Toward the See-Through Corporation - Pharmaceutical Executive

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Toward the See-Through Corporation
New research reveals the underpinnings of a good corporate reputation-and the pharma companies that earned them.


Pharmaceutical Executive



High Cost of Crises
Active listening does not stop with acknowledgement of customer comments, however. Reputable companies use incoming data to shape strategy and identify improvement opportunities. Dendrite, a major vendor to the pharma sector, deployed an "eQuality" system to improve customer service. The program monitors service reps' phone calls and corresponding screen activities. In the short term, team leaders gain a better understanding of incoming queries as well as the steps taken to address them.

The long-term benefits are even more valuable. Service channels share collected customer feedback in a company-wide effort to fine tune products and service offerings. Comments and criticisms from real customers drive decisions on strategy, processes, and product design.


A Steamroller Called Disaster
Crisis Management Of course, when disaster strikes-and no organization is immune-a company that has spent years carefully building a positive reputation can see it destroyed in a few short hours. (See "High Cost of Crises.") But the good news is that corporate reputation often depends more on a company's responses than on the nature of the problem itself. Full-blown catastrophes develop because executives ignore warning signs and respond to manageable problems half-heartedly, then freeze when the situation explodes. (See "A Steamroller Called Disaster.")

Thus, it's important that companies accept the inevitability of corporate emergencies and work hard to develop strong crisis management strategies. Reputable organizations not only develop action plans, they test and retest them to find vulnerabilites and areas for improvement. Sound plans emphasize speed, compassion, and corporate transparency and accountability. Because the public is often very forgiving of companies that respond quickly without trying to hide anything, forthright crisis management may even boost a company's reputation-and bring significant economic gains. (See "Be Prepared.")


Be prepared
The September 11, 2001 attacks spurred Gentiva Health Services to set its crisis management plan in motion. Gentiva, which supplies infusion and injectable therapies to consumers throughout the United States, knew that its patients faced a significant health risk from supply interruptions.

After US commercial airlines suspended operations, Gentiva's national crisis management team went into action, contacting all customer pharmacies, primary referral sources, and insurer payers. Gentiva also contacted various federal departments and agencies and other specialty pharmaceutical distributors to discuss distribution solutions.

Nationwide, Gentiva's team used the telephone to accomplish those tasks. In the New York City area, where phone service was unavailable, the company relied on e-mail to communicate with customer groups. At the same time, Gentiva opened call centers on a 24/7 basis to handle questions from patients and physicians. Internal employees staffed the phone lines, and the team discussed bringing temporary employees on board if the crisis persisted.

Gentiva's rapid response ensured that current inventories could accommodate a brief suspension in supply schedules. Shortly after flights resumed in September, appreciative customers flooded the company with thanks for its compassion and emergency measures.

Beyond Stereotypes Pharma companies have a particular need to overcome stereotypes that hinder positive reputation building. Energy companies struggle with environmental issues, discount retail warehouses face criticisms that they are destroying small-town character, and pharma companies must deal with public concerns about pricing.


Dialectic of distrust
Each of those stereotypes carries a negative image in its industry. (See "Dialectic of Distrust.") On the bright side, companies that distance themselves from stereotypes create their own positive reputations. And those reputations provide competitive advantage over companies mired in negative public perceptions.

Many executives see negative reactions as unavoidable costs of doing business, but the reputation study shows that the key to overcoming them is to identify and address them head on. McDonald's, for instance, has championed animal welfare to combat common images of the fast food industry, and British Petroleum and Georgia Pacific's conservation programs fight the energy industry's reputation for environmental irresponsibility.

Pharma companies receive a storm of criticism for high drug prices coupled with high profitability. Detractors paint them as greedy, insensitive organizations that profit from the misfortune of others. The criticism generated by the industry's perceived inaction in the African AIDS crisis is a case in point.

Those criticisms are especially harmful because healthcare companies seek to build strong emotional bonds with their customers. As in the Johnson & Johnson example, healthcare products generate strong sentiments and loyalty among customers. On the other hand, customers who stake their wellbeing on a therapy are easily disturbed by a pharma company's perceived lack of compassion.


Pfizer in Africa
To combat the industry's negative stereotypes, Pfizer launched several initiatives. The company has poured resources into relief for AIDS victims in Africa. (See "Pfizer in Africa.") Its biggest effort lies in funding the construction of Africa's first large-scale AIDS clinic. By training medical personnel from across the continent in the latest treatment options, the clinic aims to bring patients the highest standard of care available.

Pfizer also supports a new initiative to recruit, train, and equip medical volunteers in South Africa. The volunteers will be given 18-month assignments to care for HIV-infected patients and teach others how to prevent infections.

Pfizer's efforts run counter to stereotypes about the industry's response to the spread of third-world AIDS. The company fights that perception through its free distribution of Diflucan (fluconazole), a treatment for fungal infections common among AIDS patients, in 50 developing countries.

Reputation-Focused Culture Beyond countering negative opinions, companies must build strong positive ones through a network of interlaced activities. First, reputations thrive on cultures that value product and service quality, attract top talent, adhere to ethics codes, and ultimately deliver shareholder value. Along the way, those companies identify and overcome "reputation killers" that plague industry segments.

A positive reputation-so difficult to quantify and measure-leads to strong tangible results. A Pennsylvania State University study shows that reputable companies consistently gained financially: Between 1983 and 1997, Fortune's Most Admired companies increased annual returns, on average, by 22 percent. During that same period, the S&P 500 posted 16 percent returns, and companies on the other end of the spectrum-those ranking lowest in annual reputation urveys-faced average negative annual returns of 1.7 percent.


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