How to rethink the customer model of healthcare and innovate the pharma industry in the process. Jeff Wordham and Kathleen Onieal of Doblin/Monitor outline common obstacles to innovation--and ways to overcome them. (Presented at the ePharma conference in New York in February 2011.)
Innovation and the Evolution of the New Customer Model
1. and the Evolution of the New Customer Model Innovation ePharma Summit 2011Jeff Wordham & Kathleen Onieal
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7. US Healthcare Reform - $1.1Bn in Healthcare Reform legislation for CERSource: 1. Wall Street Journal – May 6th 2010, 2. IMS Launch excellence III databases. 3. fda.gov & NSF.org. 4. Epsilon Strategic & Analytic Consulting Group, as cited by MediaPost News’. 5. Morgan Stanley, “Internet Trends,” April 12, 2012
8. Introduction | Pharma has tried 3 different approaches to fix the model Approach 2 Increase revenue by developing new offers around the existing product-centric model Approach 1 Focus on cutting costs and reduce the use of ineffective channels Approach 3 Restructure the commercial organization to move decision-making closer to the customer Cost Cutting New Offerings Regionalization
9. Introduction | A few questions need answering to drive fundamental change What is a customer model? How should we think differently about innovating the Customer Model? Where are the success stories? How does this impact your organization? ? ? ?
10. Introduction | What is a customer model? Whois being engaged? AUDIENCE What value is being provided to them? OFFERING How does this value reach them? CHANNEL
11. Introduction | Traditional approaches to innovation face 3 key challenges Organized for the short-term Limited integration Narrow focus & mindset Companies need to do 3 things to drive more effective customer model innovation: 1 2 3 Think broadly about innovation Make integrated choices across the model Organize forinnovation
13. 1. Business model how the enterprise makes money 5. Product performancebasic features, performance and functionality 6. Product systemextended system that surrounds an offering 2. Networkingenterprise’s structure/value chain 7. Servicehow you service your customers Offering Process. Finance Delivery Business model Networking Product performance Product system Service Core process Enabling process Channel Brand Customer experience 8. Channelhow you connect your offerings to your customers 3. Enabling processassembled capabilities 9. Brandhow you express your offerings benefit to customers 4. Core processproprietary processes that add value 10. Customer experiencehow you create an overall experience for customers Think broadly | Ten Types of Innovation™ All logos are property of their respective companies
14. Think broadly| Where to play in the diverse landscape of innovation strategies Pharmaceuticals innovation landscape 2010
18. Make integrated choices|Two types of integration to consider… Providing an integrated customer experience Integrating across clusters of stakeholders STAKEHOLDER i
19. Make integrated choices|Developing an electric vehicle ecosystem charger infrastructure at station parking includes recharging clean energy Danmark “Nissan-NEC’s $1 billion battery manufacturing venture” Six types:
20. Make integrated choices|Pfizer & Keas partner to provide an integrated experience… Nurse Doctors USER ofMY HEARTWISE PLAN(with Lipitor) Health & Wellness Experts TAILOREDPLANS PLANS, EMR, GOALS REMINDERS, MONITORING Physical Therapist Family Four types:
22. Organize for innovation Working across the organization Encouraging experimentation and adaptation Building new skill sets Thinking outside your organization
25. Some common mistakes to avoid Focusing all of your efforts on products Think more broadly about the value you can create Believing Innovation is all about creativity Discipline is more important Generating a high volume of ideas Do fewer, bolder things…and do them well Believing financial analytics are paramount Build prototypes instead Thinking that the answer exists in your organization ‘Get outside’ and talk to customers and partners
There has been a lot of talk the last several years about how the industry is evolving and how companies must innovate as a result…What we’ve seen in the market, however, is that while there have been lots of incremental innovations, very few companies are tackling customer model innovation holistically or in a truly strategic wayAs a result, most of our customers still have disconnected, confusing and, ultimately, poor experiencesNote: Detail impact measured as impact of detailing spend between 2006/7 and 2007/8 on product launches. Source: IMS Launch excellence III databases
There has been a lot of talk the last several years about how the industry is evolving and how companies must innovate as a result…What we’ve seen in the market, however, is that while there have been lots of incremental innnovations, very few companies are tackling customer model innovation holistically or in a truly strategic wayAs a result, most of our customers still have disconnected, confusing and, ultimately, poor experiences
! Indicates where the industry already innovates. This may be an area where you must be at least active to participate in the industry: table stakes.? Indicates where the industry focuses little or no innovation activity. This may be caused by external regulation that limits the activity, or, more than likely, it’s more difficult to accomplish: opportunity area.
High level overviewLexus is the luxury vehicle division of Toyota Motor Company that was first introduced to the U.S. market in 1989. In order to compete against existing luxury brands in the marketplace, Toyota realized that Lexus needed a separate brand and sales channelAbout 40% of the first Lexus dealerships were not Toyota dealers since they did not have the best customer satisfaction survey scores in the area. The Lexus Covenant signed by every dealer stated that they “would treat each customer as they would a guest in their home”. Lexus dealers will pick up cars, service them, fill them up with gasoline, wash them and return them to customers.The first vehicle recall in December 1989 resulted in Lexus flying some technicians to customers who lived hundreds of miles from a dealership to do the work on the spot. Lexus has received numerous awards in the areas of customer satisfaction since its launch in 1989Lexus surpassed 300,000 in annual sales for the first time ever in 2005, retaining the crown as American's No. 1-selling luxury brand for the sixth consecutive year. The 300,000-unit milestone has been achieved only on three other occasions, by Cadillac, in the mid 1980s. Since that time, no other luxury nameplate has been able to reach this sales pinnacle, even in a thriving auto market.BUSINESS MODEL – Certified pre-owned vehicles are offered same financing options as new car salesCORE PROCESS - At the Tahara plant, separate assembly lines were developed for Lexus vehicles, along with new molds and specialized manufacturing equipment.[] Welding processes, bpdy paint, fit tolerances, and paint quality requirements are more stringentPRODUCT PERFORMANCE – Measuring performance factors beyond vehicle performance. Each vehicle is designed according to approximately 500 specific product standards, known as "Lexus Musts," on criteria such as leather seat stitching.[SERVICE – Service waiting areas designed to resemble a living room with fireplaces and flat screen TVs.CHANNEL- Lexus focuses on understanding its dealers at a deep level. While every automaker analyzes data and talks to dealers about what vehicles they need and who their customers are, Lexus goes several steps further. Lexus helps its dealers with their business strategy, facility planning and inventory management. The company helps its dealers understand how to engage their staff and partner with them to train and educate them.BRAND - Lexus Magazine featuring automotive and lifestyle articles published quarterly for owners.CUSTOMER EXPERIENCE – Lexus exacting attention to detail creates an exceptional customer experience.
mPedigree OverviewmPedigree, a Ghanaian startup working with Hewlett-Packard, plans to put unique codes on packages containing antimalarials and other medications. Pharmacistss will be able to text the code to a phone number on the package and get an immediate reply of "NO" or "OK," with the drug's name, expiration date, and other information. Drugmakers will pay for the systems through subscription fees. Using mPedigree's technology will add about 4 cents to the cost of a typical $4 malaria treatment. Glaxo-SmithKline (GSK) says it's considering using mPedigree's technology, and the company is in discussions with three other big drugmakers. The drugmakers will also get the information on usage and prescribing.Ten TypesCustomer Experience – Customers can find out immediately if the medicine they have is good or notService – Counterfeit drugs kill many people in Africa, this allows patients, pharmacists, and drug companies to know the efficacy of the drugs being sold.Networking – mPedigree, H-P, and GSK – potentially others – are working together to solve the problem.Business Model – The subscription cost of the service is bundled into the cost of the treatment.
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