Saturday, January 27, 2007

The New Era of The Long Tail of the Pharmaceutical Industry?

I came across a good article on the New York Times this morning, The Dangers of Swinging for the Fences by Joe Nocera. Reading this article, I could not help but think whether the pharmaceutical industry had entered a new era where addressing the long tail of drugs production would be the next evolution for that industry.

Joe Nocera makes the point in his article that the pharmaceutical business is changing. This is particularly well illustrated by the tough times at Pfizer. The modern Pfizer was built on Blockbusters, which is what the industry calls medicines that generate $1 billion or more in annual revenue.

At Pfizer for instance, the top 4 drugs account for 35% of revenue. Lipitor alone with $12.9 billion in annual revenue accounts for 27% of Pfizer's revenue. And with Lipitor coming off patent in 2010, Pfizer needs to worry on how to make up for that blockbuster's revenue.

The blockbuster business model is falling apart - and not only in the pharmaceutical industry by the way. First, big bets like the Lipitor one, require a significant time period to recover the investments to produce such blockbuster and drug patents expire after 17 years. Second, expensive go to market strategies with direct advertising to consumer and doctors are experiencing a backlash.

New business models in the pharmaceutical industry are starting to favor the long tail of drugs where new discoveries tend to be very much targeted and according to Harvard economist David Cutler:
Drugs are eventually going to be customized for individuals.

Jeffrey Kindler, CEO of Pfizer is betting on it and wants Pfizer to become as good at developing $500 million drugs as in coming up with new blockbusters. Well, that's a big bet for Pfizer and let's hope with Pfizer can pull it off.

It will make for a much healthier industry and could be the start of a new area of the long tail of the pharmaceutical industry. It will be interesting to watch closely how successful Pfizer is at revolutionizing its industry.

Friday, January 26, 2007

The Cost of Ineffective Search

Great article in Network World on the Cost of Ineffective Search. The author starts with a strong punch line:
A company that employs 1,000 information workers can expect more than $5 million in annual salary costs to go down the drain because of the time wasted looking for information and not finding it, IDC research found last year.

You think that's bad. think again:
A survey conducted by Accenture this month of 1,000 middle managers found that more than half of the information they find during searches is useless.
  • The Butler Group estimates that 10% of a company's salary are wasted on ineffective searches.* Susan Feldman at IDC found that 3.5 hours each week are wasted on search that don't turn up the right information.
  • People spend about 9-10 hours a week on average looking for information and don't find the information they are looking for 1/3 to 1/2 of the time.
So why is search so ineffective?

1. Enterprises are not investing much in search
Most companies are under-investing in search compared to other systems such as portals, dashboards, databases and other enterprise systems and are not using the latest search technology. The best search applications use concept searches and very few companies have adopted such technology.

2. 90% of the documents that are created have no useful metadata
Companies for the past 10 years have found it extremely difficult to get employees to add metadata to content.

3. The right data sources are not getting indexed
Companies need to figure out what search is used for (customer service, eDiscovery, etc.) and adapt their search strategy.

The Answer?
The semantic web is viewed as an answer to ineffective search. Recent research from MIT Sloan shows that using semantic search technology will turn up most desired results about 80% of the time compared to 50% of the time with search technology used by most companies today.

Improved metadata through a non-intrusive tagging process will definitely contribute to improved search as well, further indicating the value of social tagging.

Tuesday, January 23, 2007

Service-Oriented Information Infrastructure

Mark Lewis had an interesting write up a few days ago on Service Oriented Information Infrastructure (SOII) and I could not agree more with him. Actually, I believe that in many ways this trend has already started. Look at Amazon Simple Storage Services and how sites like SmugMug and YouOs use this infrastructure to essentially run their web sites. You are talking 60,000 customers utilizing 12 GB of storage and 80 GB of bandwidth per month for YouOS and 10 terabytes of new images each month for SmugMug. That's serious infrastructure there. In the case of SmugMug, the company estimates saving $1/2 million a month in storage expenditure!

So, I definitely agree, SOII is the way of the future for the storage industry, looking at Amazon S3 strategy is actually enlightening.

Amazon S3 Strategy
This actually strongly highlights the need for standards in that space. But, then imagine the possibilities: based on the value of their information, customers could either leverage an Amazon S3 services or internal storage for key business records. This also means that application providers need to anticipate such need and layer their product architecture accordingly.

This is starting to happen, Koral, a startup in the content management space is built from the ground up to support storage as a web service and has done a reference implementation using Amazon S3. It will take a while for this type of technology to be adopted in the enterprise, but given the profound impact it will have on established players' product architecture, this clearly has the potential to be a disruptive innovation.

Saturday, January 20, 2007

The Value of Co-Creation

I have been reading Wikinomics by Don Tapscott and Anthony Williams. Overall, it is a good book. One of the arguments the authors make is that corporations need highly permeable boundaries to foster innovation in their organizations and be successful. In the software industry, we have seen how IBM and others have leveraged the open source movement to co-create and drive innovation in the industry. IBM for instance estimates that it saves in R&D around $1 billion a year by investing in the Linux community. And in its hardware business alone, IBM sold $2 billion worth of Linux based hardware in 2006. Those make strong arguments for the value of co-creation, right? Well, wait to hear how P&G leverages co-creation. In the late 1990's, P&G realized that out of a $1.5 billion R&D budget, generating a lot of patents, less than 10% of the produced patents resulted in products. So P&G's CEO, A. G. Lafley, set out a pretty aggressive goal: that 50% of P&G new products and service ideas come from outside the company by 2010. We aren't talking about outsourcing here, but true co-creation. Identify most promising ideas out there that help P&G innovate and incorporate them into P&G R&D.

The result is big time dividend as mentioned in P&G's New Innovation Model in March 2006, by Larry Huston and Nabil Sakkab on HBS Working Knowledge.

More than 35 percent of our new products in market have elements that originated from outside P&G, up from about 15 percent in 2000. And 45 percent of the initiatives in our product development portfolio have key elements that were discovered externally. Through connect and develop—along with improvements in other aspects of innovation related to product cost, design, and marketing—our R&D productivity has increased by nearly 60 percent. Our innovation success rate has more than doubled, while the cost of innovation has fallen. R&D investment as a percentage of sales is down from 4.8 percent in 2000 to 3.4 percent today. And, in the last two years, we've launched more than 100 new products for which some aspect of execution came from outside the company. Five years after the company's stock collapse in 2000, we have doubled our share price and have a portfolio of twenty-two billion-dollar brands.

That's pretty amazing and should be a call for action for any executive out there. Co-creation works in a big way!

Saturday, January 13, 2007

What do the "Out There" People in Your Organization Think?

The Attention Company posted an interesting survey on what it calls the "Out There" people. See the "Out There" survey and the "Out There" reactions.

In a nutshell, the survey makes the following points as described below:
  • The "Out There" people are the ones "participating in online communities"
    • 20% of your organization population very active
    • 32% are somehow active
  • They are the winners in your organization
  • Information is everything:
    • Employees at the bottom levels of an organization have most of the knowledge
    • Transparency in decision making increases the likelihood of success
Out There Survey
These points are particularly interesting when put in context with organizations and how better information sharing techniques can help organization perform better. This shows the benefits of having a strategy to best disseminate information and knowledge within a company.

Monday, January 08, 2007

Confluence: A Nice Product Evolution

I have been tracking Confluence for a little while now, I have to give credit to their team for a nice product evolution.
In 2.0 in November 2005, they added label or tagging support with cloud display and improved their dashboard display. See their 2.0 release notes.

More screenshots are available in this slide show.

In April 2006, in their 2.2 version, they added support for personal spaces. See the 2.2 release notes.

And, this January, they are adding people directories in 2.3. See their 2.3 release notes.

For those interested in getting in touch with their developers, some of their personal spaces are available online.