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How Successful Companies Create and Develop a High-Value CI Function to Drive Better Business Decisions - Pharma and Device

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When done well, the Competitive Intelligence (CI) function helps companies make better decisions, anticipate threats, plan effectively in a rapidly changing market, and avoid corporate risk. But the …

When done well, the Competitive Intelligence (CI) function helps companies make better decisions, anticipate threats, plan effectively in a rapidly changing market, and avoid corporate risk. But the non-traditional CI function is often undervalued in corporations, and CI leaders can find themselves struggling for attention and resources.

This report includes the findings from benchmarking the Competitive Intelligence function at 32 companies in the bio-pharmaceutical industry. It includes metrics and insights that CI leaders can use to evaluate their functions, increase the value of deliverables, and generate greater influence among their stakeholders.

Included in the report are benchmarks for the size, cost, scope, structure, tools, activities, and best practices that drive effectiveness in high-performing CI organizations. This report also identifies 10 Hallmarks of Competitive Intelligence Excellence and presents insights from interviews with veteran CI leaders on how to evolve the CI role from data gathering to providing strategic advice to decision makers.

Best Practices, LLC conducted this study to identify best practices and innovative methods for improving the strategic role and impact of the Competitive Intelligence function within the pharmaceutical and related industries. The study provides health care industry and CI leaders with metrics and insights they can use to increase the value of their function and generate greater influence within the corporation.

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  • 1. How Successful Companies Create and Develop a High-Value CI Function to Drive Better Business Decisions Best Practices, LLC Strategic Benchmarking Research Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 2. Table of Contents  Executive Summary      Research Objectives & Methodology Participating Companies Key Findings & Insights Hallmarks of Excellence in Competitive Intelligence Section 1: Key CI Sources, Activities & Deliverables 1A. Sources 1B. Activities & Deliverables  Section 2: Use of Third Party CI Vendors  Section 3: CI Resources, Structure & Operations, Functional Evolution 3A. Resources 3B. Structure & Operations 3C. Functional Evolution & Influence  Section 4: Best Practices & Lessons Learned 2 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 3. Research Project Objectives & Methodology Best Practices, LLC conducted this benchmarking study to identify best practices and innovative methods for improving the strategic role and impact of the Competitive Intelligence function within the pharmaceutical and related industries. Research Objectives  Provide healthcare industry leaders with metrics and insights they can use to evaluate and compare the performance of their Competitive Intelligence organizations.  Develop findings & insights CI leaders can use to increase the value of their function and generate greater influence within the corporation. Research Methodology  Best Practices, LLC engaged 35 Competitive Intelligence leaders from 32 companies in the healthcare industry to participate in this benchmarking study.  Research analysts also conducted six deep-dive executive interviews with selected benchmark participants. Topics Covered  Sources & Activities - Key primary & secondary research activities - When to use primary sources - CI source effectiveness - CI from social media & internal employees - Most effective activities - Percentage of work that is analysis  Budget & FTE Levels  Uses of Third Party Vendors  Top 5 CI Employee Skills  CI Evolution & Trends  Structure & Leadership  Best Practices & Lessons Learned 3 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 4. 35 CI Leaders Participated in the CI Benchmarking Research Thirty-five Competitive Intelligence leaders from 32 companies in the healthcare industry participated in this benchmarking study. Participants represented small, midcap and large biopharmaceutical and medical device companies. Seventy percent work in U.S. locations. Participating Companies: Benchmark Class Abbott Nutrition, Amgen, AstraZeneca, Ariad, Bayer, Biocon, Boehringer Ingelheim, B Braun, Covidien, Daiichi-Sankyo, Dentsply, EMD Serono, Emergent, Ethicon, Ferring, GSK, Glenmark, Janssen, Jazz, Johnson & Johnson, McKesson, Medtronic, Merck, Novo Nordisk, Pfizer, Purdue, Sanofi Pasteur, Teva, Torrent, Upsher-Smith, Waters, Wyeth Nutrition/Nestle 4 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 5. Key Findings & Insights (1 of 6 pages) The following key findings and insights emerged from this study. CI Functional Value Is Not Universally Recognized CI is not yet seen as a traditional corporate function, such as Finance or Sales, and, as such, the value of the function remains poorly understood by senior leadership. CI continues to be subject to a periodic ebb and flow of corporate resources, as the perceived value of the function changes within individual organizations. Interviewed Competitive Intelligence leaders agreed that the constant flux makes it difficult to maintain lasting relationships and generate influence. Results of Pharma CI Studies by Best Practices, LLC: CI Is Becoming More Decentralized This research observed a continuing decline in the presence of centralized CI groups over the past dozen years. Embedding CI within other functions (44%), leads to emergence of shadow resources, work fragmentation, and lost opportunity to leverage company size when purchasing services. Only 18% of participants represent centralized, dedicated CI groups serving the entire company compared with up to 85% in past Best Practices, LLC studies of pharma CI. Year % Centralized 2001 85% 2007 67% 2010 31% 2013 18% Use of Advisory Boards to Collect CI Is Shrinking The use of Ad Boards is down significantly from previous BPLLC studies, where as many as 90% of respondents engaged them to gather intelligence. In this study, only 52% collect intelligence from advisory boards, and only 21% find them highly effective for primary research. 5 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 6. Hallmarks of Excellence in Competitive Intelligence Ten key hallmarks of excellence were observed in CI programs at participating companies. 10. Grow the function by providing quality deliverables that create demand 9. Measure results to show that CI function can ‘move the needle’ 8. Engage internal clients in a continuous feedback loop 1. Build strong relationships with a few key customers Competitive Intelligence Excellence 7. Reduce risk by engaging Legal in developing polices & processes 2. Focus on top decision makers and understand their issues 3. Hire staff with past experience involving outcomes responsibility 4. Choose questions (KITs) that are of a strategic rather than tactical nature 5. Provide relevant, forwardlooking deliverables with analysis & recommendations 6. Exhaust secondary resources before engaging in primary research 6 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 7. KOLs Seen as Most Effective Primary Research Source (1 of 2) Two-thirds of participants rate Key Opinion Leaders/ industry experts as a highly effective primary source for collecting CI, and another 17% find this source somewhat effective. Although clinical investigators are less used for intelligence, 60% who use them rate them highly effective as well. Q. Please indicate the effectiveness of each of the following sources your company uses for primary CI research. [Choose the best option for each primary source type.] Primary Research Source Effectiveness Highly Effective Somewhat Effective Industry experts (e.g., KOLs) Primary CI research vendor Not Effective 66% 45% Investor analysts 38% Medical Congresses Internal Employees 31% Internet/Online 28% 24% 7% (n=29) 3% 17% 31% 17% 45% 3% 31% Clinical trial investigators for competitive products 17% 14% 3% 34% 34% Not Used 59% 21% 10% 48% 59% 3%10% % Responses 7 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 8. Primary Research Accounts for More than 1/3 of CI Activity While the bulk of intelligence gathering requires secondary research, 38% of CI activity across the benchmark class involves primary research. CI groups typically turn to primary sources and vendors for access or when secondary resources have been exhausted and a question remains unanswered. Q. Approximately what percentage of your intelligence gathering work involves primary (field) research and what percentage involves secondary (desk) research? [Total should equal 100%] Primary vs. Secondary Research Activities % Intelligence gathering from primary research, 38% % Intelligence gathering from secondary research, 62% (n=35) 8 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 9. Developing Insights/Recommendations Takes Brains & ‘Guts’ Creativity, guts, brains, and a ‘’sixth sense” are attributes CI people need to take their findings from reporting to delivering insights and recommendations. Q. What does it take for a CI person to be able to develop insights and make recommendations? “It takes creativity. The ability to step outside your own seat and your own job function and think about it from another person’s point of view—typically from another company’s point of view.” – Company A “At some point it’s just a matter of guts. You have to be willing to be wrong before you can be right. You have to be willing to put a stake in the ground and understand that sometimes you’re going to be wrong and that’s OK.” – Company A “Hire smarter people. They have to be smart enough on day one to think things through. The difference I see in CI staff who can deliver insights and who cannot has everything to do with the individual staff and how they are wired. It’s not an issue of training. Not everybody can learn it. You have to grow/foster confidence.” – Company A “They have to have the ability to understand the question, the implications, the impact on the business, and then orchestrate the steps of the intelligence process.” – Company E “It’s about experience, and context, and having that sixth sense of things because you've been involved in this activity for a period of time.” – Company B 9 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 10. Profiling Is Top-Ranked Activity for Creating Actionable Insights Forty percent of benchmark participants listed profiling among their top three CI activities for producing actionable insights and influencing business decisions. Competitor, portfolio, and product profiling were all mentioned. Q. Overall, what three CI activities conducted by your group and/or your vendors most often produce actionable insights that can influence business decisions? [List your Top 3 activities. You may include activities beyond those listed.) Top 3 Most Influential CI Activities Profiling 40% News Updates / Alerts/ Warnings 33% SWOT Analysis 30% Tracking, Mapping, Monitoring, Other 30% Primary Research 27% Clinical trial monitoring 23% War games/ Scenario Planning 23% Conferences 23% Market audits (n=35) Note: Survey participants indicated a high value for monthly/periodic reports and a much lower value for daily updates. 13% % Responses “Head towards the hot spots - seek out where you can be most impactful” 10 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 11. Percent of Companies Ranking Each Skill Among Top 5 This table shows which CI skills benchmark participants selected among their top five most important and the relative rank they assigned to each. Critical thinking was far in front with 44% ranking it #1 and 83% including it in the top five. Q. Which 5 of the following employee competencies are most important for delivering maximum value CI performance? [Choose only 5, placing your choices from top to bottom of list in order of their importance] Rank Critical thinking Communication/ Industry presentation experience Intelligence Competitor source profiling identification Database/ Internet searching skills Product Networking knowledge #1 #2 #3 #4 #5 44% 17% 11% 8% 3% 14% 11% 6% 14% 22% 11% 14% 8% 6% 3% 11% 8% 11% 3% 6% 3% 8% 14% 8% 8% 3% 3% 8% 8% 8% 3% 6% 6% 8% 8% 3% 3% 0% 11% 11% Total 83% 67% 42% 39% 42% 31% 31% 28% Rank Interviewing Company knowledge Data synthesis Scenario development Project & planning management /war-gaming Portfolio analysis Financial analysis Pattern recognition #1 #2 #3 #4 #5 (n=36) 3% 0% 0% 6% 3% 3% 3% 0% 3% 0% 0% 25% 22% 11% 0% 0% 0% 3% 8% 11% 0% 0% 6% 3% 6% 0% 3% 0% 0% 6% 0% 0% 6% 0% 0% 0% 0% 0% 0% 0% Total 11% 8% 58% 22% 14% 8% 6% 0% 11 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 12. Building CI Capabilities & Value Starts with Client Relationship A veteran CI leader shared basic steps for growing capabilities and value in a small or fledgling Competitive Intelligence organization. The steps emphasize building close relationships with a few key customers and collecting feedback on the financial impact of the CI contribution. Steps for Building CI Capabilities & Value  Have a January 1 appointment on the calendar of your primary customer or customers.  Know their businesses well before you walk in.  Start a conversation about:  Which of their objectives need intelligence support to help make a better decision?  What decision needs to be made in what timetable?  How critical is it to the growth of the company, or at least at producing revenue or reducing cost?  Be able to directly link CI to an increase in revenue, a decrease in costs, or an opportunity cost that is avoided. Use feedback to improve CI services To close the loop, get client feedback— immediately not at the end of the year Delivering intelligence back to customer Supplement with primary interviewing if necessary to support analysis Execute the secondary research Establish plan for fulfilling KITs “It’s critical these days is to be able to say the intelligence gathering program can move the needle. If it can be measured and attributed to CI input, that’s what gets people recognized for value. Especially if it’s a small, start-up group.” – Company E Work with client to define KITs 12 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 13. About Best Practices, LLC Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics, and winning strategies of world-class companies. Best Practices, LLC 6350 Quadrangle Drive, Suite 200 Chapel Hill, NC 27517 www.best-in-class.com 919-403-0251 best@best-in-class.com 13 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC