Critical thinking

Assessing the Darwinian model of mutation in pharmaceutical companies
Critical thinking

My research into the evolution of the life sciences industry involves hunting for mutations. I look for ways in which some firms differ from the industry standard in ways that improve their fit with our value driven, scientifically-transforming market.

For the most part, this involves strategic, pan-organisation mutations such as the ability to create health-economic value or to absorb externally-sourced innovation. These large changes are analogous to evolutionary anthropologists observing larger brain-cases or upright walking in early hominids. But occasionally I come across smaller, less obvious mutations that seem to be very important to a firm's evolutionary fitness. Such changes are analogous to discovering the FOXP2 gene, which enables the power of speech.  An important example of this is my observation about how small groups of senior managers think collectively.

While most groups think quickly, decisively and in a quite routinised manner, I increasingly see that a minority of such groups seem to think more carefully, reflectively and in a way that varies more from case to case. Importantly, this mutation seems to lead to decisions that are more original and value-creating. An example of this is a firm who recognised that as much value lay in its usage data as in its direct clinical benefits. This small but very valuable mutation raises important questions: what do these firms differently? What “genes” are responsible for this difference? How can other firms capture this mutation? My work is beginning to answer those questions.

What firms are doing differently is readily uncovered by careful observation. The “mutant” groups question how the problem is framed, how things are defined and how things are connected to each other. This challenging is what leads to better solutions. For example, one group, trying to accelerate new product uptake, questioned if it was an adoption issue, redefined KOL influencing as a learning problem and redrew how the patient experience was mapped.

Its thinking and its result was very different from the industry standard KOL management approach. To an academic, this is very clearly the evolution of critical thinking capability. It is characterised by metacognition, the active control of the normally intuitive thinking process. It is a more deliberate form of thinking that involves challenging and often overriding the normal assumptions that allow us to think quickly. But recognising this mutation as critical thinking ability is only a first step in understanding the evolutionary process. To help other executive groups develop this trait, we need to know what the gene mutation is that is being expressed in these mutant executive groups.

Market access becomes health economic value creation

To understand the evolution of critical thinking in life science companies, we must remind ourselves of some basic tenets of organisational evolution. Firms, like animals, evolve via the Darwinian process of variation, selection and amplification of information-carrying replicators. In animals, the replicators are genes. In firms, they are organisational routines (ORs). ORs are stable, repetitive patterns of action by a group within a firm. And just as genes are made up of base-pairs, ORs are made up of the habits of individuals.

This Darwinian perspective, which is fundamental to my research, led me to look for the mutations in ORs that lead to critical thinking and the changes in habits that underpin those mutations. It's early days, but my work suggests that there are identifiable differences in both the ORs and the habits of those executive groups that have evolved critical thinking abilities, compared to more industry-standard groups.

The first OR mutation seems to enable executive groups to reframe how the issue is framed. In most firms, the issue-framing OR involves putting the issue into the closest pre-existing problem box. For instance, gaining market access is often framed as an approval issue because it involves compiling data for submission to an external body.

It therefore shares a box with regulatory issues. By contrast, the critical thinking OR involves framing the problem as if there were no close parallels and so relying on its inherent properties. Gaining market access then becomes a health economic value creation issue and shares its box not with regulatory issues but with customer experience and segmentation. The origins of this mutated OR – in academic jargon, its “microfoundations” – include habits of taking a customer perspective, considering ultimate rather than proximate commercial objectives and setting aside functional perspectives in favour of overall business needs.

Second mutation 
The second OR mutation enables firms to improve how issues are communicated. In most firms, the issue-communication OR involves using a well-accepted argot of terms and acronyms in order to speed up communication. These are often packaged into templates. For instance, the issue of what the product should do is almost always communicated through a well-accepted  set of terms that are embedded into the target product profile (TPP). This OR is rarely questioned because it is seen as very valuable, reducing a technically complex issue into something that can be communicated easily. By contrast, the critical thinking OR for issue communication involves testing the meaning of key expressions and challenging the structure of templates like TPPs. Defining what the product should do then becomes a much more ab initio process that is far less influenced by the design of previous TPPs.

And the terms embedded in the TPP are also challenged. Target segments such as disease categories are challenged for their homogeneity and distinctiveness. Seemingly self-evident terms, like value and superiority, are challenged for their exact meaning. Valuable to whom and by what measure? Superior to what and against what criteria? This process – testing construct validity in academic language – is more laborious than that carried out in most firms and can appear pedantic.

But it has the effect of flushing out any ambiguity and weak thinking that otherwise reduces process effectiveness. In our TPP example, I observed that it led to a much stronger definition of not only the product profile but also the design of the overall value proposition. Examining the microfoundations of this routine reveals some interesting difference in habits. They include alertness for important but ill-defined terms and a default position to doubt any  processes copied from other contexts. Most importantly, however, seems to be a habit of tolerating the pedantry of questioning terms that seem self-evident.

Firms must remove barriers to the evolution of critical thinking capabilities

The third observed OR mutation is that which enables firms to understand how different factors in any situation are interconnected. In most firms, the situation-understanding OR involves using a set of unchallenged, intuitive assumptions about causal and influencing relationships. So, for example, clinical data may be assumed to cause product acceptance and brand salience to cause prescriptions.  Interestingly, in the cases where my work has looked for these hidden assumptions, a dense web of often contradictory and rarely substantiated assumptions was revealed. These hidden assumptions serve a valuable process, greatly reducing the time it takes to get to an agreed understanding of the business situation. In cases where everyone in the executive group shares the same assumptions, the group appears to work more smoothly with less politics and discord.

By contrast, the critical thinking OR for situation understanding involves making the most important assumptions explicit and then testing and improving them. So, in our example, the causes of product acceptance might be opened out to multiple factors, each of which could be evaluated by quantitative factor analysis. And the relationship between brand-salience and prescription might be tested by using different physicians as natural experiments.

Both the flushing out of hidden assumptions and the testing of the most important of them leads to a much better understanding of the situation, although the process of getting to that understanding has a cost in time and, initially, intra-group conflict. The microfoundations of this situation-understanding OR depend heavily on the first two ORs of issue-framing and issue-communication - without those two ORs, the situation-understanding OR is effectively hobbled.  But building on those two ORs, the individual habits that enable situation-understanding include the mapping of causal linkages, a habit of hypothesising if-then statements and the use of quantitative data to test those hypotheses.

Evolutionary adaptation
Critical thinking is therefore a capability that is emerging in some management groups and one that confers a competitive advantage over firms with fast, decisive routinised thinking. It is an evolutionary adaptation to a more complex market environment. And, as an evolutionary adaptation, it can be explained in terms of the mutation of three connected ORs - for issue-framing, issue-communication and situation-understanding. These mutations can, in turn, be explained in terms of changes in individual managers' habits.

So how might your own executive group acquire these critical thinking genes? This question is at the leading edge of my research and my early findings suggest that firms might accelerate their evolution in three ways: by encouraging diversity of educational background in their executive groups, by heaping praise on early signs of critical thinking and by facilitating the copying of these ORs through peer-to-peer communication. Equally, firms must also remove barriers to the evolution of critical thinking capabilities by discouraging the habits that hinder it. These negative habits include unnecessary impatience for decisions, assigning too much value to hard but simplistic data and intolerance for the reflective discussion that is necessary for metacognitive processes.

Few industry executives would deny that the life sciences market is becoming more technologically and commercially complex. Yet the ways executives typically think remain those that evolved to fit simpler times. What I'm seeing in the most advanced groups I study is the emergence of a new capability, critical thinking, that is adapted to our transforming market. The ORs and habits that enable critical thinking are becoming clear and that allows senior executives to genetically engineer this capability into their teams. As an industry, we are very sensitive to obvious organisational capabilities, for example in market access or digital strategy, but we should be equally aware that less-visible things can transform a company. The big processes in our value chain are important but its thinking better that is essential to our industry's evolution.

Professor Brian D Smith is a world-recognised authority on the evolution of the life sciences sector. He welcomes comments at brian.smith@pragmedic.com

3rd August 2015

From: Research, Sales

Professor Brian D Smith is a world-recognised authority on the evolution of the life sciences sector. He welcomes comments at brian.smith@pragmedic.com

3rd August 2015

From: Research, Sales

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