there is some level of risk associated with changing industries, as Michael Jordan discovered when he left basketball to play baseball. You typically lose the ability to leverage unique experiences as well as relationships built and groomed over many years. So there has to be a compelling reason to do it – a problem that is pushing you out of your current industry, as well as a benefit that is pulling you to a new one. In some cases those reasons can be related to job satisfaction and self-fulfillment, but more often they’re rooted in financial issues associated with the job market in each industry. In the example of the medical device and pharmaceutical industries, the similarities between the two make it a viable option for many. For marketing executives, the end-user customers are often the same (physician specialists) so the work experience and relationships can be fairly transferable.
So on the surface certain kinds of intra-market industry changes are fairly straightforward – at least in the mind of the employee. From the employer’s perspective, and for most hiring managers in the medical device and pharmaceutical industry, they typically don’t view it as an easy transition because of regulatory differences and related pace of work. A PMA or 510K approval process is generally easier and less complicated than a New Drug Application approval, so it moves faster and requires fewer people. As with all industries an employer will prefer a candidate for employment from their own business vertical than taking a chance on someone from an adjacent business. So a candidate can generally expect at best a lateral move in title and money when switching industries, and sometimes may need to retreat a step, particularly if they are unemployed.
Because of the difficulty in making such a switch, the benefits “pulling” someone into a new industry are usually not as significant as the problems that are “pushing” them out of their current situation. Sometimes it makes a great deal of sense to do it, particularly when one’s current industry has a gloomier outlook (eg. company consolidation) than the prospective new one. For instance, the unprecedented rate of M&A activity in the biopharmaceutical industry may drive drug company personnel to consider moving to the Medical Device or Molecular Diagnostics markets (in the first quarter of 2015 there were as many acquisitions in the pharma industry as in all of 2014).
Proactive vs. Reactive
Is it smart to wait until you’re forced to try to make a change, or better to act proactively when you first “read the writing on the wall?” My own view is that, unless you believe you will enjoy the work more, it makes more sense to wait, generally, for conditions to dictate a change. Why? Because of the post-recession competitive landscape in the job market. More often than not when a middle-management candidate tries to make a change to another industry in the open job market, he/she is not going to be very competitive unless they already have person relationships established. When the change is made successfully it’s often because they follow a former boss or colleague who already made the change, or they work for a large multinational with business in several verticals and they transfer internally. That’s often not a merit-based decision process and is usually a matter of being in the right place at the right time, which is a difficult way to plan your career.
Some functions are more easily transferable than other, including finance, IT and HR. In the case of Marketing and Business Development work, I see Marketing Communications, Forecasting and Licensing personnel make industry changes relatively often. And agency personnel in Management Consulting or Advertising or usually so embedded in their client’s industries that they make the change to the “client” side all the time. And currently many talented pharmaceutical executives are successfully pursuing new roles in the “companion diagnostics” or “personalized medicine” markets driven by genomic and proteomic technology, particularly when they can leverage disease-state expertise.
So there are plenty of examples of talented people who have changed industries successfully. For the most part however, there exists significant financial risk in attempting to make a change unless it is done early in one’s career when the monetary hit is not as significant. A noteworthy caveat to all this is that the personal opinion of a hiring manager will often override conventional thinking. If a VP of Marketing at a drug company began his or her career in the Medical Device industry, for example, then they will usually be much less concerned about the ability of another smart, talented person to make the transition. In the end a candidate’s viability is measured against that of other candidates who are pursuing the same job, and as with most things in life it often comes down to being in the right place at the right time (with the right recruiter, of course!)