Lessons from the business gurus

pharmafile | May 7, 2013 | Feature | Manufacturing and Production, Medical Communications, Research and Development, Sales and Marketing |  MSI, buffet, business gurus 

Pharmafocus asked members of the team at specialist pharma strategic marketing consultancy The MSI Consultancy to suggest some lessons that pharma could learn from the wise words of the gurus.

“It is more important to do what is strategically right than immediately profitable.”

Philip Kotler

Jon Bircher – managing director

If we focus on creating and exchanging value with our customers, we have to have the boldness to do the right thing – and making money quickly can sometimes go against that.

In pharma, this may mean taking longer to develop a brand which better meets the needs of patients, going beyond traditional offerings and interventions. Likewise, assembling and developing the right people to take an organisation forward can take time and investment, the return on which may not be seen short-term.

It is human nature to want instant gratification – which in business often means a focus on short-term profitability. Both in the industry and in consultancy, I have been in situations where short-term profit is the forefront consideration; and invariably this focus puts people under pressure to do things they don’t necessarily believe in. This does the individuals no good, and it follows that the organisation will suffer in the long run.

Clearly there is nothing wrong with making profit; indeed, it is a necessity if our industry is to be able to carry on developing new innovations to benefit everybody. But building value for the long-term – for our customers, and for the health of our organisations and the people within them – means that our strategy has to be aligned to our longer-term objectives.  And that sometimes, painfully, means being bold, staying true to your vision and resisting the temptation to focus on short-term gain.

“Without passion, you don’t have energy. Without energy, you have nothing.”

Warren Buffet

Cassandra Rix – head of Market Access

We are in an environment where new product launches are often driven by a global organisational agenda. In the desire to ‘as quickly as possible’ and recoup the investment made in bringing an asset to market, do we get caught up a situation where local launch teams take the attitude “we’ve got this product so we’re going to launch it?”

But if as a marketer you are required to launch a product which you are not certain meets the unmet needs in the market, and which is unlikely to gain local traction because it doesn’t hit the ‘sweet spot’, are you simply going through the motions, and will you have a weak-willed approach to the launch?

“Because we’ve got MA for it” simply is not a good enough reason for launch any more. In a cost-constrained environment, where we have exhausted ‘great innovation’ in many therapy areas, new products more often have smaller incremental benefits than previously.

Motivating a pressurised and restricted customer to pay extra ‘premium’ for that smaller extra benefit is essential – and you can’t do this if you don’t passionately believe in the product yourself.

You cannot manufacture passion, so if it is not there for a launch, then perhaps don’t do it. You have to find the belief which fires passion within you. Maybe that is making more effort to find the right patient group where the benefits will be greater and more demonstrable for the customer, where you can therefore genuinely enthuse about the product.

If you know you are doing the ‘right’ thing, that inner will to make it happen will be there.  If not, as Buffet says, you will lack energy and end up with nothing.

“Best efforts will not substitute for knowledge.”

W. Edwards Deming

Bernard Murray – senior consultant

Deming is probably best known for the ‘Plan-Do-Check-Act’ quality cycle, which was attributed to him. He applied his approach in post-war Japan as they strived to re-build their business and was seen as a major contributor to their reputation as an innovative export powerhouse.

His 1982 book ‘Out of Crisis’ describes how knowledge and trust throughout an organisation is worth more than effort alone. His basic premise is that managers ought to be measured not only on short-term profit, but on their innovation in plans for improved products and services designed to protect and grow future business.

Pharma can benefit from his focus on collective vision, inclusive communication and leadership to ensure that everyone in an organisation is engaged in order to achieve sustainable success.

If the healthcare sector is to thrive in providing innovative, improved products as well as services, what we can learn from Deming is that by creating an atmosphere in which we allow ourselves to look into the future together, without fear of short-team conflicts but with a vision of trust and interdependency, we will allow thought and innovation to flourish.

“There are still too many chief executives who identify marketing with selling and advertising. But marketing evolved to be not only product centred, but customer centred.”

Philip Kotler

JB: I would argue that marketing hasn’t evolved to be customer centred – it has always been about creating and exchanging value with the customer. I think Kotler is emphasising how many chief executives (and other managers) define marketing as a function, rather than embracing it organisationally where marketing becomes the driving philosophy of the organisation and its people.

In pharma this is critical as we aim to understand the consumers of our brands: the patients themselves and the healthcare professionals treating them. Working in cross-functional brand teams requires a collective mindset which seeks to understand our customers’ needs, beliefs and fears in order to best create and exchange value, meaning marketing transcends function. We all have to do that!

The phrase ‘patient-centricity’ is often overused, but in my experience organisations which put the philosophy of marketing at their heart are naturally much more patient-centric.

Marketing defined in this way permeates every corner of an organisation where understanding customers’ unmet needs drives early-stage drug development, in the laboratory through to clinical trial design, and where creating and exchanging value puts the patient:doctor engagement at the centre of all commercial decisions – involving and engaging them in the development of offerings, services, messages, advertising and even the pricing of our brands.

Incidentally, this quote from Kotler goes further into the fundamentals of excellent marketing by challenging us to go a step further by defining target segments to focus on, choosing to walk away from others in order to become truly customer-centric rather than product-centric. With this proper definition of marketing, how brave and customer-centric do we feel?

“You don’t learn to walk by following rules. You learn by doing, and by falling over.”

Richard Branson

Jonathan Dancer – managing partner

There is so much truth in this – you learn far more from a mistake than from a success, because it forces you to reflect on what went wrong.

Unfortunately, in pharma, mistakes can be very costly indeed: not just the obvious ‘life and death’ consequences of getting it wrong, but also commercially.  More than in any other sector, you only get one chance to get the product launch right, and if you get it wrong, the brand may never recover. So apart from learning from other people’s mistakes, how can we translate Branson’s truism into our industry?

The obvious answer is through making those mistakes in a safe environment where they don’t have the same disastrous consequences. Just as airline pilots make their mistakes – and hopefully learn from them – in simulators, so should we. Business simulations and competitor rooms offer the pharma marketer the opportunity to experiment, get it wrong, learn why it went wrong, and develop a way of getting it right.

“Even a correct decision is wrong when it was taken too late.”

Lee Iacocca, chief executive of Chrysler

BM: As well as his huge achievements in the automotive industry, octogenarian Iacocca is also known, amongst many other achievements, for his contribution to diabetes research. Many of his famous quotes focus on the need to be proactive, making and acting on decisions.

The current focus on avoiding risk and being theoretically more certain on assumptions the initiative can be lost, and organisations stifled by a lack of direction. Iacocca penned his nine ‘C’s to define leadership and drive activity. This quote seems to require all nine in different measures: curiosity, creativity, communication, character, courage, conviction, charisma, competency and common sense.

Organisations need the curiosity to look for solutions, but also the courage to take and stand by a decision. Pharma can learn from Iacocca by examining processes for making decisions, ensuring that qualitative strategic analysis is coupled with quantitative outcomes scenarios which lead to clear recommendations – and these should be acted upon with clear communication throughout the organisation.

The message is perhaps simple but vital: it is better to make a decision with some quantified risk than to be consigned to the fog of indecision.

“The thing that keeps a firm ahead of the competition is excellence in execution.”

Tom Peters

Peter Smith – senior consultant

In the pharmaceutical industry, increasing customer complexity, together with new promotional channels, has led to a growing array of tactical options. However, with so many possibilities there is a risk of spreading the mix too thinly.

Excellent execution starts with discerning choices being made about a manageable number of investment areas. Indeed, with often reducing resources, eggs need to be put in even fewer, well-chosen baskets.

Precise implementation of these selected programmes is then all the more important to compete effectively and drive brand growth. These tactical choices need to be grounded in quality plans based on clear brand objectives and sound customer insight-led strategy.                              

Plans can understandably attract significant management time, in large part because they crystallise financial commitments; however without taking the time for quality execution, plans can represent little more than interesting theory. Plans fail because of poor execution as much as poor strategy. Companies therefore need to ensure the correct level of focus on both planning and execution with that balance ideally being exemplified up and down the organisation.

“Good companies will meet needs; great companies will create markets.”

Philip Kotler

Jonathan Dancer

Traditional thinking defines marketing as being about meeting customers’ needs, and that is unarguably right. But great marketers go beyond those needs, creating and exchanging value with customers – and this is certainly relevant to the pharma industry. Steve Jobs once said that you shouldn’t consult customers, because they don’t know what they need.

No one even knew they needed an iPad before it existed, but a whole market has been created around it, because it creates value for the customer. Need alone is not always sufficient to crystallise an offer around.

In pharma, of course, the development cycle is so long, that it is not always possible to identify what the need will be six or seven years out – but you can know what value will look like to your customer.

Kotler talks about ‘creating markets’, but perhaps a better way of putting it for the pharma marketer is creating a ‘value exchange’ with our customers. It is not about market shaping or creating something false; it is about creating and exchanging real value in and for that market, and that goes way beyond simply need satisfaction.

“Unless commitment is made, there are only promises and hopes… but no plans.”

Peter Drucker

Cassandra Rix: Back when I was a rep for a leading pharma company, we talked endlessly about customer centricity, and aligning to the customer’s agenda. There was lots of talk, but it didn’t often translate into action, except for realigning territories to match NHS organisational boundaries. Seldom did anyone say: “As a result of this key insight, we need to commit to this particular course of action.”

What about realigning our thinking and our activity to match NHS organisational and individual needs and drivers? As an industry, we often say we develop products that will meet unmet needs, but how often do we develop a product and then try to find the unmet need it satisfies, trying to shoehorn the product into that particular disease or niche?

This isn’t simply an industry issue, many healthcare systems say they will invest in medicines, but actually the only commitment they make is to cutting costs and finding efficiencies. A guideline or product recommendation with no implementation structure is simply a hope and a recommendation, with no commitments and no plans – just a big stick to use when the system has failed, when we can’t afford to pay for a treatment that is recommended, which is too late for the patient.

Ah yes, the patient. Was there ever a group which heard so many promises but saw so little commitment? Both the industry and healthcare systems need to commit to genuinely putting the patient – and their unmet needs – at the centre of things. Perhaps we could ask them what they need before giving something to them and then trying to persuade them they need it? Then we will be able to turn those hopes and promises into effective plans.

“Today’s smart marketers don’t sell products; they sell benefit packages. They don’t sell purchase value only: they sell use value.”

Philip Kotler

David Watson – senior consultant

A hundred years ago, a chemist could sell a range of formulations to the very price – and value-savvy consumers of the day. They did so with a flair for being very clear on the impact of their preparations: “The liquid will provide an instantaneous cure.”

Whilst we are both fascinated and appalled by the brazen claims of that time, we certainly can’t criticise the Victorian pharmaceutical industry for not talking about the benefits and value of using their products. In the following decades, medicines promotion became increasingly led by clinical evidence, therefore often resulting in purely functional claims.

Fast forward to the present day, and marketers could take heed of their ancestors’ passion for shouting about value beyond simply functional characteristics.

In our new focus (and obsession) with generating messages around the payer, we must never lose sight of the fact that as a customer, their needs are not solely product-based, but are increasingly about the value of purchasing, the outcomes generated – and in fact, a small dose of Victorian passion for benefit to life can also be key.

Jon Bircher, managing director; Jonathan Dancer, managing partner; Cassandra Rix, head of Market Access; Bernard Murray, senior consultant; Peter Smith, senior consultant; and David Watson, senior consultant

See www.msi.co.uk for further details.