As pharma and healthcare companies embrace the need for digital transformation, how can they ensure that they are set up for success?
I was recently invited to speak at a Brand Innovation Summit in Princeton NJ. Senior representatives from a number of large Pharma and healthcare companies attended the session co-hosted by Hale Advisors and eXL Pharma.
Attendees were looking for answers to key questions such as: “what makes a company nimble and able to embrace digital transformation?” and “What types of organizational structures are best for pharmaceutical and healthcare companies looking to build digital marketing capabilities?”
Presenting some of Econsultancy’s thinking on the subject of Digital Transformation, I began by highlighting the prediction by Professor Richard Foster of Yale University that in just six years, by 2020, more than three-quarters of the S&P 500 will be companies we’ve not heard of yet.
I also mentioned research concluding that companies that achieve digital excellence outperform their peers in innovation, agility, and responsiveness and most importantly of all, revenue.
I went on to discuss some of the findings of Econsultancy’s Organizational Structures and Resourcing report, written by my colleague Neil Perkin and then outlined the evolution of corporate structures over the past two decades:
- Stage 1: A dispersed structure, dominated by a “let many digital flowers bloom” attitude, was prevalent from 1995-2001.
- Stage 2: A dedicated Digital Center of Excellence model was the dominant structure from 2001-2006.
- Stage 3: A hub-and-spoke structure became more prevalent from 2007-2012.
- Stage 4: A multiple hub-and-spoke structure evolved beginning in 2012.
- Stage 5: Digital Enlightenment: The ‘Honeycomb’ structure has digital marketing capabilities fully integrated throughout the organization.I suggested that whilst this might be an ideal to which companies should aspire, less than 2% companies in the sector were organized this way.
I stated that currently, Pharma organizations are between stages 2 and 3, with the hub-and-spoke the most popular and widely adopted model.
This was echoed by Craig DeLarge, Global Leader, Multichannel Marketing Strategy & Innovation for Merck, who researched this very subject last fall.
He said that there is constant flux and experimentation happening; the pendulum is very active between the two models, with CoE members often embedded in the brand teams.
World-class CoEs within Pharma and Healthcare
So what does a world-class multi-channel marketing Digital CoE look like?
DeLarge researched this across Pharma and discovered these attributes:
- Facilitates integration and customer driven marketing approaches.
- Demonstrates innovation leadership (in customer strategy & execution, project management, channel/content strategy, analytics, knowledge management, and digital asset management).
- Facilitates CRM practice and systems, from build to acquisition to segmentation to retention, analytics etc.
- Has strong, utilized thought leadership and knowledge management (Use of these is the differentiator of world-class: Does all this research get actively used? Can people find what they need from you?
- Is knowledgeable, relevant, engaged, and “at the table,” having earned respect from marketing, sales, and other stakeholders.
- Has a strong, cross-pollinated talent pool, sourced from inside and beyond.
- Serves as liaisons and translators between business and technology.
- Orchestrates the right combination of in-sourced and outsourced resources and abilities.
- Facilitates standardization (policy) and accountability across the organization without being obstructionist.
- Has executional responsibility with budget; not just strategy.
- Adds non-redundant competence and value, doing what others are not able to do (critical when under-resourced).
- Has strong consulting and stakeholder partnership skills; know when to go to war and when to back down (diplomacy); do a lot of internal marketing (the soft skills).
In summary, the differentiator of world-class CoEs is the ability to be persuasive within the organization, and to be a true change agent.
De Large highlighted the KPIs for Center of Excellence performance and contribution that he felt most relevant.
- Incremental revenue earned and time/money saved.
- Level of partner (executive) sponsorship and buzz (This concept was reinforced throughout the summit).
- Multichannel Marketing competence, capability, and performance improvement: Speed to market, cost efficient execution, customer engagement effectiveness, resource understanding and use, organization knowledge and process, standards, policy, compliance and practice.
- Industry awards and publications for partners—it is important to acknowledge when recognition is given.
Centers of Excellence face many challenges, summit participants agreed. One of the biggest is that top management very often does not know how to use the CoE and sometimes doesn’t even know what they’re doing or what their purpose is.
One problem is where inside the organization the CoE resides: “Often, it’s not strategically well thought out”, one summit participant said.
The functional placement (under which Vice President the team sits) is often a result of a certain situation, in many cases being decided on the basis of whoever raised their hands first – but what’s the ideal scenario? The answer, according to DeLarge, is that it’s situational and organization-specific.
Participants agreed that with a digital CoE, there’s a lack of shared learning, a need to protect this structure from the rest of the organization, and a need to keep proving yourself and justify your existence. “It’s hard to be in this position because you have responsibility but not authority,” one participant noted.
“You’re given all this digital work to do, but can’t implement or impose it on the brand teams. It’s hard to effect change across the organization,” another said.
Additionally, new customer types in the customer ecosystem: HCP, specialist, payer, and pharmacist—are demanding Pharma companies address how to execute a multichannel marketing campaign across this ecosystem.
Other barriers to effectiveness:
- Inconsistent commitment and sponsorship. When it gets lean, you need someone upstairs who can support the CoE. Tip: Let the CFO see the ROI presentations — how efficient they are; how they’re saving money. “Manage upwards”.
- Lack of bandwidth and resources.
- Shallow understanding of CoE by members, stakeholders, and senior management.
- Failure to keep up with customer requirements. Tip: Use this as a lever for driving the organization: “If our customers are here and we’re not, that’s a problem”.
- Lack of integrated analytics to justify value.
- Being viewed as an obstruction to business functioning and creating non-value adding complexity.
- Overvaluing sales and product and undervaluing marketing and customer value and expertise (Organizations are too product-focused rather than customer-focused).
- Lack of customer experience decision rights.
- Too many pilot executions, the purgatory when innovation goes to die. (Pilot culture isn’t a good way to execute) Jump right in!
- The hazard of centralized innovation. Innovation is now the job of the group, not the organization. Too often we silo innovation. (Innovation should be responsibility of everyone, with incentives).
- Too little internal CoE marketing of its value contribution and contribution to sales. Self-promotion is crucial.
- Confusion of CoE and stakeholder role, process, and interworking.
- Lack of advanced consulting, stakeholder & change management competence. (Earn your seat at the table. Respect must be earned).
To get around these impediments, DeLarge suggested CoEs conduct SWOTS for the CoE against the barriers and vet these with stakeholder to prioritize development plans, devise and execute CoE stakeholder engagement and marketing plans, and build in more time with the sales team to build sales acumen and seize opportunities.
Summary: the three most important tips for optimizing organizational readiness
- An entire organization has to get behind digital. There’s a need to change the mind-set of the organization and to enact a cultural shift.
- Companies should recruit talent that has broad-based digital skills but depth in creative, marketing and tech knowledge and experience rather than single-area experts.
- We should stop talking about ‘digital’ as being somehow separate from marketing: it’s not separate. We are marketing in the digital age. It should be infused in the standard of marketing.