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Darwin's Medicine blog

Professor Brian D Smith is an authority on the pharmaceutical industry and works at SDA Bocconi University and Hertfordshire Business School.

Awesome abstraction

Business development deals and commercial operating models show the power of Generalised Darwinism

Meeting room

It’s interesting to me how very unscientific the life sciences industry can be. I was reminded of this twice this week during separate conversations with senior industry executives.

That’s not to say that these people aren’t experts in their fields. Far from it. But I do observe that for some executives, once they get outside their areas of expertise, their ability to transfer their scientific training is sometimes weaker than one might expect.

Let me tell you about those two conversations en route to my very practical point about how abstraction defines great executives.

Species of business development

The first conversation was with a business development leader of a large company, tasked with in-licensing novel innovations. We began talking about the interesting findings that are coming out of the work one of my PhD students, Zaki Sellam, is doing in this area.

Then we moved on to my research into how evolutionary science – Generalised Darwinism, in the argot of management scientists – has incredibly wide utility in explaining business phenomena. I suspect that, in my enthusiasm, I’d gone a little beyond this man’s attention
span.

To keep it general, I had been explaining industry evolution in abstract, conceptual terms. “Give me an example I can use!” he asked, or perhaps demanded. I paused for a moment.I know from experience that examples, even very good ones, are counterproductive unless they are very close to the recipient’s personal experience.

So, I pointed to some work I’d seen referenced in Zaki’s literature review, by Crama, De Reyck and Taneri, which concerned Licensing Contracts. It’s an elegant piece of work that shows how the variability of market potential and the innovativeness of the R&D process combine to shape the deal environment.

I’m oversimplifying, but they found that a different deal structure works best in different conditions, allowing the innovator to extract maximum value from the deal.

In short, they uncovered ‘speciation’ in business development behaviour. The beauty and relevance of the finding were enough to convince even my impatient interlocutor that a Generalised Darwinism perspective might seem abstract but was useful in practice.

Varieties of the commercial model

The second conversation, one of many I’ve had on the same topic, was with a commercial leader. She wanted to know how to adapt the commercial operating model of her firm to the changing conditions of the market, especially the changing roles of payers and prescribers.

As with the business development leader, I began by explaining commercial models as adaptive traits, in the Darwinian sense, just like a giraffe’s long neck. Again, I must have worn her patience too thin because, although she was more polite, her exasperation was thinly veiled.

“What is the best practice commercial operating model?” she asked, stressing the definite article. I changed tack and led the discussion to describe what we saw emerging in the real world. As she knew very well, different commercial models are emerging. Some we might call finance-led, in which the goal is to mitigate the risks of high-cost treatments.

Others we might call sales-led, in which the goal is to trade volume against price in an essential commodity type model. A third we might call science-led, in which the goal is to achieve striking clinical outcomes through knowledge transfer.

What these and other emergent commercial models have in common is that they are all aiming for the same goal – risk-adjusted health economic value – but in very different market conditions.

So, there is no single model. Instead, a little like the business development example, we are beginning to see a speciation in commercial models according to the conditions of the market. Again, the relevance of the example helped me to communicate the idea that Generalised Darwinism is a very practical tool.

Far-reaching importance

So back to my point. In both these cases and many others, I was speaking to very clever people with strong scientific training. As philosophers of science have noted, successful science requires abstraction from the specific to the general.

And yet here were two bright, scientifically trained minds for whom the abstraction of Generalised Darwinism had little value until it was translated into specific examples with which they were very familiar.

Reassuringly, I’ve also had many contrasting experiences with industry executives who look at my work, applying Generalised Darwinism to the life sciences industry, and can make use of it quickly and practically. Some even compare it to the physicists’ Holy Grail and describe it as a ‘Grand Unifying Theory’ of how industries and firms change.

And that difference – between the specific example-seekers and the abstraction-appliers, is becoming one of the ways I differentiate between the good and the great executive thinkers. To quote the cognitive scientist Douglas Hofstadter: “This idea that there is generality in the specific is of far-reaching importance.”

Professor Brian D Smith works at SDA Bocconi and the University of Hertfordshire. He is a world-recognised authority on the evolution of the life sciences industry and welcomes questions at brian.smith@pragmedic.com

23rd March 2020

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