5 lessons in reinvention from Encyclopedia Britannica

This is the tenth blog post in a twelve part series that transforms ideas from the marketing world at large into practical plans for pharmaceutical marketing in the time of health care reform.

It’s time to throw the book at the pharma business model.

Actually, not one book, but an entire 32-volume set of Encyclopaedia Britannica.

Exploring how Encyclopedia Britannica blew up a 244 year-old business model sparked some ideas about potential life-saving changes to the pharmaceutical industry. In an article entitled, “Encyclopaedia Britannica’s President on Killing Off a 244-year-old product,” Jorge Cauz, the CEO of Encyclopedia Britannica, tells the tale of how the company evolved from a reference product business into a “full-fledged learning business.”

Reading this article, it struck me that many of the key components of their transition had relevance to the type of reinvention required in the pharma industry. Here are a few of the pertinent concepts worth extrapolating from the Encyclopedia Britannica transformation:

  1. Moving to a digital product. Encyclopedia Britannica announced in 2012 that they would no longer offer the printed version of Encyclopedia Britannica. What Encyclopedia Britannica offers now is a complete online suite of educational support products as well as an online store of DVDs, books, online reference books and software. 
    • Encyclopedia Britannica’s drive to digital was prompted by changing customer preferences. They found that  “families became busier and had less patience for doorstep solicitations.”  Customer’s expectations had also risen regarding the quantity and real-time updates. So Encyclopedia Britannica changed their “editorial metabolism,” to enable updated content several times an hour rather than several times a month.
  2. Shifting focus to a different customer group. Over time, Encyclopaedia Britannica’s core customer group evolved from individual consumers to school systems. Now approximately 85% of their revenues come from online curriculum products.
  3. Switching to a new sales channel: Encyclopaedia Britannica’s most painful transformation was to eliminate the 2,000 person sales force. Instead, Encyclopaedia Britannica employs direct marketing as well as a smaller field force targeting the school administrator market.
  4. Bringing in new skill sets.  As Encyclopaedia Britannica went digital, they found new skill sets were required. They needed a different editorial staff that could convey information using multimedia and interactivity. Encyclopaedia Britannica also required “curriculum specialists for every key department of the company: editorial, product development, and marketing.”
  5. Continuing evolution.  Encyclopaedia Britannica did not stumble upon their magic business formula out of the gate. Encyclopaedia Britannica tried CD-Roms, an online version of Encyclopaedia Britannica, selling subscriptions, free ad-supported consumer encyclopedias and a learning portal before developing their online education business.

So how do we export Encyclopaedia Britannica’s transformation to guide pharma’s increasingly urgent need to reinvent itself? Here are some thought starters:

  1. Recalibrate your customer investment portfolio. Just as your personal financial portfolio needs periodic recalibration to compensate for changing market conditions, so does your promotional portfolio. Calculate or estimate what percentage of your brand’s business is really driven by institutions such as payers and hospital groups versus individual physicians. Are you truly matching your investments to opportunities?
  2. Evaluate your sales channels. If your customer focus is shifting, shouldn’t your sales channels change too? There is no question that pharma has reduced the size of the field forces it employs. The real question for me is whether the industry has been aggressive enough in embracing multi-channel marketing. 
  3. Double your digital. According to a study by Publicis/Razorfish Healthcare, 35% of HCPs feel sales reps should use iPads. Isn’t it time to break the print habit? Develop a strategy to help motivate your marketers and sales people to increase their digital adoption curve!
  4. Assess your workforce. Seems to me that the evolution of pharma into a more patient focused business would require an infusion of new abilities. For example, adding customer service and compliance experts to your staffing model.
  5. Allocate a sacrosanct budget for innovation. Here is where I believe pharma marketing and sales have really missed the boat. In most marketing departments, there is little focus on keeping up to date with customer preferences and technological advances. A more structured approach needs to be taken to a) figuring out what are the most promising communication and service innovations and b) identifying appropriate pilots. 

Check back on Thursday for the eleventh post in the twelve part series, “ 4 lessons in change from inside the R&D organization.” In this post, I explore how the ways R&D organizations are reinventing themselves provides a model for commercial reinvention.

Thanks for letting us share,

Dorothy