Among the cultural similarities that are shared by every pharmaceutical company is the tribalism of sales and marketing.
Among the cultural similarities every pharma company shares is the tribalism of sales and marketing. Their suspicion of each other, their feelings of relative self-importance and their willingness to criticise rather than confer are all familiar to most of us. This is not a new phenomenon and firms spend much time and treasure trying to bridge the gap with coaching, cross-functional teams and 360º reviews.
That tribal habits persist, despite these efforts, suggests that this behaviour has deep, pervasive origins. Plus, while the problem is an old one, the changes in the pharma industry are making its consequences more important. The need to align processes such as diverse key opinion leader management, social media, key account management and compliance means that the cost of tribal conflict will only increase. The importance and difficulty of cross-functional working have been researched and the results suggest that new ways of solving the problem are emerging.
The new ideas about managing the sales/marketing divide and, suitably adapted, other cross-function barriers, have their foundations in evolutionary psychology. Evolutionary theory dismisses the idea that humans are altruistic, unless they are dealing with near relatives. Altruism in a corporate setting is disguised selfishness; people are simply helping others in order to help themselves.
In evolutionary history, humans lived in kin-groups of up to 150 people who shared many of their genes and so they evolved to identify with and support that group. The net result of this process is that humans are hard-wired to be self-serving and to identify with their own group and stand against others.
This genetic predisposition is so deeply embedded that attempts to override it by appealing to sales and marketing people to work together for the good of the company are naive. When management practice comes up against evolutionarily-embedded behaviours, it should put them to good use, not attempt to bury them. In practical terms, this means that the traditional management ideas of trying to make sales and marketing co-operate are simplistic and it is important to understand, then harness, embedded behaviours.
Three examples illustrate the obsolescence of typical pharma industry management practice: getting backing for a decision, setting SMART (specific, measurable, achievable, relevant and time-bound) goals and the internal customer concept.
Getting support through joint decision-making is so deeply ingrained in most pharma companies that it seems heretical to question the concept. However, there is little evidence that sharing a decision increases commitment to it. Some research suggests that sharing a decision helps to communicate it, but joint decision-making may have three disadvantages.
First, it can mean the blurring of accountability and, consequently, a reduction in commitment to achieving the goal.
Second, when the decision is a specialised one, a compromise between specialists and non-specialists may be a weaker decision than a more unilateral one made by the specialists.
Finally, collaborative decision-making tends to be slower and more costly than a more autocratic one. So, getting backing from marketing and sales may not be as effective a tactic as it may at first seem. That is not to say, of course, that decision makers should not consult with, and listen to, their colleagues, but consulting to gather information is quite different from collaborating to get support.
When bright people are given SMART goals, it leads to a number of unintended consequences
Setting SMART goals is another unquestioned mantra for getting teams to work together. Yet, as with collaborative decision-making, there is little relevant evidence for its effectiveness.
The original research behind it was done with factory workers who had very simple tasks. For the complex, knowledge-based and cross-functional work done by sales and marketing people, there is little empirical support that this theory works.
Further, when bright people are given SMART goals, it leads to a number of unintended consequences. First, people manage the targets, not the task and, since SMART targets are often role-based, this behaviour entrenches ‘silo working’ and discourages teamwork.
Second, SMART targets only apply to activity that can be measured. They do not consider important but intangible things like sharing knowledge with colleagues or adaptability. So SMART targets make people pay less attention to the ‘soft’ but immeasurable activities that create much value.
Finally, SMART objectives are time-consuming to administer, which means it is all the more important that they are effective tools. This is not to say that SMART goals should be abandoned, but these weaknesses imply that they are necessary but not sufficient for making cross-functional working effective.
The internal customer
The internal customer concept is often used in sales and marketing. The theory behind it is persuasive: treat your colleagues like customers and satisfy their needs. But its practice is problematic because the internal customer relationship is often one-way. For example, sales may be the internal customer of marketing.
This asymmetric relationship has two flaws in practice. The first is that customers are often very conservative, preferring tactical change to strategic development. The second is that such relationships create status imbalances with the ‘customer’ on top. This leads to social competition, in which the ‘supplier’ underdog undermines the position of the ‘customer’ top dog by withholding information, spreading negative stories and allowing the ‘superior’ function to make mistakes. As with the support and SMART goals, some aspects of the internal customer idea are valuable, but its practice creates as many, or more, problems as it solves.
There are other common management practices that are intended to help the sales/marketing interface while, in practice, hindering it. But these three examples illustrate the point that traditional practice should be challenged in modern pharmaceutical businesses. They also allow interesting contrasts with emerging practices that seem to be more effective. In short, these new solutions can be labelled ‘taking the D’, consilient goals and the dependency web.
Taking the D (for decision) involves changing the goal of cross-functional meetings. Instead of trying to reach a consensus, a specialist function (marketing for marketing decisions, sales for sales decisions) takes on both accountability and authority.
These functions have to demonstrate that they have sought, gained and considered the inputs of the others, but they do not have to reach a compromise. The sales team, for example, has to ensure the call plan fits the marketing strategy, but it does not need approval for it. Taking the D leads to greater accountability and, counter-intuitively, makes the D-holders listen more carefully to other functions. This is because the price, in career and status terms, of making a wrong decision is higher than when the decision is spread across the team.
Consilient goals mean changing the SMART paradigm in two important ways. First, they mean designing individual and functional objectives so that they cannot be achieved without implementing the overall strategy. So, sales targets shift to call rates and sales by target segment and marketing targets include measures that directly fit sales goals.
Second, they mean building-in goals for activity that cannot be measured. So targets are set for sharing information and thinking beyond the role and management judgement is deemed to be a good enough measure of success.
These examples show that traditional practice should be challenged in modern pharmaceutical businesses
Consilient goals mean that managing the target becomes identical to managing the task, because it is not possible to do the former without doing the latter. It also has the side effect of making self-interest work for the strategy, not against it.
The dependency web involves setting goals in a mutually-dependent web. Instead of an internal customer culture, sales and marketing are dependent on each other. So, for example, marketing may be obliged to supply certain sales aids to the sales director’s approval, but the sales team is also obliged to supply competitor intelligence to the marketing director’s approval.
This creates a web of dependency and avoids the status asymmetries listed previously, as well as social competition. In a sense, each function becomes a hostage to the other. The dependency web uses the best ideas of the internal customer concept but without its disadvantages. It therefore replicates the conditions, and builds the habits, of a co-operative Stone Age tribe.
Tribal behaviour between sales and marketing has always existed, but, as the market changes, its consequences today are greater. It cannot be managed by traditional approaches alone. Ironically, the emerging ideas about how to adapt to the future come from the past and the recognition that, beneath the suits, sales and marketing people are products of evolution.
Brian D Smith is adjunct professor at SDA Bocconi and a visiting research fellow at the Open University Business School. He also runs www.pragmedic.com, a specialist strategy consultancy.