Customer first…Customer is king …These are all catch phrases that I have always heard and believed strongly in… But does this always work? Or does too much customer focus make you lose track of other business opportunities that are available?
This thought first came to mind while I was working on understanding disruption…Initially it looked like a coincidence but when you break down companies that have brought in change and new ideas you will almost always find that these were new companies…Even when the technology which the companies used to disrupt or change the market was already available with the market leaders they very often missed to notice the opportunity or were more focussed on other trends which they thought would lead to better gains in their business.
Let’s understand this with a case study found in the insulin business
Insulin is a hormone made by the pancreas that allows your body to use sugar (glucose) from carbohydrates in the food that you eat for energy or to store glucose for future use. Insulin helps keeps your blood sugar level from getting too high (hyperglycemia) or too low (hypoglycemia).
The cells in your body need sugar for energy. However, sugar cannot go into most of your cells directly. After you eat food and your blood sugar level rises, cells in your pancreas (known as beta cells) are signaled to release insulin into your bloodstream. Insulin then attaches to and signals cells to absorb sugar from the bloodstream. Insulin is often described as a “key,” which unlocks the cell to allow sugar to enter the cell and be used for energy.
If your body does not produce enough insulin or your cells are resistant to the effects of insulin, you may develop hyperglycemia (high blood sugar).
In 1922 four researchers from Toronto successfully extracted insulin from the pancreas of animals and injected it humans with diabetes.
Because improving the purity of insulin was one of the key ways of performance of the treatment companies in the initial stages of the industry growth from 1950 to 1980 primarily focused on the same
The industry leader at that time in the industry was Eli Lilly and company and they were at the forefront of this research and were in the forefront of driving these improvements.
Despite the improvements animal insulin which was slightly different from human insulin caused a fraction of patients to build up resistance in their immune systems
Thus is 1978 Eli Lilly contracted with Genentech to create genetically altered bacteria that could produce insulin proteins similar to human insulin and which are 100% pure…So by 1980 probably the first product from the bio technology industry was in the market…Branded as Humulin developed after an investment of almost 1 billion dollars the product was priced at 25% premium to the normal insulin that was available in the market…But the market response to the product wasn’t so great and the company soon found it difficult to main sales with the premium pricing..
At around the same time Novo a very small Danish insulin maker was making a line of insulin pens a more convenient way of taking penicillin. These pens would hold a cartridge of about 2 weeks of insulin ..People using the insulin pen only had to turn a small handle deciding the amount of insulin that the patient had to take poke the pens needle under the skin and press a button…The process of injecting insulin that was followed easily took more than 2 minutes while the insulin ten took only about 10 seconds.. Driving on the success of the insulin pens Novo grew from strength to strength and that too very profitably…Today nearly all diabetic persons have used an insulin pen..
So what could have made Eli Lilly go after purity improvement …Lets understand who would be the people Eli Lilly would talk to regularly for product feedback etc …The physicians…and of the physicians whom would they listen to most patiently and thoughtfully…the Endocrinologists whose practice is focused on diabetes care and who are the specialists in this field….and who are the people who are most likely to go to an Endocrinologist…the patients with the most acute issues in diabetes…So if you were to ask your opinion to the Endocrinologist like what Eli lilly did they would definitely ask them to improve on the insulin purity and the insulin resistance developed by patients
This is not a one-of case…What do all good companies do…They focus on their customer requirements …see how to provide and address more and more of the customer requirements…try to anticipate future requirements of their customers and build their products and services accordingly …In this mad rush for growth the companies focus on their customers becomes so high that very often they tend to miss out of the other market or technological or customer requirements which are coming up…
This is perhaps the prime reason why established and well performing companies miss out on disruptive technologies and fail to see the disruptive opportunities and fail to seize on them…
