Monday, August 19, 2013

Business Models at Issue for Company Chiefs

Regeneron is eyeing a market - about a million people with diabetic macular edema - with their eye drug. The pharmaceutical industry must work its business models, as part of creating treatments for all sorts of diseases. So CEO Leonard Schleifer can talk, simply as a matter of fact, about this being a huge market and therefore a key opportunity for one of their products - Eylea.

In the meantime, neither nor Matthew Herper, with Forbes, even hint at the irony of their conversation.  It's this:  Pharmaceuticals depend on the propagation of disease and ailments to drive their business models.  So even as they provide vital remedies, they tacitly, or maybe not so tacitly, that assorted ailments actually recur. Consider, as a related example, the market for print cartridges:  That's repeat business for the life of the printer.

DJs (disk jockies) are very much a part of the economics of night clubs. The good ones are going more mainstream and can command higher fees. Neil Moffitt, CEO of Hakkasan Group, applauds this, that is, as long as the DJs add value to the club and the company.  Put more bluntly, imagine Moffitt saying this to them:  Want me to pay you more?  Make more money for me!

I was in a related situation:  I was offered a managerial promotion, but the position was a problematic one.  So before deciding on the offer, I proposed a plan for resolving these issues.  Moreover, the compensation package was lower than I expected.  As part of this proposal, I also made a business case for a bigger package.  In particular, the company was weighing a major sales initiative that would've cost $1 million.  With a modified job description, I could've re-analyzed and led the initiative and brought down its costs to about $100,000.  The difference would've more than covered my (proposed higher) annual salary!  

Colette LaForce, Chief Marketing Officer, at AMD says, "Marketing is the new HR." It's a catchy, sensible point: A company has to make sure that marketing works with its own people first and that they buy into what the company offers.  

I'm not familiar with AMD products, but here is my query:  LaForce seems to know her stuff rather well, and comes across as articulate and confident.  But what does she think about her company products?  I mean, really think.  How do her technical colleagues view their offerings?  More vitally, how have customers experienced the devices they've bought?

The reason I ask is that:  There were only six comments, as of now, on this video interview on YouTube.  But there is a decidedly sour note from two viewers:
my amd laptop is a piece of garbage. They dont need any marketing, they just need to make better products.
we just want value for our money !!!!
When the new CMO at RIM, makers of BlackBerry, was also interviewed by Forbes, he struck me as steely confident, articulate and knowledgeable, too.  But I commented among colleagues that the issues behind RIM's horrendous decline in the last three years were not about marketing, rather they were about product quality and timely delivery.  A few months later, RIM sales are still lagging, and company executives have yet again wondered what they ought to do and whether to sell the company!

So I hope that LaForce applied business acumen to evaluate the viability of the very things that she and her function are tasked to market.    

Thank you for reading, and let me know what you think!  Also, if you'd like a PDF of this article, please e-mail me at

Ron Villejo, PhD

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