Profits at what price? Pfizer had two choices when it discovered that each vial of its vaccine held six rather than five doses. One was to push the FDA to declare a vial contains six doses. With this decision, Pfizer would make more money. Because it gets paid for each dose, each vial could now be priced twenty-percent above the agreed-to purchase price. The premium would all drop to Pfizer’s bottom line. The alternative was to remember the original price met or beat Pfizer’s expected return rate, which would be huge given the quantity of vaccinations involved. Producing a vaccine for an unpredicted global pandemic is a once-in-a-lifetime opportunity for a pharma company. The extra dose could be a contribution, helping nations vaccinate more people than they had planned. Pfizer’s leadership team decided on the FDA route, choosing higher profits over societal benefits….
The right way for a company to be audacious
The word audacity comes to mind when I think of the fine line brand leaders must walk. Audacious actions can mean bold and courageous, which will build brand awareness and positive feelings. Audacious can also refer to impudent or cheeky, detracting from the brand’s image. Financial considerations create the fine line for brands. Strong brands generate price premiums, leading managers to ask, “How do we grow this brand?” But you do not want your growth strategies to muddle your brand’s image, hence the challenge for moving forward. Showing us the right way to be audacious in its brand strategy is Dove Soap’s advertising, using “real” women in its commercials. They are a sharp contrast to the picture-perfect models most often used in the health & beauty industry marketing. Dove broke ranks by showing women of all sizes and complexions. It also offered a…
Has the drive for efficiency through cost cutting gone too far?
The drive for efficiency has gone too far in my estimation. “But efficiency is always good,” you might protest. True, productivity gains increase incremental profits all else equal. But “all else equal” rarely holds true in practice. Therefore, like all good things pushed too far, gains from incremental efficiency initiatives may not be worth the price paid to secure them. Why is the Efficiency Goddess who brought us big box miracles like Staples, online retailing and record corporate cash balances failing us? Efficiency initiatives usually pay attention only to readily measurable costs, ignoring unintended consequences and opportunity costs. Why do CIOs limit support to only PC-computers? Why do CFOs reduce support staff, forcing administrative work onto revenue-generating managers? Such is the thinking of modern corporate managers: They are brilliant at measuring costs and lousy at measuring professional productivity. Shortsighted trade-offs are magnified as…
The role of Value Propositions in Business Model Strategy
A prospect recently asked, “What is the difference between strategy and value proposition work?” Since “strategy” is used to describe everything from how to stop a 2-year old’s tantrum to how to grow a Fortune 500 business, the question is best posed differently: “What is the role of the value proposition in a company’s strategy work?” A value proposition articulates: a promise of value being delivered to a defined target market, where value is the tangible and intangible benefits less the price the target pays to receive them; why this promise is to be believed; and, the offering that gives rise to the benefits. A value proposition should be defined and regularly reviewed at every level where you also develop a strategy. Remembering to do so will make you a better strategist. At the customer level, great sales reps know how to pitch…