Forward-Looking Intelligence

Feb 02, 2006

Just Because The Pharmaceutical Industry is the most frequent user of competitive intelligence (CI), it doesn't mean it is the most effective. In fact, a survey of senior executives at large US corporations, across industries, shows that despite the millions of dollars pharma spends, only one company—Johnson & Johnson—ranks among the top-10 companies that make the best use of CI.

In many ways, that has to do with the way pharma thinks about collecting intelligence. Most executives use CI to compile competitor newsletters, profiles, and other static deliverables to understand what actions their competitors have recently taken. But there's no strategic advantage in that. To succeed, pharma execs need to anticipate threats and opportunities before they occur. At their very core, CI functions need to be designed to deliver predictive, actionable intelligence that minimizes surprise—not just reports recent competitor actions. Indeed, when establishing Lilly's CI function, former Lilly CEO Randall Tobias called it the "department of surprise avoidance."

In the past several years, a small number of pharma companies have taken steps to use CI more proactively. Rather than just monitoring competitor actions, these companies' CI units work to anticipate new threats and opportunities, to develop preemptive strategies for launching or defending products, and to help build the overall competitive awareness of their organizations. This article examines a few trailblazing companies, and offers some advice on how to use competitive intelligence more effectively.

Eli Lilly: External Awareness

Lilly established its CI team in 1998 to serve the highest levels of the organization and to advise top executives about longer-term threats and opportunities. Company executives were very supportive of the unit because the need for better intelligence was apparent: The industry was changing rapidly and the level of competition had increased dramatically. These executives—some of whom had been intelligence users in the US government—understood the benefits that top decision-makers gain from knowing about emerging threats as soon as possible. In fact, running a large pharmaceutical corporation without an effective CI capability, says Lilly's head of competitive intelligence, Jerry Hoffmann, is tantamount to "making your key decisions with one eye closed."

As Lilly's intelligence effort developed, its focus broadened beyond the top executive suite. Today, the company's CI team provides more support at the business-unit level, delivering intelligence to the leaders of those groups and others, while acting as advisors and training referents to teams within the organization. This is a trend not only at Lilly, but also at other companies with well-developed intelligence efforts, within and outside of the pharmaceutical industry.

According to Hoffmann, Lilly's CI effort has contributed significantly to a company-wide initiative to become more externally aware. CI teams are often called upon to facilitate initiatives that require their unique perspective, from scenario-planning projects to war-gaming exercises and competitor-response modeling.

Strategy Game Planning
The use of CI at Lilly not only leverages internal expertise and resources, it also helps build a competitive culture at the company. The belief is that this culture will further reduce risk by encouraging the development of good CI prior to every significant decision. To date, the company has seen pervasive growth in the use of CI. The corporate strategy group regularly requests CI in support of long-term planning efforts, recognizing that competitors' actions can change the future business environment just as other outside forces can. Marketing groups use CI to understand everything from how competing companies will address big-picture issues like the Medicare prescription drug benefit to how a single competitor will evolve its product positioning. On the other hand, R&D is increasingly reliant on CI to help reduce the risks, thereby lowering the costs of discovery and development.

3M Pharmaceuticals: Incorporating Intelligence

lorem ipsum