- Welcome back to Business Strategy as a Scientific Skill.
My name is Deborah Dauber,
and in this lecture, I'll be walking you
through the environmental assessment toolkit.
By the end of this class, you will be able to describe
commonly used tools for environmental assessments,
understand benefits of doing the analysis,
identify which tool applies best in a given setting,
and finally, use one or more of these tools
to describe the operating environment
of a scientific enterprise.
Let's start by revisiting the definition of strategy.
In an earlier lecture, we defined strategy
as being how a scientific enterprise
plans to conduct activities in order to achieve
a set of overarching goals.
Here's how this breaks out when an enterprise
is actually developing a strategy.
They'll start by thinking about their current state.
What are their mission and values?
They'll do a little internal assessment
and think about what their strengths are,
what their weaknesses are, what their core capabilities are.
And of course they'll also do an environmental assessment,
where they think about their operating environment,
whether that be a market or a research environment,
anywhere where they plan to operate and achieve their goals.
Then they'll think about their desired state.
What's their vision and what are their long-term objectives?
Or put another way, where do they want to be
at the end of the strategy period?
The strategy is then simply a set of objectives
that are prioritized and written in detailed form
that tell the enterprise how to get from their current state
to their desired state.
Today, we're gonna focus in on tools
that help with that environmental assessment.
So why do we need tools to evaluate the environment?
It turns out, environmental assessments
are incredibly complex.
Let's take this enterprise that wants to sell this product.
Well, of course, first they're gonna think
about their customers.
Customers can be an incredibly simple group
but they can also be very complex.
In the pharmaceutical industry,
customers include patients, doctors,
hospitals, public payers, private payers,
and any one or more of these can combine together
to make a decision about how a patient is treated.
So the customer set is incredibly complex.
The next set of stakeholders a company
might think about is the distributors.
How do you get your product to your customers?
This could be as simple as the click of a button
if you're selling software or it may involve shipping,
storage, distribution, resellers, and any one or more
of those stakeholders could be critical to your strategy.
You also have to think about suppliers.
Are your suppliers consistent or inconsistent?
Is there a seasonality to your supply?
Do you need to think through the supply
and how you get your supplies in order to make your product?
Competition.
Of course there are direct competitors,
especially if you're in a commercial industry.
Other companies trying to sell products
to meet the same need you're trying to meet.
But also competitors can be a little more indirect
than that, it could be any option out there
that your customers may choose instead of your product
in order to meet their needs.
So competition is, of course, a really critical piece
to think through in developing your strategic plan.
And then there are a series of forces
that are indirect, not necessarily tied
to any one stakeholder but nonetheless
affect your operating environment.
This could include regulatory agencies,
economic trends, technology trends,
anything that affects your ability to achieve your goals.
So as you can see, there are a lot of things
to think about in an environmental assessment.
And this is where the tools come in.
Assessment tools are a framework.
They help you to facilitate conversations,
organize your knowledge and maintain focus
as you think through your environment.
Today, we're gonna talk about three different tools
used in environmental assessments.
The SWOT, the PEST, and the Four Corners.
Let's start with the ubiquitous SWOT.
SWOT stands for Strengths, Weaknesses,
Opportunities, and Threats.
And they're arranged in a grid and as you can see,
the columns refer to whether an attribute
is positive or negative.
And the rows refer to whether it's internal or external.
Let's take an example SWOT.
Let's say I'm a pharmaceutical company
and I wanna sell product X.
I'm gonna think through my own attributes for this SWOT.
What are my strengths?
Well, my product is very convenient.
I'm please with this.
The patient can choose between oral
or subcutaneous formulations, whichever works best for them.
We were also the first to market,
and we have broad approvals.
And because of that we have a lot of market share,
and very high awareness.
These are all attributes we can take advantage of
in our plan.
We have some weaknesses, though.
Our efficacy is perceived by our customers
to be weaker than that of the competition.
And we're also missing data in a key patient set.
And those two weaknesses are attributes
we have to think about compensating for in our plan.
Also our product requires fasting
before administration, which makes it
a little less convenient than we'd like it to be.
We also have some opportunities.
We've been working in our labs
and we have a new, more convenient formulation
that will help patients to have to dose less often.
We can take advantage of that launch
to help talk to patients about something new.
We also, because we've been out in the market
for such a long time, and we have such a large share,
we have fantastic relationships with our distributors.
And we may choose to leverage those
to try to get better deals, better contracts in place.
And finally, we've been thinking about doing a DTC,
or direct-to-consumer campaign,
that would allow us to capture new patients.
Finally, let's think about the threats.
Well, unfortunately, our competitor
has also been hard at work and they
are getting ready to launch a new product of their own
that will be more efficacious and more convenient than ours.
So that will be a threat to our market share
when they do that launch.
Also, our customers have been increasingly dissatisfied
with our price increases, and finally,
and perhaps most importantly, in three years
our patent is gonna expire and we need
to start thinking about how much money
we wanna invest in this program,
and when is the right time to just kinda let it go
until the generic erosion hits us
and we lose those revenues.
So as you can see as I work through the SWOT,
even now I'm starting to think about ideas
for where my strategy needs to go.
When do you use a SWOT?
Well, the benefits of the SWOT
are that it's widely applicable and well understood.
It's a fantastic tool if you wanna walk into a meeting
and start getting your whole team
onto the same page quickly.
Drawbacks?
It's a little bit less comprehensive than a dynamic market.
There's nothing to say you can't consider trends
in regulatory or economic factors when you're doing
your SWOT, but it doesn't explicitly call for them
and you really have to think that through
if you're using the SWOT.
The ideal setting is in stable markets
where competition is the most important
environmental driver, and in fact,
SWOTS are used quite commonly
in the pharmaceutical industry.
Before I leave the SWOT I wanna also point out,
not only is this an environmental assessment tool,
it's also fairly commonly used
for internal assessment, as well.
Our second tool we're gonna talk about today
is the PEST.
PESTs are really useful for validating
environmental forces, and for PEST,
I'm gonna take a more academic approach
to describing each of these forces.
The forces we're looking at are political,
economic, social, and technological.
Let's think through what this might mean for a lab,
particularly a lab doing some cutting edge research.
For political, what's the regulatory environment,
and what are the trends?
Who are the congressional advocates or detractors?
This might be particularly important if you're, say,
doing stem-cell research and you wanna know
if you're gonna be able to continue to operate
in an increasingly conservative environment.
Economic trends.
What are the budgets of your funder or funders,
and are those budgets likely to increase
or decrease over the coming years?
Also, what are the institutional finances
of the institution in which your lab is based?
What kind of constraints do those finances
put on your lab?
Social.
What are the public perceptions of your technology,
not just the overall general public,
but also your scientific community?
What are the hot research areas
and what kind of articles would make your peers
and your colleagues most excited to see published?
And finally, technological trends.
What kind of available research tools
and supporting science is there
that you can build upon?
And also, what are competing technologies
in some of the competing labs that you need to stay aware of
as you embark upon your research program?
When would you use the PEST?
Well, clearly the PEST gives a very nuanced consideration
of influences from indirect stakeholders
and it can capture unknowns in a changing landscape.
Drawbacks.
There is somewhat less familiarity,
so if you bring it out in a group,
you might need to take some time
to explain it to them and talk them through it.
It's also unhelpful when the PEST forces themselves
are constant and the same for all competitors.
You'll spend a lot of time turning
and not really creating anything useful.
So the ideal setting for the PEST tool
is when there is new technology
or technology pushing social norms.
When there's an unknown or untested regulatory environment.
And here we have a couple headlines, for instance,
CRISPR work, or growing human replacement organs in animals.
These are areas where these scientists,
whether explicitly or informally,
have probably thought through some of these forces
before they started in on their research.
Our third and final tool that we're gonna talk about
in this course is the Four Corners tool.
And Four Corners is really useful
for getting inside of the head
of a competitor or a stakeholder.
Using the Four Corners tool, you think through
a stakeholder using four different parameters.
The drivers, the strategy, their assumptions,
and their capabilities.
Let's walk through each of those.
Drivers.
What is this enterprise's goals and values?
What is their culture?
How are they organized?
What's their philosophy?
Basically, how do they make decisions
and what's important to them?
Second, their strategy.
How have they described their strategy?
What kind of investments have they made?
What kind of relationships do they have?
How successful have they been?
Are they likely to continue on
with this same course of strategy
or are they likely to think about changing it?
Assumptions.
What do they assess their own strengths
and weaknesses as?
How do they assess the market?
Do they think they're strong in a strong market
or weak in a strong market?
How might that affect their strategy?
And finally, their capabilities.
What kind of assets and competencies
does this company have?
How adept are they to make changes
if they need to in their strategy?
How might this affect their ability
to be nimble in the market?
So clearly, as you've seen, the Four Corners
is a really useful tool for creating
an in-depth profile of another stakeholder,
and really anticipating their strategies.
Some drawbacks are that it is a lot of work
and it captures only one competitor at a time,
or one stakeholder at a time, so if you're interested
in multiple stakeholders you do have to do the work
for each one separately.
The ideal setting for Four Corners
is anticipating competitive strategy
particularly in the absence of data.
Really getting in the headset of these other stakeholders.
An added little bonus is if you're looking for a job,
you can use Four Corners to evaluate
a potential employer and really think through
where you think their strategies are gonna go
and how you feel about that.
So let's revisit now the structure of strategy.
In this lecture, we've been exploring several tools
that help with the environmental assessment
for an enterprise.
And to some extent, the internal assessment as well.
These tools are used all the time
in a corporate setting, by commercial groups,
strategy groups, corporate development groups,
and can also be applied very well in a lab setting
by leaders of the lab group or groups.
I wanna also point out that these tools
are really useful for you personally
as you plan your career or your research plan
to think through what your own personal strategy is.
And that brings us to the completion of this lecture
on environmental assessment toolkit.
At this point you should now be able to describe
commonly used tools for environmental assessments,
understand benefits of doing the analysis,
identify which tool applies best in a given setting,
and use one or more tools to describe
the operating environment of a scientific enterprise.
Thanks for joining me today.