The Making Of A CFO — A Conversation With J&J's Joseph Wolk
By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL
There’s no doubt that Joseph (Joe) Wolk grew up a fan of Johnson & Johnson (J&J). After all, his father spent 40 years working at the nearby J&J manufacturing facility. So, it’s not difficult to picture the Wolk family gathered around the dinner table with Joe’s father sharing stories from the factory floor and, perhaps, imparting some words of wisdom along the way. “The J&J credo was certainly relevant in our lives, and not just around the dinner table,” recalls Wolk.
As a kid, Wolk saw the flyers that came home from his father’s work. He witnessed the character of the people his parents interacted with at company picnics. “I played basketball growing up, and many of my dad’s work friends would come to see my games. That’s just how tight-knit it was,” he remembers. He knew, someday, he wanted to work at J&J, too.
But his career in the finance side of business didn’t begin in pharma. Instead, he was hired by AMETEK, an American manufacturer of electronic instruments and electromechanical devices. There he learned about accounts payable, accounts receivable, and having to tell vendors that he wouldn’t be able to pay this week as he was trying to stretch out his cash flow. Then there were opportunities with Motorola and Deloitte before he was finally able to make “the call,” informing his father he’d been offered a job at J&J. “He was a bigger guy and a bit of a disciplinarian, but I could hear him sort of well up on the other side of the phone.”
Since that conversation back in 1998, Wolk has risen to the top financial spot at the largest biopharmaceutical company (by revenue) in the world, extending his family’s J&J connection to 63 years — and counting. We sat down with him to learn about the journey that brought him to this leadership position, along with how the CFO role has changed, as there are lessons to be learned and shared.
INTEGRATING TWO BUSINESS UNITS
After 10 years in various finance roles at J&J, in 2008 Wolk got his first opportunity at a job that included the title CFO. That same year, the company decided to merge its Ortho Biotech business with its Centocor business. Wolk, now CFO and VP of finance within Ortho, suddenly had responsibility for overseeing the integration of these two distinct businesses. Having come from the Ortho side, he realized he needed to learn more about the Centocor business. “They were really two different cultures,” he elaborates. He knew combining the two organizations into one meant breaking down the barriers that were keeping them apart.
At an early type of town hall meeting, he noticed the audience segregating themselves at different tables. “If I knew one person at a table, then not only did I know what organization they came from, but where every person at that table came from, because there was no blending of talent.” According to Wolk, that was the real challenge. “My thought was, we weren’t going to be beholden to doing things the ‘Ortho way’ or the ‘Centocor way’; we needed to commit to the best way, wherever that happened to come from.” In fact, he says almost half the time those best ways came from outside the two organizations, as the integration oversight board not only looked for best practices across the entirety of J&J but externally, as well.
In measuring whether the integration was a success, one obvious metric used was the ability to reduce costs. But Wolk notes there were other less tangible measures, too. For instance, he recalls being pleasantly surprised when commercial and R&D leaders started reaching out to him and the finance department to discuss various nonfinancial problems. “They wanted to kick around ideas in business, explore opportunities about how to market a particular product, or what investments we could make,” he says.
At the time, the company had recently launched two new products, and their success provided the financial wherewithal to take some chances. “A business leader came to us asking if we could explore an opportunity.” That opportunity involved Stelara, originally FDA-approved in 2009 for plaque psoriasis (Ps). The idea was to see if this product could be beneficial to patients with Crohn’s disease. But how could such a label-expansion research effort be funded? “The business was doing pretty well, enabling us to not only meet our financial commitments, but to set some money aside for exploring greenfield types of ideas.” To manage the distribution of those funds, the company created an innovation fund. “The process of possibly being awarded funds back then typically started as a discussion at a conference table, and if that and subsequent discussions went well, it might progress to a town hall type of meeting where we’d be passing out these cheesy big checks representing ‘grants.’” The Stelara team ended up being awarded a couple million dollars for research, and their efforts paid off in 2016 with an FDA approval for Crohn’s disease. Today, Stelara is not only helping thousands of patients worldwide, but also generating more than $5 billion in annual revenue. “It was worth the effort and investment of a few million dollars,” Wolk contends.
WHAT DID I GET MYSELF INTO?
When it was time for Wolk to move on he had some succession-planning discussions with the head of the CFO group in pharmaceuticals and was presented with a few opportunities. “He explained that there was one opportunity where they wanted to put a lot of things together under one umbrella, but he said it was going to be ‘like a big bowl of spaghetti’ — very confusing — and he wasn’t sure I should take that one.” That role, VP of finance of the medical device global supply chain, was brand new.
At the time, J&J had experienced decades of success operating as a highly decentralized organization. But certain parts of the organization not only needed to run more effectively, but more efficiently. “The idea, to bring J&J’s entire global medical device supply chain under one leadership team, was born out of Alex Gorsky’s leadership of medical devices,” Wolk notes. “This was an area where we thought there were some big benefits to be had in terms of compliance protocols, procurement capabilities, and quality procedures across the supply chain.” So, in a nutshell, the role involved trying to take eight very disparate medical device businesses (e.g., contact lenses, heart stents, and knee replacement systems), and get their supply chains all operating under the same SOPs. And though the businesses were very different, Wolk saw a commonality that could be instilled around better efficiency and effectiveness. The day after being presented with all his options, Wolk called the head of the CFO pharmaceutical group and said, “I’ll have the spaghetti. That’s the challenge I want.”
Up to this point, Wolk’s entire J&J career had resided on the pharmaceutical side of the business. So, the move to medical devices was completely new territory, just like the prospect of reconciling eight organizations and how they do things all under one leadership team. “I often tell people it would have been much easier to have just started with a blank piece of paper.” People were very territorial, and being new to medical devices, Wolk seemed an outsider. “About two months in, I went to the head of supply chain and said, ‘I don’t think I’m the person for you.’” Wolk conveyed that he didn’t know enough about medical devices to determine what was proper. “She looked at me and said, ‘That’s exactly why we need you here. Everyone else comes with their own medical device company perspective, while you should be bringing a J&J perspective and the objectivity we value in our finance folks. I need you to find the best way, not the Ethicon way, not the Visioncare way, not the Biosense Webster way, but the best way for J&J.’” The pep talk galvanized him.
Wolk spent the next four years working to get the eight medical device supply chains under one global roof. And while he admits he didn’t accomplish everything, they did make significant progress. After all, when he first arrived, everything about this plan was conceptual. But by the time his tenure ended, it was much more operational. “We saw significant cost reductions. We saw improvement in quality in terms of product on-time fill rates. Just about any supply chain metric you look at, we improved and delivered on expectations.” For example, consider capital deployment, a critical asset to a supply chain. One of the things Wolk noticed was a consistent tendency to spend 50% of a capital budget in Q4. In conversations with heads of manufacturing, he’d note how they’d fight for every dollar for capital improvement projects to add value to the company. “So, why are we waiting until the fourth quarter of every year to deploy that capital?” he’d ask. And while he admits that they didn’t get to the point of spending 25% of the budget every quarter, they did get much more productive about implementing valuable projects throughout the year. Another metric he points to is that the project he headed up is still running four years after his departure. In 2020, the Gartner Group’s annual supply chain rankings had J&J at No. 3, behind Cisco Systems (1) and Colgate-Palmolive (2). “That’s quite an improvement over where we were a decade ago when we had some supply issues and consent decrees,” Wolk relates. “It is really a testament to how our teams were able to evolve, but the foundation was actually laid 10 years previously.”
There are a few important lessons from the experience. One involves relationships and time. “I would say that 75% of my time in that role was spent working on individual relationships,” he notes. Another component involved messaging, or, as Wolk referred to it, nifty use of a “velvet hammer.” “You could be sitting in a leadership team meeting having a discussion, and just by asking the question, ‘Is that the best decision for J&J?’ you could sort of freeze people in their tracks.” Wolk says that being able to reference the J&J credo as a point of guidance on decision-making is something that can’t be overused. “It’s so logical, and yet sometimes we lose sight. But used properly, it is a rallying cry to get everyone operating on the same page.”
Wolk counsels people to look for those roles where you wake up asking, “What did I get myself into? How am I going to do this?” Because while stretching people is part of the rigor of J&J’s leadership development program, everyone needs to strive and stretch so they know how to react when under pressure. “I knew I didn’t have all the answers, but I knew I’d have support to figure things out.” That seems to have served him well in terms of expanding his knowledge, experience base, confidence, and conviction in his abilities.
FROM DREAM JOB TO A UNIQUE OPPORTUNITY?
His next position as CFO and VP of finance for global pharmaceuticals at J&J (2014) was what many might describe as Wolk’s dream job, because it was in the organization where he first started. Plus, he got to reunite with folks such as Joaquin Duato, vice chairman of the executive committee, and Paul Stoffels, MD, vice chairman of the executive committee and CSO. “The supply chain role was global, but this was finance from A to Z, from profit and loss, sales, all the way to income; that was now my responsibility.” In addition, it involved the prioritization of investments across the globe and functions. “It is what I was groomed for, and I ran to the opportunity.”
Two years later, though, he found himself faced with a unique opportunity to expand his understanding of the overall J&J business when he was offered the position of VP of investor relations (IR). “I always had an affinity for capital markets, and even on vacation I’d find myself tuned in to CNBC,” he recalls. “But at the time, I never imagined how valuable this position ultimately would be to my career path.”
The IR team consisted of only four people, so he knew this would be a rare experience. As part of the job, he regularly met with Wall Street analysts who wanted updates on the company’s business. “You go through that initial phase of wondering how you’re going to understand or anticipate the thousands of potential questions the analysts are going to throw at you. But after about four investor conferences, it occurred to me that the questions themselves were a gold mine.”
Wolk felt that the questions represented what was on the minds of investors, so he wanted to use this information to keep J&J leadership informed. He ended up creating the employee investor-engagement program, which still exists today. His plan was to get more than just the IR team engaging with investors; he wanted senior leaders, executive committee members, and the next generation of executive committee leaders all involved, when possible. “It is such a great experience to have these professionals interact with the external investment community so they can garner the perspective of an outsider who maybe doesn’t know our business as well, but certainly knows the competition and landscape in terms of physician mindset,” says Wolk.
In 2018, Wolk was tabbed as EVP and CFO for J&J. And while his father wasn’t around (he died in 2006) to witness his son becoming the chief financial officer of the largest biopharmaceutical company in the world, his mother was. In fact, prior to COVID-19, he says his mom still got together with coworkers and their spouses every few months for lunch or dinner just to keep in touch. “J&J was more than a place of work, but a form of social infrastructure, and that’s pretty special.”
Becoming CFO wasn’t a lifelong ambition for Wolk. But now that he is, he wonders, “When I’m ready to leave this role, how will I ensure the finance organization is better than when I started?” That could prove difficult, as his immediate predecessor, Dominic Caruso, not only served as CFO longer than anyone in J&J history, but is credited with establishing the company’s best-in-class Talent Development program. And while talent development remains a top priority, Wolk also wants to be sure the company is better off from a data, technology, and financial health perspective.
“What I’ve really learned over the last 18 months is you have to stick to the core values of who you are as a company; don’t try to be something you’re not.” For example, when the pandemic first struck, J&J’s kneejerk reaction was to look into creating a vaccine. But knowing development would take months, if not years, the company initially focused on a way to have a more immediate and positive impact on health. “We reached out to over 20 vendors to secure personal protective equipment (PPE), not for J&J employees, but so we could donate it to healthcare workers across the globe,” he explains. The company also implemented changes so that it could continue many of its clinical trials, and it offered more flexibility for employees considering many of them were suddenly having to also become homeschool teachers. “We even honored our commitment to our shareholders by continuing to increase our dividend by just a little bit more than the prior two years.” The CFO says he takes particular pride in that last one. Because while J&J is mostly owned by large institutions, he knows there are many shareholders similar to his parents when they retired. “They may have just a couple hundred shares, but they are counting on J&J to provide that income,” he concludes.
Sidebar 1
FOR CFOS TODAY, THERE IS NO TYPICAL DAY
When asked about what a typical day looks like in the life of a CFO, Joseph Wolk, J.D., CPA; J&J’s CFO says there’s no such thing. Sure, like many top executives, he looks at his calendar each night to prepare mentally for what awaits the following day. But given his experiences during his tenure thus far, calendars — and plans — can change in an instant. “We’ve had a pandemic. We’ve had social unrest. We’ve had numerous, unfounded legal allegations. There’s nothing in any transition manual to address any of that.”
He explains that if there is any sort of typical day for a CFO, it would most likely be those involving earnings announcements. But even those can be atypical. For example, in October 2020, Wolk was invited to speak on CNBC about the company’s third-quarter earnings results. But the first question posed was about a recently announced pause in development for J&J’s COVID-19 candidate. One of the next questions was asking for his comments on another company’s drug, their science, and why that drug wasn’t being tested in the United States. “I imagined Dr. Stoffels and the other 135,000 employees cringing when they saw that the finance guy was out there being asked about scientific issues and data,” he laughs.
He says he works with a team of J&J staffers who help prep him for unlikely scenarios like this one. That prep work means gaining insight into and understanding the fundamentals of any significant events happening throughout the company. “The night before a media briefing, I often wake up in the middle of the night and find myself going over what questions I may encounter the next day — and pondering how I might address each one. Being well-prepared should be part and parcel of any CFO’s job, especially if you’re about to be on camera.”