On laws and rules of thumb
pharmafile | October 16, 2003 | Feature | Sales and Marketing |Â Â digi pharmaÂ
This column takes a healthily sceptical (you might say cynical) view of technological innovations, and tends to the view that this process is much more art than science.
So you would be forgiven for expecting a downbeat opinion on attempts to bring in the notion of laws that apply to technology, at least in the strict sense of the word as used in physics. Often, laws are just handy rules of thumb, but when a 'definition creep' occurs, they get upgraded to the status of laws, when people think they are fixed and infallible and behave accordingly.
Two key rules of thumb seem to have governed the expectations of managers who rushed wildly into the dotcom era, spent a lot – much of it unwisely – and now don't use the web at all.
The first is Moore's Law, which is usually (and inaccurately) paraphrased as 'computers get twice as powerful every 18 months-two years'. The idea behind Moore's Law has been extrapolated, often unwisely, to unrelated areas such as economics and, most dangerously to venture capital during the dotcom boom.
This unreasoned application of a law became a principal reason for the dotcom collapse. Most of the now-failed dotcom businesses based their business plans (such as they were) on Moores Law and assumed – without much evidence – that in two years time (ie, now) the world would have changed beyond recognition, and that their products would have become world-beaters.
One important argument against Moore's Law and the network effect is that people, companies, industries and economies simply can't keep up with this pace of technological development.
Conditioned into believing Moore's Law would work outside of the computer world, so that the world changed radically every couple of years, the people hawking the new technologies expected a much more rapid uptake by consumers than actually happened.
The customers also fell for the hype. 'We have to have an Internet strategy, even if we don't know what it is for', was the prevailing attitude at the turn of the millennium. Where managers rationalised this desire, they often used Moore's Law as a guide. E-commerce departments were set up without clear mandates, expectations were high but undefined, and most companies set off on the sure and certain path to disappointment. And so it proved. Departments were disbanded, budgets were slashed, Internet enthusiasts left, and web became a dirty word.
The second rule of thumb is the so-called 'network effect', according to which the value of a service to a potential customer depends on the number of customers already using it.
Until the number of users hits critical mass, only early adopters (ie, geeks) will subscribe. This happened with the Internet, which was restricted to techies until some clever users drove the price down and made the web available to a mass market. It also happened with mobile phones, twice, as a matter of fact. First when prices came down to levels non-business users could afford, and then again when pay-as-you-go was introduced.
So, generally speaking, the problem with the pharma industry's Internet investment was not that it was wrong, but that it didn't take proper account of the network effect. It was, in many respects, too early. Critical mass hadn't been achieved yet.
It also didn't take account of the fact that some networks work better than others. The chief executive of one major pharma company in the late 1990s was unimpressed by the Internet until he started receiving e-mails from cancer patients asking to join clinical trials, and clearly knowing as much about the drug and its progress as he did.
At the risk of creating another spurious law, here is the Technophobe rule of thumb: "The sophistication of a web-based network will vary in proportion to the speed of scientific advance and new therapies in that area, and to the severity of the disease."
So, cancer stands at one extreme, and what might be termed the 'grin and bear it' conditions such as arthritis are at the other extreme. But the latter category offers almost as much opportunity for clever use of the web as the former.
Grin and bear it conditions tend not to have advanced networks, but those networks can be created. Companies marketing radical new therapies have opportunities to work with patient groups to demonstrate that the new therapy provides more effective quality of life outcomes than the conventional protocol. In other words, a nascent network can be kick-started by pharma involvement, subject to the usual caveats about who can see what information, and the patient groups need to maintain impartiality between the different types of treatment.
So what has all this to do with the price of fish? Quite simply that, contrary to some views, the Internet revolution in healthcare is not over, but that it has hardly begun. All companies have scarce resources, but the degree of sophistication of a web-based network gives a pretty clear indication of where those resources should be concentrated. And also, of course, that some laws aren't much more than clever rules of thumb.
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