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.

Risk

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.

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?

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...."

Commercial Skills training for Schools

On Monday 4th April 2010, we are piloting a new course called Commercial Skills for Schools.
It is aimed at Teachers, governors and school administrators who, facing up to the new realities of school funding, want to improve their commercial skills so that they can get more for less, and get more income into the school from their commercial activities.
This is the first pilot, and if it is successful we shall be looking to launch it from May 2010.
Of course if it is not successful, we shall have to regroup and learn the lessons from the pilot.

This will be a commercial offering, but the primary driver is to help schools to strengthen their financial position. Anyone interested, please drop me a line.

Timeline of the future

As the great Yogi Berra said “it’s very difficult to make predictions – especially about the future”. However that does not mean that we should not try to. It can help to shape our business strategy, protect us from shock changes, and besides it can be great fun.

Myers Briggs personality profiles suggest that only 20% of are mainly focussed on the future – 40% are focussed on what we learn from the past, and 40% on the here and now. That is pretty much what you would expect from human beings who evolved in the Savannah - too much dreaming of what might be is not much help in escaping lions, and in fact it might get you eaten.

The same applies in business – not learning from the past, and not focussing on the immediate threats are fatal for businesses. However there is always a need for at least a few people in a business to keep scanning the horizons, and thinking about how things change.

The old metaphor about boiling a frog is appropriate for our attitude to change. Today the internet is pervasive in our society – and most of us forget that a matter of a decade ago it barely existed. Most of us have mobile phones, and we have forgotten what we did before them. Films from the 1990s can feel strangely dated when the central problem could be easily solved in the characters had mobile phones, let alone Facebook, Twitter and LinkedIn.

This makes it difficult for us to think about some of the major changes that can happen to our industry. The rise of 3D printers, which seems like a science fiction technology but is being used in aerospace, changes a lot of our ideas about manufacturing (see The Economist). The internet is of course changing other industries, and in some cases making them redundant – I can’t believe there is a major future in printing yellow pages telephone directories or CD pressing plants.

So what industries will remain unchanged?

Well haulage and distribution will still be essential to move some goods around – despite 3D printers, we are still likely to need to move chemicals and similar raw materials. However it may change significantly within a generation to include much better IT based planning and even more significantly robot driven lorries (it is on the way, trust me).

Television, if we continue to call it that, will probably merge with the web, and be shown on the sort of printed electronics paper thin screens that I have mentioned before.

My industry, consulting and training, will no doubt be changed by intelligent systems and training on demand media. I think though that will always be people who prefer to engage with (flawed) individuals rather than a (perfect) computer database.

Health is changing massively – our life expectancy rises by about 3 months every year. Think about that. The consequences are massive – and not just for pensions. This is a societal change that we don’t notice happening even though it is happening rapidly. Partly this is because medicine is advancing so fast – people live who would have died a decade ago, and people are born who would not have existed 30 years ago (including my children).

Prof. Bryan Cox in his Wonders of the Universe TV programme has reminded us that planet earth will one day be destroyed by the sun. Luckily that will be in about 6 billion years, so no need for us to worry just yet.

Trying to think on that timescale can be fun – when you think that human beings have only been around for less than a hundred thousand years. Will people in the year 3011 even be recognisable to us as people? A website providing a timeline of the future can be a way of stimulating thinking, and broadening our horizons (click here) – as can thinking about the Clock of the Long Now (see the picture for the prototype). I don’t agree with all of their projections (some I think will happen much quicker, others not at all) but that is not the point. It won’t tell you what will happen to your industry next month, or even next year, but it does help us stop thinking that the future will be just like the past.

Procurex - themes

Procurex was its usual success. Thanks to anyone who went to one of my sessions. The last one was on Risk Management, which in the week of the Japanese earthquake was a salutary reminder of the need for contingency planning.

Obviously my perceptions are my own, and I had little time to see the formal presentations but I found three key themes recurring;
- the need to improve the quality of tender submissions
- the tightness of budgets including travel to a free conference
- Category Management

The category Management theme was an interesting one, and talking to Pro5 I think is one that will be taken on from the OGC frameworks by a number of regional government bodies. It is a good and sensible approach, though for the public sector perhaps it cannot be persuded as aggressively as it is by our leading supermarkets.