A new website - the blog is moving!!

Over the past few days I finally have had time to get out the textbooks, arrange my thoughts and publish the website for EYP Advisors LLC. Now the blog, my biography and the story about what I and my team of networked professionals are trying to do is all in one place at http://www.eypadvisors.com/!!

This blog has been copied and renamed Explode Your Paradigm. All future posts can be found at http://eypadvisors.com/?page_id=12

I would very much like to thank my good friend and website guru Carol van Almelo for helping me upload my database and pictures and create my logo. Her willingness to help me is greatly appreciated. More information about Carol can be found on her website at http://www.rock-away.com/

Please check out the new site and let me know your thoughts. I look forward to your comments.

Until next time - all the best!

RolandB

Believe what they do, not what they say. Is Eli Lilly really committed to innovation?

I had lunch with Bernard Munoz recently. Bernard has worked at Eli Lilly for over 29 years. Over his career he helped run Lilly affiliates in Portugal, Austria and France while with the Elanco Animal Health group. More recently he is working as an advisor in the corporate strategy area at Lilly Corporate Center in Indianapolis.

We met at a business function a couple of weeks ago. Bernard introduced himself as a consultant in “disruptive innovation.” I worked at Lilly for over 10 years. I learned a lot about pharmaceuticals, about marketing, about how to build a business in places like Japan and Eastern Europe and about the value of a robust process. What I also learned from Lilly was that change happens slowly in a large company. The fact that Lilly now had an internal consultant tasked with to bringing change to the organization was invigorating. We agreed to meet again to discuss.

Over a plate of Greek food I learned a ton about the current happenings in the pharmaceutical industry.

Bernard has been intrigued with innovation his whole life. His passion is beginning to be noticed by others. In December 2009 he published a paper in Nature Review titled “Lessons from 60 years of pharmaceutical innovation.” He followed the number of new molecular entities (NMEs) that have been approved since 1950 and looked at the changes year to year both in the number of new entities approved and the expense to make it happen. From 1950 to 2008 the FDA has approved 1,222 new drugs. On average the number of new drugs approved each year over this period is roughly the same. In 2008 21 NMEs were approved.

He documents that over the same period the cost of developing new drugs is rising at the exponential rate of 13.5% per year. Same number of products out each year, costs rising exponentially. If nothing changes this is an unsustainable situation.

Many large pharmaceutical companies estimate they need to produce an average of 2–3 NMEs per year to meet their growth objectives. The paper states that none of them has ever approached this level of output. The historical level is close to 1 per year. Bernard’s research points out that statistically the chance to getting to this level with the current pharmaceutical industry’s business model is very low.

There have been a few spikes and troughs over the years. Bernard’s conclusion is that this may have been more a function with the number of companies with applications outstanding. The more companies, the more applications, the more approved NMEs. His paper goes on to demonstrate that M&A activity in the pharmaceutical industry actually negatively affected the number of NMEs approved. In his words 1+1=1.

Bernard argues that we need to increase the number of companies developing NMEs. A larger number of companies accelerate the acquisition of knowledge creating what economists call a spillover – an industry wide benefit that enables all companies to be more effective. He also argues that the pharmaceutical industry needs to fundamentally change the way they develop new products.

Bernard and William Chin, formerly a colleague at Lilly and now at Harvard Medical School published a paper in Science Translational Medicine also in December 2009 titled “A Call for Sharing: Adapting Pharmaceutical Research to New Realities” that points out that today’s innovation increasingly stems from the aggregation of numerous small contributions. The authors argue that companies should compete in areas that offer a viable return on investment, and share where pre-competitive collaboration helps all of us discover new therapies more efficiently and effectively. The authors issue a call for the pharmaceutical industry and governmental agencies to “join hands and intensify sharing in order to help repower pharmaceutical innovation.”

To summarize the pharmaceutical business model is broken and it needs to be fixed. This is something many of us in the industry have been discussing for years. Costs are increasing, pricing pressure is increasing causing sales revenue per NME to decline and the number of new products being developed is not keeping pace with what is required. How much longer will investors continue to support pharmaceutical research? How can we keep the engine that is driving a large section of the economy alive and well?

Bernard told me he has been getting calls from groups in industry and in government requesting information about his ideas. Momentum is growing for change.

Great news - don't you think? Well here is the rest of the story

A senior executive at Lilly told Bernard Munoz this week that his job was being eliminated as of September 7, 2010!!

It is no secret that Lilly is facing patent expirations on a number of their most popular products. The company is cutting jobs. I have friends who have left the company and others who are looking over their shoulder not knowing if their job will be there tomorrow. What concerns me is that it appears Lilly has eliminated the position of a successful executive that has made and is making a name for himself discussing how to move the pharmaceutical industry forward. Lilly could have a voice at the table and they are choosing to turn it down.

Why? I think it is much better to participate in the discussion and be a part of potential solutions rather than wonder what will happen.

John Lechleiter, the CEO of Eli Lilly and Company, in an editorial published in the Wall St. Journal on May 14, 2009 wrote “U.S.-based private industry is the heart and soul of this innovation drama, investing $58 billion in research and development for new medicines in 2007 alone…. Biomedical innovation is not incompatible with the health-care reform goals of universal access, quality improvement and cost control. On the contrary, without new, more effective medicines -- along with new devices and diagnostic tools, and better treatments and surgical techniques -- it will be impossible for larger numbers of Americans to obtain better health care at a manageable cost.”

I think Lechleiter gets the message that Munoz and Chin are preaching that industry, universities and government need to come up with creative solutions to get better medical solutions to the marketplace. I don't know if the message is flowing down to his staff. I wonder if the bureaucracy at Lilly will wise up and get it before more innovators like Bernard Munoz are forced to do their work outside of the company.

Is Lilly committed to innovation?? The proof is in what they do - not what they say.

If you would like to read either of the papers referenced above please follow the links or send me an email at rjbydlon@earthlink.net.

I am interested in your thoughts. Please comment below.

Until next time – all the best!

RolandB

Game changing innovation needs a risk-taking environment

In the April 26th Indianapolis Star Michael Goldsby the executive director of the Entrepreneurship Center at Ball State University wrote a very good My View column titled “The game has changed for entrepreneurship.” Dr. Goldsby, an expert on the field, makes the argument that currently policy makers and companies view entrepreneurship as primarily composed of small business startups and that this is a mistake. By only looking at small business we are missing a large segment of the economy since continuous improvement coupled with continuous innovation is the magic formula for a company’s success. He states that companies of all sizes need entrepreneurial thinking to compete successfully in the 21st Century and suggests that schools must craft curricula to teach creative problem solving and innovation that can and will be used to drive innovation in small and large companies.

I agree with everything he is saying. Problem solving, how to effectively manage risk, and more importantly how to think creatively are critical skills that should be taught in every management school in the country. I also add that we won’t succeed in converting our medium to large companies into entrepreneurial powerhouses until we seed and grow a culture with current company management that promotes rapid experimentation and accepts short term failures as a learning event to prepare for long term success.

So why is entrepreneurship composed of mainly small business start-ups? I think a small company is an ideal climate for entrepreneurial thought. The stakeholders are usually willing to bet the farm and risk their jobs and financial wealth on an idea. Successful entrepreneurs have passion and are able and willing to focus on the key success factors for getting a product or service to their customers. The management team is a critical piece of the puzzle. Successful management team members are judged not on what they have done in the past but what they can contribute in the future. Each member must be willing to roll up their sleeves and participate in multiple tasks for the venture to succeed. It is OK to fail as long as information is learned. Timelines are short. Milestones are measured in weeks or months. Who knows where anyone will be in 5 years. The key is to enjoy the moment. If the basics are done right success will follow.

So how does a large company foster an entrepreneurial culture? Many years ago I started my post MBA career at a large company here in Indianapolis. At the time one of the selling points to join the company was that it was managed by consensus. I got an excellent education in business and worked with some of the best individuals I know but one thing I learned very early on was that consensus did not promote or reward risk taking. If 100% of the decision makers had to agree that an innovative idea was worthy of a risk before it was approved there was usually one member willing to kill or postpone it until one of our competitors tried it first. Decision makers were worried about failure. Some found it was much easier to go along with the status quo than try something different and find him or her knocked off their career track.

That is not to say that entrepreneurship in large companies will never happen. 3M is known for spinning off numerous companies based on internally developed technology. Apple over its lifetime has continuously reinvented its product line to lead the field.

I agree with Dr. Goldsby that if large companies in Indiana embrace the role they play in an entrepreneurial society the entire state will thrive. The challenge is how can we encourage them to do so.

1. The first thing is that the company must make a long term strategic decision from the top down that in order to promote game changing innovation they need to accept diversity of thought in their organization and also provide a safety net for entrepreneurs that try but fall short of a goal.
   
2. Second they need to cross pollinate by hiring or contracting with individuals from businesses outside of their traditional environment to provide input to product and/or business development teams. A pharmaceutical company could benefit by hiring someone with a consumer goods background, an airline could hire an individual with an expertise in promoting widgets who also flies a lot, a company wanting to compete using social media should add a few 20-something employees that text their friends rather than call them. These new members should encourage companies to think outside the status quo and consider non-traditional change.
   
3. Finally companies should not expect to change overnight. Mount Everest is not climbed in a day or even a week. The process takes months and involves conquering numerous milestones to get to the top. The road to game changing innovation is littered with hazards. Successful companies are the ones that do their homework, provide a supportive environment, take calculated risks and allow their employees to spread their wings and enjoy the process.

Until next time - all the best!

RolandB

BizTown – the entrepreneurs of the future!

I had the opportunity recently to be a mentor at the Junior Achievement BizTown. For about a day I watched as 100 entrepreneurs created and ran a “town”. They came from a wide variety of backgrounds. Some came from families rich in financial wealth, others qualified for school lunch programs. Some were taking many of their classes in Spanish or French, others were Hispanic where English was their second language. What the students (the citizens) discovered was the joy of learning how business worked and how one business depended on others. They got along. They had fun. What I learned was that I can learn a lot about life from a group of 5th graders.

For those of you not familiar with BizTown it is a simulation where about 80-120 students run a town and all of the businesses that make the economy run. There are businesses that make and sell interesting things, there are banks that loan money to the businesses and collect interest on the loans, there is a power company that sells utilities, there is a newspaper company and sells advertisements and produces and sells an actual paper, there is a radio station with DJs that sells air time to businesses in the town for commercials, there is a post office (FedEx), a Steak and Shake restaurant where students can buy popcorn and soda, the Peyton Manning Wellness Center where students go for medical checkups and learn how to eat healthy, and a city hall where the mayor and police keep the peace. Each company has a payroll. Each company pays taxes. The employees are paid with checks, they pay income taxes, they cash their checks at the bank where they receive a small amount of cash and deposit the rest into their checking account. They use the checking account to pay for the interesting things sold at the retail stores.

This all happens between 9:30 AM and 2:00 PM. Each day a different group of students enjoy the opportunity at the facility. A group of five JA staff make sure the town “runs” correctly. Adult mentor volunteers assist in each business to answer questions. The student citizens make the decisions, do the legwork, sweat a bit and have a lot of fun.

The day I was there we had students from the International School, Saint Phillip Neri and Saint Anthony. Most of the citizens were in 5th grade. Over the previous few weeks each student had filled out a resume and had interviewed for the job they wanted. Each business had a Chief Executive Officer (CEO) and a Chief Financial Officer (CFO) along with 4-6 supporting roles. Each student had a job description so they knew what was expected of them before arriving.

Our citizens came from much different backgrounds. The International School of Indiana is a private school in Indianapolis. According to their website http://www.isind.org/ the yearly tuition is $13,050 per year. Students pick a language track in either Spanish or French and learn most of their coursework in that language. Saint Anthony is an inner city school supported by the Archdiocese of Indianapolis. The average family income is $14,000 per year. Approximately 90% of the student body is Hispanic and most of the students qualify for free school lunches. Very few of the students pay tuition. What I found fascinating and encouraging was that all of the student/citizens regardless of what school they were from participated as equal members. They all worked hard, they communicated, and the system worked.

I’m sure many of the students learned a lot about business, about teamwork, about leadership and a few life skills like how to balance a checkbook. What I experienced as a mentor was how well the students got along, how well the students were prepared by their teachers for the day’s activities, how well they performed in their roles, how hard they worked, and in many ways how once they understood the rules they policed themselves. I learned that our youth when given the opportunity rise to the occasion.

As a marketer I am often the champion for the voice of the customer. The following are the top 10 reasons for BizTown as recorded in JA BizTown Newspaper by the citizen staff.
1. It is fun.
2. You learn how to be an adult.
3. You learn how to do jobs.
4. You learn how to control money.
5. You learn how to write checks.
6. You learn how to balance a checkbook.
7. You learn how to handle breaks.
8. You learn different jobs.
9. You get to spend money and shop.

….. and the final reason

10. You get two paychecks!

What is the value to this adult volunteer of experiencing entrepreneurial spirit in a group of 5th grade students – Priceless!

If you have an interest please consider making an investment in the future by giving some of your time and/or your financial treasure to support a good cause like JA BizTown. It is worth the effort.

Until next time - All the best!

RolandB

Ducks Quack - Eagles Soar.

A friend of mine sent me this message today. I cannot vouch for the authenticity. I do know that Harvey Mackay is a very successful businessman, motivational speaker and author from Minneapolis. He is very active with my alma mater the University of Minnesota. The message is a great one though. Thought I would pass it on.

"Life isn't about waiting for the storm to pass. It's about learning to dance in the rain." Have a great day.

Until next time - all the best!

RolandB

Photo credit

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No one can make you serve customers well.....that's because great service is a choice.

Harvey Mackay, tells a wonderful story about a cab driver that proved this point.

He was waiting in line for a ride at the airport. When a cab pulled up, the first thing Harvey noticed was that the taxi was polished to a bright shine. Smartly dressed in a white shirt, black tie, and freshly pressed black slacks, the cab driver jumped out and rounded the car to open the back passenger door for Harvey. He handed my friend a laminated card and said:"I'm Wally, your driver. While I'm loading your bags in the trunk I'd like you to read my mission statement." Taken aback, Harvey read the card. It said: Wally's Mission Statement: To get my customers to their destination in the quickest, safest and cheapest way possible in a friendly environment.

This blew Harvey away. Especially when he noticed that the inside of the cab matched the outside. Spotlessly clean! As he slid behind the wheel, Wally said, "Would you like a cup of coffee? I have a thermos of regular and one of decaf." My friend said jokingly, "No, I'd prefer a soft drink." Wally smiled and said, 'No problem. I have a cooler up front with regular and Diet Coke, water and orange juice. Almost stuttering, Harvey said, "I'll take a Diet Coke." Handing him his drink, Wally said, "If you'd like something to read, I have The Wall Street Journal, Time, Sports Illustrated and USA Today."

As they were pulling away, Wally handed my friend another laminated card,"These are the stations I get and the music they play, if you'd like to listen to the radio." And as if that weren't enough, Wally told Harvey that he had the air conditioning on and asked if the temperature was comfortable for him. Then he advised Harvey of the best route to his destination for that time of day. He also let him know that he'd be happy to chat and tell him about some of the sights or, if Harvey preferred, to leave him with his own thoughts.

"Tell me, Wally," my amazed friend asked the driver, "have you always served customers like this?" Wally smiled into the rear view mirror. "No, not always. In fact, it's only been in the last two years. My first five years driving, I spent most of my time complaining like all the rest of the cabbies do. Then I heard the personal growth guru, Wayne Dyer, on the radio one day. He had just written a book called You'll See It When You Believe It. Dyer said that if you get up in the morning expecting to have a bad day, you'll rarely disappoint yourself. He said, "Stop complaining! Differentiate yourself from your competition. Don't be a duck. Be an eagle. Ducks quack and complain. Eagles soar above the crowd". "That hit me right between the eyes," said Wally. "Dyer was really talking about me. I was always quacking and complaining, so I decided to change my attitude and become an eagle. I looked around at the other cabs and their drivers. The cabs were dirty, the drivers were unfriendly, and the customers were unhappy. So I decided to make some changes. I put in a few at a time. When my customers responded well, I did more."

"I take it that has paid off for you," Harvey said. "It sure has," Wally replied. "My first year as an eagle, I doubled my income from the previous year. This year I'll probably quadruple it. You were lucky to get me today. I don't sit at cabstands anymore. My customers call me for appointments on my cell phone or leave a message on my answering machine. If I can't pick them up myself, I get a reliable cabbie friend to do it and I take a piece of the action." Wally was phenomenal. He was running a limo service out of a Yellow Cab. I've probably told that story to more than fifty cab drivers over the years, and only two took the idea and ran with it. Whenever I go to their cities, I give them a call. The rest of the drivers quacked like ducks and told me all the reasons they couldn't do any of what I was suggesting.

Wally the Cab Driver made a different choice. He decided to stop quacking like ducks and start soaring like eagles. How about us? Smile, and the whole world smiles with you... The ball is in our hands! A man reaps what he sows. Let us not become weary in doing good, for at the proper time we will reap a harvest if we do not give up... let us do good to all people. Ducks Quack, Eagles Soar.

Have a nice day, unless you already have other plans. SORROW looks back, WORRY looks around, and FAITH looks UP. "Life isn't about waiting for the storm to pass. It's about learning to dance in the rain." And while in the storm, give it to God and let Him handle it.

Selling with a System

This article was originally posted on the Indianapolis chapter of the AMA's website on 3/15/10. Click here to access the article.

One of the advantages of joining the Indianapolis chapter of the American Marketing Association (AMA) is an invitation to free members only meetings. I attended one recently titled “Selling With a System.” The presenter was Aaron Prickel from Lushin & Associates, a sales training and consulting firm.

As the economy has slowed the rules of the game have changed. Everyone at your company is a salesman and we are all required to climb higher on the tree to get to the “low hanging fruit.”

As Aaron put it, our parents have taught us since we were children it is not polite to talk to strangers and also don’t about money. A successful salesperson needs to talk to strangers confidently and also needs to talk about money early in a conversation in a positive way. Without conscious effort we will fall back into old habits.

The sales process is relatively simple; ask, present, quote, close. The successful salesperson needs to understand the type of person they are talking to, what the buyer is consciously or unconsciously trying to do and finally creating a win/win agreement that both parties will feel comfortable about the day after the sale.

People buy from people who are like them. You need to understand your customer and communicate with them in the way they are communicating with you. Aaron breaks most individuals into three categories:

1. Dominant – this type of individual knows what they want and is results driven. A successful salesperson will ask a few questions then ask for the sale.


2. Influencer – a happy go lucky person, talks a lot about themselves and what is going on in their life. A successful salesperson will ask questions about the person, listen, then after a period of time ask for permission to move on


3. Steady Relater – a cautious thinker, detail and process orientated. A successful salesperson will need to be very patient and move the individual forward slowly in small increments.

Understand the 4 step traditional buyer’s process. Buyers will

1. Lie – they don’t want to lose control. How many times have you entered a store to buy something but told the attendant you were “just looking?”


2. Steal – information and time. The salesperson usually knows more than the prospect. When the prospect asks questions the salesperson will think the prospect is interested and will usually answer question after question requesting nothing in return.


3. Lie again – this time in a positive way. How often have you told a salesperson that you think the product they are trying to sell you is great but you need to go home and think about it?


4. Hide – Many prospects want to say “no” but don’t want to hurt the salespersons feelings. They will give the salesperson unlimited access to their voicemail and will never call him or her back. The result is that the salesperson will keep the prospect on their active list and invest an increasing amount of time trying to contact and sell them. This is time that should be spent cultivating other prospects.

Successful salespersons will implement a personalized form of the following system

1. Ask – pain is the #1 compelling reason why people make changes. You build credibility by the questions you ask rather than the statements you make. Get your prospect to share their pain. Then tailor your presentation to helping them remove the pain.


2. Present – but first set expectations up front with the prospect. Outline a mutually beneficial agreement of what is going to happen.
   i. Don’t be afraid to talk about money up front to qualify the prospect. A fair question is how much money do you have? How much are you willing & able to spend on this project?
   ii. Start talking about the decision you will be asking them to make before you give them all of the information. (Remember they want to steal time and information)
   iii. Don’t tell them everything you know. Your expertise is worth something. If your product/service is a commodity all you can compete on is price.


3. Quote – Price is never the real issue. Don’t be embarrassed about giving them a fair price. Don’t feel that you need to come down in order to get the business.


4. Close – Ask for the business. Remember your prospects have a need for approval. Make it easy for them to say “no.” This is counter intuitive since you want the business. If they are going to say “no” you want/need to hear it sooner rather than later. According to Aaron one of the biggest problems in the sales world is delayed closings, those customers that will tell you tomorrow that becomes tomorrow etc.

Talk to your prospects the way they are talking to you.

1. They are visual thinkers if they describe a picture, look up with their eyes (more on eye movement a bit later), and speak quickly. You may want to respond by saying “ I see what you mean.”


2. They are auditory thinkers if they describe sounds, look straight and have a slower rate of speech. You may want to respond by saying “I hear what you are saying.”


3. They are kinesthetic thinkers if they describe feelings such as “I can’t put my arms around it” and look down with their eyes. You may want to respond, “Tell me how it make you feel.”

Looking at the eyes can also tell you a bit more. If a person looks to their left after you ask them a question they are most likely thinking logically and if they look to the right they are thinking creatively. Ask someone (preferably a friend) about where they were last night. If they look to the left they are trying to place where they were. If they look to the right they may be trying to create an answer (i.e. they are lying)

A commercial for Lushin & Associates. They help energize or reenergize individuals or groups of salespersons to get more sales in less hours. If you or your company is in need give Aaron a call. I’m sure he would like to help you.

A commercial for the AMA. This outstanding seminar lasted about 90 minutes and had about 40 attendees. Lots of great information was presented that helped me do my job better immediately and lots of great folks were there to network with. What a benefit!!

Until next time – all the best!

RolandB

Photo credit - I was looking for an "agreement" photo. Thought this was a great one.

The Time to Invest is NOW!

This article was originally published at Inside Indiana Business and can be accessed at http://www.insideindianabusiness.com/contributors.asp?id=1643

I was at the monthly meeting of the Venture Club of Indiana recently. The organizers had invited respected entrepreneurs, angel invertors and venture capitalists from around the country to comment on the Top Trends Impacting Midwest & Indiana Business in the Upcoming Year. The panelists accepted questions from the audience and seemed very open and passionate in their responses.

One topic that came up repeatedly was that a recession is a great time for buying companies. The reason is that there are lots of good ideas to pick from and valuations of many companies are relatively low when compared to a booming economy. To prove a point one of the members of the panel asked the audience how many individuals in the audience were looking for money? About 75 hands went up from the group of about 400 individuals. When asked how many people were ready to invest today only about 10 volunteers raised their hands.

I think it is human nature that when times are bad many of us hide in our “box” where it is safe until we are convinced it is safe to come out. However if you look at history a lot of winners did just the opposite and invested in times of turmoil. I read an article recently that stated 16 of the 30 companies that make up the Dow Jones Industrial Average were started during a recession or down economy. These include Procter & Gamble, Disney, Alcoa, McDonald's, General Electric and Johnson & Johnson. Some other companies that made their start when many were pulling back are Hyatt Corporation, Burger King, IHOP, FedEx, LexisNexis, CNN, and Microsoft. Why did these companies succeed? The founders knew their customers, understood their needs, understood the changing environment they were operating in, and created new products and services to meet the needs. They identified a solution and were not afraid to move forward.

In a recession the reservoir of business is drained to critical levels exposing the rocks on the bottom. Companies set in their ways with aging policies/mindsets are like ships that were able to succeed in good times but are now too bulky and crash into the rocks. This creates opportunities for nimble, flexible companies (visualize a speedboat) to take advantage of the situation and change.

In the climate today here are a few investments to consider to achieve a sustainable competitive advantage.

1. Market your existing products aggressively. As others decrease marketing and promotional spending keeping your level of spending the same or even increasing it will help you build share of voice in the marketplace. This increased share will give you an incredible advantage over your competition now and once the economy begins to grow again.


2. Innovate your product line. Has your market changed? Can you come up with a better mousetrap that will allow you to meet your customer’s needs at a lower price point.


3. Improve your production process. Can you produce more for less allowing you to lower your price and buy market share?


4. Fill a new market vacuum. How are your competitors responding to the recession? Are they pulling back creating a vacuum that you can fill?


5. Talk to your existing customers? Are they happy? What are their needs? Identify things your company can do to increase sales to them. A satisfied customer is much easier to sell than a new one.

Entrepreneurs willing to take risks with their time and/or financial resources understand that this is a time to invest rather than pull back. It is what makes them entrepreneurs. This is what separates them from all others.

In summary don’t be afraid to invest now. When the economy improves and your competition climbs out of their box you will be several steps ahead.

Until next time - all the best!

RolandB

Photo credit