What if We Could Be Heroes, not Villains..
Dale Partridge, founder of Sevenly, is living proof that new, socially conscious business models are not only imminent but also surprisingly profitable. What if valuing people over profit was actually more profitable for pharma?
It’s always all about perception. And the perception of big pharma is that it is places profits before…well almost anything (that’s legal of course!).
It is only a perception, but it’s one that pharma has at one time or another tried to mitigate, sway or modify but it seems to me, that most are simply coming to terms with it, as it seems too hard to change and there is too much money at risk to change.
For pharma’s customers and stakeholders, the issue seems to be one of priorities.
There is an incredible undercurrent within big pharma, and it’s the undercurrent of profitability. It’s almost a dirty word in some circles in pharma and often ranks as one of the industry’s ‘undiscussables’.
I think pharma is actually embarrassed about the profits that it used to make and continues to make. It’s entered urban legend that the top 10 big pharma companies during the early 2000’s made more profit than the rest of the Fortune 500 put together!
But, what is it about ‘profit’ that makes the industry so uncomfortable? Is it the amount, or how they make it, or the fact that perhaps they feel they shouldn’t make as much as they do?
I’m not sure what the answer is, but I do know that the industry has avidly avoided engaging in any public discussion on this topic and has thrived historically by ‘staying under the radar’ when it comes to public scrutiny. Typically, they wanted a very low public profile and stayed hidden behind their brands rather than build a strong company brand and awareness.
Of course, when it comes to Wall Street and most senior pharma executives for that matter, it IS all about profits and shareholder value, though, in my experience, many, if not most of the line managers and other employees were drawn to the industry by its ability to ‘do good’ to ‘add value to people and society’ in the most positive way.
I think this is still the case. So, there exists within the industry a sort of schizophrenia where many still hang on to the desire to ‘do good’ while senior leadership all too often focuses on profitability. And, of course, that leads to some interesting behaviors.
It certainly contributes to many peoples' feeling that Big Pharma is one of the villains in Big Business.
Unleashing the Power of Conscious Capitalism
None of this is news to most of us of course, but what prompted this column was a recent article and video about ‘Conscious Capitalism’ where Dale Partridge, CEO and founder of sevenly.org and author of ‘People before Profits’, puts forward the case that ‘the times, they are a changing’. That, driven by consumer demand, a new era of transparency and honesty is somewhere in our collective near future.
Watch this short video of Dale talking about Conscious Capitalism.
The thinking behind Conscious Capitalism postulates that we are fast approaching a time when honesty and transparency will be a prerequisite for business to flourish".
I guess many would watch it and be somewhat skeptical about the concept, and fall back on the well-tried used, (some would say overused) comment that business exists to make a profit. That they are not charitable organizations, not ‘not -for-profits’, they are there to build shareholder value, provide jobs, build long lasting, competitive businesses. And that is true! The point here though, is that there is more profit to be made by doing the right thing. That changing the pharma business model and delivering more value to customers, shareholders, healthcare and society as a whole is a better, more effective and yes, more efficient way of doing business. But who in pharma actually believes this applies to their situation in healthcare?
Being profitable should not be at odds with doing the right thing.
The thinking behind Conscious Capitalism postulates that we are fast approaching a time when honesty and transparency will be a prerequisite for business to flourish. That customers value these qualities and seek out those organizations that walk the talk. Of course, Dale is not talking about pharma, he is talking about people generally and business in general but clearly this applies particularly to pharma, long acknowledged for its low levels of customer trust and lack of transparency.
There are clear examples of companies going the extra mile and doing incredible things that add amazing value to stakeholders, customers and society in general. But, for big pharma this does not seem to be the case.
Of course, many of you will disagree, quoting all the good things pharma does, corporate responsibility work, charitable donations, volunteering, supporting emerging economies and the like, but take a serious look at public opinion and it’s clear that pharma lacks trust and is not seen as one of the leading lights of industry. A pity!
And, let’s also be honest here. The current business model is simply not sustainable. I know we’ve been saying that for years, but we continue to tweak and fiddle with it to extend its life, in my view, well beyond its expiry date.
What if...
Michael Porter is another thought leader that puts a very strong case for the competitive advantages gained from a Shared Value approach to business. Value to the company, and to customers but also to the greater good. And it turns out that by doing this, there is a very positive impact on business performance as a direct result.
Check out www.sharedvalue.org for more information and insight.
What both of these concepts have in common is the idea that actually intentionally ‘doing good’ and making a profit are not mutually exclusive, indeed, doing the right thing can turn out to be a better way to make more profits.
And for pharma that could be a very powerful differentiator particularly for the first mover.
They can be the ‘why’ behind what pharma does and can provide clarity and intent behind the business model, where customer focus and patient centricity, and value added services and beyond the pill, and much more come together in a more holistic approach to business. They can be the backbone of a framework that provides a reason to do these things and expand the business model into these and other areas.
Can pharma really move beyond corporate responsibility initiatives, well-intentioned but ineffective mission statements and ad hoc philanthropy to a new business model that is based on these emerging concepts?
It is not a matter of poor intent by pharma, but it seems the industry is stuck with a commercial model it cannot change for fear of negatively impacting revenues. They simply don’t seem to see alternatives.
However, there is clear evidence, not in pharma but elsewhere, that profits increase and costs decrease when trust improves and organizations seek to do the right thing for all the right reasons.
Wouldn’t it be amazing if pharma were seen as heroes instead of the villains most are perceived as today?