What excites me most about my work is the way that its two worlds overlap.
My academic research does, I know, seem abstruse to the industry executives I work with. And, to my professorial colleagues, the way that business managers look at their problems often seems simplistic and unscientific. All the more interesting then when these two different planets collide to address a practical management question with apparently abstract theory. Just such a collision occurred for me this week, throwing light on the fast-developing immuno-oncology market. To explain, let me begin with the management question and then answer it with some new management research.
Those of you involved in oncology will know that ASCO is the big event in that market and is often a platform for important debate. This year’s event revealed a baffling issue in immuno-oncology, arguably the most dynamic part of that market. On the one hand, Merck’s Keytruda seems to be a clear leader, with impressive results as a combination therapy in non-small cell lung cancer, the biggest part of that market. Rivals like BMS can’t make the same claims and Merck seems to be pulling ahead in a very important disease. But, on the other hand, that leadership doesn’t seem attributable solely to a superior product. Dan Chen of Genentech, who knows a thing or two about the science in this area, was quoted in FiercePharma saying: “Are there small differences between Roche’s Tecentriq, AstraZeneca’s Imfinzi, Bristol-Myers Squibb’s Opdivo and Keytruda? Maybe, but any differences are likely to be very small.” Bristol-Myers’ Giovanni Caforio said much the same thing in a TV interview. “When you look at the totality of the data … there is really no difference between these two medicines,” he said of Keytruda and Opdivo. Merck, predictably, makes counter arguments. Now, we don’t have space here to critique the two sides of the debate but it’s probably safe to conclude one thing: Merck’s leadership isn’t due to the product alone. There’s something else going on.
I mulled over this question as I got on with my academic work, much of which is consumed with reading papers that are only read by academics and never by practitioners. One paper1 caught my eye because of its focus on organisational routines, which are central to my work on the evolution of the industry. Routines are small sets of activities that combine to create organisational capabilities. A life sciences company has many thousands of such routines, enabling everything from ordering stationery to designing a trial. As I’ve written about before in this column, an organisation’s complement of routines (its routineome) is directly analogous to an organism’s proteome; they each allow the organisation or organism to be viable in its environment. The academic paper described how management innovations can only be understood at a very detailed level because they are the result of the organisation creating new routines that work with existing routines to create superior new capabilities. This perspective, to quote the paper, ‘reminds managers of the depth and complication of innovation implementation’. To extend my analogy, becoming good at something new is every bit as complicated as gene therapy.
Taking this organisational routines perspective and applying it to the question of why Merck has been more successful than its rivals throws up both a short and a long answer. In short, it’s very complicated. The longer answer is that Merck hasn’t only come up with a good product, it has also generated some new routines that enable it to exploit Keytruda better than its rivals can exploit their checkpoint inhibitors. What those routines are isn’t known exactly but even looking from the outside we get some hints. Analyst Umer Raffat wrote: ‘Maybe Merck is just executing these trials much better.’ Merck also seems to be doing some clever things in co-marketing with AstraZeneca and Eisai. And its segmentation, targeting and positioning strongly suggests that the old dog has learnt some new strategy tricks. There are probably other new routines ticking away behind the scenes too. Just as biological success is rarely attributable to a single gene, Keytruda’s success seems due to a phalanx of novel routines working together. Such routine complexes, analogous to gene complexes, are what my academic research is beginning to uncover.
To return to my metaphor of academic and business worlds colliding, the question of Keytruda’s success is obviously an applied business question while the concept of organisational routines is just as obviously rooted in pure research. But, as someone once said, there is no such thing as pure research; only research that hasn’t been applied yet.
1Haifen Lin, Mengya Chen, Jingqin Su, (2017) How management innovations
are successfully implemented? An organizational routines’ perspective, Journal of Organizational Change Management, Vol. 30 Issue: 4, pp.456-486