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Strategic planning: a state of flux

Challenging the state of the pharma industry

Planning

It seems that every few months we’re hit with a wave of ‘now more than ever’ articles that describe a pharmaceutical industry in flux. If it’s not the increasing influence of payers or the pressure on healthcare budgets, it’s the rise of multichannel that’s forcing pharma to ‘reimagine its operating model’ and strengthen its strategic planning. And just when we think we’ve got a handle on the currents of chaos, up pop Brexit and Trump to bring new levels of confusion and uncertainty. It fuels a familiar lament: “In this world of flux, now more than ever, we need to be responding to change.” Yada yada. Perhaps it’s time we shut the flux up. The idea that responsivity is a modern-day need is a red herring; strategic planning exists precisely because we live in an ever-evolving world. The job for marketers is to build plans that anticipate and prepare for change as best they can. It was ever thus.

The pharmaceutical industry lives in a permanent state of flux. This is partly attributed to the ‘built-in obsolescence’ of its brands, where the inevitability of patent expiry and brand erosion leaves drug companies forever seeking new sources of growth. Flux is in pharma’s DNA. Despite this, the industry is commonly accused of failing to adapt to change. Moreover, its reliance on tried-and-tested methodologies now yields underwhelming returns. In 2014 a McKinsey study showed that around two-thirds of all drug launches fail to meet their first-year sales expectations and typically go on to under-deliver for the following two years. The findings suggest inherent flaws in companies’ brand planning.

One of the biggest challenges has been the market shift from paying for drugs to paying for value. This movement, perhaps more than any other, is forcing companies to re-evaluate their strategic planning. Again. Four years ago, CapGemini suggested that pharma’s planning not only needed ‘courage and a tolerance for trial and error’, it also needed to focus more on the external environment and customer needs. The analysis lapsed on to familiar turf: ‘Now, more than ever,’ it said, ‘the industry finds itself in an environment of great uncertainty, patent cliffs, less favourable public opinion, legal and regulatory scrutiny and global economic pressures.’ That was 2013. Those same market characteristics remain today. Sadly, the industry’s response has remained largely similar too.

Formula one

So what’s the winning formula? Perhaps the very idea that there’s a formula is part of the problem. Much of industry’s approach to strategic planning is templated. But do marketers hide behind the template? Possibly. “There’s a big difference between having a template and having a proper plan,” says Ed Corbett, commercial practice lead at Novasecta. “We see many marketers going through the familiar drill of filling in brand templates and presenting the results at the ‘annual review’- but in some cases it’s simply viewed as something that has to be done to secure budgetary commitment for the next twelve months. Templates exist for good reasons; they force critical thinking and enable those responsible for implementing strategy to establish and align insights with brand objectives. However, it’s not uncommon to see marketers dust off last year’s plan, update the numbers and resubmit it. Having a template is one thing, but unless it’s used to answer all the strategic questions that are crucial to a brand, it’s a missed opportunity.”

Duncan Ferguson, managing director, Lucid Strategic Consultancy, agrees, suggesting that some marketers suffer from ‘templatitis’ - a tendency to fill in forms without properly considering customers’ needs. “You can embrace a template and still capture what you need,” he says. “There’s no excuse for not doing the proper analysis and getting deep customer insights. A good template should provide the perfect platform for that.  What’s more, those insights will be pivotal in determining your value proposition, your strategy and the strategic imperatives required to deliver it. In an increasingly value-based environment, value is not simply about the benefits a product provides, it’s about the outcomes it delivers to customers: HCPs, payers and patients. If your plan doesn’t start with a full understanding of the customer experience and the behaviours you’re trying to influence, it will fall short. Unfortunately, in some cases, companies try to reverse-engineer their strategy; they use their own end goal as a startpoint and then write a plan to try and justify it. It doesn’t work.”

Begin with the customer in mind

Consensus suggests there are four components of an effective brand plan: insight, strategy (encompassing the value proposition), execution and optimisation. The first two are inexorably linked. In the shift from price to value, a value proposition can only be determined by a holistic understanding of your customers’ environment. “Customer-centricity is the defining principle of strategic planning,” says Fred Bassett, head of strategy, Blue Latitude Health. “It’s about understanding the value your medicine brings to different stakeholders and then finding compelling ways to articulate it. There are three defined steps. First, distil - as succinctly as possible - the needs of your customers and the value your product provides. Next,  strategically articulate, in simple terms, how you’re going to win. Then, figure out the critical steps to achieve that win. We break this down into three stages; diagnosis, guiding principles and critical action points. The diagnosis is a clear expression of the challenges your brand faces. The guiding principle is a simple statement of how you’re going to win. And the critical action points are the actions that are derived from that.”

Clearly, ‘insight’ is the order of the day. However, in an industry where many pay lip-service to the concept of customer experience, ‘insight’ has become a word that’s also used cheaply. “There’s a big difference between research and insight,” says Tim Brierley, creative strategy at GHG. “The nuance often has a major impact on companies’ willingness to be brave in their brand planning. Every marketer wants to be more creative, but sometimes research is set up to identify all the things we want, and when we tick all those boxes we end up with something that’s sanitised. Research-based recommendations often go with the lowest common denominator - but the lowest common denominator is the enemy of good creativity. Many make the mistake of thinking that research is insight; it’s not. Insight comes from analysing, challenging and reflecting what was found in research. It’s about looking beyond research observations and identifying a point of differentiation. Observations are not insights, but the reflective appraisal of them can be an incubator for creativity that drives strategic planning.”

Experimentation

Talk of creativity takes us into the buzzword territory of digital and multichannel. Once again these are areas where customer insights should act as a guiding hand. The industry is full of cautionary tales where companies have rushed to ‘do digital’ without properly connecting it to a meaningful objective or customer behaviour. Similarly there are countless examples of brand teams that take decisions to ‘do multichannel’ without first deciding why. Fortunately, multichannel maturity is taking shape.

“We’re moving into a period of structured experimentation,” says Fred Bassett. “In the early years of digital, companies let ‘a thousand flowers bloom’ and conducted uncoordinated tests to establish customers’ use of digital channels. Today, marketers are increasingly using insights to pinpoint customer needs and experimenting with technologies to find new ways to over-deliver against them. The companies that can structure that experimentation in a targeted and customer-centred way will move ahead. The most proactive are incorporating behaviour change planning into their strategies - recognising that customers’ challenges are not one-dimensional but are based on complex sets of parameters. If we can address them all, we’ll change behaviours.”

Compelling engagement

The intersection between insight and creativity - to create compelling programmes that change behaviours - moves the narrative into the critical arena of implementation. “Enabling and maintaining engagement is a crucial part of the strategic planning cycle - not just externally but internally too,” says Duncan Ferguson. “People like to do the clever bit of creating the strategy - but if that strategy is not well connected to the cross-functional team, or properly communicated to different regions, divisions or partners, it will fail. This is commonly overlooked. Consequently, companies end up spending disproportionate amounts of time trying to compensate and realign teams rather than getting everyone fully aligned from the start. Such over-compensation stifles momentum. It’s far easier to remove those barriers at the outset with good communication.”

Internal engagement must extend to strategic partners and be a continuum throughout the planning process. “There are opportunities for creativity every step of the way,” says Tim Brierley. “The most effective clients know how best to use their agency, allowing them a degree of freedom to explore ideas, concepts and directions that may otherwise have been suppressed. An agency’s role is to bring new perspectives and challenge thinking - to make clients feel ‘happily uncomfortable’ with bold ideas, safe in the knowledge that they’re the ultimate decision-makers. The best partnerships have a mutual trust that gives agencies permission to explore ideas that may not be fruitful, providing they’re anchored to insights and objectives. Some companies are afraid to go down that ‘what if’ road. But the best work often emerges from it.”

Leading from the front

Strategic planning is a virtuous circle rather than a fixed roadmap. The pharma industry is, after all, in a constant state of flux. But while the process doesn’t have a defined endpoint, it should have a clear startpoint that ultimately drives everything. “Strategic planning should start with a solid understanding of the customer,” says Ed Corbett. “Unfortunately, our experience is that many plans are focused on tactical implementation, often around some new, ‘digital’ initiative. If plans lack customer insight that supports such choices, these tactics are likely to be a waste of time and money. Leaders have a duty to challenge their organisations and ask fundamental questions, such as ‘who are our key customers’ and ‘what do they believe’ to ensure that the strategic basics are covered. An obsessive focus on the fundamentals, not the latest fashion, is predictive of success.”

Constant flux?

Let’s end with a look back at CapGemini’s parting advice in 2013. The industry, it said, “is ripe for change as the writing has been on the wall for more than a decade. The question is, are corporate leaders willing to take one eye off the next quarterly numbers just long enough in order to prepare their organisations to strategically stake out their own path to survive and thrive for the many quarters ahead?”

Flux? Some things never change.

Article by
Chris Ross

is a freelance writer specialising in the pharmaceutical and healthcare industry

5th May 2017

From: Marketing

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