So, how do I recognize the need to change my approach to strategy? There are several signs that your existing classical strategy approach is not delivering for you:
• You notice that you keep revisiting your strategy, it isn’t appropriate for as long as it used to be, changing at least parts of it substantially when in previous plan periods you did not need to do so. Fundamentally, your ability to predict what the future looks like in gross terms is lost
• Similarly, you notice that while your strategy seems OK, there are new things happening in the market that you must quickly respond to, and this is becoming more common. It is likely that this puts your organization under strain as you are not organized to respond in these ways
• You notice that you have a competitor, or more than one, that seems significantly more responsive to the market then you
• You notice that competitors in your field are structured differently to you. You may notice this first when they advertise for an important job role that you don’t have, or experts you work with in the field mention it
All of the above point to an important increase in the unpredictability of your market, and the subsequent need to look at it differently and to plan how you interface with the market in another way. They also point to the need to reassess the impact you can have on your market.
A useful way of assessing your market is to consider these two parameters; the level of predictability and your ability to impact the market. Even better is to consider your market over time and plot this on the axis illustrated below to inform your thinking about how your market is evolving:
The realization that you need a new approach to strategy triggers other important considerations. The organizational structure required to implement strategy will change as your approach to strategy changes. It is perhaps obvious that a clothing retailer is structured differently to a pharmaceutical company or to a software developer. The differences in structure are because of the different relationships these organizations have with their markets and competitors, along with the internal needs this drives.
For example, the needs of a business in internet fashion retailing, where there is unpredictability is combined with an ability to influence the market and where a shaping strategy is ideal. Whereas a traditional pharmaceutical market is vastly different in that predictability is high and influence low. The fashion retailer needs instant feedback on what is selling today. They need an ability to respond to this with increases and decreases in production and an ability to get items to sale rapidly, within days rather than weeks. Strategy is based around gaining advantage by understanding and sometimes predicting short term trends ahead of the competition. For example, when the March coronavirus lockdown was implemented in the UK the online fashion retailer Boo-Hoo rapidly responded and increased the visibility and availability of ladies’ blouses and work tops. Boo-Hoo predicted the short term need for more work tops for women as a result of the increased use of video calls for people working from home. Interestingly, Boo-Hoo did not increase the availability or visibility of ladies’ work trousers, skirts or dresses, recognizing the nuances of the market need in a lockdown. As a result, Boo-Hoo returned excellent results during the lockdown.
So, how does this apply in the healthcare field for those strategists feeling they are in less predictable markets? It may mean several important changes. For example, developing shorter-term strategies that track important parameters in the market on a regular basis and an adaptable strategy to respond to specific changes or triggers in the market. This requires a new approach to monitoring markets and an ability to make changes in your approach to the market effectively and rapidly. Additionally, having the ability to keep reviewing and amending the strategy as well is vital.
When a new competitor is due to enter your market, it is becoming increasingly challenging to accurately predict what their launch strategy will be. There are more options for pricing and position than there used to be with value-based pricing and unique modes of action. The Fxla market, and the asthma market with the likely introduction of Tezepelumab, are good examples of this. It becomes a significant risk if plans are based on a competitor adapting a specific strategy when uncertainty prevails. A new approach, perhaps based on scenarios, that tracks changes in the market in real time and rapidly adapts the approach to the market is required. This changes how the organization operates and how it implements its approach to the market. While this level of change may be concerning for some in pharma, it should be remembered that adaptability is an advantage and those that choose the right strategic approach are likely to be creating a more effective approach for their organization.
The World Heavyweight Champion Mike Tyson was once quoted as saying “Everyone has a plan until they’re punched in the face”. He was describing life in the boxing ring that is often extremely unpredictable and where he had a great ability to influence the situation. He knew instinctively that his ability to respond to what was going on in real time, to be adaptable and use a new approach given the specific circumstances he was witnessing, were a significant advantage to him. He was a visionary in the ring. However, other boxers may tell you that they went into a fight with a plan and applied that plan and won the bout. This may be true and these bouts are likely to be matched with a similar number of bouts where someone applied a plan, didn’t change it and were defeated.
The point is that adaptability gives you a better chance of winning, that a single classical strategy is not doomed to lose, merely that it has less chance of winning in unpredictable situations. Perhaps this is why some healthcare strategists will argue that classical strategy works even though their markets are becoming less predictable. They see a level of success and accept it as the best they can do, when they may have been more successful with an adaptive approach to strategy.
Healthcare in general
Healthcare is vast and encompasses pharmaceuticals, biotechnology, devices, apps, systems and delivery. No single approach to strategy will work across these diversely different fields. The use of social listening, real time data capture and influencer tracking are becoming increasingly important in understanding where markets are moving and what a strategist should do about it. Classical strategists often struggle with these new ideas as they don’t fit with a classical approach to strategy.
Another challenge for the strategist is that the key, as with all strategy, is the implementation. In healthcare organizations there are often massive salesforces built around an annual or bi-annual briefing cycle. Sales management and marketing strategy report through different management lines and there is significant resistance to change from senior people as it must sometimes be a daunting challenge to effect change. This may be another reason why some organizations do not respond to changing markets. However large the challenge, we know that those that respond subsequently do well and those that don’t do less well. The courage to make the change, to recognize the punch in the face, and adapt to a changing world may have a significantly positive effect.
Chris Stevenson, is the CEO of Cambridge Healthcare Research (CHR). CHR provides market insight services to healthcare clients through its VOX market research business and its CHR market insights and competitive intelligence business. At CHR we believe that methodologies and information are the start. Insight and constant curiosity are essential parts of our business that allow us to add significant value to our clients understanding of markets and decision making. We employ people who are not only smart, they also want to understand the deeper, fundamental drivers of markets and to make our clients decisions more effective.
This article is based upon the thinking of many leaders in the field, most notably Martin Reeves and colleagues in;
- Your Strategy Needs A Strategy, Reeves, Love and Tillmanns, HBR, September 2012
- Adaptability: The New Competitive Advantage, Reeves and Deimler, HBR, July 2011
Learn more about how CHR helps healthcare and pharma companies strategise to stay ahead of market changes and competitor activities.
Click here to read Chris' latest piece on why war games are no the answer to understanding markets.