Tuesday, 19 April 2011

OECD: Innovation and Trade in Pharmaceuticals

The OECD has just published a document on the links between Trade and Innovation in the Pharmaceutical Industry. I was an (unnamed) contributor to the study, which I think is quite interesting. The study was not able to take account of the developments in the industry in the past quarter (the closing of a number of UK based R&D facilities), but highlights the UKs strong position in pharmaceuticals, and the dominance of the developed world. Although India is growing strongly, this is still an industry based in, and for, the "west".

Over time this will surely change, but for the moment the question for Western economies must be how do we build on and maintain this advantage?

The paper can be found here.

A previous study I was involved with looked at Chemicals. It is possible that a revised document will bring together both of these studies later in the year.

Monday, 18 April 2011


One of the most important elements in business is risk. It is a commonplace that there is no profit without risk, and that every decision is risky (which is why some people avoid making decisions at all). In the standard Kraljic model of procurment one access is about money, and the other is about supply risk. Unfortunately, human beings are particularly bad at correctly accessing and understanding risk. Even when we have correctly assessed the risk, we often then fail to address it in the appropriate manner. As simple examples, many people are scared of flying when statistically the most dangerous part of the journey is driving to the airport. Having worked in the chemical industry, it is also a fact that despite eye catching disasters such as Bopal and Flixborough, again the most dangerous thing in the chemical industry is driving to work. We all also react irrationally to circumstances. We base our assessment of risk on previous experience. So we may drive too fast thinking it is safe because we have never had an accident. Or put in new security systems because we feel the neighbourhood is unsafe after being burgled. In both cases the actual risk is the same before and after - but we perceive it differently, and react accordingly. (actually there is a slightly increased risk of being burgled again, because some burglers wait for you to replace all your stuff on insurance and then rob you again...). These are unconsious attitudes - partly hardwired, and partly based on experience. But they do affect our ability to be successful in business. The BBC has an interesting experiment that takes about 20 minutes here. It not only gives you some feedback on your personal attitude to risk, but also provides data for a study that will help academics at the University of Cambridge. Well worth the time.

Wednesday, 6 April 2011

Basics of Business - Ethics part 1

It was widely reported in Yorkshire that a senior manager at Leeds City Council was also the owner of an events management organisation that had won contracts from Leeds City Council.
The manager involved had declared their interest, and took no part in awarding the contracts to her business. However it still ended up as front page news and a leading item on the regional television news- see here.

This highlights an important element of business ethics - it is not enough to be clear of influence, you have to be seen to be clear of any possible influence. Of course in other countries, Italy comes to mind as their Prime Minister goes to trial today, things are different. However it is a good rule for all people involved in business, particularly those in procurement roles, to consider how their decisions would look if published on the front page of a newspaper.

Perfectly legitimate and legal activities can be viewed as potentially corrupt, and that corrodes confidence in both the individual and the public sector as a whole.

It may well be the case in this situation that no influence was brought to bear on the decision making process - which may well have been a tender. One of the major reasons for running a tender process is because they are seen as more ethically "clean" than negotiated routes, and are harder for people to influence. The price we pay for that is that they are not always the route to best value.

In the middle east I have met course delegates who run businesses that supply their employer. In many cases they are able to demonstrate that this is beneficial for both sides, and that they are able to demonstrate both improved quality and lower prices.
However the question will always linger - who are you really working for?

Friday, 1 April 2011

An April First post

In a surprise move to open up public procurement, the government today announced that henceforth all central government requirements will be sourced from Cambden Market. A spokesman said, "we have long wanted to obtain lower prices, and to open up government procurement to small businesses. This initiative allows us to achieve both at a stroke.

All of the businesses in Cambden market are small, new and entrepeneurial - in fact some of them are so new that they have not yet registered for VAT or tax. But that is a small detail that we are sure will be addressed in the fullness of time.

It is amazing what you can get there. Software is all lot cheaper than from conventional suppliers, and so are the CDs and DVDs. All the goods are of excellent quality - you can tell because of the wide range of Gucci, Dolce & Gabana and Armani products that are sold there at prices that are frankly unbelievable.

We were concerned that there might be difficulties with the audit trail, but the stall holders have been happy to give us receipts. In fact some have provided blank ones for us to complete later in an effort to speed up the process.

We were initially focussing just on goods, but we are thinking of extending the initiative to cover services having met a guy called Gary, who assures us he is excellent at sorting things out. His rates are very reasonable, and a significant saving over employing Accenture again. Of course, there will be a few teething troubles - especially for Gary who does not appear to have any. He does tend to talk of arranging for people to have accidents, when of course what he means is preventing accidents. He also has excellent sub-contractors in Bert and Dave, thus helping to stimulate further entrepeneurship, who he assures us are expert at making problems and people go away. They also have a side line in concrete posts for motorways, for some reason.

This new initiative promises much for the country, and we are of course happy to stimulate the economy by paying for items cash, no questions asked. This is an initiative for the ages. Or at least until lunchtime...."