Encyclopedia Britannica: the Playbook for Pharma Business Model Evolution

You can’t actually buy physical encyclopedia anymore. That’s what makes the Encyclopedia Britannica story so relevant for Pharma. The company blew up its 244 year-old business model to adapt to the changing marketplace. In the HBR blog post entitled, “Encyclopaedia Britannica’s President on Killing Off a 244-year-old product,” by Jorge Cauz, the company president tells the tale of how the company evolved from a reference product business into a “full-fledged learning business.”

Their evolution involved….

  1. Moving to a digital product. 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. 
  2. Shifting focus to an institutional customer group. Over time, Encyclopedia Britannica’s core customer group evolved from individual consumers to school systems.
  3. Switching to a new sales channel: Encyclopedia Britannica’s most painful transformation was to eliminate the 2,000 person sales force in favor of direct marketing. 
  4. Bringing in new skill sets.  As Encyclopedia Britannica went digital, they found they needed a different editorial staff that could convey information using multimedia and interactivity.
  5. Continuing evolution.  Encyclopedia Britannica did not stumble upon their magic business formula out of the gate. Encyclopedia Britannica tried CD-ROMs, an online version of Encyclopedia Britannica, selling subscriptions, free ad-supported consumer encyclopedias and a learning portal before developing their online education business.


So how can Encyclopedia Britannica’s transformation guide Pharma’s increasingly urgent need to transform it’s business model? Here are some thought starters:

  1. Recalibrate your customer investment 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 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 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.

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