In almost half a century in our industry, I’ve participated in hundreds of strategy reviews. And although I’ve published a couple of million words about the differences between strong and weak strategies, I’ve neglected one small but essential cog in the strategy machine – the questions that senior executives ask to encourage their strategy teams to think harder and do better.

In this series of articles, I’ll share the four challenges that often flummox brand leads and other strategists. More importantly, I’ll share how the smartest strategists are able to answer those questions. In this article, I’ll begin with the killer question that sorts the strategising wheat from the chaff.

Think of a nightmare strategy review scenario that you never want to be part of. After you have presented a detailed, comprehensive analysis of your market, the senior person in the room compliments you and has only one, little question: “What do we know about the market that is useful, valuable and our competitors don’t know?” The simplicity of the question belies its power. Rarely have I seen convincing answers. Too often, I’ve seen strategists splutter, stammer and waffle their way through. Try asking yourself that question now. Most strategists, if they’re honest, struggle to answer it convincingly.

The right answer to this question can only take three forms because there are only three kinds of knowledge (see Box 1).

The best strategists might build on some proprietary declarative knowledge, such as the views and priorities of the key opinion leaders (KOLs) in their field. Or they may make use of some unique procedural knowledge, such as how a market access decision is made. Or their strategies might depend on some novel causal knowledge, such as what causes one product to be given preferred status over its competitors. But many strategists carefully consider all the vast troves of declarative, procedural and causal market knowledge in their possession and conclude that they know a lot, but nothing that their rivals don’t also know. If you’re in that majority, then you need to understand why this is and how you can create new, unique knowledge that allows you to create a strongly differentiated strategy.

‘Many strategist carefully consider all their declarative, procedural and causal market knowledge and conclude that they know a lot, but nothing that their rivals don’t also know’

When I ask pharma and medtech companies about what they do know about their market, I observe a paradox. The larger their business intelligence resources and efforts, the less likely they are to know something that their competitors don’t. Smaller companies are the ones that often have unique market insight. This analysis paradox contradicts all expectations and only careful research into this puzzle reveals why even big, well-resourced firms only know what everyone else knows. The reason is slightly different for each of the three kinds of knowledge.

When firms’ declarative knowledge is much the same as their competitors, it is usually because they share the same information providers and because people, and the knowledge in their heads, move freely between rival firms. And if your firm’s knowledge of, for example, customer names, locations, behaviours or other market facts is no different from that of your competitors, it can rarely be the source of any kind of kind of competitive edge.

When firms don’t have any procedural knowledge advantage over other firms in their market, it’s mostly because of knowledge intangibility. In general, healthcare systems appear to be transparent in their processes. Patient journeys are often standardised and explicit. Standards of care are agreed and published. Purchasing processes are usually legally required to be made public. But this superficial transparency often hides implicit parts of healthcare procedures, such as the involvement of influencers and tacit decision criteria, that aren’t amenable to ordinary market research. When you share your understanding of how things happen with every other firm in the market, you have little chance of uncovering opportunities and threats that could be the basis of a differentiated strategy.

The third kind of knowledge, causal knowledge, is the most problematic of all. This is because healthcare systems are complex, and complexity means that, rather than ‘X causes Y’, it is more common that ‘A, B, C…and X interact to cause Y’. This means that is hard to unravel why, for example, a new product has not been adopted as quickly as expected or how professional communities of practice cause a preference for one clinical approach rather than another. If your firm’s causal knowledge is no different from that of your competitors, it’s very difficult for you to influence market behaviour in a way creates competitive advantage.

This exploration of the analysis paradox explains why, when asked what they know about the market, many strategists answer: “Only what everybody else already knows.” It also explains why, consequently, their strategies lack distinctiveness and advantage. The research reveals that analysis – the slicing and dicing of information – is a generic activity that is very similar in all pharma and medtech companies. This undifferentiated activity leads to the same sort of declarative, procedural and causal knowledge in every company, especially if they are all buying the same information from the same suppliers. That generic information processing is not, however, up to the task of creating novel insights that nobody else has and that can form the basis of a superior competitive strategy. In short, most firms do the same things to the same information, so they get the same knowledge.

Of course, this raises another obvious question. Some strategists escape the nightmare strategy review scenario. They present some combination of declarative, procedural or causal knowledge that is genuinely insightful and is not known by competitors, on which a distinctive strategy can be built. How do they do this?

The research behind this article revealed that pharma and medtech companies that make strong strategies have senior leaders that challenge their strategies with four questions. In this article, I’ve addressed only the first: “What do we know about the market that our competitors don’t know?” This is a simple but powerful question that, if not anticipated, can lead to excruciating moments during the strategy review.

This holds important lessons for everyone involved in a strategy review. For senior leaders, asking this question is a constructive and valuable thing to do. But it shouldn’t be a surprise to your team. The best answers are only possible when they know they are going to be asked this question. For strategists, preparing an answer to this question is the necessary and professional thing to do. The DISE process is a simple, practical guide to delivering a good answer. Then, with this killer question asked, answered well and the strategy process consequently improved, we can consider the next three questions, which are the subject of the following articles in this series.

Professor Brian D Smith is a world-recognised authority on the evolution of the life sciences industry. He welcomes questions at brian.smith@pragmedic.com. Visit www.pragmedic.com