Monday, December 7, 2009

Organizational growth & message loops

I GOT THE ABOVE IMAGE FROM HERE.

Life is expansion, and death is contraction, said a seer once. Verily, if we observe, we are normally very happy with changes that represent growth. Each individual or group of individuals with common objectives (ie., organizations) all endeavor for growth. Organizations look for growth in nos. (ie., members in their organization), financial increase in organizational turnover and corporate/brand equity. When these dimensions show positive change, organizations are considered to be growing.

When we say organizational growth we normally mean:

a) increase in organizational members (employee base, manager base, etc)
b) more channel associates and retail points
c) more customers, target prospects, geographical markets, and market segments served
d) increase in products and product lines
e) expansion of the network of associates and associated organizations
f) higher marketing and financial outcomes (sales, ROI, profits, and market share)
g) better corporate/brand equity

Balance is the key to organizational growth

Growth is always multidimensional, if a company has poor market image but hefty profits, can it be called a balanced growth? If the employee base is parlous, with all employees being hard pressed for time, and the internal climate being stress-oriented, can it be called a growing organization? Mind you, if an organization is not growing, it should, logically speaking, be a dying organization. So there are either growing organizations or dying organizations.

Marketing and growing

The essence of marketing (ie., value delivery process of organizations) is to delight customers, expand customer base, retain customer set, increase throughput of customers (for eg., if a doctor is prescribing two products, make him a loyal prescriber for three products), stimulate consumption, penetrate markets deeper and make inroads in to new markets. Marketing envisages a value bundle of offerings to delight customers and achieve the above objectives.

So if marketing is effective, the organization grows - that seems to be a logical inference, vice versa, if marketing is ineffective, the organization does not grow, it starts dying (that sounds harsh, but it is true).

So the idea is to have robust marketing (ie., value delivery) processes in organizations so that the organizations grow.

How do pharma organizations grow?

Pharma organizations are product dependent yet service led organizations. Products become successful based on efficiency and effectiveness of services provided to doctors. There are two classes of pharma products: patented and me-too. The former enjoy monopoly markets for upto 20 years. The latter are in a rat-race for gaining mindshare and prescription share. Services are however very vital. In fact, the marketing game in pharma is augmented product (ie., product + service) that delivers value to target doctors.

Pharma organizations grow through:

a) research products
b) new brands of me-too products
c) innovative technologies that help create newness in the brand (for eg., Tetra Pak technology based products)
d) more MRs for increasing coverage and providing repeat calls
e) new markets (geographical and new prescribing segments)
f) divisions: during 90s, the fervor to launch divisions was at its peak, as pharma companies were fewer and market was uncluttered. Today, divisions are made only after due diligence since risks are greater
h) new strategic initiatives: the reason for listing this point separately is that certain strategic investments of monies and efforts create a transformational growth for companies. For eg., the rainbow coalition of promotion (where Revital was promoted based on OTX model - product promotion is for doctors, and patients) was a strategic investment that has led to Revital becoming the numero uno product for Ranbaxy.

What is organizational growth?

Marketers generally think in terms of the 4Ps - Product, Price, Promotion, and Placement (distribution and retailing) for organizational growth.

The HRD guys think of hiring more people and better personnel, improved work climate, better discipline, superior training, safety, and enhanced benefits (financial and non-pecuniary) as organizational growth.

The manufacturing personnel view more machines, manufacturing plants and more production as organizational growth.

The quality personnel see organizational growth as improved quality standards and more quality certifications like ISO, WHO GMP, US FDA etc.

The financial honchos constantly want surplus cash, reduced cost, higher sales and improved net worth as organizational growth.

The R & D people want better R & D facilities, state-of-the-art research equipment, research journals and information, research chemicals and constant training - they view this as organizational growth.

Hence, organizational growth means different things to different people. Personnel engaged in corporate management try to integrate all these dimensions and provide a balanced growth to the organization.

The critical key for organizational growth: MESSAGE LOOPS (in organizations)

Intra-organizational messaging or communication is a key point that is often given a low priority in organizations. However, communication is the master key for ensuring marked growth of organizations. In large organizations, communication is through well-defined channels. Hence, messages may get lost or often not tapped by people who could find the message useful. In medium and small companies, unofficial channels of message transfer dominate - so subjectivity rules!

Messages represent knowledge. In fact, communication management in organizations is a part of knowledge management. If a critical insight from a field person for eg., let us say the market feedback is that Chikungunya fevers are increasing and, assume, this aspect is not conveyed to the product management team (by the sales team) - then the product management guys will not make any literatures or other strategic inputs for strengthening product promotion in Chikungunya. The loss is ultimately suffered by the organization. Passing around actionable messages are vital. Red tape, organizational politics and inertia of people are the main reasons why messages get lost.

ILLUSTRATIONS:

Let us say, Crocin suspension is introduced in a new easy-to-pour bottle (with a narrow mouth) - when a competitor company field person flashes a message on this novelty, to his superior(s), ideally, the R & D guys should also be kept in the message loop (by the superiors). This will enable R & D to take proactive steps to improve packing and the field person can counter competition from Crocin effectively. BUT DOES THIS HAPPEN?

Another example can be of the trend of using polymer (PET bottles) packs for liquids (oral formulations, particularly for anticough formulations or tonics). These bottles can reduce freight costs, breakage, they are safe for the patients, the fact that they are light and unbreakable helps stockist salesboys send the bottles to microinteriors (this improves market penetration), and the bottles are elegant to look at/feel. When market information comes in favor of PET bottles, if the proper personnel are kept in the message loop, in all probabilities, the pharma company may switch from glass bottles to PET bottles to ensure competitive advantage.

The above examples reflect the importance of COMMUNICATION or message loops.

Looping of messages on performance of competitor products (collected from market data providers or field personnel or stockists etc) will improve decision making. When the right person(s), get the right information (or message) at the right time, decision making is better, organization growth gets a fillip.

These are simple ways of how message loops (communication loops) enable organizations to operate better. This in turn, will enable organizational growth.

Power and organizational growth

Power is the ability to influence and control events, resources and behaviours. Individuals exert power. So do groups of individuals or organizations. Power is of the following types:

Legitimate power: that comes by virtue of birth or position or rank. If a company is a leader in a market segment for eg., Himalaya in the Ayurvedic segment, Juggat Pharma in the electrolyte energy drink segment, FDC in the powder rehydration salt sachet business, GSK in the Indian pharma market, Cipla among the Indian pharma companies ... by virtue of its position or rank it has a high level of legitimate power. The structure of such organizational legitimate powers need to be analysed and activities constantly done to strengthen them. This will ensure organizational growth.

Expertise power: relates to the expertise or knowledge and skill sets of the organization. By virtue of corporate positioning, certain companies get recognition of their expertise power, egs.: Biocon as an expert biotech company, Pfizer as an expert marketer, Himalaya as an expert marketer in the Ayurvedic segment, Juggat Pharma as an expert in the electrolyte energy drink biz, Glenmark and DRL as experts in global generic biz and wannabe innovator companies, Cipla as an expert marketer and market penetration pricing leader ... For organizational growth, one needs to analyze the organizational expertise power and again bank on its expertise pillar for growth.

Connection power: is critical for success and growth in today's society. Relationships with the people who matter, matters for growth! During its heydays as the numero uno Indian pharma company, Ranbaxy was a master in connection power. Getting licences and other approvals or other inputs that help organizational growth comes through connection power. It pays to be well connected!! Always!!

Referral power: is the power to charm people. At the individual level, it comes through looks, behavior, dress sense, style, accent, and such soft powers. Organizations too excel in collective charm and style. In the Ayurvedic segment, Himalaya rides high on referral power. Cipla in its marketing inputs has a lot of referral power. Most of MNCs have a highly rated referral power in clinics that enables them to lead doctors to product patronage. Development of referral power at a collective level in organizations does cast a spell on customers and will boost organizational growth.

Reward power: is the ability of organizations to reward people associated with it, and those who are a part of the organization. Inevitably, those organizations that reward their associates, customers, prospects, members and others, handsomely (yet calculatedly) and appropriately will have clipping growth rates. Rewards can come as freebies to target doctors, gifts and schemes to chemists, gifts and incentives to performers, goodwill gifts to regulators and other business associates, recognitions/promotions to the deserving, and so on. The tact, intelligence, and ability to use reward power (to all members, associate people and associate organizations) can propel organizations to a high level of growth.

Coercive power: is the power to punish. If at all this power needs to be used, it should be only with great tact. What goes around comes back!! So it is very important to use coercive power in a discerning way. The wheel of fortune spares none!! The idea of using organizational coercive power on business associates, vendors, distributors, employees/members and others should always be on basis of fairplay, mutuality, and win-win relationships. Or else organizational growth will get hampered.

Ultimately, organizational growth depends on goodwill. This is because people do business with people. Emotions play a major role in decision making. Even cold-blooded logical decisions have a cold emotion associated with it. Goodwill makes organizations grow. It is undoubtedly true that goodwill (and not illwill) makes organizations grow. Life is growth, and death is degrowth. Life is goodwill and death is illwill.

Thanks for all your GOODWILL in reading this blogpost. Please scroll down and click on older posts wherever required to read all other posts. Kindly recommend this blog to your acquaintances. Cheers!!

5 comments:

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sunil said...

Thanks Larry for your encouraging words.

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Sunil S Chiplunkar said...

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