Pharmaceutical Executive Europe - November 2008 - (Page 9)

Using the Wooden Spoon Ansoff’s groundbreaking Matrix was introduced to marketing theory 50 years ago. But are today’s young marketers using it correctly? Dr Brian D. Smith has doubts. W hen I get a creative block, I sometimes find it beneficial to switch from doing one thing to something completely different. Recently, for example, I was critiquing a good but heavyweight piece of research into how much (actually, how little) executives use the tools of strategic management. As light relief, I picked up a copy of a cookery magazine, which contained a survey on famous chefs’ favourite tools. Their choice was not some hi-tech gadget but the humble wooden spoon, preferred for its simplicity and utility. When I went back to the academic work, the idea came with me as I considered what was the single best tool for strategic management. The simple, old-fashioned but really useful analogue of the wooden spoon, I concluded, was Ansoff’s Matrix. Few executives won’t have used or at least seen the 2 x 2 matrix that presents new and existing products and new and current markets as four distinct growth opportunities. It was first shown in Ansoff’s 1957 paper “Strategies for Diversification” and is now found in almost every strategy text book. However, its familiarity and superficial simplicity means that although it is often seen in business plans, it is much rarer to see it used correctly. Few executives won’t have used or at least seen the 2 x 2 matrix that presents the four distinct growth opportunities… The big problem with Ansoff’s matrix lies not in the tools itself but how some executives, especially marketers, use it. To the naive marketer, it is a to-do list, presenting a list of strategies to incorporate into the plan. For the experienced executive, however, it is more like a medieval map, in which new areas of business should be marked “Here be dragons!” The key difference between the naïve and experienced approaches is the consideration of risks. Anything other than market penetration (winning share with existing products) is riskier than sticking with what you know. So the current pharmaceutical industry push into emerging markets or acquisition-led entry into new therapy areas is, by definition, more of a gamble than fighting the old battles harder. That’s not to say that new markets and new products should be avoided, of course, but the risk should be allowed for by demanding higher returns for these new ventures. That is the basic lesson of Ansoff’s work that has been forgotten, or never learned, by some executives who get more of a buzz from the excitement of new business than the hard slog of the old. In practice, Ansoff’s work tells us to get all we can from the markets and products we already have. Only then should we try new ventures, and then only when we’ve 11 BioFutures The state of biotech venture capitalism 13 Critical Vision Is pharma recession-proof? 15 Executive Profile Dr Jacques Servier 19 IT Using IT to maximise a company’s brain power

Table of Contents for the Digital Edition of Pharmaceutical Executive Europe - November 2008

Pharmaceutical Executive Europe - November 2008
Contents
From the Editor
News Round-Up
Calendar
Brussels Report
Using the Wooden Spoon
VC: Virtuous or Vampire Capital?
Is Pharma Recession-Proof?
Servier: Patience and Passion
Boost Your Brain Power
Innovation, Innovation, Innovation
Last Words

Pharmaceutical Executive Europe - November 2008