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A. Coming to Terms with What You Can Be |
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We predict that one-third to one-half of the top international pharmaceutical companies will not be in the drug discovery and development business as a primary strategy within five years. We also fear that many competitors will not face this reality until their stock price takes a poundingor worse. So what will a firm have to do right if it wants to avoid the slow, painful upheaval of a GM or an IBM? |
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We believe there are three key activities and decisions that need to occur almost simultaneously in order to reinvent any business: |
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1. Make a conscious, and realistic, decision about what value we choose to bring to our customers and come to terms with what we can be. |
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As described in the recent Harvard Business Review article on the value disciplines, successful players across all industries stake out leading positions in one or, rarely, two of three basic value propositions: |
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Product Leadershipfocused, disciplined programs that give us differentiating ability to understand unmet or emerging customer needs; skills, organization, and culture that let us outperform competitors in developing new products to meet those needs, and continuing investments aimed at maintaining leading-edge performance. |
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Operational Excellenceruthless cost-cutting and quality-raising programs, enabling competition based on lowest price, hassle-free service, and guaranteed performance. |
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Customer Intimacybundling and customizing products and services to match intimately understood total customer needs. |
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Winning organizations must be brutally realistic about where they have the best chance to compete. This means defining and being able to at least match best-in-the-industry performance for those things that are critical competitive factors in a given value arena. It also means hard truths about how we perform today. For example, drug firms that choose to continue to compete on product leadership will probably have to move new compounds from GLP animal studies to regulatory approval in five years or less to compete with firms like Glaxo and Merck that have demonstrated they can do so. The industry average cycle time is six years or more. |
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An emerging adaptation of the value-disciplines model is the focused spin-off or reverse-synergy approach. A firm physically and organizationally separates into two or more stand-alone businesses. Each piece pursues a different value discipline and does so with unique, focused operating models. This allows firms that currently fall into the black hole of mediocrity because they are trying to integrate conflicting customer needs to salvage |
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