“Money motivates neither the best people, nor the best in people. It can move the body and influence the mind, but it cannot touch the heart or move the spirit; that is reserved for belief, principle, and morality. As Napoleon observed,‘No amount of money will induce someone to lay down theirlife, but they will gladly do so for a bit of yellowribbon.'” – Dee Hock (founder of VISA)
Great businesses are built by people and around people. Great ideals that are required to create and sustain wealth creation are domiciled in the minds and hearts of individuals, like Dr. Ravi Zacharias rightly stated, “there are no great movements moving ahead, there are only great individuals who are moving ahead.”
With the above in mind, the chief aim of organisations that would seek to maintain relevance in the present and near future should be the creation of this vital resource – the human resource.
THE SMART BUSINESS
We live in a knowledge economy in which knowledge-based or “smart” industries make the most money. It is no secret that those that earn the most in today’s world exert the least amount of physical energy. They, however, exert a tremendous amount of mental energy and provide “thought leadership”. All industries are “smart” to the extent that they are, in some part, dependent on knowledge inputs. It is equally true, however, that some industries and parts of industries increasingly rely more on knowledge intensity than others.
The parts of an industry with the greater knowledge input like administration, research and development, marketing, advertorial and information communication technology are increasingly becoming the determinant factors of production and the remuneration of the staff of these sectors show a healthy respect for these “smart” contributions.
It is this creative component of the marketplace that is the key to increasing the value of raw materials and systems. The near-absence of which is one of the limiting factors in the economic development of developing or underdeveloped nations.
In these developing and underdeveloped nations, the requisite will, systems or capacity to incorporate these components into what they bring to the marketplace is deficient. The result is that crude raw materials like coffee beans, crude oil and palm oil, which are at their lowest level of economic value, are offered at the global market arena.
These failings on the part of individuals, organisations and nations cannot be blamed on the lack of financial resources. The lack of financial resources can never be a long-term obstacle; they are only short-term hindrances which can be overcome.
Applied knowledge is domiciled in individuals, and these human beings have varying emotions and aspirations.
A FOCUS ON THE PHARMACEUTICAL INDUSTRY
Speaking from a Nationalistic posture, the Nigerian pharmaceutical industry could be said to threatened by the invasion of Asian firms and hence a greater strain on indigenous firms to either innovate or perish. While we await major nationalistic policies that could tilt the balance of trade in the favour of local players or create platforms that would ultimately favour the development of local content, there is a much greater need for the Nigerian pharmaceutical firm to embrace innovation – research and development.
Innovation is the means by which entrepreneurs either create new wealth-producing resources or endow existing resources with enhanced potential for creating wealth – Peter Drucker
It is the profitable implementation of strategic creativity – Elaine Dundon
There are basically two components of innovation: strategic creativity and profitability.
The pharmaceutical industry is such that the probability for profitability on a long term is very much in the favour of the individual with the greater hold on creativity – value creation.
To engage in value creation, there are some major points that we would need to bear in mind.
TYPES OF VALUE
There are two basic sources of value;
Natural raw material/resource – e.g. oil and gas, man (labour), trees, coal, etc.
Immaterial resource – these could be ideas, techniques, skills, competencies, processing procedures, strategies, software etc.
I have made some postulates to explain my thoughts on these;
- All materials of value are at their least economic value until acted upon by an immaterial resource e.g. crude oil is at the least economic value compared to diesel, gasoline and aviation fuel. The latter are processed products of the former. The same thinking applies to pharmaceutical products.
- Processing is the value expansion factor for all values.
- The process value (immaterial value) is more important than the material value.
- All natural raw materials at their least value would deplete in value if not acted upon by an immaterial resource or value system.
- The value potential of every raw material or immaterial resource can be perpetually increased.
- The most important natural raw material at the market place is man, his labour is the most important factor of production and it is not biceps but the immaterial resource at the disposal of man.
To achieve a perpetual increase in the value of their value propositions and hence of their profitability, pharmaceutical companies would need to innovate at three levels – let’s call these the three P’s of Innovation:
Product innovation is the development of new products or services with enhanced value or the addition of greater value to old products or services. Google, Facebook, iPod, iPad and BlackBerry are product innovations.
Process innovation is exemplified by Michael Dell’s direct sales marketing of computers, e-bay’s online sales of virtually everything and Apple’s iTunes application that sold single tracks rather than the conventional CD album.
These firms did not develop new products or services; rather, they developed new and better processes for doing the same things.
Management innovation was what happened with the development of the Franchise system for business expansion. Venture financing and public limited liability companies are more or less a system of management innovation.
THE CHALLENGE OF LEADERSHIP
All of these focus areas require the contribution of individuals. What a leader really desire is to create a winning mix of individuals in a profitable manner, to do that he must make sure that each component of that mix is good enough. The law of demand and supply dictates that with this focus on individuals, there would be a natural rise in the cost of individuals, hence the natural disposition that home-grown talent is cheaper.
The leaders challenge therefore is to find and grow great people, to make these people create great products and processes and to structure the reward system to reflect this priority.
Firms that would achieve long-term leadership at the retail, wholesale and manufacturing sector of the pharmaceutical industry are those who have achieved the right mix of great people, great management systems and great products and services.
They would be leading organizations that are committed to continuous education, innovation and candour, they would be led by people who can be believed and followed.