McKesson headquarters in Las Colinas, Texas
McKesson is one of the largest healthcare companies on earth. It is known as a $264 billion revenue distributor of pharmaceuticals and medical supplies, but its business has much more breadth. The company manages a significant portion of oncology practices across the United States, and it provides support services to physicians in those practices so they can focus on their patients. That includes providing technology and security to them. McKesson has one of the largest platforms that connects all pharmacies to authorize medications across the US and Canada. The company also has growth businesses that are purely data-driven, geared to improve patients’ lives. Among these is a business called Ontada through which McKesson works with manufacturing companies, collaborating on data to identify outcomes to create better treatments for patients to improve their lives. The architect of many of the technical and data-centric solutions is Nancy Avila.
Avila is the chief information and technology officer of the company. Her responsibilities include running technology for the company, but it has expanded into developing technology for products and services that the company sells to customers. As a company in a regulated industry, the role involves compliance. Avila ensures the company is compliant, secure, that there is data to provide the right visibility to track controlled substances, and the like. “I think the most strategic piece [of my role] comes with the CTO responsibility,” Avila noted. “We work across the company and build the right technology to enable our key growth strategies. When you think about what I do day-to-day, a lot of it is working across my leadership team to understand what our critical growth areas are, making sure we have the right investments to drive the right values across the company.”
Over her three years with McKesson, Avila has also focused great attention on modernizing the technology that serves as a critical foundation to the company. “When you think about some of the newer technologies that are changing and reshaping a lot of industries, these technologies now require us to rethink everything from our network, how we move to cloud and how we build our data structures,” she listed off by way of example. “It’s no longer just a data lake. [We must determine how to] move data closer to the customer experience. It’s about OT [operational technology] and how you leverage that. It’s starting to build a collaboration across the entire community to do that.”
McKesson Chief Information and Technology Officer Nancy Avila
Finally, Avila and team have their hands on the levers that help improve both customer and employee experience. This requires a combination of better engagement with each constituent group to understand needs, and a curiosity about new technology coupled with a willingness to play with it. As she described these parts of her mandate, she lit up with excitement of one who continues to have a great curiosity about how these tools might be impactful to the company and its customers.
An additional thrust for Avila and the team has been to advance data practices. The team has focused on workflow automation and leveraged robotic process automation. The next step will be to automate at scale where she and her team can have automation take over work that people have traditionally done. The second area of focus is to leverage data to drive intelligence and insight to better run the business. “We have a vast amount of data, and we’re starting to use it not only to validate the hypotheses of an experienced, seasoned businessperson or to understand our customer, but…to drive better outcomes for our customers and patients,” she said. “How do we use that intelligence to give us insight that we didn’t really understand or provide insights at scale?” Avila noted that in the past, when a customer sought a product that was unavailable, that was a lost opportunity. Now, through better data analysis, the company can suggest alternatives, ensuring they get what they need through a different product.
McKesson CEO Brian Tyler has focused considerable attention to making McKesson’s an innovation-centric culture. Avila believes her role is to be a steward to help teach and create that culture. “Innovation isn’t a top-down initiative. We’ve built a group of people who work across the businesses to teach them how to ideate,” she said by way of an example. “[There are] typically a number of inputs from across organization. The best ideas come from people living and breathing in the trenches.” There is an innovation office to help stimulate new ideas. That office helps maintain a stage gate process to efficiently develop minimum viable products. “[This year], we’ve done something like 40 use cases,” she noted. “We’re only taking a few to scale but…we’ve taught our business how to bring in startups, how to look at different technology, how to solve problems differently and how to go out and experiment and understand the customer.” Avila is playing the long game believing that the progress made will scale across the colossus that is McKesson. So far, so good. With Tyler’s backing, she knows that she has room to experiment.
With all of the issues that companies have had with supply chains, McKesson was a success story during the pandemic of scaling its supply chain. “We had to scale our supply chain to 15 times the volume of what we had ever done in order to help the US government provide the COVID vaccine to the nation as well as to other countries,” she said with pride. “We learned where we had to be dynamic. Two years ago, we saw constraints in the supply chain that we had to solve for.” Although the company had several legacy platforms, they were platforms that were built to scale, and scale they did thanks to platforms that reflected the company’s operating model. “When we didn’t have supplies, we were able to look at the data, understand the patterns and be able to pivot through alternative sourcing,” Avila said. “We were also able to push down unique capabilities. One great example is early on in the pandemic, facemasks were a standard product that became a critical component to delivering services and surgeries to critical patients.” Seemingly overnight there was a misplacement of inventories. From this issue a new capability referred to as Dynamic Distribution was born. “We were able to understand where the need of supply chain was and re-appropriate that,” Avila said. “That’s one example where we were able to use some of our new technologies to pivot.”
Given the company’s vast size, technology must operate across the diverse array of businesses. Avila’s team is neither fully centralized nor fully federated. She leverages a hybrid approach. “There are things every business needs at the enterprise [level],” she offered to explain the rationale for those items managed commonly. “There’s typically no debate around the compliance, the cybersecurity, the foundational infrastructure that works. There is also no debate around building a center of excellence around core capabilities like data, like process and software engineers that can build common things for our businesses and are then provided services.” She has CIOs within each business unit, and they have responsibility to develop technology priorities and enablement to optimize those business units. “They have responsibilities to drive innovation,” Avila said. “They have responsibilities to drive and embed enablement through newer technologies and data, and they have a responsibility to lean into the central organization to procure those services.”
Given the complexity of the operation she manages and the success she has had as a CIO, it is not a surprise that board opportunities have presented themselves. For the past year, she has been on the board of Comerica Bank. She credits her former boss, Johnson Controls’ Chairman and CEO George Oliver, who framed board membership as an opportunity to experience another culture and another management team, both of which provide insights into how best to manage one’s own team and culture. (Avila was the Chief Information Officer of Johnson Controls prior to her current post at McKesson.) She indicated that a key step in getting an opportunity to serve as a director of a publicly traded company was serving on a non-profit board. She has been on the board of Children’s Wisconsin since September of 2018, and that provided her with operating board experience that proved invaluable.
For others who might wish to follow in her footsteps, she advises that they follow their passion. “Yes, there is compensation [in being a board member], but the amount of investment and [time] commitment and risk you take on to be on a board outweighs anything like that, so find something you like to do – your passion – and get experience from non-profit boards.”
Avila continues to influence her own company and those whose boards she serves on, and each experience strengthens the others along the way. Given her vast responsibilities, she and her team are likely to continue to be drivers of product and service innovation at scale.
Peter High is President of Metis Strategy, a business and IT advisory firm. He has written three bestselling books, including his latest Getting to Nimble. He also moderates the Technovation podcast series and speaks at conferences around the world. Follow him on Twitter @PeterAHigh.