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Brand teams: why are some smarter than others?

It’s not for the reasons you think

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You’re not so clever. Although life sciences companies talk about having world-class commercial teams, the truth is rather more mundane. Compared to your rivals, you and your colleagues have similar backgrounds, use similar methods and work with more or less the same data bought from the same market research companies. In some cases, you might even be buying the same strategy from the same consultant as your competitor uses. In practice, a comparison of brand plans from different companies and across disease areas finds them to be surprisingly similar and depressingly undifferentiated. The consequences of this can be seen in launches that fail to meet expectations and pricing pressures that overwhelm brand preference. When one controls for the product differentiation created by R&D, not marketing, the added value created by many brand teams is often less than they cost.

And yet some brand teams, a rare and exceptional elite, come up with something special. They defeat powerful incumbents, like Cialis did with Viagra, or they overcome health-system conservatism, as Abbot is doing with its FreeStyle Libre device. That tells us that some new capability is emerging, but is as yet far from common, in our industry. The evolution of our industry is my research specialism and, in this article, I’ll describe one particular finding of my research. It is a discovery that illuminates how some brand teams have made an evolutionary leap in their intelligence, much like our hominid ancestors did when we diverged from other primates.


Box 1: What is an insight?
Insight is a particular subset of knowledge that comes in three ‘flavours’. It can be:
* Procedural: we know how something happens
* Causal: we know what causes something to happen
* Declarative: we know what something is.
Whatever flavour it is, an insight is only truly an insight if it meets four specific criteria. It must be:
* Valuable: it must enable the creation of value
* Rare: it must be unique to us
* Inimitable: it must be hard to copy or substitute
* Organisationally aligned: it must be usable by our organisation.
Other knowledge, which does not meet all four criteria, is merely ordinary knowledge. It may still be useful but it’s not insight.

The value of insight

Superior brand performance can rarely be attributed to a single factor. But it is also true that the most successful brand plans very often share one important attribute: they are built on market insight. To be clear, when I say ‘insight’, I’m using the term in a very specific way. I don’t mean some piece of useful but generally available information one can buy off the shelf, such as an advisory panel opinion or a voice of the customer report. When I use the term insight, I mean it in the technical sense of a piece of valuable knowledge that no one else has (see box 1).

If you take a moment to consider the ‘insights’ in your current brand plans and apply those four tests, you will probably uncover a discouraging fact: almost all of what life sciences companies call insight is in fact just ordinary knowledge that is useful but isn’t the basis for a differentiated competitive strategy. True insight (VRIO Insight to use the acronym) is amazingly rare and correspondingly valuable. This simple truth leads to an important question: What is it that some brand teams do, and most don’t, to create true insight? My research has uncovered that there are two complementary approaches to creating market insight but I’ll begin with a harsh reality about where insight does not come from.

To adapt Lennon and McCartney, money can’t buy you insight. Although there are innumerable agencies that will offer to provide it, what they sell almost never meets the four criteria of true insight. In particular, externally-sourced ‘insight’ is often available across the industry, meaning it can’t, by definition, be true insight. Like love, insight can’t be bought and, like most intangible sources of competitive advantage, such as brands or culture, if you want true insight, you have to make it yourself.

On the surface, the ways that exceptional brand teams create market insight are many and varied, but a closer look reveals that there are two basic methods that are not mutually incompatible and often work well together. If you’re a logician, you will recognise them as varieties of inductive and deductive reasoning.

Spirals of insight

The inductive approach to creating insight was described by Nonaka, a Japanese researcher. Fittingly for a collectivist culture, it involves extracting tacit knowledge from the heads of the team and crystallising it into something more tangible and usable. Nonaka’s learning spiral, as it is known, involves four stages:

1.  Socialisation, when tacit knowledge is shared, usually informally, between colleagues. For example, experienced customer-facing colleagues might share their experiences of how different prescribers respond differently to the same value proposition.

2.  Externalisation, when that shared knowledge is developed into models or concepts that can be understood by everyone. For example, the firm might develop a two-by-two matrix that captures the four different kinds of prescriber.

3.  Combination, when the new model or concept is integrated with complementary knowledge from other sources. For example, the firm might already use a three-disease stage model to categorise patients. Combined with the prescriber model, this creates a model that describes 12 different prescribing contexts.

4.  Internalisation, when the combined knowledge is built into a powerful insight. For example, that the optimal value proposition varies according to the particular prescriber/patient context.

In this way, brand teams use  mostly internal resources to craft  a piece of knowledge that they  can use to create value and which their competitors don’t have and can’t easily copy. In this case,  it is an insight that drives  targeting and the design of differentiated value propositions. This is the sort of insight upon which strong brand strategies  are often built.

Loops of insight

The deductive approach to  creating insight has its origins in the work of Agyris and Schon,  two American researchers, and is correspondingly scientific  in its method. Like a lab experiment, it involves testing hypotheses with data. Double-loop learning, as it is known, also has four stages:

1.  Explication, when implicit assumptions about how the market works are ‘surfaced’. For example, beneath the major investment in a congress programme might lie the hidden assumption that ‘a corporate presence at congresses influences its attendees towards prescribing a brand’.

2.  Hypothesising, when if/then statements are developed based on the now-explicit assumption. For example, if congress attendance influences brand choice, then we should have higher brand share among those who attended the congress than among those prescribers who did not attend.

3.  Testing, when the hypotheses developed from the explicated assumptions are tested against real-world data. For example, we might compare the brand preferences of a sample of congress attendees vs a control sample of non-attendees.

4.  Confirmation or revision, when the tested assumption is either confirmed or revised based on the results of the test. For example, we might revise our assumption to be ‘a corporate presence at congresses influences its attendees towards prescribing a brand when they are in a supportive payer environment’.

Using a learning loop, which is very different from the learning spiral approach, brand teams can also  craft a piece of knowledge that they can use to create value and which their competitors don’t have and  can’t easily copy. In this case,it is  an insight that drives the design  of marketing programmes to be  more efficient and effective.  Again, this is the sort of insight  upon which strong brand strategies are often built.


Box 2: Smart and ordinary brand teams
The differences between brand teams can be seen at three levels:
1. Capabilities to create insight vs those for supporting decisions
Most brand teams have the capability to generate data to support their existing decisions. Smart brand teams focus on creating VRIO insight that challenges current thinking.
2. Routines for scanning and synthesis vs those for narrow analysis
Most brand teams have sub-processes for buying a few narrow sets of data and analysing it to the nth degree. Smart brand teams have sub-processes for scanning widely across the whole business environment and synthesising those different sources.

3. Extensive vs narrow microfoundations
Most brand teams lack the knowledge and skills to perform inductive and deductive logic,  and knowledge-sharing is often hindered by structural and political barriers. Smart brand  teams develop these skills and manage the knowledge flow within and between brand teams.

Tools for the job

The spiral and loop approaches to creating market insight, illustrated in my simple examples, are very different. They stem from different philosophies of knowledge. They take as their inputs different kinds of information from different sources. Their outputs are often characterised by different formats, the quantitative and the qualitative. To compare them is, to use an English idiom, to compare apples and oranges. The implication of all these differences is that it would be wrong to say that one is better than the other. Instead, when choosing between the spiral and the loop, three things should be borne in mind.

The first is the availability of information. If you have lots of unused tacit knowledge in your organisation, you would be wise to consider using Nonaka’s learning spiral. Alternatively, if you are swimming in quantitative data, using Agyris and Schon’s loop might be easy for you.

The second is your company culture. If your firm’s habits encourage sharing of ‘soft’ information, such as customer behaviours, then you are in a good position to use a spiral approach. If, however, your firm is culturally wedded to the idea that only numbers matter, then anything but a loop approach would struggle to gain acceptance.

The third is that these two approaches do not conflict and are often synergistic. For example, an insight into contextual segmentation, as in my spiral example, might well combine usefully with an insight into the effectiveness of congresses, as in my loop example. Combining the two would focus congress activity on certain contextual market segments that are not amenable to other channels and divert some of the congress budget to, for example, payer relations. In reality, your market is like a rugged mountain. If you want to map it and climb it, you need to look at it from different perspectives.

The smart and the ordinary

The discovery that only exceptional brand teams create true insight, and that they don’t buy it but make it themselves using two complementary methods, is in itself a finding of great practical use. But my research also addresses one more important question in this area.

If we know how to create insight, why doesn’t everyone? The answer is that insight-creation is a complex capability, the aggregate of many sub-processes that are themselves underpinned by intricate micro-foundations. Space precludes a detailed description of this finding but, in short, there are three major differences between exceptional and ordinary brands teams. These are summarised in box 2.

In practice, all brand teams recruit from the same labour pool, adopt industry-standard processes and buy data from the usual sources. It would be surprising, in those circumstances, if the resultant brand plans were greatly differentiated. That some are is a sign that our industry is evolving new capabilities in insight creation. It’s unrealistic
to expect your people to be
smarter than your competitors, but it’s essential to evolve your routines and microfoundations faster than them.

This article is based on Professor Smith’s new book, Brand Therapy. If you would like a sample chapter, please contact brian.smith@pragmedic.com

8th August 2018

8th August 2018

From: Marketing

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