Thursday, May 10, 2018

Viagra Is Not Just For Men!

There was a time when the profession of medical representatives (called drug reps in the USA) held an enigmatic charm for those outside looking in. They were considered to be articulate, charming, suave, well-paid and well-informed. As with other (often erroneously) generalized stereotypes, the ‘bohemian’ quality of their lifestyle that was often whispered about was neither more nor less on an average than for any other profession. The opening up of information technology jobs in the middle 1990s, which offered astronomical salaries by the existing standards and international exposure disrupted many existing orders and changed many social paradigms. As the industry attracted articulate and intelligent youngsters, pharma selling jobs lost much of their sheen.    

C. Northcote Parkinson's In-laws and Outlaws (1962) teaches enough tips and tricks to those interested in scaling the corporate ladder, from first entry, right up to the top – without actually working hard. Parkinson warns the reader that his book is not like other self-help books that “urge you to be a little more intelligent; a little more hard working; a little more painstaking.” He wryly observes that if a reader was all that, he would probably not need a book! Jamie Reidy’s Hard Sell: Love & Other Drugs (2005) may be less classy, as it was written by a first-time writer but it teaches enough tips and tricks for drug reps to beat the system, despite the industry’s sophisticated surveillance systems to check on its field sales people.

There were several works on the fascinating profession of pharma sales reps. Sidney Sheldon’s Bloodline (1977) is the story of a giant pharmaceutical company. Sheldon called the company Roffe & Sons, similar to the real life Hoffman-La Roche. The novel has a drug rep character and gives an account of the profession. The plot of Arthur Hailey’s fictional work Strong Medicine (1984) is based on the career of a drug rep who eventually becomes the chairperson of her company. Robin Cook’s Mindbend (1985) puts in perspective the lengths to which pharma companies go to – literally – “bending doctors’ minds” and the role played by drug reps in the manipulation. Douglas Farrago’s Diary of a Drug Rep (2017) gives an interesting and realistic peep into the seamy side of the enigmatic profession in manipulating the medical profession.

Hard Sell: Love & Other Drugs is however a first person account of a drug rep and reads like memoirs. The book is witty and hilarious, especially the Viagra tales! It lists quite a few maneuvers drug reps have tried and capers they pulled to beat the system. For some Indian medical reps there could be a sense of déjà vu in reading the memoirs. But there are quite a few that they could not even imagine.

Jamie Reidy disproves Pfizer’s assumption that former army men are malleable to organizational discipline, which was why the company recruited its drug reps from the army. After a career in the army, Reidy joined Pfizer's paediatric division as a drug rep and then moved on to the urology division that marketed Viagra the breakthrough drug for erectile dysfunction. Many would be surprised to know that the drug is not just for men! Reidy’s first inhibition when he sought to detail the drug to a lady doctor – as he explained how it worked in women – and how he she reacted makes for hilarious reading.

Reidy was with Pfizer for five years from 1995 to 2000 and then spent another five in Eli Lilly's oncology division. Eli Lilly sacked him after he published Hard Sell: Love & Other Drugs in 2005. Naturally! What he revealed was enough for pharma companies to see the need to scrutinize the work of their drug reps and probably sack half of them! He explained how he did his ‘best’ to beat the system: from bulging expense accounts to buy dinners for self and friends to scooting work and filing false reports. In any case, Reidy must have found that cancer was more macabre and less interesting than erectile dysfunction.

The book has been adapted into a major motion picture starring Jake Gyllenhaal and Anne Hathaway. The success of the book and the motion picture set Reidy on a new course, as a writer. 

Originally published at VOXINDICA 

Wednesday, December 31, 2014


Field Humour

There is this interesting story of an insurance salesman in the SpeakersEncyclopaedia of Humour.

The meek insurance salesman entered the sanctum of the big, burly Sales Manager.

The BBSM growled, “What is it?” –

The meek salesman mumbled “Sir I am from “α-β” Insurance Company; but I suppose you may not be interested in a policy. It’s OK” and began walking back.

The BBSM has been a very successful salesman in his time and trained hundreds of salesmen in his career. He took pity on the insurance salesman and said, “Hey come here; just to give you some confidence, I will buy a policy.”

As the salesman wrote the policy proposal and collected the cheque, the BBSM felt he should encourage him and said, “Look you should exhibit confidence if you want to achieve success in your profession.” He added, “You should plan a strategy to sell to each prospect and implement it.”

The salesman collected the signed form and the cheque, put it in and closed the bag. While walking out of the room he said, “I do plan a strategy to sell to each prospect, Sir. And this is the one I use for dynamic Sales Managers!”

Saturday, April 6, 2013

Novartis Vs. The People Of India

Ivan Illich opened his seminal work, Limits to Medicine with the observation that ‘the growth of the medical establishment is a major threat to health.’ A large part of Illich’s work dealt with iatrogenic (meaning physician-induced) diseases. But to Illich, the ‘medical establishment’, also includes the pharmaceutical industry.

The recent Supreme Court verdict in the Novartis’ Gleevec (Glivec) patent case has generated a lot of heat and uninformed debate in the media. Novartis challenged the order of the Intellectual Property Appellate Board (IPAB), for rejecting a patent for its ‘old wine in a new bottle’, first in the Madras High Court and then in the Supreme Court. Novartis filed world-wide patents for its active molecule imatinib in 1993. In India, the company filed patent in 2003 for imatinib mesylate a beta crystalline form of the active ingredient, under the ‘mailbox provision’.


Novartis’ application for a patent for its beta crystalline form was rejected by the IPAB in 2006 on the ground that Novartis’ original patent application covered all forms of imatinib. The Madras High Court decreed that IPAB’s rejection of the application under Sec. 3 (d) of the Indian Patents Act as amended in 2005 did not violate Article 14 of the Indian constitution. This is now upheld by the Supreme Court.

The Indian Patents Act of 1970 did not recognize product patents but only process patents. However India agreed to consider patent applications filed from January 1 1995 for granting product patents pending amendment of its laws in line with the requirements of the WTO. The process was known as the ‘mailbox’ provision. Eventually India amended its patents law in 1999, to grant product patents with effect from January 1, 2005. A patent is an intellectual property which has a life of 20 years from the date of filing and which gives its holder exclusive marketing rights. The actual period of exclusive marketing depends on the company’s ability to develop the product for commercialisation.


In the pharmaceutical industry, Research and Development (R & D) is of course an expensive and risky process. A company begins with thousands of molecules and narrows down its search to a few (less than a dozen) for further experimentation. After initial animal experimentation to establish efficacy, safety and toxicity a candidate drug (known in the industry as New Chemical Entity or NCE) is selected for human clinical trials. A patent application is generally filed at this stage and approval sought for commencing human clinical trials. These are conducted in four phases before it is submitted for marketing approval by the regulators. It is called filing a New Drug Application (NDA). The process takes quite a few years. This means, although a patent is granted for 20 years a company gets to exclusively market it for the residual period after conducting clinical trials and obtaining marketing approval. Even after a drug is approved for marketing it is still tested in a process called, Post Marketing Surveillance (PMS) every year to find out if any hitherto unnoticed side effects come to light. The company has an obligation to market a product only to be used in conditions for which it is approved. However a physician may use it in other conditions if he finds it suitable. This is known as off-label usage.

There are varying estimates about the cost of research and development of drugs. Several years ago an article in the Readers’ Digest put it at between $ 100 and 200 million. Recent estimates vary from $ 500 million to 1 to 2 billion depending on the therapeutic category and method of calculation used, such as inclusion of capitalization and opportunity costs. This does not mean that the entire amount is spent by a company. There is public funding and tax write-offs on R & D spending, which is a not unlikely incentive for bolstering the figures.

Pharmaceutical companies quite naturally argue that they have to make profit out of successful candidate drugs because they have to incur huge expenditure on R & D, which is a long drawn and uncertain process. This is the reason they claim, new drugs cost so much.


However pharmaceutical companies are aware there is an element of uncertainty in the business. For, even if a company is able to come up with a successful candidate drug, there is no guarantee that a rival company with a competing product might not upstage it. As an illustration, see the case of the first anti-ulcer drug cimetidine. It was introduced by the British multinational, Smith Kline & French (SK&F) in the mid-seventies when the only cure for peptic ulcers was surgery. The drug was indeed a boon for patients as it reduced the necessity for surgery in about 90% of cases. The drug marketed by SK&F as Tagamet entered the Guinness Book of World Records for maximum number of prescriptions received in a year. A few years later another British multinational Glaxo came up with an updated version of the drug ranitidine which it marketed as Zantac. It too entered the Guinness Book of World Records in the year of its introduction, and Tagamet lost 50% of its market share. As a result, many heads rolled in SK&F and its Chairman had to resign. The two companies merged in the mid-nineties to become what is now known as GlaxoSmithKline (GSK). (In its process of mergers and acquisitions, GSK has also absorbed several other companies like Beecham and Burrows Wellcome.)

The success of the first two molecules, in the class of drugs called H2 receptor antagonists, made other companies board the bandwagon and many variations of cimetidine were launched. These include famotidineloxitidinenizatidine and roxatidine. Of these molecular variations only ranitidine and famotidine could achieve significant commercial success, while the others remained small players. For the treatment of peptic ulcer, another class of more powerful drugs known as proton-pump inhibitors emerged with members like omeprazoleesomeprazolelansoprazolepantoprazole and rabiprazole, a few years later.

Wouldn’t it be unfair for a company marketing, for instance, roxatidine to claim the same pricing privilege as SK&F which has laid the groundwork for finding a drug for peptic ulcer? On the flip side could SK&F claim that, as there was every possibility of its market monopoly being upstaged, it should be permitted to recover its costs at the earliest? In view of this should the company be allowed to price a tablet of cimetidine at $100 a pill?


It would be unfair to see the Indian Supreme Court verdict as a triumph of left-liberal altruism against Western capitalism for several reasons. Firstly, US courts too held that derivatives of known substances are not eligible for patent protection under the ‘doctrine of inherent anticipation’. Also in the US a patentee cannot claim rights for more than one substance with identical claims, under the ‘doctrine of double patenting’. The third principle governing US jurisprudence in relation to intellectual property rights is the ‘patent misuse doctrine’, which prevents pharmaceutical companies from extending their patent rights by obtaining multiple patents covering essentially the same invention. In her extensively researched paper, Trials And TRIPS-ulations: Indian Patent Law And Novartis AG v. Union Of India, (Berkeley Technology Law Journal, Vol: 23. Mar 21, 2008. 281-313), Lynda L. Lee opined that the stand of the Indian courts indicates that the objective of India’s Section 3 (d) is not a radical departure from international practices to regulate the patenting of derivatives and new uses. It must be noted that the article was based on the Madras High Court judgment and written much before the final verdict of the Supreme Court.

The reaction of Novartis to the Supreme Court judgement appeared a bit peevish. In a press statement, the company’s Vice Chairman warned that it will discourage R&D spending by multinational companies in India. This is a bit surprising as multinational companies may have been using India as low cost hub for manufacturing and conducting clinical trials but never seem to be bothered about diseases specific to India. For a long time the healthcare fraternity has been complaining that multinational companies focus on diseases prevalent in the western world for researching remedies. For example, we have not seen new drugs introduced to combat malaria and tuberculosis which are endemic to countries like India, in years. The incidence of both the diseases is seeing virulent, intractable forms. Today tuberculosis resistant to multiple drugs – multidrug resistant TB or MDRTB is quite prevalent. On the other hand new drugs for cancer, diabetes and hypertension and related diseases are introduced by the dozen every year.


Multinational companies which have been assuming moral high ground for their altruistic R&D efforts ‘to ameliorate pain and suffering of humanity’ have also been guilty of destroying the lives of millions of people for short term gains.

The introduction and withdrawal of thalidomide is a classic example. In the 1950s, Distillers & Co (the makers of Johnnie Walker whisky) purchased Grunenthal, a small German pharmaceutical company. Grunenthal developed a tranquiliser named thalidomide which was then believed to be so safe it could be prescribed to pregnant women to relieve them of morning sickness. It was introduced in several countries in Europe and freely prescribed for pregnant women. In the early sixties a causal link was established between the use of thalidomide and delivery of malformed babies. This property of a drug which causes foetal abnormalities known as teratogenicity, was unknown till then. By 1961 an estimated 10000 to 20000 thalidomide babies were born and the drug was withdrawn. 

The thalidomide story should have warned the managements of pharmaceutical companies to be extra careful in vetting and promoting their products. But alas no, drugs with serious adverse effects have been introduced by pharmaceutical companies with unceasing regularity. Here are a few examples, some of which may not be as lethal as thalidomideAnalgin (like penicillin) is known to cause anaphylactic reactions so severe a single tablet could kill a patient. Anti-inflammatory drugs like oxyphenbutazone and phenylbutazone have been known to cause blood disorders. However all these drugs were marketed by multinationals in India for a long time after they were banned in their home countries. The newer pain-relieving drug, nimesulide has been banned in several European countries but is still marketed in India (however not by multinationals, but by Indian pharmaceutical companies). Terfenedine, introduced as an advanced, non-sedating anti-allergic had to be withdrawn a few years later as it was found to cause heart-problems. The latest in the series of drugs to be withdrawn was the antibiotic gatifloxacin, which was found to cause cardiac problems. Illich mentioned in his book that the American innovator of chloramphenicol (trade name, Chloromycetin) marketed the drug for simple conditions like acne. Originally introduced for treating typhoid, the drug is known to cause bone-marrow depression. (The human body produces red-blood cells in the bone-marrow.)


An argument that was vociferously voiced in the television debates relates to pricing; especially that pharmaceutical companies which spend millions (billions?) should be allowed the freedom to price their products. And any regulation would be a disincentive for them to introduce newer products. This argument lacks substance because the pricing of drugs is not uniform even in the western world. For example the prices of drugs in Canada are far lower than the corresponding prices of drugs in neighbouring USA. In some cases the Canadian prices are about half of their American counterparts.

The marketing of anti-retroviral drugs (used to treat AIDS) in South Africa offers an object lesson for those who blindly take sides with the advocates of free-pricing. Indian companies like Cipla and Hetero Drugs offered to sell a combination of anti-retroviral drugs @ $350 for a year’s course. Four multinational companies challenged them in the South African Supreme Court, on the ground that these companies were infringing their patent rights. They were selling the drugs @ $10,000 for a year’s course. They had to withdraw their suit following worldwide revulsion. For, more than a third of the world’s AIDS population lives in Sub-Saharan Africa.

In the television debates, medical doctors representing Novartis claimed that the company has a scheme for providing the medicine free of cost to ‘below poverty line’ patients. This is not entirely true because the company stopped providing imatinib free after two Indian companies were permitted to introduce low cost alternatives in 2006. (See the research paper cited above.) Even if the company has been providing the medicine free to BPL patients, how does one define a BPL patient? Certainly a household with an income of Rs 50,000 per month cannot be considered BPL? If the household has a patient who requires imatinib, can it expend Rs 1.20 lakh a month? Besides, many cancers require multiple regimens of treatment, which include chemotherapy (drugs), radiation and surgery. The latter two are even more expensive than the cost of medicines.

TAILPIECE: By the by, the promotional or marketing budgets of pharmaceutical companies exceed their R&D budgets by a long chalk.   

This article originally appeared in VOXINDICA on April, 04, 2013

Monday, April 9, 2012

'You Can Sell!'

Book Review

Khera, Shiv. (2012) You Can Sell. Chennai. Westland. Pages: 316. Price: Rs 275

For some strange reason, selling is referred to as the second oldest profession in the world. A number of other professions compete for the second spot including spying. Designating selling as the second might be an attempt at disdain, ascribing to it associative notoriety with the first. Notwithstanding the fact that sales people are generally unwelcome and viewed with suspicion, they do have a useful function in the society. A successful sales manager was fond of saying, ‘the only person in the world who prays for your long life is your insurance salesman!’ Quite true! The reason is simple. An insurance salesman receives commission on a life policy as long as the insured person lives, but his heirs bequeath his property when he ceases to.

The lighter side apart, every human interaction has an element of selling in it. It need not be selling goods or services. It could be selling ideas. The obvious implication of this idea is that to get ahead in life, one has to sell oneself. Quite often we find the same attributes or prerequisites listed as factors for success both in self-improvement / success literature and selling skills manuals. They are a pleasing personality, a positive outlook, an ability to forge harmonious interpersonal relations and good communication skills. Conversely this is the reason why for sales people success literature has been a first manual.

Napoleon Hill’s 16-lesson The Law of Success (1928) was one of the earliest tomes on the subject in modern times. This was followed by Dale Carnegie’s How to win friends and influence people (1936). Since then there has been a steady stream of success literature, the most popular in recent years being Stephen Covey’s Seven Habits of Highly Successful People. Some like Norman Vincent Peale’s The Power of Positive Thinking (1952) and Robert Schuller’s Tough Times Never Last but Tough People Do (1983) had religious overtones embedded in them. Parkinson & Rustomji’s Business is People, Walter Veira’s booklet on salesmanship, revised and updated as The New Professional Salesman and Spencer Johnson's The OneMinute Sales Person deserve mention in this context as they are precisely and very well written books on the subject. There are hundreds of others, including biographies of great sales people and fiction, which among them must have covered every aspect of selling skills.

Therefore there is not much new ground left for Shiv Khera to cover in his (new) book, You Can Sell. However one must give it to him for putting together a comprehensive manual for sales people which covers the entire range of mechanics from positive thinking to professional pride; from prospecting to selling; from goal setting to time management. There is also a chapter on ethics. He has provided an exercise at the end of each chapter for self assessment of readers as they go along. The book is peppered with interesting anecdotes. Old salesmen’s jokes have been skillfully used to make points. For people in the profession they might sound jaded but planted in a context, make for interesting reading. Even the Rotary Club’s four way test is planted in the chapter on ethics.

You Can Sell is highly recommended. For people in the business of selling it makes for a thorough revision of all that they have learnt over the years. For others it is a comprehensive, useful primer on the subject.

This review is part of the Book Reviews programme at

Thursday, March 29, 2012

Scammed - Confessions of a Confused Accountant

Book Review

Anonymous. (2011) Scammed - Confessions of a Confused Accountant. Bangalore. Grey Oak Publishers. Pages 175. Price: Rs 175/-

Auditing and business consulting cannot be combined just as oil and water do not mix. The reasons for this are simple. Auditing is retrospection. It deals with hard, cold facts. It advises against adventurism and advocates conservation. Caution is its watch word. On the other hand business consulting is prospective in nature. Optimism is its mantra. It functions in uncertainty. Its principle is gung-ho adventurism. It favours exploration of new ideas and new markets. ‘The only safe ship is the ship in a port’, business consultants wryly quote! Therefore the twain cannot meet. The split and demise of Arthur Andersen LLP is attributed to the firm’s overweening ambition to ride the dichotomy between auditing and business consulting at the same time. Eager to compete with its (own) business consulting arm, Andersen Worldwide in revenue generation, Arthur Andersen compromised on accounting standards, as a result of which Enron, the Texas-based energy firm sank. Along with it the original accounting firm Arthur Andersen broke up and its regional fragments merged with Deloitte Touche Tohmatsu, Ernst & Young, KPMG, three of the ‘Big Five’ Accounting firms (which included Arthur Andersen) and Grant Thornton. In order to ward off the stigma attached to the name Andersen, Andersen Worldwide is now renamed Accenture.

However auditing firms jockeying into business consulting is not new. James Oscar McKinsey a Professor of Accounting at the Chicago University founded McKinsey & Company in 1926. McKinsey was hired to turn around Marshall Field & Co a company manufacturing and marketing readymade garments that ran into the doldrums during the great depression of the 1930s. Many decades before words like ‘downsizing’ were heard, McKinsey proposed that Marshall Field & Co do exactly that to turn the company around. Unable to implement his radical suggestions the company brought him in as CEO and charged him with implementing them. McKinsey was initially successful but because of his overbearing nature, made potential enemies. As he ventured into areas he knew nothing about and his mistakes caught up with him, the pressures of work finally got him and at the age of 47 McKinsey died of pneumonia.

If we delve into the history of businesses and accounting firms, we are likely to come up with many more such cases. Do we learn any lessons from these stories? The answer is ‘no’ going by the experience of Satyam Computer Services Ltd. (Satyam) and its auditors PwC – well, the Indian ‘member firm’ of PricewaterhouseCoopers International Limited (PwCIL) anyway. The two were charged with fudging accounts for several years and a partner of PwC along with the Founder Chairman of Satyam and some others of the two firms were arrested on charges of criminal conspiracy to defraud the public. The charge-sheet ran into 55000 pages. Did the story of Satyam and PwC inspire Anonymous, the author of Scammed ­to write the novel? It possibly did. The setting of the novel is Hyderabad and Visakhapatnam. (The British, who could not pronounce Visakhapatnam, made it Vizagpatam and then shortened it to Vizag. For several years now the state has reverted to its original Telugu pronunciation but the author seems to have not noticed it. He insists on calling it Vizag). Its characters speak with a thick South Indian accent’! (What else would you have them do?)

There was a time when literary critics in the West dismissed fiction by authors like Arthur Hailey and Irving Wallace as pulp fiction, meaning really not serious literature. This of course leads to the question whether literature should really be as sombre as a Russian novel to be considered serious literature. While authors like Somerset Maugham were hailed by critics in their life time, others like Jane Austen achieved this distinction only with passage of time. Although Indians have been writing in English for a long time it was only in the last few decades that they have really made it big on the international scene. At the same time the Indian approach to learning, writing and speaking English has been dramatically changing. There was a time when people who could speak and write grammatically and idiomatically correct English were in a minority. The purists lament that as the numbers of English speaking and writing people multiplied, there has been a dilution of standards. There is less exactitude with regard to grammar and syntax. Fastidious adherence to the ‘English pure’ gave way to colloquial Indianisms. This is because the curriculum of English teaching in the country has also been changing. Instead of studying Shakespearean plays, Milton’s poetry and Johnsonese, students are taught, what has come to be known as business communications in English - writing letters, advertisements and notices etc.

In the literary arena, it all started (perhaps) with Shobha De who introduced Hinglish in her writings. She was not taken seriously (or kindly) by critics at first. But as her novels acquired popularity – from those readers who did not have a stomach for more serious authors like Nirad Chaudary, V. S. Naipaul or Salman Rushidie – her publishers recognised her as a saleable author. If one can say De marked a turning point in Indo-Anglican literature, she opened up the market for more authors who catered to the needs of a certain type of burgeoning English-speaking class.

The explosion of communications through the IT, ITES and off-shoring of jobs truly Indianised English and there is no looking back. Employees of the Business Process Outsourcing Centres (BPOs, popularly known as ‘Call Centres’) have created their own patois - different of course from what they were expected to speak with their customers outside. In short, the expansion and proliferation of the English-speaking elite (?) has resulted in a ‘dumbing down’ of standards. Shobha De did not have serious competition for maybe a decade and a half till Chetan Bhagat debuted. He found a winning formula by precisely identifying his target audience. If the (Indian) English-literature consuming market is largely populated by the information technology guys (and girls) why not directly address them? This he did and was an instant success.

Scammed is in the Chetan Bhagat mould. Its setting is the accounting / business management industry. Its protagonist Hitesh Patel was entrusted by his accounting firm to audit a motor car company in Visakhapatnam, where he espies a lot of white-collar crime and siphoning of funds in it. While making a report of it to the principal board members he finds himself making some useful suggestions for the expansion of business. To an outside observer his formula of forward integration may not be very appealing. For example if a motor car company wishes to diversify into car-hiring business is it necessary that it should confine itself to cars manufactured by the parent company, unless it was for captive consumption? Be that as it may, the director was so impressed with the idea that he offers him a job at five times his salary to implement it. As fate catapults Hitesh into the big league of five figure salaries, five star hotels and of course beautiful girls he also willy-nilly gets sucked into a vortex of organisational politics, political intrigues and financial wheeling-dealings and finally financial offences. The novelist seeks to paint Hitesh as a self-righteous manager with only a weakness for a few girls. How else could he plant those steamy scenes so essential in a formula novel?

In Indish, the adjective ‘homely’ has a cultural connotation, quite different from what the word means in general English, and qualifies a woman as dutiful, home-loving and not coquettish. Therefore high-paid eligible bachelors look for ‘homely girls’ in matrimonial advertisements. In this story too after Hitesh had had his flings with attractive but unfaithful girls he finds succour in his ‘homely’ personal assistant Payal, whom he had ignored for long. As she dotes on him as a mother-hen he finally finds his soul-mate. She lends him a shoulder to cry on when he is down and generally offers him solace and succour. The characters are too linear and colourless but the book may be a good travel companion in a short journey. The novel could have done with some editing and proofing - its Indish notwithstanding. But the last two chapters seem to have been written by a more professional hand.

This review is part of the Book Reviews programme at 

Friday, March 23, 2012

Dynamics of Change & Cultural Inertia

There is an interesting relationship between organisational culture and management of change. Organisations which were able to gear up cultural changes within, to changes in the environment benefited while those which could not overcome cultural inertia suffered. This article examines the relationship between cultural inertia and the dynamics of change in organisations.   

The rapid economic, political and technological changes at the global level affect the business environment by increasing competition manifold, reducing lead times, customer demand for high quality and low prices. It is therefore imperative for organisations to develop an appropriate customer focused culture in order to achieve sustainable competitive edge

John Frain defines culture as a “set of key values, beliefs, understandings and norms of behaviour, which prevails within the organisation.” (Introduction to Marketing, Fourth Edition. International Thomson Business Press. London. 1999. p. 93) Organisations have to cope with culture in three different contexts. The first of these relates to the buying behaviour of consumers whether individual or the decision-making units (DMU) in case of business-to-business operations. The second is when they transact business with or operate in different countries/geographical locations. The third and - perhaps most important - cultural context organisations have to cope with is, within the organisation itself. Culture influences organisational structure, strategies, control systems and operations.

In his book, Frain quotes the researches of two teams, Dale and Kennedy in 1982 and Baker and Hart in 1996, which proved that culture has a major effect on the success of a business. The Baker and Hart team analysed a sample of successful and less successful firms in a cross section of growing and declining industries. They found that some of the critical attributes of successful organisations (e.g. entrepreneurship, ‘lean and mean’ structures etc.) were found in less successful organisations also. This led them to conclude that what makes some organisations more successful is not what they do, but how well they do it - culture and commitment are the key determinants for the success of an organisation. Organisations will have to audit their culture as the first step to manage it. The questions to be asked are: is it functional? or is it dysfunctional? And if it is functional, will it support the organisation’s projected goals?

To illustrate his point, Frain cites the example of the acquisition of Goetze the well-known German manufacturer of piston rings by T&N the British components and specialist-engineering group. Goetze had severe financial losses for three years when T&N took over the company with the objective of acquiring a significant share of the German market for piston rings. When T&N analysed the German company, it found the company was steeped in the culture of the rich in its arrogant behaviour towards customers. It had a bloated management structure, with ten layers of management and seven tiers of secretaries. The company was not able adopt new technologies because of a deeply entrenched cultural inertia. T&N decided that it needed to change Goetze’s culture of hierarchy. The result of restructuring, rationalisation of work force and pruning inefficient production lines resulted in a sharp lowering of costs and the company returned to profits in 1994.

The Goetze case is not an example of the imposition of an alien culture but a release from inertia triggered from outside. What happens when there is no external trigger? How does an organisation bring about changes that are necessary for fostering long-term customer relationships? It is not easy to bring about cultural changes because of an innate human resistance to change. There is always a conflict between the driving forces that seek to bring about change and resisting forces that seek to preserve the status quo. Managers refuse to see that ‘change’ is real and continue to work as before. If they find that they are not able to function as before because of their denial to see changes within the organisation and the environment, their denial gives way to fear and energies are diverted to politicking.

Organisational Impediments to Change

Nigel F. Piercy (Market-Led Strategic Change. Third Edition. Butterworth Heinmann. Oxford. 2002.) identified four kinds of managers who can block change. The dangerous enthusiasts go about trying to change everything without understanding the goals of change. The “Yes…But”s understand the need for change but are not inclined to change. In fact their “Yes…But” is a polite way of saying “No”. If pushed to implement change they turn to malicious obedience only to wait for things to go wrong when they can point out: “Look I have done what you asked me to do, but see what happened!” The Dinosaurs simply do not want and won’t change.

Piercy gives some amusing examples form Royal Dutch/Shell the world’s second largest oil company to illustrate his point - of resistance to cultural change.

Executives of Shell were encouraged to suggest three alternative courses of action for the implementation of strategies with the result that they always chose the middle path, as they felt, it was the safest.

Shell executives have buried expensive exploration equipment in Gabon, as they did not want to face the bureaucratic hurdles in relocating it to another country.

An MD noted that the company believed that fourteen signatures on an official note made it look better!

The company driver who picked up an executive from a delayed African flight was driving him for a meeting at a sedate thirty mph speed as the car had a speed governor on it and could not be driven faster. When questioned by the exasperated executive as to what he would do in an emergency, the driver replied that he would take a taxi!

Piercy noted that a conscious effort to bring about a culture change helped IBM to turn back on the endemic losses of the late 1980s and return profits beginning1993. Lou Gerstner who came in as CEO, created the ambience for a “strong customer-needs focus, leading to the development of integrated technology solutions drawing on all of IBM’s R&D, product, service and software skills.” Executives who tried to resist were weeded out.

Philip Kotler describes a study by the Stanford researchers Collins and Porras, which they published under the title Built to Last. The researchers identified two companies each in eighteen industries and designated one as a ‘visionary company’ and the other as a ‘comparison company’Visionary companies (e.g. General Electric, Hewlett-Packard and Boeing) were the recognised industry leaders: they set ambitious goals, communicated the goals clearly to their employees and most important they had a higher purpose other than making money. They outperformed the comparison companies (e.g. Westinghouse, Texas Instruments and McDonnell Douglas) by a wide margin. 

The visionary companies had three common features. First, they held a distinctive set of values from which they did not deviate.  IBM’s values included respect for the individual, customer satisfaction and continuous quality improvement. Johnson & Johnson’s believes that its first responsibility is to its customersits second to its employees, its third to its community and its fourth to its stockholders.
The second common feature these companies had was they expressed their purpose in enlightened terms. Thus Xerox wants to improve office productivity, Monsanto wants to end hunger in the world. According to the researchers the core purpose of a company should not be confused with its business objectives or product list.

The third common feature of the industry leaders is that they have developed a vision for the future and worked to implement it. Thus IBM is now working to establish leadership as a network-centric company and not simply as a leading software manufacturer.

The first step to induce change is to allay any unfounded fears that the change is likely to cause in the minds of its employees, rather than pressuring for change. The issue that organisations face in the specific context of developing a customer-led culture is that customer interests are regarded as concerning only the marketing function. In many organisations, the other departments see marketing as alien to the larger organisational interest of making profits. Therefore there is always a conflict between marketing and other departments.