i
NOVARTIS: VALUE CREATION THROUGH INTANGIBLE ASSET MANAGEMENT
LAURA HØEG HAGEN
MASTER’S THESIS
M.Sc. in Business Administration & Organizational Communication
Copenhagen Business School 2013
_____________________________________________
Date: November 1, 2013
Laura Høeg Hagen Copenhagen Business School 2013 ii
Executive Summary Novartis: Værdiskabelse gennem immaterielle aktiver Inden for det sidste årti har medicinalindustrien stået over for en række store udfordringer
indenfor øget regulatorisk tilsyn, image og forringelse af produktudviklingsporteføljer. Dette
har skabt et behov for signifikante ændringer af nuværende strategiske konceptualiseringer
samt tilgange. Selvom den hidtidige reaktion på lignende udfordringer har været inorganisk
vækst på nye markeder, argumenterer denne afhandling for, at en mere endogen-centrisk
anskuelse er nødvendig for at skabe øget værdi i form af forbedret produktivitet og organisk
vækst. Herunder påpeger afhandlingen specifikt immaterielle aktiver som værende
værdiskabende, især i form af kommunikationsbaseret præstationer hos den Schweiziske
medicinalvirksomhed Novartis.
På baggrund af dette, præsenterer denne afhandling en firedelt analyse af Novartis’
organisatoriske kommunikation, baseret på en tilpasset ’Balanced Scorecard’ model, som
omfatter intern-, ekstern-, og innovationskommunikation. Analysen kulminerer i en vurdering
af Novartis’ strategiske prioriteter samt de samlede perspektivers bidrag til virksomhedens
organiske vækst. Afhandlingens analyse viser, at der overordnet er en markant
uoverensstemmelse mellem den udtalte vision og den i analysen påviste indsats for at
forbedre og integrere de kommunikationsbaserede immaterielle aktiver i den strategiske
dagsorden i forhold til realiseringen af denne. Derudover påviser analysen, at Novartis’
immaterielle aktiver er uhensigtsmæssigt struktureret i forhold til den potentielle værdi, der
ville fremkomme ved at sammenkoble disse i en kausal og standardiseret ramme.
Afhandlingen konkluderer, at Novartis har potentiale til at opnå store fordele, hvis de
realiserer deres udtalte endogen-centriske strategiske vision. Dette opnås ved at identificere,
vurdere og optimere de immaterielle aktiver, der indirekte kan bidrage til øget produktivitet
og organisk vækst i en håndgribelig og standardiseret ramme med kvantificerbare
målsætninger.
3
TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................................................................... II!1.0! INTRODUCTION ........................................................................................................................ 5!
1.1 MOTIVATION .................................................................................................................................. 6!1.2 RESEARCH QUESTION .................................................................................................................... 6!1.3 THESIS STRUCTURE ........................................................................................................................ 7!1.4 SITUATIONAL CONTEXT – THE STATE OF THE PHARMACEUTICAL INDUSTRY TODAY ................. 8!1.5 NOVARTIS – CASE COMPANY INTRODUCTION ............................................................................ 10!1.6 CLARIFICATION OF TERMINOLOGY .............................................................................................. 10!1.7 DELIMITATIONS ........................................................................................................................... 11!
2.0 METHODOLOGY ......................................................................................................................... 13!2.1 RESEARCH VIEW .......................................................................................................................... 13!2.2 RESEARCH APPROACH ................................................................................................................. 13!
2.2.2 Assumptions of Validity & Reliability ................................................................................. 14!2.3 DATA COLLATION ........................................................................................................................ 15!
2.3.1 Qualitative Data .................................................................................................................... 15!2.3.1.1 Validity & Reliability – Qualitative Data ....................................................................................................... 16!
2.3.2 Quantitative Data .................................................................................................................. 17!2.3.2.1 Validity & Reliability – Quantitative Data ..................................................................................................... 18!
2.4 ANALYTICAL APPROACH ............................................................................................................. 19!2.4.1 Validity & Reliability – Content Analysis ........................................................................... 20!
2.5 MOTIVATION FOR CHOICE OF METHODOLOGY ........................................................................... 20!3.0 THEORETICAL FRAMEWORK ............................................................................................... 22!
3.1 INTANGIBLE ASSETS .................................................................................................................... 22!3.1.1 The Balanced Scorecard Strategy Map ................................................................................ 25!3.1.2 The Balanced Scorecard - Reconfigured ............................................................................. 27!
3.2 STRATEGIC COMMUNICATION ..................................................................................................... 29!3.2.1 Internal Communication ...................................................................................................... 30!
3.2.1.1 The Hierarchical Communications Model ...................................................................................................... 30!3.2.1.2 The Network Communications Model ............................................................................................................ 31!3.2.1.3 Entrepreneurial Communication Paradigm Network ...................................................................................... 32!
3.2.2 External Communication ...................................................................................................... 34!3.2.2.1 Corporate Brand Equity .................................................................................................................................. 34!3.2.2.2 Image & Identity Causality ............................................................................................................................. 36!
3.3 INNOVATION COMMUNICATION ................................................................................................... 38!3.3.1 Innovation Communication Framework .............................................................................. 39!
3.4 MOTIVATION FOR CHOICE OF THEORIES ..................................................................................... 40!4.0 ANALYSIS OF EMPIRICAL DATA .......................................................................................... 43!
4.1 INTERNAL COMMUNICATIONS – LEARNING & GROWTH PERSPECTIVE ...................................... 43!4.1.1 Efficacy of Novartis’ Communications Structure ................................................................. 44!
4.1.1.2 Vertical Communication ................................................................................................................................. 45!4.1.1.3 Horizontal Communications ........................................................................................................................... 46!
4.1.2 Communication Effectuality Metrics .................................................................................... 49!
Laura Høeg Hagen Copenhagen Business School 2013 4
4.1.3 Conclusion ............................................................................................................................ 51!4.2 COMMUNICATION & PROCESS INNOVATION – INTERNAL PERSPECTIVE ..................................... 52!
4.2.1 Creating Awareness ............................................................................................................. 52!4.2.2 Actualizing Understanding ................................................................................................... 53!4.2.3 Facilitating Acceptance ........................................................................................................ 55!4.2.4 Encouraging Action .............................................................................................................. 57!4.2.5 Conclusion ............................................................................................................................ 59!
4.3 EXTERNAL COMMUNICATIONS – CUSTOMER PERSPECTIVE ........................................................ 60!4.3.1 Communication Medias ........................................................................................................ 60!4.3.2 Novartis’ Stated Value Proposition & Target Segments ...................................................... 62!4.3.3 Communicative Efficacy Through Healthcare Professionals .............................................. 65!4.3.4 Public Perception ................................................................................................................. 67!4.3.5 Conclusion ............................................................................................................................ 69!
4.4 STRATEGIC CONSIDERATIONS & ACTIONS – FINANCIAL PERSPECTIVE ...................................... 70!4.4.1 Strategic Priorities ............................................................................................................... 70!4.4.2 Strategic Approaches ........................................................................................................... 71!4.4.3 Conclusion ............................................................................................................................ 74!
4.5 ANALYTICAL HIGHLIGHTS ........................................................................................................... 74!5.0 REFLECTION & DISCUSSION ................................................................................................. 78!
5.1 METHODOLOGICAL CONSIDERATIONS ........................................................................................ 78!5.2 THEORETICAL DELIBERATIONS ................................................................................................... 79!5.3 ANALYTICAL POINTS OF CONTENTION ........................................................................................ 81!5.4 IMPLICATIONS FOR FUTURE RESEARCH ....................................................................................... 84!
6.0 CONCLUSION ............................................................................................................................... 85!7.0 REFERENCES ............................................................................................................................... 87!8.0 APPENDICES ................................................................................................................................ 93!
8.1 OVERVIEW OF TOP 10 PHARMACEUTICAL COMPANIES ............................................................... 94!8.2 THESIS SYNOPSIS ......................................................................................................................... 95!8.3 INTERVIEW GUIDE – NATHALIE PONNIER, HEAD OF GLOBAL COMMUNICATIONS ..................... 96!8.4 TRANSCRIPTION OF INTERVIEW WITH NATHALIE PONNIER ........................................................ 98!8.5 INTERVIEW GUIDE – MURUGASAN NIELSEN, MANAGING PARTNER AT NOTABENE ................ 109!8.6 TRANSCRIPTION OF INTERVIEW WITH MURUGASAN NIELSEN .................................................. 110!8.7 PUBLIC PERCEPTION SURVEY SUMMARY .................................................................................. 115!8.8 DANISH PHARMACY SURVEY SUMMARY .................................................................................. 121!8.9 DANISH DOCTORS SURVEY SUMMARY ..................................................................................... 125!8.10 EXTERNAL INDUSTRY CONDITIONS – PORTER’S FIVE COMPETITIVE FORCES ........................ 128!8.11 NOVARTIS’ ORGANIZATIONAL STRUCTURE ............................................................................ 130!
Laura Høeg Hagen Copenhagen Business School 2013 5
1.0 Introduction Since the inception of the pharmaceutical industry as we know it today in the 1930’s, it has
grown to become one of the most extensive and powerful within the market place. Not only
does the pharmaceutical industry entail immense economic strength, it also has a significant
social impact worldwide. Accompanying the advances made in medical knowledge,
sanitation, and hygiene, pharmaceuticals have aided in reducing mortality and morbidity rates
substantially, thus adding to the productive lifespan of the world’s population and improving
the quality of life for countless patients (McIntyre, 1999: 1).
However, over the past decades, increasing criticism has been directed towards the industry as
a result of market structure, questionable objectives, and ethical disputes among many things.
Furthermore, the pharmaceutical industry is increasingly facing exigent issues that will
necessitate a fundamental change of the current business model configuration. The main
contenders of these issues is the fact that blockbuster drugs are coming off patent, worldwide
healthcare reforms and stringent regulatory bodies are applying increased pressure on the
industry’s current operations, and anemic drug pipelines are progressively evident (Kessel,
2011). Needless to say, the industry is confronted with dire issues that can potentially result in
a paradigm shift in both the way it currently operates as well as the general perception of the
industry.
The traditional response to extrinsic threats within the industry has typically been external
market-based positioning and inorganic growth (See appendix 8.10). For instance, in the early
2000’s, when generic pharmaceuticals began to pose a danger to the future competitive
advantage of ‘big pharma’1 by taking advantage of the drugs coming off patent, Novartis, a
large Swiss-based pharmaceutical, acquired several generics companies2 and established a
generics division called Sandoz. Furthermore, the oligopolistic market structure and high
barriers to entry, something that leading pharmaceuticals have been working to preserve, has
largely prevented significant strategic threat in the marketplace (Kessel, 2011; McIntyre,
1999: 2). In order to maintain sales in otherwise saturated markets, inorganic acquisitions
1 See section 1.6 Clarification of Terminology 2 See section 1.4 Situational Context – The State of the Pharmaceutical Industry Today, Generic Competition
Laura Høeg Hagen Copenhagen Business School 2013 6
have been the go-to strategy. Nonetheless, it seems that the current issues facing the
pharmaceutical industry demand a distinctively novel approach – or simply a drastically
different conceptual understanding of the means to effectively resolve the crux of the issues.
1.1 Motivation
The underlying motivation for this thesis is to attempt to recalibrate the perspective on big
pharma’s strategic operations. With the numerous issues facing the pharmaceutical industry3,
it is deemed high time to reconsider the traditional mitigative strategic responses to these
issues. Instead of simply relying on past external, market-based positioning mechanisms, it is
considered important to develop novel approaches to creating sustainable value. “This
dramatic situation requires Big Pharma executives to envision responses that go well beyond
simply tinkering with the cost base or falling back on mergers and acquisitions.” (Hunt et. al.,
2011). Thus, this thesis will attempt to ascertain the viability of an intrinsic focus on
intangible assets to further Novartis’ productivity and revenue growth as well as overcome the
hurdles associated with the trying environment of the pharmaceutical industry today.
1.2 Research Question
The purpose of this thesis is to examine how and the extent to which the strategic execution
and operation of Novartis’ intangible assets, including innovation and strategic
communication, can generate sustainable value in lieu of external market-based positioning.
In order to fully explicate the problem fields below, and subsequently conduct a targeted
analysis, the following research question will define the overarching purpose and intent of
this thesis:
As a leading pharmaceutical company, how and to what extent does Novartis structure and employ its intangible assets in order to advance productivity and increase organic revenue growth, and how can Novartis increase the impact of intangible assets on its
financial performance?
3 See 1.4 Situational Context – The State of the Pharmaceutical Industry Today
Laura Høeg Hagen Copenhagen Business School 2013 7
The following sub-questions will be sought answered in order to fully capture the intents of
the research question:
• How is Novartis' internal communications structure composed? How and to what
extent does the Novartis’ strategic communications structure contribute to the
company’s core competencies?
• How is Novartis’ value proposition articulated, and to what extent is it aligned with
the perceived value proposition from an external perspective?
• To what extent is Novartis’ innovation communication supportive of process
innovation?
• What are Novartis’ strategic priorities, and to what extent are they aligned with an
endogenous strategic approach?
1.3 Thesis Structure
The structure of the thesis is as follows. Firstly, a brief overview of the state of the
pharmaceutical industry will be presented, providing a situational context for the motivation,
problem field and research question. Subsequently, the case company, Novartis, is introduced.
Following, a brief clarification of terminology section is provided in order to avoid any
confusion regarding the terms used in the thesis as well as to clarify any industry-specific
terminology. Next, a delimitations section is presented which defines the concrete
demarcations of the thesis as well as the overall intentions and purposes.
The methodology section will provide insight into the overarching research approach as well
as the actual methodological means used during the data collation and analytical process. The
theoretical framework below will present the applied theories, including intangible assets,
strategic communication and innovation, as well as account for the choice of theories and the
composition of the overall framework. Subsequently, the analysis section will attempt to
provide a comprehensive and exhaustive study of the pharmaceutical industry’s potential
employment of intangible assets to create sustainable value, relative to the defined
delimitations. Following the analysis, an in-depth reflection and discussion of the results is
presented in order to account for any potential conceptual gaps in the analysis and results.
Finally, the conclusion will briefly state the main findings of the analysis.
Laura Høeg Hagen Copenhagen Business School 2013 8
1.4 Situational Context – The State of the Pharmaceutical Industry Today
While nearly all businesses have been somewhat affected by the economic downturn as a
result of the global recession in 2008, the pharmaceutical industry has been dealt numerous
hardships within the past decade. Despite the fact that global drug sales totaled $ 856 billion
in 2010 – an all-time high (Pain, 2011), there are significant, unmistakable signs that the
industry is ailing. While the following list is far from exhaustive, the most prominent and
consequential issues have been outlined below:
Deteriorating Pipelines: Research & Development (R&D) lies at the heart of the
pharmaceutical business model. It is needed to ensure continuous innovation in product
development, and thereby constitutes a fundamental element in any given pharmaceutical
company’s competitive advantage. However, in 2012, only 21 New Molecular Entities
(NMEs) were introduced to the market. This represents a 55% decrease from the lowest level
of NME introductions, which occurred in 2007 (ibid).
Generic Competition: Generic competition refers to the entry of companies in the
pharmaceutical industry that specialize in producing and marketing generic drugs that have
either come off patent or were never patent protected. Many blockbuster drugs came off
patent in the 1990’s, and more and more continue to do so. Generic pharmaceuticals have
skyrocketed, giving big pharma fierce competition, both in terms of price and market access.
As a result, the market composition has shifted significantly in favor of generics. While
generic companies saw a growth of 11.6 % between 1989-2010, big pharma experienced a
negative growth of -1.9 % (Hunt et. al., 2011).
Image Degradation: The pharmaceutical industry may have been one of the largest
contributors to lowering morbidity and mortality rates worldwide, but as the industry
continues to expand and prosper, intensified scrutiny is cast over the general conduct and
operations of pharmaceuticals.
According to research conducted by PatientView4, the primary drivers of this negative view
of big pharma from a patient perspective are due to a lack of fair pricing policies which lead
4 PatientView: a UK-based research, publishing, and consultancy group
Laura Høeg Hagen Copenhagen Business School 2013 9
to unseemly profits, lack of transparency in all corporate activities, management of adverse
events, and acting without integrity (LaMattina, 2013). These negative drivers are supported
by the perception that the industry is preoccupied with drugs that only offer short-term health
benefits, fails to provide affordable medicines, and conducts inappropriate marketing of drugs
with a lack of transparency in terms of negative clinical trial results (ibid).
Strict Regulatory Bodies: The pharmaceutical industry is increasingly heavily regulated.
Government regulation dates back to 1906 with the Pure Food & Drug Act in the U.S.,
prohibiting the adulteration and mislabeling of drugs. Numerous revisions of these
legislations have ensued following tragic deaths as a result insufficiently researched and
tested pharmaceuticals gaining access to the market (McIntyre, 1999: 149).
Currently, all aspects of NMEs’ life cycles are regulated - from patent application, marketing
approval, commercial exploitation to patent expiration and competition with generics. These
regulatory controls pursue three primary objectives: 1) preserving the incentives for research
and development and the flow of new drugs; 2) ensuring the safety of drugs consumed by the
public; 3) controlling the quantity and quality of drug expenditures (OECD, 2001: 7). The
radical advances in biotechnological knowledge have led to an ever-increasing scrutinous
process of pharmaceutical regulation. In turn, this has led to an increase in the cost and
development timelines for new drugs, lowered R&D productivity, reduced effective patent
life, and subsequently affected profitability and threatened future R&D investments
(McIntyre, 1999: 171).
In conclusion, several factors are affecting the current profitability of and value creating
mechanisms in the pharmaceutical industry. The current focus on externally-based mitigating
responses, such as mergers and acquisitions and market expansions (geographic and product-
based) are no longer sufficient to overcome these issues. Therefore, it is deemed relevant to
assess the viability of a strategic application of endogenous intangible assets and its
correspondence to the advancement of productivity and revenue growth.
Laura Høeg Hagen Copenhagen Business School 2013 10
1.5 Novartis – Case Company Introduction
The Swiss pharmaceutical company, Novartis, was established in 1996 through the merger of
Ciba-Giegy and Sandoz. Novartis operates in 140 countries and employs over 130,000 people
globally. Currently, Novartis holds a wide healthcare portfolio which includes patent-
protected pharmaceuticals within oncology, ophthalmics, neurology, respiratory diseases, and
hypertension, as well as generics and biosimilars, vaccine and diagnostic tools, and self-
medication products and treatments for animals5.
The generics unit was created in 2004 after a series of acquisitions of generics companies, and
thereby Sandoz was reestablished as a business division within Novartis. Within the EU, the
Consumer Health segment (over-the-counter products) represents the division with the
highest net sales, followed closely by Sandoz (generics), and Pharma (patent-protected
pharmaceuticals) (Novartis, 2012: 18). This wide array of healthcare offerings situates
Novartis in the lead within the pharmaceutical industry and combined amounts to over $ 56
billion in net revenue in 2012 (ibid).
Novartis’ mission statement strongly adheres to the betterment of global health, and is stated
as follows:
We want to discover, develop and successfully market innovative products to prevent and
cure diseases, to ease suffering and to enhance the quality of life.
We also want to provide a shareholder return that reflects outstanding performance and to
adequately reward those who invest ideas and work in our company (Novartis, 2013).
Recently, Novartis made it onto the World’s Best Multinational Workplace list (Great Place
to Work, 2013), and continues it’s strive to develop and discover innovative healthcare
products to target unmet medical needs.
1.6 Clarification of Terminology
• Big Pharma: The term refers to the top 10 global pharmaceutical companies that
currently dominate the market based on revenues from 2011. Novartis lies just below 5 See also appendix 8.10
Laura Høeg Hagen Copenhagen Business School 2013 11
Pfizer as the second largest pharmaceutical worldwide with a $47,935,000 annual
revenue in 2011 (Roth, 2012). See appendix 8.1.
• New Molecular Entities (NMEs): Recently discovered or recently marketed drugs.
• End-user: The actual persons consuming the drugs produced by pharmaceuticals. This
term will be applied interchangeably with Patients.
• Intangible Assets: Intangible, and often imperceptible, factors that underpin the
financial statement. E.g., leadership, communication, culture, knowledge, etc.6
• Tangible Assets: Physical and financial assets that are recognized for debt security
purposes.
1.7 Delimitations
The thesis is not intended to reflect a consultancy-based analytical process followed by a
targeted plan of action. On the contrary, the intention is to uncover the most prominent issues
within the industry as well as the origins of these, and subsequently attempt to present a
change in perception, which in turn could potentially foster a more fitting strategy to tackle
these challenges in lieu of pharma’s traditional mitigative responses to extant threats. (See
appendix 8.10).
While the thesis will take its point of departure in the pharmaceutical industry in general, the
Swiss-based pharmaceutical company, Novartis, will be applied as the primary case study. It
is deemed that the use of a concrete case company will allow more fruitful and concrete
findings relative to the objectives of this thesis, namely to investigate the internal intangible
assets and their contribution to firm-specific value creation. Nonetheless, the results of the
analysis are considered relevant to the industry as a whole, and as such, the industry is
referred to throughout the thesis when deemed relevant.
Furthermore, it is considered important to highlight the distinction between the cultural and
national origins of the author and the source of the collected data. In this case, the author is
researching from a Danish perspective with a predominantly Danish interpretive worldview.
Moreover, the data is demarcated to address Novartis’ organizational communication within
6 See 3.1 Intangible Assets for further elaboration
Laura Høeg Hagen Copenhagen Business School 2013 12
the EU, and Denmark in particular, in lieu of a truly global perspective. This demarcation is
considered necessary based on Novartis’ differing operational and regulatory conducts across
various geographic regions. Furthermore, the EU represents the region in which Novartis
gains the highest amount of net sales (Novartis, 2012: 2).
As is explained further below in section 3.1, intangible assets encompass a large array of
functions within the organization. However, this thesis will focus primarily on intangible
assets that pertain directly to the communicative function, such as internal communications,
external communications, innovation communication, and strategy communication.
Laura Høeg Hagen Copenhagen Business School 2013 13
2.0 Methodology The following section aims to present a comprehensive framework for the various research
approaches and methodologies as well as the analysis strategies applied in the data collation
and analytical process. Subsequently, the choice of these approaches and methods will be
sought rationalized in order to effectively present the intentions and following results in
relation to the overall objectives of the thesis.
2.1 Research View
The underlying research view applied to the analytical process in this thesis adheres to the
interpretive paradigm in the form of social constructivism. The epistemological basis for this
view asserts that analytical objects can be understood and interpreted differently in lieu of
representing absolute truths (Burr, 1998: 14). Accordingly, individual interpretations, sense-
making, and meaning constructions are socially constructed through the reiterative
(re)production of reality through a process of communicatively co-constructing meaning.
As the qualitative and quantitative data is analyzed and interpreted based on a preconceived
understanding of the meaning-based cues on part of the author, and these cues are results of
the respondents’ preconceived understanding of reality (Daymon & Holloway, 2004), it is
deemed appropriate to apply this interpretive perspective as preconceived understandings are
subjective in nature. Thus, no objective, absolute truth can be obtained. While this may seem
counterintuitive due to the fact that a definitive research question have been posed and is
sought answered, it is nonetheless considered reductionary to assume that one objective truth
exists in such a multifaceted area of research as this thesis pertains to.
2.2 Research Approach
The overarching research approach for both the data collation as well as the analytical process
represents the inductive approach. The primary purpose of the inductive approach is to allow
research findings to emerge from the frequent, dominant or significant themes inherent in the
raw data (Thomas, 2003: 2). Subsequently, emergent theories can be identified and further
analyzed based on the evident themes in the data.
Laura Høeg Hagen Copenhagen Business School 2013 14
Although inductive reasoning is considered the overarching research approach, an underlying
assumption of this method prescribes that the data analysis process is determined by both the
research objectives, which can be categorized as deductive, as well as the multiple readings
and interpretations of the raw data, namely inductive (ibid). The underlying rationale as to
why the research objective in itself reflects a deductive approach lies in the fact that a
considerable demarcation process took place prior to the commencement of the data collation,
analysis and writing process, as is expected within the academic genre of master’s theses.
Thus, the two approaches can hardly be distinguished entirely, and thereby a slight interaction
between the two is expected to occur throughout the analytical process.
The process of inductive coding will be applied to the collated empirical data, both in the
form of qualitative primary data as well as the secondary data collected through a content
analysis. In the case of qualitative data, coding is conducted by an initial close read of the
transcribed interviews as well as a thorough and reiterative review of the recorded sound files.
Through this process, various themes and/or concepts are discovered and placed in categories
in which subsequent elements of the data are allotted (Rubin, 1995: 238). This will allow any
recurrent themes, concepts or ideas to be uncovered, and thereby the importance of these can
be determined based on the amount of repetition discovered. A similar approach will be
applied to the secondary data, where certain themes and subjects will be categorized and
subsequently assessed in terms of their importance and relation to the overall analytical
objectives.
2.2.2 Assumptions of Validity & Reliability
The primary mode of analysis within the inductive function is the development of categories
which encompass the key themes in the data. However, it must be underlined that in the case
of an individual coder (as in this case, the author), the various categories that are determined
are constructed solely on the basis of what the coder judges as important to the overall
research objectives. Thus, the findings are shaped by the assumptions and experiences of the
coder, and can thereby not be regarded as universally valid. Accordingly, different researchers
may produce findings that are not identical and which may not have overlapping components
(ibid).
Laura Høeg Hagen Copenhagen Business School 2013 15
2.3 Data Collation
The following section will account for the various methods of data collation, including
qualitative and quantitative data. Subsequently, issues of validity and reliability will be
addressed.
2.3.1 Qualitative Data The primary qualitative data collected for this thesis was conducted in the form of two
focused interviews with Head of Global Communications at Sandoz, Nathalie Ponnier and
Managing Partner at NotaBene, Murugasan Nielsen. The purpose of the first interview was to
gather a qualitative depth of expert data on the current role of internal and external
communication within Novartis as well as any potential challenges relative to the company’s
communicative operations. Furthermore, the intent behind the second interview was to collect
expert data on Novartis’ internal communications, in particular their innovation
communications, from an external perspective.
The main characteristic of the focused interview is the open-ended nature of the questions and
following responses, which provide the ability to challenge the preconceptions of the
researcher while enabling the respondent to answer questions within their own frame of
reference (May, 2008: 124). Furthermore, this also allows divergent themes to emerge that
may contribute with further insight into the subject being investigated. Accordingly, it is the
inherent flexibility and discovery of meaning that characterizes the focused interview as
opposed to a standardized set of questions and answers.
Prior to the interview, extensive research on publicly available sources of communication was
conducted. Furthermore, a comprehensive background examination of the respondents was
executed in order to ensure accessibility, meaning the alignment between the questions posed
and the area of knowledge and experience available to the respondents (May, 2008: 128). In
addition, a one-page synopsis was drafted and sent to the respondents in advance in order to
provide a general overview of the overarching theme of the thesis as well as the areas of
information sought during the interview (See appendix 8.2).
Laura Høeg Hagen Copenhagen Business School 2013 16
Finally, two separate interview guides were prepared. The first interview guide was divided
into seven themes, each pertaining to a specific communication-related objective with
between two to three sub-questions in order to ease the flow of the focused interview (See
appendix 8.3). The second interview guide was composed of two themes, the former
pertaining to the respondent’s overall experience with Novartis’ communicative performance
and the latter referring to the respondent’s perception of, and role within, Novartis’ innovation
communication7.
The first interview was conducted through a teleconference call with a duration of 47 minutes.
The second took place at NotaBene headquarters in Copenhagen with a duration of 19
minutes. Furthermore, both interviews were recorded digitally and transcribed as soon as
possible following the interviews in order to retain the details of non-verbal communications.
The information was subsequently codified and otherwise prepared for the following
analytical process.
2.3.1.1 Validity & Reliability – Qualitative Data
According to Ruane (2005), in order to verify the correctness of an assertion or claim, one
must ensure that valid knowledge – i.e., knowledge that is empirically correct - is ascertained
by establishing measurement validity and reliability. In terms of internal validity, a distinction
between dependent (predictor) and independent (outcome) variables exists. Dependent
variables refer to the outcomes or effects that one is attempting to explain whereas the
independent variables are the factors that are believed to be the root causes that are
responsible for the dependent variables (Ruane, 2005: 28).
In order to establish a causal connection between the two, three criteria must be met: 1)
temporal ordering; meaning that the independent variable must precede the dependent
variable in time. 2) Association; refers to the fact that the variables must be connected and
causally create a pattern of relation. 3) Spuriousness; by excluding any rival explanations of
the dependent variable (ibid). By ensuring the fulfillment of these criteria, internal validity of
the research can be determined.
7 See 3.3 Innovation Communication
Laura Høeg Hagen Copenhagen Business School 2013 17
2.3.2 Quantitative Data
The primary quantitative data for this thesis was collected in the form of semi-structured,
attitude surveys. This method relies on a uniform structure on questionnaires as the data
collection instrument and seeks to expand the line of questioning from simply material and
objective reasoning to the subjectivity of opinions and attitudes towards the investigated
subject (May, 2008: 89). The semi-structured survey permits comparability and statistical
analysis of the results, and in certain situations, it can be representative of the population that
is sought investigated, depending on the collation process (Sepstrup, 2002: 198).
While the purpose of a structured survey is to collect standardized explanations from a wide
range of respondents by posing identical questions, thereby leaving little or no room for
deviation, nor prompting personal views, interpreted meanings, and finally, omitting
improvisation altogether, it was deemed more fruitful to conduct a semi-structured data
collection as this method allows for further clarification and elaboration on the answers (May,
2008: 123). These supplementary comments are expected to provide complementarity to the
qualitative data, while retaining quantitative statistical relevance.
The data was collected through 3 semi-structured surveys. The first was composed of 11
questions, 10 of which pertained to the general familiarity of Novartis from an end-user
perspective as well as the overall perception of the pharmaceutical industry. The remaining
questions and sub-questions concerned the gender, age and nationality of the respondents (See
appendix 8.7). The results of these permit the demarcation and segmentation of the
respondent group, thereby establishing the information needed to ascertain whether it reflects
a representative population.
The survey was administered primarily online through social media such as Facebook and
LinkedIn, and respondents were encouraged to share the survey with their network in order to
broaden the sampling pool. The total number of respondents amounted to 126 people,
including 46.6 % males and 53.3 % females with the predominant age group being 26-25,
whereof 80% were Danish and 10.8% were European. While the prevalency of Danish and
European respondents is considered favorable in relation to the geographic demarcation of
Laura Høeg Hagen Copenhagen Business School 2013 18
this thesis8, the overwhelming concentration in the 19–25 and 26-35 age groups compromises
the representativeness of the sample group, which in turn may affect the reliability of the
analytical results.
The second survey pertained to the overall communication relations and mechanisms between
Novartis and Danish pharmacies. It contained 8 questions, ranging from specific
communication-based interactions to broader perceptions of the role of communication within
the pharmaceutical industry (See appendix 8.8). The survey was administered via e-mail to all
Danish pharmacies (290 in total), and respondents were encouraged to supplement and clarify
their standardized answers with qualitative written responses. There was a 16. 2% response
rate, whereof 91.2% communicated directly with Novartis.
The third survey was directed towards Danish doctors, and primarily concerned the role of
Novartis’ communication as an influencing factor in prescribing drugs to patients (See
appendix 8.9). The survey was composed of 9 questions, and again, respondents were
encouraged to expand and supplement their answers with qualitative clarifications. The
respondent selection process represented purposive sampling whereby the selection is made
according to a known characteristic (May, 2001: 95) – in this case the Chief Physician of
Gastroenterology at Aalborg hospital as well as a Consultant Ophthalmologist. Subsequently,
the snowball sampling method was applied, as these initial respondents were encouraged to
distribute the survey within their professional medical network. This survey in particular
included a more significant qualitative function as it was deemed most appropriate due to the
relatively small sample group. Unfortunately, only 4 responses were gathered.
2.3.2.1 Validity & Reliability – Quantitative Data
The validity and reliability of the semi-structured survey is similar to that of the focused
interview. While both dependent and independent variables must be taken into consideration,
the external validity is more vital to the quality of the quantitative responses. Furthermore,
replicability and representativeness have slightly different connotations within the
quantitative method. Firstly, replicability refers to the ability to administer the survey using
the same type of sampling and questionnaire in a different setting, and thereby does not focus 8 See 1.7 Delimitations
Laura Høeg Hagen Copenhagen Business School 2013 19
solely on the replication on results, albeit this is preferred to a certain extent. Secondly,
representativeness refers to the extent to which the sample group is representative of the
general population, and is needed in order to sufficiently account for the differences in
opinion relative to age group, gender, race and culture (May, 2008: 92). As such, if the
sample group consists predominantly of one age group and gender over another, this may
signify an inequitable measurement of the population.
2.4 Analytical Approach
In order to conduct a comprehensive review of secondary data, a content analysis has been
executed. The content analysis has increasingly gained popularity as a scientific research
methodology as it allows the transformation of non-structured information into a format that
accedes analysis (Chelimsky, 1989: 6). As such, content analysis is defined as a set of
procedures for collecting and organizing information in standardized format that allows
analysts to make inferences about the characteristics and meaning of written and other
recorded material (ibid).
Content analysis is considered inductive in its nature, and largely corresponds to the coding
function in inductive research. The main differentiator between the two lies in the fact that
coding traditionally relates to qualitative interviews whereas content analysis focuses on
secondary written materials. Nonetheless, the epistemology behind the two is very similar.
As mentioned above, the coding process will be applied during the content analysis in the
sense that written materials will be gathered, thoroughly read, and subsequently emerging
themes and subjects will be categorized in order to determine commonalities, pervasive
themes, and potential problem areas.
More specifically, the procedure for content analysis begins with the alignment of research
objectives and the overall methodology of content analysis (Chelimsky, 1989: 9). In this case,
the objects of analysis primarily pertain to communication-based materials as well as meta-
communication. The second step is to demarcate the materials to be included in the content
analysis. For this thesis, the sources of secondary data consist primarily of publically
available materials pertaining to Novartis’ strategic considerations and actions in terms of
Laura Høeg Hagen Copenhagen Business School 2013 20
external and internal communications, academic research, general firm-specific as well as
industry-specific information, scientific publications and related articles.
Within content analysis, it is not considered practical, and in some instances even unfeasible,
to use long documents as analytical objects. Instead, context units within the selected
materials are identified and subsequently categorized. Context units can consist of quotes,
sentences, paragraphs, sections or chapters, and aid in the demarcation and categorization
process as they decrease the complexity of information (ibid). Subsequently, categories are
established based on the context units. The compilation of these categories is regarded as the
single most important part of the content analysis process and the validity of the results
(Franzosi, 2008: 8). The categories should adhere to the MECE principle, meaning they
should be mutually exclusive and collectively exhaustive. Finally, the coding process can be
initiated prior to the actual analysis and interpretation of results (Chelimsky, 1989: 12).
2.4.1 Validity & Reliability – Content Analysis
The procedure for the content analysis is identical to the coding process mentioned above.
The only differentiator being the object of analysis, namely the focused interview and the
secondary collated data, respectively. Therefore, the assumptions of validity and reliability for
content analysis remain the same as for the coding process9.
2.5 Motivation for Choice of Methodology
The motivation for selecting the methods above, namely focused interviewing, semi-
structured surveys and content analysis, is tripartite. Firstly, it is deemed appropriate to align
the various methods of data collection to the extent that is possible, despite the differentiation
between qualitative and quantitative data and primary and secondary data. This alignment is
considered fulfilled in the sense that both primary and secondary data are analyzed through
similar methods where coding represents the node of cohesion. Accordingly, the various
themes and categories used in one method can be applied to the others, thereby making the
results more reliable across different sources and methods.
9 Please see section 2.2.2 Assumptions of Validity & Reliability for further elaboration.
Laura Høeg Hagen Copenhagen Business School 2013 21
As mentioned above, the intent of the qualitative data is to observe and interpret expert
knowledge on Novartis’ organizational communication from an internal perspective and
within the company’s own frame of reference. As for the quantitative data, the intent is to
gather statistical data that seeks to represent an external perception of Novartis’
communication. The underlying assumption is that the application of the two methods will
counterbalance the strengths and weaknesses of each other, and thereby present a more
complete perspective of Novartis’ communicative operations.
As such, this combined approach to methodology and data analysis can be termed as
triangulation in its attempt to link qualitative and quantitative research. Triangulation is
characterized by a parallel collection of both qualitative and quantitative data, where the
priority between the two is preferably equal (Flick, 2007: 96). The basis for triangulation is
result oriented, and focuses primarily on how this method can further the validity and
reliability of the research. According to Kelle & Erzberger (2004), three alternatives to the
complementarity of the results may exist: 1) Results may converge where responses from the
standardized survey identify with statements from the semi-structured interview. 2) Results
may be complementary in the sense that statements from the interview supplement (deepen,
detail, explain, extend) the results of the standardized survey. 3) Finally, results may diverge
either completely, generally or partially, leaving a basis for further theoretical and empirical
clarification of the divergence and its cause. In summary, to the extent that it is feasible, the
triangulation method is expected to deliver the most reliable and valid results by allowing
commonalities, emergent themes and potential divergences to be uncovered relative to the
objectives of the thesis.
Finally, it is acknowledged that a longitudinal study is not feasible in relation to the overall
scope of the thesis. While an extension of the study’s timeframe and range as well as ensuring
replication of the results is considered beneficial in ensuring the quality of the results (Flick,
2007: 111), this is deemed more relevant and appropriate for another academic setting, such
as a PhD dissertation.
Laura Høeg Hagen Copenhagen Business School 2013 22
3.0 Theoretical Framework The following section aims to provide a comprehensive overview of the underlying theories
used to support and spur the analytical process. Theories regarding intangible assets and the
framing and accountability of these, strategic communication structures, and innovation
communication will be addressed. Subsequently, these theories will be presented and
accounted for as individual elements of the overarching theoretical framework used in this
thesis. Finally, the motivation and underlying rationale for the selection of these theories will
be stated in order to provide a solid basis for the theoretical framework relative to the
objectives and delimitations of the thesis.
3.1 Intangible Assets Financial accounting has become largely synonymous with business. It is considered one of
the primary cornerstones of successful business operations, and without some sort of financial
measurement, any type of venture is bound to fail. Financial accounting is defined as “the
reporting of the financial position and performance of a firm through financial statements
issued to external users on a periodic basis” (e-conomic, 2013). It encompasses the
company’s assets and limitations, both material and monetary, as well as investments and
return on investments (ROIs).
While many practitioners and academics within the positivist function adhere entirely to the
financial position and performance of the firm as basis for business success (Friedman, 2007:
173), recent research has indicated that relying solely on these metrics simply is not sufficient
in determining success, value creation, and optimization mechanisms. Proportional to the
increasingly globalized business environment, continuous technological developments and
thus intensified competition, businesses have been necessitated to acknowledge, expose and
manage the underlying intangible assets that support, create and capture value and lead to
financial performance.
Intangible assets represent the factors that underpin the financial statement. These include
human capital, intellectual capital, customer relations, leadership, culture, communication and
more (Kaplan & Norton, 2004: 29). While it may seem obvious to consider these factors in
Laura Høeg Hagen Copenhagen Business School 2013 23
business operations, investments in employee capabilities, information systems, customer
relationships, efficacy and responsive processes have largely been considered expenses in the
period in which they were incurred rather than investments as no ROI could be directly linked
to these expenses (ibid).
Although intangible assets cover an immensely large range in ordinary business operations,
Kaplan & Norton (2004) further distinguish between intangible goods and intangible
competencies. Intangible goods refer to enforceable ownership rights that can be traded,
stolen or bought; e.g., licenses, copy rights, patents and franchises. Intangible competencies
refer to non-tradable, distinctive factors of competitive advantage that differentiate a firm
from competitors; e.g., innovation, development capabilities, communication strategies etc.
The differentiation between the two largely corresponds to the metric function – namely, that
intangible goods can be definitively assessed in terms of a numeric or monetary value, and
can thereby relatively easily be compared and benchmarked at an industry-specific level.
However, intangible assets are abundantly more difficult to measure due to their indefinite
and abstract nature. The dictionary defines ‘intangible’ as “incapable of being realized or
defined”. This reflects the difficulties organizations have in managing these assets; how can it
manage what cannot be defined? (Kaplan & Norton, 2004: 199).
For instance, in the case of organizational communication, the various elements therein that
serve to form the communication function must be demarcated, and subsequently, metrics
must be selected to measure the impact of each of the communication elements, which then
must be consolidated into a preferably quantitative format in order to ensure comparability.
Accordingly, cross-company comparability within an industry becomes increasingly difficult
to conduct as ‘organizational communication’ may not be defined and demarcated identically,
and therefore, reliability of the results is compromised. Furthermore, the metric functions
used for measurability may be entirely different from company to company, adding to the
issues of validity and reliability in terms of comparability.
Accordingly, it seems that the function of intangible assets within an organization is highly
individualized. As such, internal strategic alignment is stated as the dominant principle in
Laura Høeg Hagen Copenhagen Business School 2013 24
creating value from intangible assets (Kaplan & Norton, 2004: 201). Intangible assets take on
value only in the context of strategy and in respect to what they are expected to accomplish
for the organization. For instance, assume that a large pharmaceutical company wants to
invest in brand management. Assume further that it has two choices – product branding or
corporate branding. Depending on the overall strategy of the company, the investments will
bring drastically different levels of value.
A company with a focused over-the-counter (OTC) strategy would likely gain more value
from product branding as the targeted segment is assumed to be end-users, whereas a
company following a prescription drug strategy is presumed to gain most value from a
corporate branding campaign as establishing and retaining goodwill will likely enhance the
probability of healthcare professionals’ continued selection of their products across product
lines. Thus, the same investment can create drastically higher returns when it is aligned with
the organization’s overarching strategy (ibid).
Furthermore, in order to create sustainable value, intangible assets cannot be addressed on a
stand-alone basis (Kaplan & Norton, 2004: 201). Instead, they must be integrated into a
coordinated program in order to support the enhancement of all the organization’s intangible
assets. More often than not, organizations group its activities around functions, such as HR or
IT, and each function is specialized within their disciplines. While specialization is obviously
beneficial in creating deep functional excellence in each department, the division results in a
competition for the organization’s scare resources. Solutions are thereby often sought in
isolation, and results are rarely impactful company-wide (ibid). By integrating the strategic
role of intangible assets, functional silos can be avoided and complementarity can be invoked.
In conclusion, the extensive difficulties in demarcating, measuring, structuring and aligning
intangible assets results in a need to employ a structured method and framework in order to
alleviate the issues associated with managing intangible assets. While many methods for the
valuation of intangibles have been developed over the past 20 years (Marr & Adams, 2004:
20), one of the most promising contributions to the field is the Balanced Scorecard (BSC),
which has become one of the most widely utilized frameworks for linking intangible assets to
financial performance.
Laura Høeg Hagen Copenhagen Business School 2013 25
3.1.1 The Balanced Scorecard Strategy Map
Kaplan & Norton developed the (BSC) in an attempt to help organizations realize the added
value of managing intangible assets as well as provide the means to do so. The BSC is a
strategy map that provides a framework to illustrate how strategy links intangible assets to the
value-creating process (Kaplan & Norton, 2004: 30). It provides a visual framework of the
organization’s strategic objectives and illustrates the critical intangible elements and
processes needed to capture and create sustained value.
The BSC is structured as a causal interpretation of the relationships between the financial
perspective, the customer perspective, the internal process perspective and the learning &
growth perspective, respectively. All strategic objectives are thus causally linked, starting
with the company’s employees, continuing through the various processes that support and
constitute the value proposition, which culminates in higher financial performance (Kaplan,
2010: 21).
Figure 1: The Balanced Scorecard
Source: Kaplan & Norton (2004)
Laura Høeg Hagen Copenhagen Business School 2013 26
The structure of the traditional BSC is as follows:
Financial Perspective: The BSC retains the financial perspective as the ultimate objective
for private sector, profit-maximizing companies. Financial performance measures indicate
whether the company’s strategy, including implementation and execution, contributes to
bottom-line improvement (Kaplan & Norton, 2004: 36).
According to Kaplan & Norton (2004), a company’s financial performance can be improved
through two basic approaches: revenue growth and/or increased productivity. Whereas
revenue growth is associated with long-term strategy investments, increasing productivity is
linked to short-term investments, and is therefore often a favored approach as it is considered
a more viable way of presenting positive financial results to shareholders on a regular basis
(ibid). However, sustaining growth in terms of financial performance is more valuable to the
company in the long run in lieu of sporadic bursts of short-term increased performance, which
is why a balance between the two dimensions must be upheld. The means to promote and
maintain this balance is provided in the following underlying perspectives.
Customer Perspective: The customer perspective adheres to the postulate that good strategy
is based on a differentiated value proposition (Kaplan & Norton, 2004: 38). The value
proposition defines the company’s strategy for the customer by describing the unique
offerings that said company is able to provide, and should communicate what it expects to do
better or differently than its competitors (ibid).
The primary reasoning behind this perspective is that a cause-and-effect relationship can lead
to positive customer outcomes, which successively supports the growth objective in the
financial perspective. For instance, customer satisfaction generally leads to customer retention
and, through word-of-mouth, potential customer acquisition. Thus, combining customer
retention, and thereby increased share of business conducted with loyal customers, and
customer acquisition, the company is expected to increase its overall market share within the
targeted segment (ibid), leading to increased revenue growth.
Laura Høeg Hagen Copenhagen Business School 2013 27
Internal Perspective: While the above perspectives aim to state the overall strategy (value
proposition) and the economic consequences in terms of successful strategy implementation
and execution, the internal perspective specifically addresses the means and methods applied
in order to accomplish the strategy and subsequent financial performance (Kaplan & Norton,
2004: 43).
A company’s internal processes perform two vital functions, each of which support one of the
two components for increased financial performance: 1) Produce and deliver the value
proposition to the customer, and thereby increase growth. 2) Improve processes and reduce
costs, thereby adding to the productivity component. These processes include operations
management, customer management, innovation processes, and regulatory and social
processes. The intent of this perspective within the strategy map is to select the processes
most aligned with the company’s overall strategy; e.g., a product leadership strategy would
stress innovation processes, whereas low total cost strategies would focus on optimizing
operations processes.
Learning & Growth Perspective: The final perspective describes the company’s intangible
assets and their role in the overarching strategy (Kaplan & Norton, 2004: 49) as well as the
supporting and causal function of these towards the remaining perspectives. The intangible
assets are categorized as follows: 1) Human Capital: The availability of skills, talent and
know-how. 2) Information Capital: The availability of information systems, networks, and
infrastructure. 3) Organization Capital: The ability to mobilize and sustain the process of
change required to execute the strategy (ibid). The intent behind the identification of the
categories is to create alignment between these and the internal processes that have been
deemed vital to the overall strategy as well as ensure that they are supportive of the value
proposition.
3.1.2 The Balanced Scorecard - Reconfigured
Overall, the BSC is considered a valuable tool in the identification and alignment of internal
resources and the communication of the overall strategy. However, at the same time, the
framework is deemed much too extensive in its purview, and thereby it is assumed that the
application of it in its traditional form will prove far too superficial, thus removing the
Laura Høeg Hagen Copenhagen Business School 2013 28
specialized approach needed for this thesis. More specifically, the all-encompassing nature of
the traditional BSC is considered reductionary as it fails to treat each of the perspectives
within it in depth.
While Kaplan & Norton (2004) do to some extent advocate a reasoned delimitation within
each of the perspectives, this is not considered sufficient relative to the overall objectives of
this thesis. It is believed that the framework holds more potential than evident in Kaplan &
Norton’s teachings, and that a specialized approach can be applied to the strategy mapping
process. Accordingly, a reconfiguration of the framework has been conducted in order to
make it more conducive to the communication-based angle from which this thesis takes its
point of departure. As such, each of the perspectives will adhere to the communicative
function inherent in its capacity, and thereby be aligned with the sub-questions sought
answered in relation to the research question (See Figure 2).
More specifically, the financial perspective will address the value components of increased
productivity and/or revenue growth based on the efficacy of internal and external
communication, respectively. Accordingly, the customer perspective will account for the
external communication, including a comprehensive identification of Novartis’ value
proposition derived from an internal perspective (intended message) as well as an assessment
of the alignment between the intended message, or stated value proposition, and the perceived
value proposition as conceived by the company’s customers and end-users. This perspective
is assumed to primarily support the growth component of the financial perspective.
The internal perspective will specifically deal with Novartis’ innovation processes in terms of
the level of innovation and inventive thinking applied to both their internal and external
communication processes as well as any innovation communication mechanisms that might
be present to support and spur the value proposition. Finally, the learning & growth
perspective will address Novartis’ internal communication in terms of knowledge
dissemination, information and communication systems and overall communication structure.
This perspective is considered one of the most vital areas to address in terms of ensuring
value in the productivity component in the financial perspective.
Laura Høeg Hagen Copenhagen Business School 2013 29
Figure 2: The Reconfigured Balanced Scorecard
Source: Author’s Own Production
The Reconfigured Balanced Scorecard (RBSC) is intended to function as an overarching
framework for the identification and assessment of Novartis’ organizational communication.
Nonetheless, in order to exhaustively account for the various perspectives introduced in the
framework, the following sections will outline theories on strategic organizational
communication and innovation communication, which will serve to support the individual
areas of assessment within the four perspectives.
3.2 Strategic Communication
The following section aims to outline the theories applied to the learning & growth
perspective and the customer perspective, respectively. The former will adhere to the concept
of internal communication and theories related to this field in particular, while the latter will
Financial'Perspec-ve'
Customer'Perspec-ve'
Internal'Perspec-ve'
Learning'&'Growth'Perspec-ve'
Produc'vity,Component,(short<term'value):'Increased'produc-vity'through'improved'internal'communica-ons''
Growth,Component,(long<term'value):'Increased'and'sustained'growth'through'improved'external'communica-ons''
Value,Proposi'on,
Stated'value'proposi-on''
Assessment'of'alignment'between'stated'and'perceived'value'proposi-on'
'
Process,Innova'on,
Innova-on'Communica-on'Ini-a-ves'
Opportunity'Iden-fica-on' Innova-on'Communica-on'Medias'
Internal'knowledge'dissemina-on' Informa-on'and'communica-on'systems,'networks,'and'mechanisms'
Internal'communica-ons'structure'
Human,Capital, Informa'on,Capital, Organiza'on,Capital,
Internal'Communica-on'Strategy'
External'Communica-on'Strategy'
Short@term,Value, Long@term,Value,
Perceived'value'proposi-on'from'an'external'perspec-ve'
Iden'fica'on,&,Assessment,Tools:,Entrepreneurial'Communica-ons'Paradigm'Network'(See'Figure'2)'
Iden'fica'on,&,Assessment,Tools:'Corporate'brand'equity'theory'&'image'/'iden-ty'causality'(See'3.2.2$External$Communica3on$''
Iden'fica'on,&,Assessment,Tools:,Innova-on'Communica-on'Framework'(See'3.3$Innova3on$Communica3on),,''
Laura Høeg Hagen Copenhagen Business School 2013 30
address external communication. However, it should be underlined that the two forms of
communication are not entirely distinct as many overlaps occur, thereby creating a dialectic
relationship between the two (Mazzei, 2010: 22). This is most evident in the case of auto-
communication, where intended external communication functions as an employee branding
and identification mechanism (Christensen et. al., 2008: 72), and thereby the distinction
between internal and external communication becomes diffuse.
3.2.1 Internal Communication
While economic forces within the organization have long been the focus of managerial
discussions, both in an academic setting as well as in the positivist function, ‘soft’ resources
such as communication are slowly gaining traction and acknowledgment as an essential factor
to consider within business operations. According to DeWine (1994), in every instance of
organizational malaise, human communication behavior has been significantly involved.
Indeed, many have made the case that a communication failure is at least one of the basic
sources underlying every organizational failure (ibid).
It has largely been accepted that communication holds an extremely important position within
organizational strategy (Hübner, 2007: 5). However, despite this acknowledgment, a lack of
satisfactory and unifying frameworks exists to describe, interpret, and frame the strategic
contribution of internal communication to the organization (Mazzei, 2010; Inverizzi et al.,
2012; Roehler, 2007; Werner, 1995). Many tend to oversimplify the concept of organizational
communication, and consider it a mere message exchange (Downs & Adrian, 2004: 3).
Accordingly, the dominant internal communications model has reflected the hierarchical
communications model, also know as the cascading model, in what is assumed to be an
attempt to remove the negative connotations associated with the word ‘hierarchical’, but
nevertheless still retains the weakness of the model in operation.
3.2.1.1 The Hierarchical Communications Model
The traditional communication model represents a one-way asymmetric communications
format in which operational instruction is passed down from top management to the various
operating units and front-line workers (Werner, 1995: 7). In line with the increasing
Laura Høeg Hagen Copenhagen Business School 2013 31
complexity inherent in contemporary organizations, this model was expanded to encompass
an upward flow of communication, representing a primitive feedback loop where information
ascends through the various levels in the organization in the form of formal reports, meetings,
and presentations (ibid). This model is considered inherently flawed as it represents a form of
conceptual reductionism. This simplification may aid in the management and likely mapping
of an organization’s communication system, but simultaneously sustains the many difficulties
associated with organizational communication.
The major weaknesses of this model pertains to the exponential communication gaps that
occur throughout the various levels of the organization; an increase in proximity from the
source of the message results in lessened information relative to the distance, and thus less
involvement (Werner, 1995: 10). Furthermore, this fixed, ridged pattern of communication
lacks auxiliary feedback loops that can identify and promote high potential candidates and/or
individual practices that could add value to the company as a whole. Finally, a failure to
accommodate meta-communication monitoring and feedback leaves this model in stasis,
unable to improve or even gain the means and supporting data to do so.
3.2.1.2 The Network Communications Model
Conversely, the network communications model aims to secure a multi-directionality of
communication, where the aim is for interaction and communication to occur horizontally as
well as vertically (Werner, 1995:9). A suitable analogy would be that of the body’s nervous
system; the nerves are not an obvious part of the body, and are not as open to treatment as
more tangible organs, such as the lungs or heart. Nonetheless, a function failure within the
nervous system is felt at once, and can be fatal to the entire organism (ibid). In this sense, the
role of communication is considered vital to the well-being of the remaining functions within
the organization, and should be viewed as an all-encompassing element, intertwined and
connected to each functional level and unit.
While Werner (1995) proposes the network communications model as an alleviation and
alternative to the traditional hierarchical model, the strategic contributions and practical
application and implementation of the model are sorely lacking. The value of such a cross-
functional communications model is obvious; however, it is deemed ineffectual in itself as it
Laura Høeg Hagen Copenhagen Business School 2013 32
does not provide the necessary means to effectively use in practice. Therefore, its is suggested
that a coupling of the network communications model with the Entrepreneurial
Communication Paradigm (ECP) will potentially prove mutually reinforcing in terms of the
various gaps and deficiencies apparent in each of the two models. Accordingly, the figure
below illustrates this coupling, which will be applied as the primary framework for the
analysis of Novartis’ internal communications within the learning & growth perspective of
the RBSC.
3.2.1.3 Entrepreneurial Communication Paradigm Network
The ECP is characterized as a framework used to interpret the strategic role of internal
communication, and asserts strategic communication as essential to the success of an
organization due to the fact that it directly deals with concerns relative to the generation of
competitive advantage (Invernizzi et. al., 2012: 151). According to the ECP, the strategic
contribution of internal communication to the organization is comprised of the following four
dimensions: Figure 3: Entrepreneurial Communications Paradigm Network Model
Aligning&• Internal)Scanning:)Employee)engagement)
Energizing&• Innova5on)Communica5on:)Employee)empowerment)
Visioning&• Leadership)Communica5on:)Connec5ng)organiza5onal)values)with)individual)goals)
Cons/tu/ng&• Co>construc5on)of)internal)reality)and)sense>making)
C>Level)Management)
Marke5ng)
Comm>unica5ons)
Logis5cs)
Human)Resources)
Accoun5ng)
IT)
Produc5on)
R&D)
Source: Author’s own production with adaptions from Invernizzi et. al.’s ECP model
Laura Høeg Hagen Copenhagen Business School 2013 33
Aligning activities: Within the aligning function, internal communication concerns the
internal scanning of individual decisions and actions as well as the engagement of employees
as co-decisional partners. This activity largely adheres to the feedback function within
internal communication, where through a scanning process, managers are able to get in touch
with the actual dynamics in the organizational context, and thereby become informed about
the efficacy of productive processes (Invernizzi et. al., 2012: 156). Accordingly, this enables
managers to address and adjust any potential inefficiencies and bottlenecks, which may
otherwise impair organizational activities.
Energizing activities: The energizing dimension holds a crucial role in applying internal
communication as a mechanism to stimulate innovation, mobilize intrapreneurialism, and
provide employees with a sense of empowerment (ibid). According to Quirke (1996),
competitive advantage stems from the creative and intellectual potential held by people within
an organization and, as such, they constitute the core assets on which the organization can
build its competitive differentiation and success. Consequently, internal communication
should be considered vital in its function to serve as an incentive to promote and share
learning activities, innovative performances, and best practices.
Visioning activities: The role of the visioning dimension is similar to that of the leadership
function in that it endeavors to connect employees to the company’s strategy and vision
through internal communication. This diffusion of values, corporate mission, and culture,
among other things, provides a reliable framework to guide organizational actions and
behaviors in line with the organizations overall objectives as well as ensure the support and
cooperation required to implement strategy (Invernizzi, 2012: 159). While this may seem
exceedingly control-oriented, the coalescence of the visioning and aligning dimensions enable
a balanced pull/push effect between company objectives and individual initiative.
Constituting activities: The final dimension relates to the role of internal communication in
the co-construction of organizational reality. As such, organizations are not an a priori
objective structure, but rather intersubjectively co-constructed through communication
exchanges (Invernizzi et. al., 2012: 161). More specifically, this Communication-as-
Constitutive-of-Organizing principal entails the dynamic, interactive negotiation of meaning,
Laura Høeg Hagen Copenhagen Business School 2013 34
which in turn constitutes organizing. This means that sense-making and meaning construction
do not solely represent the internal states of individuals, but rather, it jointly (re)produces
reality through a process of communicatively co-constructing meaning. Thus, the constituting
dimension drives organizational members’ interpretative efforts towards a shared
understanding of the organization, its objectives, and thereby its competitive context.
The construction of the Entrepreneurial Communication Paradigm Network (ECPN) model is
considered a viable attempt to establish a more comprehensive internal communications
framework than extantly available. By coupling the network structure with elements
pertaining to the communicative dynamisms, or activities, constitutional of organizational
communication, the ECPN is deemed capable of assessing both the directionalities of
communication and the structural components of the communication network as well as the
strategic implications as a result of the former dimension.
3.2.2 External Communication
While internal communications and the optimization and framing of these are assumed to
support the productivity component of the financial perspective of the RBSC, the following
section will focus on external communications as a means to promote the revenue growth
function. The selected theories herein include areas aligned with the communication of the
value proposition to external audiences in the form of corporate brand equity and image and
identity causality.
3.2.2.1 Corporate Brand Equity
Organizations are increasingly concerned with their appearance in the eyes of the ‘other’
(Christensen et. al., 2008: 87). The associations held by stakeholders can have an immense
impact on the corporation’s financial performance, especially in the case of publically traded
corporations where slight disruptions in the perception of the company can make share prices
plummet. Accordingly, an increasing number of firms are employing their corporate brand as
a strategic marketing weapon in the marketplace to improve their financial performance
(Keller, 2000: 115). Corporate brand equity can be defined as “the differential response by
consumers, customers, employees, other firms, or any relevant constituency to the words,
Laura Høeg Hagen Copenhagen Business School 2013 35
actions, communications, products or services provided by an identified corporate brand
entity” (ibid), and occurs when relevant constituencies hold strong, favorable, and unique
associations about the corporate brand in memory.
Corporate image dimensions include associations regarding common product attributes,
benefits or resulting attitudes, such as the corporation’s level of quality and innovativeness.
Research suggests that quality is one of the most decisive factors for consumers (Keller, 2000:
120); therefore, if a quality-based association is attributed to one aspect of the business’
operations, such as customer service or product efficacy, this will likely be linked to other
aspects of the business as well.
Another key image dimension relates to the degree of customer orientation perceived through
the corporate brand. The customer-focused corporate image association involves the creation
of customer perceptions of a company as responsive to and caring about its customers.
According to Keller (2000), such a company is likely to be regarded as ‘listening’ to
customers, having their best interests in mind, and not attempting to be exploitative - thus
strengthening the company’s brand capital.
The associations related to corporate values is another important dimension of brand equity,
and is often touted as the most impactful element of positive corporate branding. These values
are not necessarily directly connected to the product or service sold by the company, but
rather relates to the intangible beliefs, norms, and culture present in the corporation (ibid).
Often, these relate to environmentally concerned and/or socially responsible image
associations which have relatively recently become a growing trend for both corporations and
consumers in terms of the level of effective use of the environment’s scarce natural resources
and the welfare of society as a whole.
While this dimension of associations holds the potential to significantly increase brand equity,
there are numerous pitfalls affiliated with practice and communication of the values
dimension. Most responses to Corporate Social Responsibility (CSR) issues have been non-
strategic, fragmented, cosmetic, and a means to placate groups of stakeholders by staging the
company’s social sensitivity (Porter & Kramer, 2006: 81). In order to retain the benefits of the
Laura Høeg Hagen Copenhagen Business School 2013 36
value dimension, the conveyance of corporate values as well as the actual principles must be
integrated and selected based on its alignment with the overarching business model and
strategy. Furthermore, the perceived credibility of these values largely adhere to the level of
shared value, meaning the balanced distribution of economic, social and environmental
advantages (ibid). Thus, it is not simply sufficient to communicate generic ideals; authentic
and strategically aligned values are necessary for the dissemination and retainment of positive
value-based image associations.
This suitably leads to the final image dimension: Corporate credibility. Beyond the
associations listed above, consumers may form more abstract beliefs about the company in
regard to credibility, which depend on three factors. The first being expertise: the extent to
which the company is regarded as able to produce and sell products competently. Secondly,
its level of trustworthiness and the extent to which it is viewed as motivated to be honest,
dependable, and sensitive to consumer needs. Finally, corporate likability and thereby the
extent to which it is seen as likable, prestigious, attractive, dynamic, etc. (Keller, 2000: 124).
These factors supplement the perceived positive reputation of the company, but may also
offer further benefits beyond the customer response in the marketplace. In what is especially
relevant for the pharmaceutical industry, perceived credible companies may be treated more
favorably by other external constituencies, such as government and legal officials (ibid).
In conclusion, the four corporate image dimensions above are considered vital intangible
assets to manage in order to obtain a favorable corporate brand equity. While approaches and
results of this management may differ, authentic, targeted, and continuous communication
efforts are deemed viable methods to gain and retain external brand equity. Nonetheless,
corporate brand equity is not exclusively correspondent to external audiences, which is further
addressed in the following section.
3.2.2.2 Image & Identity Causality
The value and credibility dimensions mentioned above are often exclusively associated with
external advantages in terms of image. However, these dimensions may also prove to have an
internal identification attribute in terms of motivating existing employees to be more
productive and loyal as well as attract high potential candidates to the company, who have
Laura Høeg Hagen Copenhagen Business School 2013 37
similar values and beliefs (Keller, 2000: 124). As such, it must be acknowledged that the
image / identity, or internal / external communications, paradigm is not mutually exclusive,
but rather reflects a complementary and dialectic function.
Organizational identity (OI) can be defined as the central, distinctive, and continuous core of
a shared organizational schema, which acts as a framing mechanism for organizational
decision-making (Barney & Stewart, 2000: 36). The tighter the coupling between OI and the
company’s core competencies in terms of strategic and operational conduct, the more likely
OI will lead to sustained value creation and competitive advantage (ibid). As such, it
represents the underlying basis for the espoused image communicated to external audiences.
However, the image / identity causality is not simply a static, unidirectional succession, but
rather a reiterative cyclical flow of mutually influencing communication, which
simultaneously challenges and strengthens the path dependency of the image and OI.
This cyclical flow is composed of not only the OI and image, but also the external image,
which represents the way that internal members believe external constituents view the
organization. This differentiation is based on the principle that individuals account for
common experiences in many different ways (Christensen & Cheney, 2000: 260), and thus
perceive messages differently, and at times contradictorily, than intended. Accordingly,
external constituents may perceive the organization entirely different from its conceived OI,
thus creating a gap in the translation between intended and perceived, and internal and
external image, which in turn will affect the credibility of the corporation (Barney & Stewart,
2000: 39).
While the importance of a favorable brand equity is discernable, perhaps more importantly is
ensuring the alignment and authenticity of the espoused image in accordance with other
corporate communications functions. Focused efforts in internal communications are
speculated to have a considerable impact on the level of efficacy of the corporate brand equity
based on the causal relationship between OI and image, and thus supports the above
assumption of authenticity as a fundamental factor in brand equity management. Furthermore,
it is deemed essential to realize that external audiences may not be genuinely interested in a
deep involvement and communicative relationship with corporations (Christensen & Cheney,
Laura Høeg Hagen Copenhagen Business School 2013 38
2000: 266), and thereby intense communication-based efforts may be perceived as ‘noise’
rather than serve a beneficial function for the image construct.
3.3 Innovation Communication
While the previous section attempted to outline the importance and overarching role of
internal and external communications, the following section will address another intangible
asset linked to communication – namely innovation, and will adhere to the internal
perspective of the RBSC.
The term ‘innovation’ has increasingly gained traction in the business world, primarily due to
the assumption that organizations that generate and implement novel, beneficial ideas will
have a distinct advantage in the competitive environment (Monge et. al., 1992: 250). This
view is supported by the resource-based theory, which postulates that competitive advantage
and value creation stems from firm-specific resources that are valuable, rare, imperfectly
imitable, and non-substitutable (Barney, 1991: 105). Only if all these criteria are fulfilled can
the organization retain sustained competitive advantage.
According to Zerfass & Linke (2011), innovation stems from the minds of individuals in the
form of idea generation through knowledge creation. However, establishing a link between
individual learning and organizational learning is what enables the diffusion of knowledge
which in turn leads to innovation (Probst et. al., 1999: 240). Innovation in itself is a diffuse
concept; it can relate to strategic matters, production capabilities, business models, product
development and more. However, one factor links innovation to all these elements:
communication. Without the effective communication of innovations, these novel ideas are
unable to be realized and thereby fail to generate value for the organization.
Due to the individualistic nature of knowledge creation and subsequent collaborative
knowledge sharing, the primary indicators of the level of innovation within an organization
relates to the motivation of each individual to contribute time and efforts to the development
of innovative ideas. In order to achieve this motivation, the internal environment and OI must
be conducive to knowledge creation and knowledge sharing (Mazzei, 2010: 222). Following
the principal of Communication-as-Constitutive-of-Organizing within the constituting
Laura Høeg Hagen Copenhagen Business School 2013 39
dimension of the ECPN model, innovation communication has been applied as the primary
theory of innovation in which internal communication is categorized as the primary indicator
of the level of innovation within the company.
3.3.1 Innovation Communication Framework
The Innovation Communication (IC) framework posits that an innovative culture can be
established and determined based on the correspondence of internal communication to the
adaption of four change phases: 1) awareness, 2) understanding, 3) acceptance, 4) action
(Zerfass & Linke, 2011: 335). The IC framework is considered quite complementary to the
ECPN framework applied to the study of internal communication in general; however, the IC
framework also allows external influences and communication measures to be involved in the
innovation process which in turn supports the organization’s innovation goals.
Creating awareness of the importance of innovation within the company is considered the first
step in establishing an innovative culture and OI. This is considered a relatively broad
procedure in line with the visioning function in the ECPN model, and serves to inform and
include innovation as a key element of the company’s values, mission, and OI as well as
provide guidelines for actions and behaviors in alignment with organizational objectives.
Establishing understanding of the innovation goals further supports the innovative culture in
the sense that informed knowledge as to how and why innovation can contribute to the
business success of the organization provides an intrinsic motivation for the individual
employee to support extrinsic objectives (ibid). This phase is considered consistent with the
energizing dimension of the ECPN framework as the intrinsic motivational function
contributes to the promotion of incentives to stimulate intrapreneurialism and thereby
innovation.
The third phase, acceptance, is not considered to adhere entirely to its own dimension of the
ECPN model as it corresponds to the individual acceptance of innovation goals based on the
efficacy of internal communications (Zerfass & Linke, 2011: 339). However, the acceptance
phase is deemed appropriate to include in the energizing function as it is only when
understanding is coupled with acceptance that innovative knowledge is considered a
Laura Høeg Hagen Copenhagen Business School 2013 40
benevolent factor in business operations and subsequently shared. This is based on the
premise that people are inherently creatures of habit, and thereby dispositionally disposed to
resist change (Leonardi, 2009: 408). Understanding is an essential element of the innovation
function for obvious reasons. However, people may fully understand the reasons for change
and even be in favor of them, yet choose not to accept them (ibid). As such, the acceptance
phase is key to the dissemination of innovative knowledge.
The final innovation phase, action, applies to the actual process of sharing knowledge
(Zerfass & Linke, 2011: 339). This largely adheres to the aligning activities of the
organization as it reflects the information flow that occurs through feedback loops. While the
aligning dimension primarily focuses on vertical feedback, the action phase of the IC
framework extends this to include cross-divisional and cross-functional feedback and
knowledge sharing in a lateral fashion, thereby connecting diverse pools and talent and
expertise.
The application of the IC framework is expected to aid in determining the degree of
innovation relative to Novartis’ OI through the examination of the corporation’s
organizational communication. The comparative calibration of the IC framework with the
ECPN framework coupled with the causal relationship between OI and image and its
association with innovative indicators is presumed to facilitate a structured demarcation of the
analytical objects, which in turn may prove to enhance the reliability and validity of the
analytical process.
3.4 Motivation for Choice of Theories
The theories above represent the overarching theoretical framework applied in the following
analytical process, and reflect a thorough deliberation of the context and contributions this
particular selection provides in terms of meaningful alignment between the thesis objectives
and analytical objects of choice.
The motivation behind this selection is tripartite. First and foremost, the intent of the
theoretical framework was to attempt to construct a more tangible framework for managing
organizational communication. While an immense amount of extant research on the subject
Laura Høeg Hagen Copenhagen Business School 2013 41
exists, very few contributions to the field actually provide a comprehensive framework for
assessing and managing communication. For scholars and practitioners outside the field of
communication, communication is often viewed as a very diffuse and immeasurable subject,
which in turn undermines the value of its contribution to the business as a whole (Downs &
Adrian, 2004: 3). By reconfiguring the BSC, the ambition is to provide a more specified and
discernable framework for the assessment and management of organizational communication
as well as a means to link these intangible assets directly and indirectly to financial
performance. Furthermore, it was considered important to retain and highlight the interrelated
nature of external, internal, and innovation communication through a coherent framework, yet
maintain the ability to treat each element in its own right.
Secondly, an innovation perspective was deemed especially appropriate in light of the
dynamic and ever-changing business environment in which we operate today. While
innovation plays a large role in almost any industry, the pharmaceutical industry heavily
relies on this for future success and profitability among other things. Accordingly, it was
deemed necessary to address this pivotal function in Novartis, and simultaneously adhere to
the above ambition of applying a somewhat structured framework to the investigation of
innovation in order to distance the subject from its otherwise perceived intangibility.
Furthermore, formalization and structured planning within the innovation function has been
proved to have both direct and indirect positive impacts on the innovativeness of a given
organization when examined in a system of other variables as it reduces uncertainty (Johnson
& Chang, 2000: 256). This is considered appropriate as the innovation function in this case is
sought investigated in line with organizational communication as a part of a wider framework
– namely the RBSC.
Finally, a certain level of cohesion between the various theories selected to support the RBSC
framework was sought in order to reduce conceptual gaps and strengthen the viability and
reliability of the overarching framework. In this sense, the ECPN and IC models were
considered neatly aligned to a certain extent, and both reflected complementary and mutually
reinforcing elements.
Laura Høeg Hagen Copenhagen Business School 2013 42
Furthermore, the external perspective of communication was considered significant in
illustrating the boundary spanning attributes of organizational communication in terms of the
causality present between external perceptions and the internal construct of OI.
In conclusion, the intent of the chosen theoretical framework is to provide an aligned and
representative background for the analysis relative to the thesis objectives and research
question.
Laura Høeg Hagen Copenhagen Business School 2013 43
4.0 Analysis of Empirical Data The following analysis is structured according to the RBSC, starting with the Learning &
Growth Perspective, moving through the causal linkages of the Internal and Customer
Perspective before finally culminating in an assessment of the strategic approaches, priorities,
and implications of these in regard to value creation within the Financial Perspective.
4.1 Internal Communications – Learning & Growth Perspective As with any complex entity, the communication and interaction of the individual elements
and nodes, or employees and business units, of an organization are essential to the successful
operation of the business. According to Head of Global Communications at Sandoz, Nathalie
Ponnier, the dissemination of such ambitions are often communicated through business
objectives and leadership communication (Ponnier, 2013: 2), thereby attempting to connect
organizational values with individual goals. Accordingly, the organizational commitment to
effective communication can be perceived as a result of visioning activities in a descending
directionality.
From an internal perspective, organizational commitment to effective communications within
Novartis is considered a top priority and a primary objective for the corporation as a whole
(Ponnier, 2013: 8). However, it is necessary to realize that a slight bias may be present in this
case, as it is the Head of Global Communications who makes this statement. As such,
Ponnier’s specific perception of the importance of effective communication may take
precedent over those of other functions. Furthermore, the definition of ‘effective
communication’ is assumed to differ substantially depending on the function: a biochemist
will likely consider effective communication to entail detailed, thorough information, whereas
a C-level executive will prefer succinct and to-the-point information.
While the overall commitment to effective communication from a leadership perspective is
considered to stem from visioning activities through the communication of business
objectives, it is deemed more relevant to include in energizing activities as active
communication behaviors stem from the level of awareness individuals have about a situation,
the perception of obstacles in redressing the situation as well as their involvement in the
Laura Høeg Hagen Copenhagen Business School 2013 44
situation (Mazzei, 2010: 223). Ponnier herself admits that self-awareness regarding the self-
efficacy of communicating presents a larger problem than ensuring the acceptance of effective
communication as an imperative business objective (Ponnier, 2013: 9). This further supports
the posit of commitment to effective communication as an energizing activity rather than a
visioning activity as it serves an intrinsic function of motivation based on the level of self-
awareness.
This misalignment between the perceived source of commitment (top-level management)
relative to the actual source (intrinsic motivation) may not necessarily ensue serious
repercussions; however, it does illustrate the applied communications structure within
Novartis and the high accreditation attributed to this structure, which in turn consigns
communicative dynamisms (activities) to an auxiliary function.
4.1.1 Efficacy of Novartis’ Communications Structure
The sheer extensivity of Novartis necessitates a strict, formalized organizational structure.
This structure is composed of a highly hierarchical arrangement of top leaders, beginning
with the Chairman of the Board of Directors, Audit & Compliance, and the Corporate
Secretary, before moving on to more operational positions, such as the CEO, CFO etc.
In order to circumvent this stringent hierarchy and the issues associated with it, such as
bottlenecked downward flows of communication, lack of upward feedback mechanisms, and
failure to interact and communicate cross-functionally, the Executive Novartis Committee
(ENC) has been established which is comprised of leaders of functions such as HR, Group
Communications, General Council and headed by the CEO, Joseph Jimenez (See appendix
8.11). Furthermore, the head of each division is included, who serves as the primary link
between the mother corporation and their respective business divisions. Divisions such as
Alcon and Sandoz operate under their own brand, yet still stand as integral parts of the
organization both strategically, operationally, and in terms of employees’ sense of loyalty and
belonging.
Laura Høeg Hagen Copenhagen Business School 2013 45
4.1.1.2 Vertical Communication
The flow of communication within Novartis thereby emanates
from top leaders and is dispersed through the ENC members.
Subsequently, the communication is further disseminated into
each of the business units and divisions. Within these, a similar
communications structure is present, which is formally
composed of various strategic levels, starting with N (Division
Heads) descending through various functional heads (N -1) to the
lower levels of the organization (N-2 to N-7) and finally reaching
frontline managers and workers (Ponnier, 2013: 5).
Internal research in Novartis suggests that issues occur in
disseminating, and the resultant interpretation of, messages past
N -4 (Ponnier, 2013: 5). This indicates that the proximity from
the source of the message to the recipient is pivotal to the
successful dissemination and interpretation of the message.
Furthermore, it has been identified internally that organizational proximity is more significant
to the level of effective communication than geographical proximity (ibid) and as such, it can
be deduced that a key issue pertains to a structural inadequacy, rather than the immensity and
geographical extent of the corporation.
However, it is suggested that geographical proximity still presents a significant hindrance to
the effective communication globally. A single person within each division is responsible for
frontline manufacturing communication, stationed at N -2 and communicating directly to N -6
and below (Ponnier, 2013: 1). Within Sandoz alone, this entails 9,000 recipients globally with
differing communicative preferences based on cultural norms, access to communication
channels, and levels of literacy and proficiency. These factors do not seem to be taken into
consideration due to the manner of mass-communication (ibid), and could potentially present
significant issues and missed opportunities for Novartis. The unproportionate ratio between
recipients and the single sender of the frontline messages indicates that the amount of
feedback, and thus aligning activities, from N -6 and below is limited.
Figure 4: Divisional Structure
Source: Author’s own production
N"#6">"
N"#5"
N"#4"
N"#3"
N"#2"
N"#1"
N" Division"Head"
Department"Heads"
Func<onal"Managers"
Associates"
Junior"Associates"
Frontline"Managers"
Frontline"Workers"
Laura Høeg Hagen Copenhagen Business School 2013 46
Accordingly, the lack of feedback from the frontlines could be assumed to be an indirect
cause of the numerous issues associated with manufacturing incurred by Novartis over the
past couple of years (Silverman, 2013). For example, in May 2013, the Ebewe manufacturing
plant in Austria was indicted with a failure to inform the U.S. Food & Drug Administration
(FDA) of changes made in the established quality control measures, which led to temporary
cessation of approval of any new applications or supplements listing Novartis as the drug
manufacturer (FDA, 2013). It is assumed that had the General Council and/or CEO been
made aware of this change, the proper processes would have been set in play to inform and
gain renewed approval from the FDA, thereby undermining the public defamation that is
currently affecting Novartis’ already declining stock prices and financial performance
(Novartis, 2012).
CEO, Joseph Jimenez, has been adamant in the press regarding his stance that ‘quality
matters’ (Silverman, 2012 & Silverman, 2013), however, it seems that this value has not been
effectively diffused among frontline manufacturers, thereby signifying inadequate visioning
activities below N -6. Furthermore, perhaps some of these manufacturing issues could have
been proactively mitigated if more effective lateral communication and feedback mechanisms
were set place to alert headquarters of any emerging problems. As such, the deficient efforts
in terms of aligning and visioning activities is considered significantly lacking within the
formalized communication structure, which is especially apparent when proximity between
the source and recipients of the message is distant, both geographically as well as
organizationally.
4.1.1.3 Horizontal Communications
The formalized communications structure presented above illustrates a very ridged,
hierarchical structure, which is assumed to have been constructed on the basis of the original
organizational structure10. However, this formalized communication structure is not definitive
in itself. Further informal channels of communication exist cross-functionally, however these
are limited in their scope to the specific task at hand, and exist primarily at higher levels of
the organization (Ponnier, 2013: 7). For instance, the communications department serves as a
support capacity for other functions when needed, albeit in a more sporadic and informal 10 See appendix 8.11
Laura Høeg Hagen Copenhagen Business School 2013 47
manner (ibid). Due to the informality of this cross-functional collaboration, the quality and
cohesiveness of the communication cannot be determined nor controlled. Moreover, this
reverts back to the issue of self-awareness – if various functions and individuals within the
organization hold varying degrees of awareness of the importance of aligned and effective
communication, the result of the communication outcomes will deviate accordingly.
According to Ponnier (2013), the means to ensure self-awareness is providing
communications training for associates. However, it is not considered likely that employees
who perceive themselves as ‘good communicators’ (which may not be the case) will gain
more awareness of their efficacy through training. This further suggests that constituting
activities are slightly illusive in the sense that they do not appropriate the role of
communication as universally significant across functions and divisions.
Currently, there are no feedback loops from superiors regarding communication in functions
not pertaining directly to communication. Instead, a global survey is conducted globally to
assess areas such as communication effectiveness, yet the results are not shared with the
individual contributors. This indicates that the aligning activities regarding communication
are one-way, asymmetrical in the sense that leaders receive overall performance reports based
on survey responses, but do not extend these to the contributors in order to create awareness
of, and thereby potentially enhance, their communicative efforts.
An absence of peer-reviewed feedback between functions is also apparent. This is considered
an unfortunate omission as it would allow an assessment and categorization of certain areas of
horizontal and cross-functional communication as beneficial, necessary, or redundant. Such as
assessment is considered a vital factor in establishing cross-functional communication as a
formalized element of the communications framework, thus aiding in the further
standardization of the corporations communication, which in turn could reduce excess use of
resources in the form of time and efforts put into reiteration and clarification of the original
messages.
The informal and limited horizontal communication suggests that functional silos exist within
the organization, and any feedback sought and delivered to respondents directly pertains to
Laura Høeg Hagen Copenhagen Business School 2013 48
the function in which they operate, and is collated in a lateral manner. This is considered to
represent a double-edged sword in the sense that by limiting direct feedback to the specific
functions, an optimized allocation of resources is present, which focuses on improving and
advancing the tasks most relevant to the function. However, the failure to provide feedback on
an individual level on auxiliary features, such as communication, self-awareness,
commitment, etc., may result in missed opportunities to progress efficiency indirectly. For
instance, ineffective communication between areas such as R&D and Regulatory is often
resource consuming in the sense that time and efforts are wasted when the need for further
clarification or information arises.
By ensuring a continuous commitment and self-awareness of efficient communication
through reiterative feedback loops and a standardized, organization-wide communications
format, it is suggested that all four dimensions of the ECNP model can be strengthened.
Firstly, the reiterative and two-way feedback function will enhance the effectuality of aligning
activities by establishing a symmetrical feedback process, thereby increasing self-awareness,
engagement and commitment. Secondly, the fruition of energizing activities is assumed to
increase as employees will realize and understand their individual role in optimizing the
company as a whole. Furthermore, the constituting dimension may be strengthened in the
sense that through self-awareness, employees are able to understand the role of
communication as constitutional of effective business operations11. Finally, the outcomes of
visioning activities are expected to be more favorable by including individuals in the
development of competencies, and thereby allowing organizational values to be connected to
individual goals.
The overall structure of Novartis’ communications, both formal and lateral as well as
informal and horizontal, is considered representative of structural reductionism and
inadequacy. While it is realized that the resources allocated to the upholding of such a
structure is typical within corporations the size of Novartis, it is nonetheless considered
limiting in its potential to increase efficiency in the form of future opportunities and
optimization. Resource scarcity is inherent in organizations, and the allocations of these are
11 See 3.2.1.3 Entrepreneurial Communication Paradigm Network
Laura Høeg Hagen Copenhagen Business School 2013 49
often appropriated according to opportunity cost. However, it is deemed that the opportunity
cost 12 of not ensuring proper resources to the maintenance and improvement of the
communications structure to be greater than the excess resources deployed in the efforts to
optimize the structure in the form of an omission of expected margins of error.
4.1.2 Communication Effectuality Metrics
While aligning, energizing, and visioning activities are identifiable within Novartis’
communication structure, there seems to be an absence of concrete metrics to measure, assess
and manage internal communications. According to Ponnier (2013), although it would be
preferable to use a balanced scorecard, or any other intangible accounting metric, within the
communications function, they simply do not have the resources to collect, assess, and
analyze the data necessary to construct a metric system such as a balanced scorecard.
However, this is deemed a mere matter of prioritization rather than resource scarcity. It is
hard to believe that a corporation the size and scope of Novartis is unable to afford the
resources necessary to conduct the research needed, and therefore it is considered more likely
that it represents a categorical selection of resource allocation at the expense of an intangible
assets accounting mechanism.
Despite the lack of concrete frameworks, Novartis nonetheless still pursues data collation
internally in order to assess the current conditions of their internal communication. As
mentioned above, a global employee survey is deployed annually, covering areas such as
immediate management, senior management, communication effectiveness, and
understanding of division targets and objectives (Ponnier, 2013: 2). Accordingly, company-
wide assessments of intangible resources are automatically generated, and consequently
evaluated by leaders and managers within their respective functions (ibid). This upward
directionality of feedback and aligning activities is important and highly beneficial to the
development of the top levels of management, yet without a standardized scorecard for the
targets in quantitative terms, it is considered unlikely that the results will have a significant
impact on the following optimization strategy in terms of further resource allocation and
individual empowerment through energizing activities. Moreover, the results of the current
12 Opportunity cost: the difference between the actual value resulting from use of a resource and that of an alternative use (Merriam-Webster, 2013)
Laura Høeg Hagen Copenhagen Business School 2013 50
metrics are neither linked to employee performance nor Key Performance Indicators (KPIs)
(Ponnier, 2013: 2).
It is assumed that if these results were indeed incorporated into KPIs and performance
metrics, they would serve to strengthen the energizing activities within the organization, and
thereby enhance self-awareness. Furthermore, this would compliment the above assertion that
providing direct feedback of auxiliary functions, such as communication, to employees would
indeed increase the effectuality of all four ECNP dimensions. In the case of coupling
feedback and the results of the current metrics to KPIs and general employee performance
measures, it is assumed that this would increase productivity in line with the short-term value
component on the Financial Perspective. As such, definitive targets within the
communications performance scope would be more apparent to employees and thereby
strengthen their awareness of the business objectives and company expectations and thus the
attainment of these through individual goals.
According to Ponnier (2013), the current metrics are not formally linked directly to the
financial performance of Novartis. Company-wide communication effectuality is not even
formally indirectly linked to the financial performance of the corporation. However, as Head
of Global Communications, one of Ponnier’s primary business objectives is to ensure the
efficiency and effectiveness of communications (Ponnier, 2013: 2). Consequently, the
attainment of these objectives is considered to have clear contributions to Novartis’ overall
business objectives, regardless of function (ibid). Yet, the obscurity the ‘efficient and
effective communication’ may provide false results in the fulfillment of these objectives.
Without explicit and definite, quantitative targets, the actual quality and efficacy of
communication cannot be definitively assessed and benchmarked. Consequently, the
communication objectives may vary depending on the incumbent leaders. This is not to say
that communication objectives should not be changed – on the contrary, this thesis argues that
communication objectives are considered necessitated to change frequently in line with the
dynamic communication medias and platforms that exist and continue to develop. However, it
is the basis for the change that is deemed the pivotal factor to consider: change of objectives
Laura Høeg Hagen Copenhagen Business School 2013 51
should occur on a solid foundation of indicators that denote a need for change, rather than on
the basis of individual convictions and opinions.
Once again, this failure to attribute intangible resources to financial performance in the form
of increased productivity is considered highly unfortunate as it is deemed reasonable to infer
that the more information available regarding the individual components comprising the
corporation’s overall financial condition, the more feasible it would be to yield suitable
optimization strategies.
4.1.3 Conclusion
The above analysis of Novartis’ internal communications initially suggests that a high level of
commitment to effective communication is a prioritized business objective. However, it
incrementally becomes clearer throughout the analytical process that the commitment towards
effective communication is relatively superficial for several reasons.
Firstly, the archaic hierarchical communications structure implies that little has been done to
advance the structure in line with the growing organization and extant knowledge available
regarding innovative communication practices. The formalized lateral communication is
considered effective up until N -4, yet hereafter fails to reach the lower levels of the
organization, leaving it fractioned. This is deemed a significant issue, which could potentially
lower employee morale, commitment and loyalty to the company at these lower levels.
Furthermore, the lack of functional communication channels from below N -6 may have had
an impact on the severe issues associated with Novartis’ manufacturing over the past few
years. Secondly, the informal horizontal communications seem to signify a deprioritization
compared to the more formalized lateral structure, and is considered to hold great potential for
strengthening all four dimensions of the ECNP model. While the intentions to commit to
effective internal communications are considered authentic, it seems that the overarching
communication channels in terms of structure have been overlooked in regard to the
possibilities for improvement and preventing missed opportunities.
Furthermore, the lack of concrete metrics frameworks for the assessment and management of
internal communication in terms of effectuality indicates that while the intended commitment
Laura Høeg Hagen Copenhagen Business School 2013 52
to effective communication may be high, the actual commitment is inadequate. The absence
of standardized communicative targets and the linkage of these to employee KPIs is
considered other area ripe for optimization. It is assumed that by establishing such targets and
creating the linkages to KPIs, employee engagement and understanding will increase, which
in turn will drive productivity. Finally, it is deemed that a direct and formal coupling between
the results of the metrics and the financial performance of the firm would yield significant
insight into the various intangible components which contribute to financial performance,
which in turn would benefit strategy development and advancement.
4.2 Communication & Process Innovation – Internal Perspective While the above section sought to investigate the internal contrivance of Novartis’
communications, the following will aim to delve deeper into the actual communication
medias and formats used within the organization, especially in terms of innovation
communication.
4.2.1 Creating Awareness
Novartis highly adheres to the concept of innovation within their business operations. Not
only is innovation specifically addressed in the mission statement13 in terms of the discovery,
development and successful marketing of innovative products, it is touted as “The essence of
our mission” (Novartis, 2012: 1). Furthermore, innovation is stated as the greatest job
satisfaction for Novartis employees in terms of working efficiently and innovatively in order
to improve the quality of life for patients (Novartis, 2013). In Novartis’ 2012 annual report,
the term ‘innovation’ is mentioned no less than 54 times, signifying a citation on every 1 out
of 5 pages. Furthermore, Novartis’ official website commits a significant amount of
information on the subject in terms of operations and values as a prioritized element of their
external communications (Novartis, 2013).
There is no doubt that innovation holds a substantial element of Novartis culture and OI, and
the auto-communication of these values serves to strengthen the dissemination of these
values, both externally and internally (Christensen et. al., 2008: 72). The sheer amount of
13 See section 1.5 Novartis – Case Company Introduction
Laura Høeg Hagen Copenhagen Business School 2013 53
times that innovation is mentioned and referred to in Novartis materials suggests that there is
a high level of awareness in regard to the role of innovation within the organization. Even
potential new hire candidates are invited to join Novartis’ innovative mission in the form of
the annual Novartis Biotechnology Leadership Camp, where students from around the world
are selected for a three-day workshop in which they learn about innovative drug discovery
and apply this along with their extant knowledge to develop and launch a mock product
(Novartis, 2013). This indicates that potential candidates are assessed, among other things, on
their level on innovativeness, and as such, future and current employees are expected to retain
innovation as a core value. Accordingly, awareness regarding the role of innovation is
considered quite high, and instilled in candidates and employees before their actual
employment. This indicates that visioning activities in regard to instilling values of innovation
within the organizational are strong and highly prioritized.
It is quite apparent that the focus of these innovative values is placed on product
development, rather than process advancement, which is to be expected considering
pharmaceuticals being their core competence. However, as innovation and knowledge
creation is initially sourced individually, process innovation is considered essential to the
success of product development as it progresses individual learning and knowledge creation
to organizational learning through knowledge sharing (Probst et. al., 1999: 240). As such, it is
deemed relevant to investigate the internal processes of communication relating to innovation
in order to gauge the degree of auxiliary functions that support and spur the innovative
product development process.
4.2.2 Actualizing Understanding
In terms of process innovation, especially within the communications function, visioning
activities seem slightly lagging, considering the immense efforts put into diffusing innovation
values. Ponnier (2013) does not apply any formal efforts to ensure up-to-date innovative
solutions to ensure effective communication, but instead relies on her subordinates and their
extant knowledge to advance innovation communication within the organization. These
individuals are praised as highly skilled, capable of independently seeking the knowledge
necessary to advance their operations (Ponnier, 2013: 8). Furthermore, Ponnier considers her
own business unit as being extremely open to change and representative of early adopters
Laura Høeg Hagen Copenhagen Business School 2013 54
when novel medias or processes are introduced (ibid). Surrendering this highly prioritized
responsibility of ensuring innovation communication within the organization indicates that a
high level of understanding of the important role of innovation is present among individual
employees.
As such, the energizing activities are considered notably effective as they serve to empower
employees, drive intraprenurialism, and mobilize innovative practices, albeit in a laissez-faire
manner. Furthermore, the intrinsic motivation inherent in the autonomous approach to
innovation suggests that overall visioning activities have been successful, which in turn
supports the posit that awareness as a result of visioning activities is strong and highly
prioritized.
While awareness, understanding, and the motivation to ensure innovative values are present,
mainly at a knowledge creation level, the degree and means of knowledge sharing are pivotal
to the actual realization of innovative outcomes. However, within an organization the size of
Novartis, such sharing can be difficult to accommodate. In an attempt to promote and foster
innovation across the corporation, several initiatives have been implemented with varying
degrees of formality. An example of such is the WebEx teleconference calls. The content of
these are based on questions or subjects posted on the WebEx platform prior to the call, and
are intended to function as interactive learning and knowledge sharing platform (Ponnier,
2013: 7). Employees from N -1 to approximately N -4 can sign up and or/ are invited to
participate in these calls. However, 150-200 people participate in one single teleconference,
making fruitful dialog extremely difficult. Accordingly, it is assumed that this media is
primarily used as a one-way communication mechanism where only employees with a more
boisterous demeanor will have their say.
A smaller scaled version of the WebEx calls take place in the form of Town Hall meetings,
where dialogue between Novartis leaders and associates is encouraged. This type of
communication format may be more conducive to knowledge sharing as it takes place in
person and with fewer attendees. These means of knowledge sharing are considered informal
in nature (ibid), yet they still adhere to the aligning function as they represent and provide a
feedback bypass from the traditional and formalized communication channels. According to
Laura Høeg Hagen Copenhagen Business School 2013 55
Ponnier (2013), such informal channels are preferred as internal research has indicated that
the formalized processes are less effective. However, the predominantly one-way nature of
these channels indicates that the efficacy in terms of a reiterative flow of information and
communication between leaders and associates is limited. Moreover, as the availability of
these channels is primarily open to employees at and over N -3, a large part of the
organization is left without a direct line to leaders and executives. This is further exacerbated
by the fact that employees must have personal access to a computer linked to the Novartis
intranet in order to use and participate in these channels, which is rare at levels under N -6.
Although it is considered admirable to implements these initiatives to foster innovation, the
current fractitious structure is considered lamentable and contradictory in terms of intents and
results. In particular, the attempt to bypass formal communication channels, provide a direct
line of communication to leaders, and thereby strengthen aligning activities is deemed
extremely proactive and beneficial, yet it simultaneously excludes those whom may be in
need of these bypasses the most. As a result, understanding of the important role of
innovation and the communication thereof may be undermined by the apparent lack of
mechanisms to facilitate such actions among the lower levels of the organization.
4.2.3 Facilitating Acceptance
One of the more promising initiatives to elicit understanding and action in terms of innovation
communication is the interactive Yammer platform. Yammer is an internal web-based
platform that functions as a online community where Novartis employees can share ideas, ask
questions for peer-review, and discuss work related issues, much akin to social media
platform, Facebook (Ponnier, 2013:8). Yammer is intended to create a network outside the
traditional organizational and communications structure, and allow information,
conversations, and communication to be exchanged between employees whom otherwise
would most likely never interact (Yammer, 2013).
This particular platform is considered significantly more effective compared to WebEx or
Town Hall meetings as it provides a direct channel for cross-divisional and cross-functional
communication to occur. Furthermore, the configuration of the platform allows two-way
Laura Høeg Hagen Copenhagen Business School 2013 56
communication take place more functionally, regardless of the amount of users and
participants.
Accordingly, the Yammer platform can be considered conducive of understanding,
acceptance, and action within the IC change phase model as well as contributive to the goals
of aligning, energizing, and to a certain extent, visioning activities. This is based on the
speculation that the two-way nature of the communication configuration of the platform
allows more effective feedback, both laterally as well as horizontally, thereby promoting
cross-divisional and cross-functional communication, which is sorely lacking in other areas of
the communications structure. Furthermore, Yammer provides an outlet for innovation
communication, which in turn elicits understanding and acceptance of the role of innovation
as the beneficial results of knowledge sharing exponentially becomes more apparent to the
users, thus resulting in employee empowerment. Finally, Yammer is considered a promising
place for visioning activities, where Novartis leaders can diffuse organizational values, and
simultaneously gain direct responses to such communication.
This all seems good and well, however, the Yammer platform has one major weakness.
Namely the fact that it is externally hosted by Yammer, Inc., a U.S. based software company.
Accordingly, Yammer employees are responsible for all back-end configuration, updates, and
customer support (Yammer, 2013). This essentially means that any confidential information
communicated on the platform cannot be 100% ensured, thereby significantly limiting the
content. Consequently, the platform is not encouraged by Novartis management as it is
deemed an unfit forum to discuss confidential subjects (Ponnier, 2013: 8). This presents a
critical issue in terms of the usability of the platform, and undermines the benefits otherwise
associated with it in terms of open communication channels, both vertically as well as
horizontally.
The pharmaceutical industry in general is notoriously reticent as the future profitability of any
innovative idea stands and falls with propriety of said idea, and therefore innovation is
considered a critical factor of competitive advantage (Hara, 2003: 24). As such, it is
understandable that Novartis is hesitant to commit entirely to a communications platform at
the risk of undermining its competitive edge. Nevertheless, the benefits associated with
Laura Høeg Hagen Copenhagen Business School 2013 57
Yammer are obvious (Ponnier, 2013: 8), which thereby indicates a need for an internally
hosted platform that could increase the degree of knowledge sharing, and thus innovation, by
allowing content to be posted and exchanged freely.
The incongruity of providing a platform for innovation communications, yet not encouraging
employees to use it due to confidentiality risks seems highly contradictory, and may ensue a
feeling of ambivalency from an employee perspective towards innovation communication.
Furthermore, the direct disencouragement from Novartis leaders in terms of using the
platform most certainly exacerbates any intrinsic, divided attitudes toward acceptance and
action of innovation communication. This in turn debilitates the platform’s intended
contribution to energizing, aligning, and visioning activities as mentioned above.
4.2.4 Encouraging Action
While most of Novartis’ innovation communication is web-based in order to circumvent the
difficulties associated with organizational and geographical proximity, the LEAD program
provides high-potential leaders from emerging market economies within the organization the
opportunity to develop and share innovative proposals directly with ENC members
(Waltmann, 2013). 25-30 high-potential candidates are selected to participate in this annual
program, which runs for 10 months, beginning with face-to-face exposure to top leaders
within the pharmaceutical industry as well as healthcare professionals.
In the following phase, participants develop action learning projects with clear deliverables
based on real-world issues, which they are expected to further develop throughout the
program. Phase 3 entails visiting innovative healthcare systems around the world to help
provide inspiration for their action projects. After further developing these action projects, the
LEAD program culminates in each participant presenting their strategic propositions to the
ENC (ibid).
According to Waltmann (2013), Head of Global Training at Novartis, the LEAD program is
intended to foster innovation and teach participants how to embrace new business
technologies, practices, and models that contribute to more socially responsible business
practices, and collaborate with healthcare professionals in order to build a more effective and
Laura Høeg Hagen Copenhagen Business School 2013 58
sustainable system. Furthermore, this is a prime example of encouraging action in terms of
providing the necessary communication channels needed to progress a good idea to an
implemented innovative solution.
For the 2013 LEAD program, NotaBene, an external communications consulting and training
company, was brought in in order to help participants structure and present their strategic
proposals (Nielsen, 2013: 2. See appendix 8.6). While internal sources, such as Frank
Waltmann, and Pharmaceutical Executive, William Looney, commend the program for its
overall contribution to innovation within both Novartis as well as the general pharmaceutical
industry, external sources seem to have a slightly more unfavorable outlook on the program in
terms of actual outcomes. According to Nielsen (2013), the participants had severe difficulties
in structuring and presenting their proposals, and based on his assessment, a whole third of
the program participants would have failed. This indicates that the participants were lacking a
concrete, standardized communications framework to apply to their proposals, which further
suggests that communications training and a commitment to ensuring effective
communications has been neglected both within the program but also at the various sites,
divisions, and business units wherefrom the participants are based.
Moreover, issues pertaining to self-awareness and attitude were evident in the sense that
certain participants exuded a sense of indifference and conceit (Nielsen, 2013: 3-4). Insofar as
these participants were concerned, there was no need for them to prepare or accept assistance
from NotaBene’s consultants despite the fact that the LEAD council had advised them to do
so based on their performance thus far (ibid). This reverts back to the issues of self-awareness
in terms of self-efficacy, which Ponnier states as a primary obstacle in the attempt to ensure
effective communication and a commitment thereof (Ponnier, 2013: 9).
Furthermore, while instilling awareness of the critical role of innovation within Novartis is
considered quite successful, this indicates that the level of awareness may not be entirely
equitable across the organization. Whether this pertains to the geographical origin of the
individuals in question is debatable. However, the fact that all participants are based in
growth economies may potentially signify that the establishment of awareness of Novartis’
innovation-based objectives, and thereby visioning activities, has faltered in these regions.
Laura Høeg Hagen Copenhagen Business School 2013 59
In regard to the content of the strategic proposals, Nielsen (2013) further states that, in his
opinion, the level of innovation present was indistinct. While the program is touted as a
catalyst for highly innovative outcomes (Waltmann, 2013; Looney, 2013), it seems that the
actual content is less than innovative in the sense that many of the 2013 proposals were not
considered novel, but rather simply recycled ideas from other industries and competitors
(Nielsen, 2013: 3). For instance, several participants proposed lowering prices in emerging
markets in order to gain market access (ibid). This is hardly a newfangled strategic approach
as it has been applied within the pharmaceutical industry since the introduction of generic
pharmaceutical in the 1970’s (Horneck, 2013).
The lack of concrete innovation present within these proposals suggests inadequate visioning
activities in the sense that participants are not aware of what constitutes true innovation.
Although innovation as a core value has been strongly instilled and diffused within the
organization, it seems that the meaning of innovation from a participant perspective is
unclear, which in turn leads to subpar innovation generation. Nevertheless, the LEAD
program in itself is considered a highly innovative method of circumventing traditional, and
occasionally limiting, communication channels in order to provide the opportunity for
ingenious ideas to be acknowledged and potentially implemented.
4.2.5 Conclusion
Innovation is clearly a highly prioritized value within Novartis, and the numerous and
multifarious ways in which visioning and energizing activities are conducted strongly suggest
that considerable efforts are applied in the attempt to create awareness regarding the critical
role of innovation as a primary business objective. Already prior to employment, potential
candidates are introduced to Novartis’ innovative values, which suggests that future and
present employees are expected to retain innovation as a core value in their working life.
Within the communications function, visioning activities take an auxiliary position and
energizing activities are brought to the forefront in the sense that process innovation becomes
an autonomous capacity based on intrinsic motivation and extant knowledge on part of the
employees. This serves to empower employees by allowing them to achieve individual goals
in line with organizational values, thus driving intrapreneurialism.
Laura Høeg Hagen Copenhagen Business School 2013 60
While the various communication platforms, in theory, are deemed extremely beneficial in the
form of mechanisms to facilitate innovation communication, the functionality of these vary to
a great extent, thereby undermining the underlying intent. Moreover, the configuration of
these platforms serves to exclude certain levels of the organization, which could be highly
detrimental to future innovation generation as well as employee loyalty and commitment.
Furthermore, there seems to be a significant incongruity present in the sense that innovation
communication platforms are provided, yet disencouraged by Novartis leaders.
One of the most promising initiatives in terms of innovation communication is the LEAD
program, which grants a communication bypass from lower levels of the organization directly
to ENC members. However, this program is laden with difficulties as a result of poor
communication skills, lacking self-awareness of self-efficacy, and questionable innovative
content on the part of participants, which severely affects the innovative outcomes and
underlying intent of the program.
4.3 External Communications – Customer Perspective
While the sections above have retained an internal focus in terms of communication, the
following section will aim to explicate and analyze the state of Novartis’ external
communications. Accordingly, an assessment of the juxtaposition of the company’s stated
value proposition in terms of outward directed communication versus the perceived value
proposition based on public perception will be conducted. More specifically, this section will
address the various medias used for external communications and the functionality of these,
the core messages being communicated, as well as the general perception from an end-user
and healthcare professional perspective.
4.3.1 Communication Medias
The exponential increase in communication platforms and medias in the marketplace today
has provided private and public businesses the opportunity to not only communicate directly
to their stakeholders, but also receive feedback from these stakeholders instantaneously.
Novartis is no exception. According to Ponnier (2013), the company websites are their
strongest communication tool to reach external audiences. Yet the websites represent an
Laura Høeg Hagen Copenhagen Business School 2013 61
overwhelming one-way, asymmetric communication as the contact options are limited to
listed e-mail addresses (Novartis, 2013). As such, the websites are considered essentially
informative in nature rather than interactive. Furthermore, a public perception survey
conducted for this thesis shows that 99.1% of respondents have not actively sought
information about Novartis in terms of visiting their website or connecting with the company
on social media platforms (Survey 1, 2013: 7. See also appendix 8.7). This suggests that
Novartis’ stated strongest communications tool may in fact not be as effective as internally
perceived.
Regardless of what social media platform is accessed, Novartis has a presence, including
Facebook, Instagram, Twitter, Pinterest, and LinkedIn. In order to add a two-way,
symmetrical communications function to Novartis’ external communications, these various
social media platforms are used, where external audiences are able to comment and provide
feedback directly. The degree to which this interactivity is feasible depends entirely on users
propensity to seek out the company online and connect with them. Novartis has 48,275
followers on Twitter (Twitter, 2013a) and 35,825 likes on Facebook (Facebook, 2013a). At
first glance, this seems quite positive as these numbers signify the amount of people
worldwide who have expressed an interest in connecting with Novartis and following their
updates and progress. However, considering the fact that Novartis products reached 1,2
billion patients in 2012 (Novartis, 2012: 66), amounting to 16% of the world’s population,
Novartis’ social media followers are miniscule. Furthermore, Pfizer, Novartis’ main
competitor, holds 51,972 followers on Twitter (Twitter, 2013b) and 82,949 likes on Facebook
(Facebook, 2013b), more than double that of Novartis14.
This indicates that despite Novartis’ significant efforts to reach external audiences through
contemporary medias, the actual audience is quite inconsequential relative to Novartis’
geographical reach, size, and amount of patients using their products. This unproportionate
ratio may be affected by the nature of these medias, namely that users select and control the
information they deem relevant and interesting, thus representing the dominant party in the
external communications relationship. Such a dynamic is considered relatively new. In more
traditional medias, such as TV, newspapers, etc., the sender determines the content,
14 See appendix 8.1
Laura Høeg Hagen Copenhagen Business School 2013 62
placement, and timing of the messages and as such, the audience relinquishes control of the
messages and information that they are exposed to.
4.3.2 Novartis’ Stated Value Proposition & Target Segments
The manifold ways of connecting with external audiences also signify an opportunity for
businesses to communicate and clarify their value proposition, also known as their promise of
value to be delivered. Regardless of the media platform, Novartis’ core message is clear: We
produce and provide innovative products to treat and prevent diseases, ease suffering, and
enhance the quality of life (Novartis, 2012:3). This is the core message, communicated and
paraphrased in numerous forums, online platforms, and promotional materials. Furthermore,
this is a direct excerpt of Novartis mission statement15. However, unlike its competitors,
within the mission statement, Novartis specifically mentions profit-maximizing objectives in
the form of “… providing a shareholder return that reflects outstanding performance and to
adequately reward those who invest ideas and work in our company.” (Novartis, 2013). This
is considered quite admirable and to reflect a certain level of transparency as Novartis
explicitly expresses the primary business objectives of a private sector organization in lieu of
simply attempting to disguise it as a doing good for all mankind for the sake of doing good.
This secondary part of the mission statement is not evident on any other communication
medias or platforms, which indicates that it is deemphasized relative to the more value-based
part of the mission statement pertaining to innovation, enhancing the quality of life, and
alleviating suffering. Moreover, transparency in terms of accurate information pertaining to
Novartis products seems to be a high priority. The 2005 Ethical Promotion of
Pharmaceuticals publication available on Novartis’ website reads as a reassurance to patients
that despite the dubious promotional practices by many pharmaceutical companies, Novartis’
promotion of products is assuredly ethical and based on the merits of the product and the
needs of patients (Novartis, 2005).
While the adherence to health, innovation, and transparency is evident when researching and
analyzing Novartis’ value proposition, the extent to which this core message has been
effectively communicated and perceived as authentic can only be determined by examining 15 See section 1.5 Novartis – Case Company Introduction
Laura Høeg Hagen Copenhagen Business School 2013 63
the public perception of Novartis based on the external communication efforts, which will be
addressed further below.
Within the customer perspective of the RBSC, the value proposition is based on the customer
management processes that serve to enable the company to acquire, sustain, and grow long-
term, profitable relationships with targeted customers (Kaplan & Norton, 2004: 107).
Accordingly, the targeted segment for the communication of the value proposition must be
defined in order to strategically align the core message with the values, beliefs, needs, and
expectations of the specified segment. Novartis’ targeted segment is stated as end-users of the
pharmaceuticals produced by the company (Ponnier, 2013: 3), thus leaving the segment
extremely broad as Novartis’ products cater to a wide array of people, ranging from seriously
ill patients using prescription medications to people purchasing OTC drugs in the form of
birth control or lesser painkillers.
As such, the segment cannot be defined in the traditional sense based on demographics.
According to Sepstrup (2007), preferential perceptions of a company from a customer
perspective are based on the communicative efforts displayed by said company. As such,
superior communication in terms of the value proposition in alignment with the values,
beliefs, needs, and expectations of the selected target segment can lead to customer attainment
and retainment. As Novartis’ target segment remains extensively broad, certain difficulties in
aligning the value proposition with the target segment are expected to occur in terms of
appealing to the customers’ preferences across significantly differing demographics.
Furthermore, due to the fact that the use of Novartis’ products is often based on necessity, its
is considered unlikely that end-users’ preference will actually represent a signifying factor in
the strategic equation, especially when considering patented or prescription drugs.
However, here it is important to distinguish between OTC and prescription products, as the
consumers’ preferences are more relevant to the former, whereas healthcare professionals’
preferences are more significant to the latter.
As Ponnier (2013) states that end-users are Novartis’ primary target segment, it is to be
expected that a considerable communicative effort is applied in the strategic endeavor to
Laura Høeg Hagen Copenhagen Business School 2013 64
attract and retain loyal customers. However, only 50% of respondents were familiar with
Novartis, whereof 10.1% had bought/been prescribed medication from Novartis (Survey 1,
2013: 2). Furthermore, only 10.3% of respondents were able to name a Novartis product
(ibid), despite the fact that on average 10-30% of Danish pharmacies’ sales are Novartis
products (Survey 2, 2013. See also appendix 8.8). Considering the above statistics along with
the fact that Novartis is the second largest reaching pharmaceutical company in the world, it is
deemed reasonable to infer that their external communicative efforts simply are not up to par.
As it is deemed implausible that resource scarcity is the source of this shortcoming, it is
considered relevant to examine other limitations present in Novartis’ strategic operations.
Within the EU, one of Novartis’ primary constraints in terms of external communications is
regulatory legislation. Pharmaceutical companies are not permitted to communicate or market
their products directly to end-users (Ponnier, 2013: 3), as EU regulation has decreed that
pharmaceutical products, be it OTC or prescription, should only be applied or consumed
based on informed decisions by educated healthcare professionals. Furthermore, the
marketing of any OTC products must be authorized based on safety, quality, and efficacy
(Bogaert et. al., 2005: 43). This signifies a considerable hurdle for Novartis in terms of
reaching their target segment and attempting to create relations to their end-users, which in
turn restricts revenue growth through effective external communications according to the
RBSC. It may also explain the relatively low public familiarity with Novartis and their
products (Survey 1, 2013: 2) as well as the predominantly user-controlled communication
medias used by Novartis to engage with end-users.
When heavily restricted by EU in terms of interacting and communicating directly with end-
users, Novartis is instead necessitated to use secondary segments as intermediaries to their
primary target segment. According to Ponnier (2013), this secondary segment is composed of
wholesalers, pharmacists, doctors, and other healthcare professionals, who deal directly with
patients and end-users. While this secondary segment is internally considered a difficult
stakeholder group (Ponnier, 2013: 4), Novartis acknowledges that these difficulties are
outweighed by the expert knowledge and education held by healthcare professionals, which
can safeguard and ensure the proper usage of pharmaceuticals. Furthermore, the authoritative
role of healthcare professionals as objective experts is assumed to support Novartis’
Laura Høeg Hagen Copenhagen Business School 2013 65
distribution objectives by applying their knowledge when selecting drugs for treatment based
on their assessment of functionality and quality. Consequently, it is deemed relevant to
examine and assess the communicative relationship between Novartis and healthcare
professionals in order to determine the efficacy of Novartis’ external communications to the
primary target segment through the secondary, intermediate segment.
4.3.3 Communicative Efficacy Through Healthcare Professionals
Considering the restrictions placed on Novartis, and the pharmaceutical industry in general, in
terms of communicating directly to patients coupled with their strategy of reaching this
audience through healthcare professionals, it is deemed reasonable to assume that significant
efforts will be applied in the communications relationship of this segment in order to fulfill
the organization’s communication-based objectives. However, research suggests that
Novartis’ interaction with Danish pharmacies and doctors is sporadic and significantly less
frequent than anticipated (Survey 2, 2013: 1; Survey 3, 2013; 1). 73.5% of Danish
pharmacists indicated that Novartis only communicates and interacts directly with them to a
lesser extent (ibid). Of these 73.5%, only 29.8 % receive in-person visits from Novartis
representatives and consultants about 4-5 times annually regarding OTC products only
(Survey 2, 2013: 2).
This indicates that there is a clear differentiation in terms of product communication relative
to the respective audience. As such, information pertaining to OTC products in regard to
product recalls, launches, delivery failures, safety, and usage is communicated to pharmacies
(Survey 2, 2013: 3), while information on product safety and application of prescription drugs
is communicated directly to doctors (Survey 3, 2013: 4). This differentiation is considered
reasonable, however, pharmacists have expressed a need for more information pertaining to
prescription drugs as these are prescribed by doctors, who can be very difficult, and at times
impossible, to get a hold of (Survey 2, 2013: 6). Furthermore, the pharmacist respondents find
it difficult to assist with patient information when they are unaware of the specific
instructions and information provided to doctors and subsequently passed on to patients
(ibid).
Laura Høeg Hagen Copenhagen Business School 2013 66
88.8% of pharmacist respondents have indicated that strong and frequent communications
between Danish pharmacies and Novartis is either important or very important (Survey 2,
2013: 5). Their reasoning primarily pertains to the advantageous outcomes from a societal and
patient perspective in the sense that Novartis holds the newest results in terms of specialized
knowledge of drug usage, efficacy, and patient safety (Survey 2, 2013: 6). Regular
information can be accessed through various resource tools, but without this specialized
knowledge, pharmacists consider themselves unable to provide optimal guidance for patients
(ibid). As such, this indicates a need for a revision of the communication prioritization and
content between Novartis and healthcare professionals in order to suitably transmit
information from the company to end-users in line with Novartis’ communication-based
objectives.
The results show that only 25% of the respondent doctors engage directly with Novartis, and
that this interaction occurs only once or twice annually (Survey 3, 2013: 1). Conversely, 50%
of respondents interact with other pharmaceutical companies 1-2 times a week, 25% interact
with these pharmaceutical companies 1-2 times a month, and 25% engage with them 1-2
times biannually (Survey 3, 2013: 1). This could potentially signify a drastic preference of
competing pharmaceutical companies over Novartis despite the fact that 66.6% of doctor
respondents prescribe Novartis medication to their patients (Survey 3, 2013: 4). Nonetheless,
these respondents do not consider Novartis’ communication an influencing factor when
prescribing medication (Survey 3, 2013: 4), and as such, it cannot be concluded that Novartis’
communicative relationship, or lack thereof, is explicative of the respondent doctors’
preferences.
The respondents further indicated that the only forms of communication received from
Novartis are either letters (33.3%) or advertisements in scientific journals (33.3%), which
primarily pertain to information on drug safety and application (Survey 3, 2013: 2). Also, the
results show that doctors will consult the product summaries for further information on drugs,
rather than contact Novartis directly (ibid). This suggests that the communication relationship
between Novartis and doctors is extremely limited. Accordingly, the above assumption that
ancillary efforts are applied to communications directed towards doctors in order to reach the
primary target segment, namely end-users, is tentatively debunked.
Laura Høeg Hagen Copenhagen Business School 2013 67
4.3.4 Public Perception
While 50% of the end-user survey respondents were unfamiliar with Novartis, the remaining
respondents indicated a slightly positive perception of the company (Survey 1, 2013: 11).
34.2% had a neutral perception of Novartis, while 12.9% signified either a positive or
moderately positive perception (ibid). Conversely, an astounding 21.9% of respondents stated
a negative or moderately negative general perception of the overall pharmaceutical industry,
whereas only 2.7% indicated a negative or moderately negative perception of Novartis in
particular (Survey 1, 2013: 8). This indicates that while Novartis is associated with the
negativity affiliated with the pharmaceutical industry, the company itself retains an
incrementally better reputation.
Moreover, when assessing the general perception of the pharmaceutical industry, 37.6%
indicated a neutral perception (ibid). The underlying reasoning for the high percentage within
the neutral categories is due to a prevalent feeling of ambivalence towards the corporate
values and corporate credibility image dimensions of the industry in general, rather than
Novartis in particular (Survey 1, 2013: 12). Within the respondent group, there are many
harsh critics that believe that pharmaceutical companies “…prey on sick people by taking
patents on cures that should be freely available…” and “…speculate on peoples’ health…”
(Survey 1, 2013: 9).
Yet the prevailing response is ambiguous in the sense that people are aware of the benefits
and positive contributions by pharmaceutical corporations, but still feel discomforted by the
lack of transparency, level of political influence and power, and general profit-maximizing
objectives (ibid). For instance, one respondent noted that “… the pharmaceutical industry is a
necessity, and that high costs are due to extensive R&D… However, I have a wary opinion of
the industry due to the general disconcern about how it (read: drugs) is used by the medical
community, which seems to me like an attempt at avoiding any responsibility for their
product.” (Survey 1, 2013: 9).
Furthermore, another respondent stated that despite “…the bad things in the media regarding
testing adverse side effects, and lately stories about tax evasion, ultimately prescription
medicine is there for a reason and a noble cause.” (Survey 1, 2013: 9). This indicates that the
Laura Høeg Hagen Copenhagen Business School 2013 68
majority of respondents have positive product attributions and perceptions pertaining to
Novartis’ customer orientation, yet these are undermined by a low sense of corporate
credibility. Moreover, many of these associations are based on the pharmaceutical industry in
general, with no mention of Novartis in particular, but nonetheless, these perceptions seem to
beset the specific credibility of Novartis.
When asked to select a statement that most effectively encapsulates the pharmaceutical
industry, 31.8% of respondents stated that it is profit-oriented with questionable ethical and
social standards (Survey 1, 2013: 13). The second largest category indicated that it is one of
the most innovative industries worldwide (ibid). Once again, this underscores the prevalent
ambivalent perception pertaining to positive product attributes in terms of innovation being
undermined by the perceived inherent incongruity between CSR values and profit-
maximizing objectives. In addition, a recurring theme is evident in the form of a broad
respondent perception that pharmaceutical companies largely cater to western regions and
neglect developing countries by overpricing drugs and attempting to block generic
competition in these markets (Survey 1, 2013: 11). One respondent noted that “Health is a
human right, not a business opportunity” (Survey 1, 2013; 10), while another stated that
“Access to health should not be determined by place of birth.” (Survey 1, 2013: 19).
This suggests that there is an abundantly negative perception of the industry, which as
mentioned above, affects the credibility of Novartis, despite the fact that Novartis is not
directly connected to these adverse events in the minds of the respondents. When asked if
better and more publically available information and communication from Novartis would
change their perception, 29.7% of respondents answered ‘yes’, while 51.4% were uncertain
(Survey 1, 2013: 15).
When asked to further elaborate, respondents underlined that they desire less brand
communication and marketing, and more information pertaining to progress made in
developing countries, ownership structures, and production circumstances (Survey 1, 2013:
16). Another recurring and prevalent aspect was to ensure more transparency and authenticity
in current communications, while making it relevant and interesting to the audience: “Just
posting information on your website wouldn’t work (not for me anyway). Don’t assume that
Laura Høeg Hagen Copenhagen Business School 2013 69
people find your pharmaceutical communication interesting, MAKE it interesting.” (Survey
1, 2013: 16). Yet again, this reverts back to Ponnier’s (2013) statement that Novartis’
websites are their strongest external communications tool, and indicates that it simply is not
as effective as internally perceived.
4.3.5 Conclusion
In conclusion, Novartis’ external communications are seemingly incongruous in terms of
stated versus perceived value propositions. The external communications efforts by Novartis
are largely deployed through user-controlled communications medias, and to a great extent
constitute brand communications. While this strategy is considered inadequate, there are few
alternatives as Novartis, and the entire pharmaceutical industry in general, is heavily restricted
by EU legislation in terms of external communications. End-users represent Novartis’ official
target segment for external communications and marketing, however, due to these regulatory
restrictions, the company is necessitated to use a secondary segment, namely doctors and
other healthcare professionals, as an intermediary in order to reach the target segment.
This endeavor is considered quite unsuccessful based on the indications that Danish
pharmacies require more information than currently provided by Novartis and that doctors
rarely interact or engage with Novartis beyond advertisements in scientific journals or letters
pertaining to information on drug safety and application. As such, the prioritization and
content of Novartis’ communications to healthcare professionals is deemed inadequate.
Furthermore, the resulting public perception is largely negatively laden, and thus does not
correspond entirely to Novartis’ stated value proposition. A prevalent ambivalent perception
is evident as value-based efforts, such as easing suffering and providing healthcare
worldwide, is frequently outweighed by negative associations in terms of profit-maximizing
objectives and questionable ethical standards. However, many of these negative associations
are based on the pharmaceutical industry in general, yet still affect the perceived credibility of
Novartis.
Laura Høeg Hagen Copenhagen Business School 2013 70
4.4 Strategic Considerations & Actions – Financial Perspective
While the sections above have addressed the various communication-based operations within
Novartis and the efficacy of these, the following section will seek to further analyze the
contribution of these communication-based operations to the advancement of Novartis’
strategic objectives in terms of increased productivity and revenue growth. Accordingly,
Novartis’ strategic priorities will be assessed and juxtaposed to the actual activities conducted
to obtain these objectives from a communicative perspective.
4.4.1 Strategic Priorities
The overarching strategic goal for Novartis is stated as establishing itself as a sustainable
leader within healthcare (Novartis, 2012: 15). As the only pharmaceutical company with a
leading position within pharmaceuticals, eye care, generic medicines, vaccines and
diagnostics, and consumer health, the corporation is considered well on its way to establishing
leadership within the industry. However, simply expanding the product portfolio is not
considered a viable approach to ensuring leadership. Instead, Novartis lists three strategic
priorities and focal areas, which aim to serve as intermediate goals to the attainment of the
overarching strategic objective, namely building sustainable leadership within healthcare.
The first priority is the extend their lead in innovation as well as their current track record of
receiving approvals for more innovative products than any other pharmaceutical company
since 2007 (Novartis, 2012: 15). This commitment is reflected by the 21% of
Pharmaceutical’s net sales investment into R&D in 2012 in terms of product innovation, and
the relatively new initiatives spearheaded by the CEO, Joe Jimenez, himself and the ENC,
such as the LEAD program in terms of process innovation.
The second priority pertains to accelerating growth by continuously reconfiguring their
commercial model in alignment with the rapidly changing healthcare environment (Novartis,
2012: 15). Within this priority, capturing emerging markets is explicitly articulated as a key
factor in attaining this goal (ibid). However, this priority does not seem to have been
effectively communicated to external audiences as the analysis on public perception indicates
that this is a main area of concern. 48% of end-user respondents stated that third world access
to medication is the primary shortcoming within the healthcare industry, and as such, it seems
that the actions and initiatives taken to capture these markets and ensure access to medication
Laura Høeg Hagen Copenhagen Business School 2013 71
in developing countries has been poorly addressed in Novartis’ external communications.
Finally, the third strategic priority relates to driving productivity within the organization by
streamlining processes to improve profitability (Novartis, 2012: 15). From a communications-
based standpoint, the first two sections of the analysis suggest that there is much to be done in
order to optimize internal processes, especially in terms of communications structures and
innovation communication. Nonetheless, the role and functioning of the ENC is “…to
promote an active internal and external communications policy…” (Novartis, 2012: 110),
which suggests that the commitment to effective communication emanates from the very top
of the organization.
While none of the above priorities directly pertain to communications, the alignment of these
to the financial perspective in the RBSC is considered remarkably accurate. As such, the
second and third priority directly relate to the short-term and long-term value components of
the financial perspective, respectively, whereby the only differentiation is the specificity of
the actions taken to achieve these objectives. Within this thesis, organizational
communication and innovation are advocated as the primary composition of intangible
resources to reach the productivity and growth component objectives. Novartis’ presentation
of strategic priorities does not clarify which particular resource composition is applied in their
strife to achieve these objectives, which is in all likelihood a means to protect their
competitive advantage in terms of intangible assets. Furthermore, the constituting dimension
of the ECNP model serves to underscore the inherent and actualizing function of
communication within business operations, and thereby communication cannot be entirely
separated from these priorities, despite the fact that it is not explicitly stated. Accordingly, it
is deemed reasonable to apply a communications perspective to these priorities.
4.4.2 Strategic Approaches
Novartis’ mission statement explicitly states the goal of providing outstanding shareholder
returns in order to reward those who invest in the corporation (Novartis, 2013). Consequently,
it is deemed safe to assume that this objective is aligned with the strategic priorities in terms
of building a sustainable leadership in healthcare as a basis of financial performance.
According to Merchant & Van Der Stede (2007), there are three primary approaches of
Laura Høeg Hagen Copenhagen Business School 2013 72
increasing net income, and thereby maximize shareholder returns: 1) Increase revenues
organically, 2) decrease costs by driving productivity, 3) increase revenues inorganically
through acquisitions and mergers.
Historically, Novartis has been known to apply the third strategic approach in order to
increase net income, namely through mergers, acquisitions, fusions, spin-offs and divestments
(Novartis, 2013). In fact, Novartis itself is a result of a merger between Ciba-Geigy and
Sandoz in 1996. Since the inception of Novartis as we know it today, no less than 16 mergers,
acquisitions and divestments of non-core business divisions have taken place (ibid),
amounting to nearly one merger or acquisition per year. Accordingly, it is deemed appropriate
to postulate that Novartis’ primary strategic approach has had an external focus in terms of
assessing industry conditions and subsequently acquiring, merging or divesting business
divisions based on the expected future profitability.
As such, the above supports the underlying assertion of this thesis, namely that external,
market-based positioning strategies and inorganic growth have been the accepted and
commonplace strategies applied by the pharmaceutical industry in general as well as Novartis
in particular. However, since the inauguration of current CEO, Joe Jimenez, in 2010, the
strategic approach has taken a different course, which is evident based on the current strategic
priorities listed above that focus on organic growth and increased productivity. Furthermore,
only one acquisition has taken place during Jimenez’ tenure, which suggest a deceleration of
inorganic growth strategies. Moreover, Jimenez has states that “…The core unifying element
in the Novartis game plan comes from the recognition that the best strategy is little more than
a paper weight without the internal capacity to motivate and change the organizations
responsible for executing it.” (Looney, 2012). This indicates that a relatively new perception
of the role of internal and intangible assets has surfaced, which further suggests that a shift in
the strategic focus is in the making.
Furthermore, this internal realization that inorganic and external market-based positioning
strategies are no longer feasible in terms of sustaining industry leadership correlates neatly
with the motivation for this thesis. Despite the apparent shift towards a more endogenous
strategic perspective, the extent to which this is readily discernable is contentious. As such, it
Laura Høeg Hagen Copenhagen Business School 2013 73
is deemed relevant to assess the level of strategic applicability of this relatively novel strategy
formulation based on the results of the analysis of the above perspectives.
The analysis above based on the learning & growth, internal, and customer perspectives
suggests that there is a relatively engaged commitment to the communications dimension of
Novartis’ business operations. However, within each perspective, several shortcomings are
evident, which in turn affect the efficacy of each communicative function in relation to the
remaining causally linked perspectives. According to Kaplan & Norton (2004), value creation
is indirect in the sense that intangible assets seldom have a direct impact on financial
outcomes. Nonetheless, improvements of the employment and structuring of these can
positively affect financial performance through the chains of cause-and-effect relationships.
Furthermore, intangible assets rarely create significant value on their own, and must be
bundled with other assets, tangible and intangible, in order to contribute value to the
organization (Kaplan & Norton, 2004: 30).
Due to the fact that the perspectives analyzed above have no detectable formal connection, it
is deemed reasonable to deduce that the relatively isolated intangible assets are unable to
deliver value to the extent that their combined potential holds. Furthermore, this lack of
formalized reciprocity and connection in the form of a standardized framework, such as the
RBSC, makes it unclear how the various internal, external, and innovation communications
create value and support financial performance.
Consequently, the application of such a framework as well as quantitative metrics to assess
the efficacy of each perspective is considered necessary to determine the added value of
effective intangible assets to Novartis’ financial performance. As such, the articulation of a
more endogenous-centric strategy is deemed admirable, necessary, and to a certain extent
forward-thinking in relation to the industry, however, the actualization of this strategy is not
considered up to par. Accordingly, the lacking alignment between stated and actualized
strategy is perceived to be fraught with missed opportunities.
Laura Høeg Hagen Copenhagen Business School 2013 74
4.4.3 Conclusion
While the overarching strategic goals for Novartis’ future conduct is to retain leadership
within the healthcare industry, the intermediate ambitions are to proliferate innovation within
the organization, drive productivity by streamlining internal processes, and increase revenue
growth organically. These objectives are considered neatly aligned with the perspectives
within the RBSC, and thereby Novartis is considered capable of attaining these from a
communicative perspective.
Historically, Novartis has been fraught with mergers, acquisitions, and divestments, which
has led to signify the prevalent strategic operations of the firm in order to create revenue
growth. However, within the past three years and in connection with the inauguration of the
current CEO, a shift in strategic focus seems to have occurred, placing more attention the
potential added value of an endogenous, intangible resource-based approach to value creation.
Nonetheless, the actualization of the novel strategy is not entirely discernable, and it is
considered lacking relative to the articulation of the strategic priorities.
4.5 Analytical Highlights
The quadripartite analysis above has sought to assess the structuring and efficacy of Novartis’
internal communications, innovation communications, external communications, and the
implications of these in regard to financial performance. The results of the analysis vary to a
great extent, contingent on the perspectives, however, one element seems to be recurrent and
applicable to each perspective: a significant incongruence exists between the articulation of
commitment to the communicative objectives and the actualization and implementation of
initiatives to reach these.
For internal communications within the learning & growth perspective in particular, the
analysis showed that there is a genuine and high commitment to ensuring effective
communications. However, the available communication channels based on the
communication structure contradicts this supposed adherence to ensuring effective
communications. The formalized structure proved to be overly reductionist in the sense that it
only includes vertical communications in an archaic, hierarchal formation. This leads to
significant issues in disseminating key messages beyond the higher levels of the organization,
Laura Høeg Hagen Copenhagen Business School 2013 75
and indicates that organizational proximity to the source of the message is essential to the
successful diffusion of the message. Furthermore, geographical proximity was also identified
as problem area as feedback functions, and thus aligning activities, proved to be significantly
lacking in terms of frontline communication.
The analysis further indicated that horizontal communications are informalized and occur
relatively sporadically, which suggests that functional silos exist within the organization. A
such, no feedback loops are present to ensure the integrity of auxiliary tasks, such as cross-
divisional and cross-functional communication, which in turn could result in excess resource
consumption in the form of time, need for clarification, and general misunderstandings.
Furthermore, across the entire communications structure, both horizontally as well as
vertically, any feedback loops currently in place are primarily one-way, asymmetric in the
sense that the feedback directionality is upward and not subsequently shared with the
contributors in order to create awareness of, and thereby potentially enhance, their
communicative efforts.
In regard to the internal perspective, it is clearly evident that innovation holds a large priority
within Novartis and has been identified as an integral part of the Novartis culture and OI.
While the innovation focus primarily pertains to product innovation, the auxiliary processes
conducive to knowledge sharing, and thus the actualization of innovation, are considered vital
to the innovation development process, and thereby constitute the main focus of the
innovation-based analysis. The results indicated that significant efforts are put into the
diffusion of innovation as a core value, however, the functionality of the actual mechanisms
and communication platforms set in place to encourage and spur innovation are considered
lacking, thus undermining the intent of these.
The most promising initiative in terms of innovation communication is considered the LEAD
program, however, several problem areas were identified, which specifically pertain to
communication skills, self-awareness of self-efficacy, and level of innovative content. This
potentially signifies a misalignment in global visioning and energizing activities, which in
turn affect the efficacy of Novartis’ overall innovation communication.
Laura Høeg Hagen Copenhagen Business School 2013 76
The results of the analysis of the customer perspective suggest that there is a significant
discrepancy between Novartis’ stated value proposition, which adheres to innovation,
transparency, alleviation of suffering, etc., and the perceived value proposition from an
external perspective. In terms of external communication, the analysis suggested that Novartis
is quite forward-thinking in their application of external communication medias. These
include the most popular social media platforms, which enables them to communicate and
receive feedback from external constituents instantaneously. However, these medias are
primarily user-controlled, which significantly hinders Novartis’ reach to these audiences.
While end-users have been identified as Novartis’ target segment for external
communications, the execution of this is considerably impeded by the heavy EU regulatory
restrictions placed on pharmaceutical companies in terms of external communications and
marketing. This is considered the main explanatory factor as to why Novartis primarily uses
user-controlled communication medias as well as a significant factor in terms of their
relatively limited reach.
In order to circumvent the EU restrictions to reach their target segment, Novartis uses
healthcare professionals as an intermediary segment. However, the efficacy of this is
considered rather poor as neither healthcare professionals’ nor the public’s perception of
Novartis is particularly commendable. Furthermore, the public awareness of Novartis is
extremely low, and as such, the general negative public perception of the overall
pharmaceutical industry heavily affects the specific perception of Novartis as an individual
corporation. Nonetheless, the analysis of the corporate image dimensions indicate that
Novartis holds an incrementally better reputation relative to competitors from both a public
perception as well as that of healthcare professionals.
The effective management of the learning & growth, internal, and customer perspective is
expected to culminate in heightened financial performance, relative to the strategic
application and approach. While the analysis indicated that Novartis’ overall strategy has
recently taken a slight shift towards a more endogenous intangible resource-based view in lieu
of inorganic market-based positioning tactics in order to increase revenue growth and drive
Laura Høeg Hagen Copenhagen Business School 2013 77
productivity, the actualization of this strategy is simply not effective, relative to the potential
it is deemed to hold.
The basis for this ineffectuality is considered to be due to a lack of a standardized framework
for the structuring, assessment, and management of intangible assets. As such, the various
intangibles are unable to be realized in terms of bundled, dialectic assets, which indirectly
contribute value to Novartis’ financial performance. Despite the indirect nature of the value
contribution of intangible assets, it is considered reasonable to infer that the more concrete
information and data constitutive of the various components of financial performance, the
easier it is to define and improve the core competencies that contribute the most value.
Laura Høeg Hagen Copenhagen Business School 2013 78
5.0 Reflection & Discussion The following section aims to reflect upon and discuss the results of the analysis above. More
specifically, areas such as methodological validity and theoretical representativeness relative
to the objectives, analytical process, and resultant outcomes will be discussed. Furthermore,
the main findings of the analysis will be accounted for in more reflective detail, and the
implications of these findings will be considered and subsequently evaluated in terms for
future research.
5.1 Methodological Considerations
While the majority of the data collection for this thesis is deemed reliable to the extent that it
is feasible within the scope of such a paper, the doctor respondents and their resultant
responses in Survey 3 are not deemed entirely representative. The small sample group of four
doctors is not considered sufficient to provide generalizable results, and therefore the
reliability of this data is deemed compromised. Furthermore, a reluctance to participate in
interviews and even participate in the survey was evident, which is assumed to be based on
either time constraints or simply an aversion to be affiliated with research on a pharmaceutical
company.
The unreliability and perceived unrepresentativeness of this data is considered extremely
unfortunate as increased reliability and representativeness would be expected to strengthen
the analysis and subsequent results significantly, especially due to the fact that these
respondents represent the intermediate segment through which Novartis communicates with
their target segment, namely end-users. Accordingly, the analysis was predominantly based
on quantitative data collection from the other surveys as well as qualitative data from the two
semi-structured interviews in order to retain the integrity of the analysis to the extent that it
was feasible.
It is further acknowledged that it would have been preferable to have included more
qualitative and quantitative sources from within Novartis. As such, it is realized that the data
collected from the semi-structured interview with Head of Global Communication, Nathalie
Ponnier, may incur a slight bias and may even be misrepresented. Yet at the same time, the
Laura Høeg Hagen Copenhagen Business School 2013 79
respondent’s role within Novartis is considered to strengthen her credibility as a source of
information as she holds expert knowledge on the subject most relevant to this thesis, namely
communications, both in general and within Novartis specifically.
Based on the analytical process as well as the resultant outcomes, the concept of triangulation
as a means to increase validity is considered quite successful. Of the three manners in which
complementarity of results can be invoked according to Kelle & Erzberger (2004), the
complementarity has been found to occur in the form of a partial divergence between the
qualitative and quantitative data. The most pronounced example of this is considered to be the
incongruity between Novartis’ stated value proposition and the perceived value proposition,
where the analysis of the former was based on the qualitative, semi-structured interviews as
well as relevant written sources representing Novartis’ external communications and the
analysis of the latter was based on the quantitative public perception survey. This divergence
is not considered a malignant consequence – quite the contrary, it has provided a basis for
further analytical and empirical clarification in regard to the cause of the divergence, and
thereby it is considered to have reinforced the validity of the conclusions and results.
5.2 Theoretical Deliberations The theoretical section outlines some of what is considered to be the main pitfalls in regard to
the overall theoretical framework. In particular, these pertain to the extensivity of the BSC as
well as the inability to use the framework as a benchmarking tool across an industry. These
shortcomings to a large extent constitute the basis for the reconstruction of the framework and
the development of the RBSC. Nonetheless, the RBSC is not without faults.
Due to the fact that the RBSC has been constructed specifically for this thesis and based on
the objectives of it, the viability of it in other contexts is indeterminable. While the framework
is expected to hold water in similar contexts and case studies, it has never been used or tested
in a real-life, and thereby the practical applicability is unknown. Undoubtedly, any future
application of the RBSC is bound to raise some conceptual or practical points of contention.
However, if and until this is conducted, these contentious areas can only be hypothesized.
Laura Høeg Hagen Copenhagen Business School 2013 80
Nevertheless, there are a few points of criticism that are considered relevant and apparent at
this stage. For instance, the issues associated with metrics as presented in 3.1.1 The Balanced
Scorecard Strategy Map are still applicable despite the reconstruction of the framework.
While the RBSC allows for a structured identification and assessment of the company’s
communication-based performance, in itself, it lacks the definitive metrics that can reveal the
degree of efficiency in the causal linkages between the various intangibles and tangible
outcomes in terms of ‘hard data’.
Consequently, Kaplan & Norton (2004) suggest that various generic metrics should be
selected according to the firm’s strategic objectives in order to evaluate the attainment of
chosen targets. While the intention of this approach is considered admirable as value is highly
contextual, certain unfavorable implications may ensue. For instance, selecting metrics to best
illustrate the alignment between strategy and objectives may prove misleading as there is a
danger of self-actualization in terms of selecting metrics that serve to reinforce the desired
results rather than ones that are thoroughly objective.
Furthermore, the role of leadership is considered essential to the successful execution of the
RBSC as a means to identify, assess, and manage communications. Among other things, the
RBSC functions as a communicative tool to convey the organization’s strategic objectives
and intended initiatives to reach these, both internally and externally. However, if leaders
within the organization fail to induce a committed environment for developing, sharing, and
implementing the strategic objectives, the framework will ultimately amount to little else than
a pretty picture of a could-be scenario.
The ECNP model is perceived to hold the same indeterminate viability outside the context of
this thesis as the RBSC as it was constructed solely on the basis of the objectives for this
specific thesis. Nonetheless, the application in the analytical process is deemed successful,
and it was considered highly valuable, and necessary, to have such a concrete and
comprehensive framework to work with when assessing the communications structure as well
as the various communicative dynamisms (activities) inherent in the organization. As such,
the ECNP model is considered a positive contribution to the theory of internal
Laura Høeg Hagen Copenhagen Business School 2013 81
communications. Whether it is advantageous to use in a practical, real-life setting is unknown,
however, the academic applicability is deemed satisfactory.
5.3 Analytical Points of Contention
The analysis above has pointed to several problem areas within Novartis’ communication-
based performance as well as attempted to suggest the primary causes for these. However, the
bases for these issues are not unequivocally straightforward.
The analysis suggested that numerous issues pertaining to structural inadequacy exist based
on lacking feedback functions, both horizontally as well as laterally, and insufficient value
dissemination below N -4. This translates into poor aligning and visioning activities, and is
speculated to cause significant communication gaps within the organization. While the
underlying determinant of these inadequacies has largely been associated with the
composition of the current communications structure, it is acknowledged that the historically
commonplace strategy of inorganic acquisitions may play a large role. The nearly annual
acquisitions and mergers conducted by Novartis has undoubtedly made it extremely difficult
to assess the ever-changing communications structure, and subsequently formulate, and
implement a fitting strategy and structure that can accommodate the multifarious divisions,
functions, and sheer geographical extensivity of the organization.
An unanticipated, yet recurrent theme in the analytical process was that of self-awareness.
The prevalent lack of self-awareness of self-efficacy in terms of communication-based
performance is deemed a key issue to address. As such, simply articulating and formulating
an improved company-wide communications strategy is not considered feasible in terms of
successful implementation without attending to the issue of self-awareness at an individual
level, and thereby encourage a self-reflexive practice. As a means to increase and potentially
achieve self-awareness in the minds of the employees, it is suggested that the current
asymmetrical, one-way feedback function is extended to entail a feedback loop in the sense
that feedback from the annual global survey is passed on to the individual contributors.
Furthermore, cross-functional and peer-reviewed feedback is also suggested as a means to
address self-awareness at a more concrete level.
Laura Høeg Hagen Copenhagen Business School 2013 82
The analysis indicated a generally high level of commitment to and awareness of the
important role of innovation as a core value, yet once again there seemed to be some self-
awareness issues pertaining to self-efficacy, especially within the LEAD program. The results
hinted that the basis for this may be due to inadequate visioning activities in emerging
economies. This is considered plausible due to the exclusion of certain levels of the
organization in other innovation communication formats, however, it is considered important
to realize that there are outliers in all organizations, and that some individuals may have
drastically different emotional intelligence profiles than the remaining majority. Accordingly,
it cannot be conclusively concluded that lacking visioning activities in growth economies are
the source low self-awareness from these outliers.
In regard to Novartis’ external communications, several contradictory and convoluted
problem areas arose during the analytical process. One in particular pertains to end-users’
communicative preferences: based on the generally negative perception of the pharmaceutical
industry and in turn Novartis, 81.1% of the respondents indicated that more authentic,
transparent communication concerning efforts made in developing countries, ownership
structures, and production circumstances would or might positively change their general
perception (Survey 1, 2013: 15). Yet 99.1% of respondents stated that they had never actively
sought out in-depth information on Novartis through their website or other media platforms.
This signifies a telling inconsistency in terms of end-users’ stated wants and actual actions.
This is further supported by the fact that the majority of communication medias used to
engage end-users are user-controlled, and thereby they have the opportunity to express these
wants to the company.
As postulated in the theoretical framework, it is important to realize that external audiences
may not be genuinely interested in communicating or forming a relation with organizations
(Christensen & Cheney, 2000: 266), and that perhaps this fact has only become significantly
evident in the wake of social media, where users are in control. Moreover, the inconsistency
between end-users’ stated wants and actual actions may reflect a personal need to display
social consciousness rather than a genuine interest in engaging in communications with
Novartis.
Laura Høeg Hagen Copenhagen Business School 2013 83
The primary hindrance in connecting with and communicating to end-users is assumed to be
the heavily regulatory restrictions enforced by the EU. One could argue that in order to
surpass this, lobbying efforts could be conducted in order to relax legislation on the subject.
However, this is not considered advantageous for Novartis as it represents a Pandora’s box.
While it would be preferable to connect directly to patients and end-users from Novartis
perspectives, Novartis would not be the only ones able to do so. The market would be flooded
by pharmaceutical advertising and marketing ploys, which in turn would intensify
competition, increase communications and marketing costs, and potentially drive generics out
of the market. Not to mention the ethical considerations that must be addressed in such a
scenario: is it really preferable to allow end-users and patients to make product preference
decisions over doctors who are scientifically educated to do so?
Consequently, despite the difficulties associated with Novartis’ current external
communications, the current strategy of predominantly user-controlled medias is deemed
appropriate. However, it is important for Novartis to realize that their website, stated as their
strongest external communications tool, simply is not as effective as they perceive. The
apparent lack of insight into this fact indicates that yet another inconsistency in terms of their
perceived efficacy versus actual efficacy, which could potentially result in a subpar resource
allocation.
The basis for this thesis was to examine and assess how and the extent to which Novartis
structures and employs its intangible assets, in particular organizational communication, in
order to create value for the corporation in terms of increased productivity and organic
revenue growth. The analysis has showed that while a relatively strong commitment to the
effective employment of these assets is present, the actualization of this commitment is
substandard. Moreover, the structuring of these intangibles is considered fractitious, informal,
and negligible. Based on the analysis, it is strongly suggested that the use of a standardized
framework, such as the RBSC, along with the development of concrete target metrics could
benefit Novartis exponentially by providing insight into the various components and
intangible assets that indirectly support productivity and revenue growth.
Laura Høeg Hagen Copenhagen Business School 2013 84
Nonetheless, it is realized that an optimization of Novartis’ communicative strategy and
execution is by no means sufficient on its own to obtain these strategic priorities. In actuality,
the approach of assessing current communications-based conditions, formulating a fitting
strategy, and ensuring the proper implementation through the use of a standardized
framework, such as the RBSC, should be applied to other intangibles outside the purview of
communication, and combined, these intangible assets are expected to generate great value for
the firm. To do so, an asset mapping is suggested in which the original BSC is considered
useful due to its extensivity. As such, the comprehensiveness of the BSC allows for an
exhaustive depiction and charting of the corporation’s intangible assets, which subsequently
enables an identification and assessment of those that signify core competencies.
5.4 Implications for Future Research
The academic modes and variations available in terms of conducting further future research
within this field is deemed manifold. However, provided a larger scope and timeframe, the
opportunity to conduct longitudinal comparative case studies is considered particularly
interesting. By doing so, it is estimated that the viability of the theoretical framework and
methodology can be established through the application on these in differing, yet similar,
contexts. As such, an industry-level analysis could be conducted, which in turn would allow
for an assessment of the implications of effectively managing intangible assets in terms of
competitive advantage within the pharmaceutical industry in general.
It is expected that such an approach would likely support the underlying postulation of this
thesis, namely that an endogenous strategic view is necessary in order to create sustainable
value in line with the rapidly changing environment of the pharmaceutical industry.
Laura Høeg Hagen Copenhagen Business School 2013 85
6.0 Conclusion Despite its positive contribution to global health, the pharmaceutical industry in increasingly
facing exigent threats which are no longer deemed mitigable by traditional strategic means.
As a result, this thesis suggests the recalibration of the industry’s strategic perception to
include a more endogenous-centric approach based on a case study of Novartis.
Accordingly, this thesis sought to uncover how and to what extent Novartis structures and
employs its intangible assets, in particular organizational communication, in order to create
sustainable value, and thus assess the potential inherent in the effective management of
intangible assets. The quadripartite analysis was based on various perspectives pertaining to
internal, external, innovation communication as well as the alignment of these in terms of
strategic priorities within the Reconfigured Balanced Scorecard, a reconstructed framework
which specifically addresses communication-based performance.
The results of the analysis indicated that a large incongruity exists between the stated intent
and commitment to the effective employment and management of intangible assets and the
actualization of this objective within all four perspectives. The lack of a standardized
framework, quantifiable target metrics, and causal coupling of the various intangibles proves
that the structuring of Novartis’ communication-based intangibles is insufficient, which
thereby makes it difficult to yield any concrete indicators of how these intangibles currently
contribute to the advancement of productivity and revenue growth.
Within the learning & growth perspective, the hierarchical communications structure entails
extensive difficulties in disseminating key messages throughout all levels of the organization
and simultaneously negates formalized cross-divisional and cross-functional communication.
The lack of feedback loops within this function extends these difficulties by vitiating the
possibility of identifying and assessing key issue areas and subsequently improving the
communications structure in order to accommodate these inadequacies. As such, Novartis’
communications structure is not considered constitutive nor contributive of the corporation’s
core competencies, and reflects an area ripe for optimization.
Laura Høeg Hagen Copenhagen Business School 2013 86
The analysis on innovation communication showed that innovation constitutes a core value
within Novartis, and that significant efforts are applied in the attempt to instill this value
within current and future employees. However, the communication platforms and channels
available to facilitate knowledge sharing, and subsequently innovation, retain several issues in
terms of functionality, which in turn undermines the intent of the initiatives. Consequently,
Novartis’ innovation communication is deemed relatively supportive of process innovation,
yet holds untapped potential in terms of advancing its impact on, and the efficacy of,
innovative outcomes.
Novartis’ stated value proposition is considered authentic and transparent, however, a
significant inconsistency exists between this articulation and the actual perception of the value
proposition from an external perspective. As such, the alignment between the two is quite
poor. However, the negative perception which to a large extent causes the discrepancy is due
to a generally adverse perception of the overall pharmaceutical industry in lieu of Novartis in
particular.
Currently, the intangible assets addressed in this thesis are undoubtedly conducive to
Novartis’ productivity and revenue growth. However, without a structured framework and
quantifiable targets to illustrate this contribution, the extent to which this benefaction
indirectly generates value is obscure, and thereby negates any benchmarking and optimization
potential.
Conversely, a more structured and focused approach to intangibles assets would allow the
strategic priorities in terms of increased innovation, productivity, and revenue growth to be
actualized in terms of an endogenous strategic view. In conclusion, the application and
operational implementation of a standardized framework, such as the RBSC, in order to
identify, assess, and manage communication-based intangibles is considered necessary in the
strive to advance Novartis’ value creation.
Laura Høeg Hagen Copenhagen Business School 2013 87
7.0 References Barney, J. (1991) ‘Firm Resources & Sustained Competitive Advantage’. Journal of Management Vol. 17. Barney, J. & Stewart, A. C. (2000) ‘Organizational Identity as Moral Philosophy: Competitive Implications for Diversified Corporations’ in ‘The Expressive Organization – Linking Identity, Reputation, and the Corporate Brand’. Oxford Univeristy Press, UK. Bogaert, Covington & Burling (2005) ‘EU Pharmaceutical Legislation: An Overview of the Main Challenges’. Global Counsel Handbook. Life Sciences. Burr, V. (1998) ‘Overview: Realism, Relativism, Social Constructionism, and Discourse’. In: Parker, I. (1998) Social Constructionism, Discourse & Realism. Sage Publications, UK. Chelimksy, E. (1989) ‘Content Analysis: A Methodology for Structuring & Analyzing Written Material’. Transfer Paper 10.3.1, United States General Accounting Office. Christensen, L. T. & Cheney, G. (2000) ‘Self-Absorption and Self-Seduction in the Corporate Identity Game’ in ‘The Expressive Organization – Linking Identity, Reputation, and the Corporate Brand’. Oxford Univeristy Press, UK. Christensen, L. T., Morsing, M. & Cheney, G. (2008) ‘Corporate Communications: Convention, Complexity, and Critique’. Sage Publications. London, UK. DeWine, S. (1994) ‘The Consultant’s Craft – Improving Organizational Communication’. St. Martin’s Press. New York, USA. Downs, C. W. & Adrian, A. D. (2004) ‘Assessing Organizational Communication - Strategic Communication Audits’. The Guildford Press. New York, USA. Daymon, C. & Holloway, I. (2004) ‘Qualitative Research Methods in Public Relations & Marketing Communications. Routledge Publications, USA. E-comonic International (2013) ‘ What is Financial Accounting?’. Accessed: June 6, 2013 http://www.e-conomic.com/accountingsoftware/accounting-words/financial-accounting Facebook (2013a) ‘Novartis’ Group Official Facebook Page’. Novartis International AG. Accessed: September 28, 2013 https://www.facebook.com/novartis Facebook (2013b) ‘Pfizer’s Official Facebook Page. Pfizer, Inc. Accessed: September 28, 2013 https://www.facebook.com/Pfizer
Laura Høeg Hagen Copenhagen Business School 2013 88
FDA (2013) ‘Ebewe Pharma Ges MBH Nfg KG 5/28/13’. Warning Letter. Inspections, Compliance, Enforcements, and Criminal Investigations, U.S. Food & Drug Administration. Department of Health & Human Services. Accessed: August 19, 2013 http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2013/ucm354707.htm Flick, U. (2007) ‘Managing Quality in Qualitative Research’. The SAGE Qualitative Research Kit. Sage Publications. London, UK. Franzosi, R. (2008) ‘Content Analysis – Overview’. Sage Publications. California, USA. Friedman, M. (2007) ‘The Social Responsibility of Business Is To Increase Its Profits’ in ‘Corporate Ethics & Corporate Governance. Springer-Verlag Berlin Heidelberg. Great Place to Work (2013) ‘World’s Best Multinationals to Workplaces 2013’. Great Place to Work Institute. Accessed: October 29, 2013 http://www.greatplacetowork.com/ Invernizzi, E., Biraghi, S., & Romenti, S. (2012) ‘ Entrepreneurial Communication and the Strategic Role of Internal Communication’. International Public Relations Research Symposium. Hara, T. (2003) ‘Innovation in the Pharmaceutical Industry: The Process of Drug Discovery and Development’. Edward Elgar Publishing Limited, UK. Hornecker, J. R. (2009) ‘Generic Drugs: History, Approval Process, and Current Challenges’. U.S. Pharmacist Journal. Jobson Publications. Accessed: September 24, 2013 http://www.uspharmacist.com/content/s/78/c/13785/ Hunt, V., Manson, N. & Morgan, P. (2011) ‘A Wake-Up Call for big pharma – Lower Profit Margins Suggest A Need for New Business Models’. McKinsey & Company. Insights & Publications. Accessed: May 29, 2013 http://www.mckinsey.com/insights/health_systems/a_wake-up_call_for_big_pharma Hübner, H. (2007) ‘The Communicating Company: Towards an Alternative Theory of Corporate Communication’. Physica-Verlag Heidelberg. New York, USA. Johnson, D. J. & Chang, H. (2000) ‘Internal & External Communication, Boundary Spanning, and Innovation Adoption: An Over-Time Comparison of Three Explanations of Internal & External Innovation Communication in a New Organizational Form’. Journal of Business Communication Vol. 37, No. 3. Association of Business Communication Kaplan, R. & Norton, D. (2004) ‘Strategy Maps – Converting Intangible Assets into Tangible Outcomes’. Harvard Business School Press. Boston, USA. Kelle, U. & Erzberger, C. (2004) ‘Quantitative and Qualitative Methods: No Confrontation’, in Flick, E. & Steinke, I. (2004) ‘A Companion to Qualitative Research’. Sage Publications. London. UK.
Laura Høeg Hagen Copenhagen Business School 2013 89
Keller, K. L. (2000) ‘Building & Managing Corporate Brand Equity’ in ‘The Expressive Organization – Linking Identity, Reputation, and the Corporate Brand’. Oxford Univeristy Press, UK. Kessel, M. (2011) ‘ The Problems with Today’s Pharmaceutical Business – An Outsider’s View’. Nature Biotechnology 29, 27-33. Published online January 10, 2011. Accessed: April 24, 2013 http://www.nature.com/nbt/journal/v29/n1/full/nbt.1748.html LaMattina, J. (2013) ‘Pharma’s Reputation Continues to Suffer – What Can be Done to Fix It?’. Forbes – Pharma & Healthcare January 18, 2013. Accessed May 29, 2013 http://www.forbes.com/sites/johnlamattina/2013/01/18/pharmas-reputation-continues-to-suffer-what-can-be-done-to-fix-it/ Lee, T. (1999) ‘Using Qualitative Methods in Organizational Research’. Organizational Research Methods. Sage Publications. California, USA. Leonardi, P. M. (2009) ‘Why Do People Reject New Technologies and Stymie Organizational Changes of Which They Are in Favor? Exploring Misalignments Between Social Interactions & Materiality’. Human Communication Research Vol. 35. International Communication Association. Looney, W. (2012) ‘Novartis: LEADing in Emerging Markets’. PharmaExec, Advanstar Communications. Accessed: September 13, 2013 http://www.pharmexec.com/pharmexec/article/articleDetail.jsp?id=764163&sk=&date=&pageID=4 Marr & Adams (2004) ‘The Balanced Scorecard & Intangible Assets: Similar Ideas, Unaligned Concepts’. Measuring Business Excellence Vol. 8, No. 3. Emerald Group Publishing. May, T. (2008) ‘Social Research – Issues, Methods and Process’. Third Edition. Open University Press. Berkshire, UK. Mazzei, A. (2010) ‘Promoting Active Communication Behaviours Through Internal Communication’. Corporate Communications: An International Journal. Vol. 15, No. 3. Emerald Group Publishing. McIntyre, A. (1999) ‘Key Issues in the Pharmaceutical Industry’. John Wiley & Sons, Ltd. West Sussex, London. Merchant, K. A. & Van Der Stede, W. A. (2007) ‘Management Control Systems: Performance Measurement, Evaluation, and Incentives’. Second Edition. Pearson Education Publications, UK. Merriam-Webster (2013) ‘Online Dictionary’. An Encyclopedia Britanica Company. Merriam-Webster, Inc. Accessed: October 29, 2013 http://www.merriam-webster.com/dictionary/opportunity%20cost
Laura Høeg Hagen Copenhagen Business School 2013 90
Monge, P. R., Cozzens, M. D., & Contractor, N. S. (1992) ‘Communication & Motivational Predictors of the Dynamics of Organizational Innovation’. Organization Science Vol. 3, No. 2. USA. Nielsen, M. (2013) ‘Interview with Managing Partner of NotaBene, Murugasan Nielsen’. Transcript of Focused Interview for Primary Data Collection. See also appendix 8.6. Novartis (2013) ‘Official Novartis Global AG Website’. Novartis International AG. Accessed: March – November, 2013 www.novartis.com Novartis (2012) ‘Novartis Group Annual Report 2012’. Novartis International AG. Novartis (2005) ‘Ethical Promotions of Pharmaceuticals’. Novartis International AG. OECD (2001) ‘Policy Roundtables: Competition & Regulation Issues in the Pharmaceutical Industry’. Directorate for Financial, Fiscal and Enterprise Affairs – Committee on Competition Law and Policy. Pain, E. (2011) ‘A Pharma Industry in Crisis’. Science AAAS Journal. Highwire Press. Accessed: May 28, 2013 http://sciencecareers.sciencemag.org/career_magazine/previous_issues/articles/2011_12_09/caredit.a1100136 Ponnier, N. (2013) ‘Interview with Head of Global Commmunications, Nathalie Ponnier’. Transcript of Focused Interview for Primary Data Collection. See also appendix 8.4
Porter, M. E. (2008) ‘The Five Competitive Forces That Shape Strategy’. Harvard Business Review. Leadership & Strategy. Hrb.org
Porter, M. E. & Kramer, M. R. (2006) ‘Strategy & Society – The Link Between Competitive Advantage and Corporate Social Responsibility’. Harvard Business Review.
Probst, G., Büchel, B., & Raub, S. (1999) ‘Knowledge as a Strategic Resource’ in Knowing in Firms: Understanding, Managing, and Measuring Knowledge. Sage Publications.
Quirke, B. (1996) ‘Putting Communication on Management’s Agenda”. Journal of Communication Management, Vol.1, No. 1.
Roehler, Y. (2007) ‘Internal Communication – The Neglected Strategy’. Roehler Solutions. Roth, G. (2012) ‘Top 20 Pharma Report: Our Annual Look at the 20 Biggest Players in the Pharmaceutical Marketplace’. Contract Pharma. Published July 18, 2012. Accessed: May 19, 2013 http://www.contractpharma.com/issues/2012-07/view_features/top-20-pharma-report/ Ruane, J. (2005) ‘Essentials of Research Methods – A Guide to Social Science Research’. Blackwell Publishing. Oxford, United Kingdom.
Laura Høeg Hagen Copenhagen Business School 2013 91
Rubin, H. & Rubin, I. (1995) ‘ Qualitative Interviewing: The Art of Hearing Data’. Sage Publications. California, USA. Silverman, E. (2012) ‘After Manufacturing Gaffes, Worried Novartis CEO Insists 'Quality Matters'. Pharma & Healthcare. Forbes LLC. Accessed: August 21, 2013 http://www.forbes.com/sites/edsilverman/2012/09/05/after-manufacturing-gaffes-worried-novartis-ceo-insists-quality-matters/ Silverman, E. (2013) ‘Another Novartis Manufacturing Facility Gets An FDA Lashing’. Pharmalot, UBM Canon. Accessed: August 21, 2013 http://www.pharmalive.com/another-novartis-manufacturing-facility-gets-an-fda-lashing Sepstrup, P. (2004) ‘Tilrettelæggelse af information: Kommunikations- og kampagneplanlægning’. Third Edition. Academia Publications, Denmark. Sepstrup, P. (2002) ‘Stikprøveundersøgelser – kvantitative. Om at bruge kvantitative undersøgelser uden at snyde sig selv’. Systime Academica. Copenhagen, Denmark. Survey 1 (2013) ‘Public Perception of the Pharmaceutical Industry & Novartis’. Survey Summary Report for Primary Data Collation. See also appendix 8.7. Survey 2 (2013) ‘Novartis’ Communications Relationship with Danish Pharmacies’ Survey Summary Report for Primary Data Collation. See also appendix 8.8. Survey 3 (2013) ‘Healthcare Professionals’ Perception of Novartis’. Survey Summary Report for Primary Data Collation. See also appendix 8.9. Thomas, D. (2003) ‘A General Inductive Approach for Qualitative Data Analysis’. University of Auckland, New Zealand. Twitter (2013a) ‘Novartis’ Official Twitter Feed’. Novartis International AG. Accessed: September 28, 2013 https://twitter.com/Novartis Twitter (2013b) ‘Pfizer’s Official Twitter Feed’. Pfizer, Inc. Accessed: September 28, 2013 https://twitter.com/pfizer_news Waltmann, F. (2013) ‘Training Exclusive: Novartis Takes the Lead – Leadership Development for Transformation and Innovation in Emerging Growth Markets’. Training Magazine. Accessed: May 17, 2013 http://www.trainingmag.com/content/about-us Werner, D. (1995) ‘Managing Company-Wide Communication’. Chapman & Hall. London, UK. Yammer (2013) ‘Communication & Collaboration Tools to Help You Move Faster’. Yammer: The Enterprise Social Network. Accessed: September 13, 2013 https://about.yammer.com/
Laura Høeg Hagen Copenhagen Business School 2013 92
Zerfass, A. & Linke, A. (2011) ‘Internal Communication & Innovation Culture: Developing a Change Framework’. Journal of Communication Management Vol. 15, No. 4. Emerald Group Publishing.
Laura Høeg Hagen Copenhagen Business School 2013 93
8.0 Appendices
8.1 Overview of Top 10 Pharmaceutical Companies
8.2 Thesis Synopsis
8.3 Interview Guide – Nathalie Ponnier, Head of Global Communications
8.4 Transcription of Interview with Nathalie Ponnier
8.5 Interview Guide – Murugasan Nielsen, Managing Partner at NotaBene
8.6 Transcription of Interview with Murugasan Nielsen
8.7 Public Perception Survey Summary
8.8 Danish Pharmacy Survey Summary
8.9 Danish Healthcare Survey Summary
8.10 External Industry Conditions – Porter’s Five Competitive Forces
8.11 Novartis’ Organizational Structure
Laura Høeg Hagen Copenhagen Business School 2013 94
8.1 Overview of Top 10 Pharmaceutical Companies
(based on 2011 pharma revenues) Ranking Company Revenue (2011) 1 Pfizer $57,747 2 Novartis $47,935 3 Sanofi $42,779 4 Merck $41,289 5 GlaxoSmithKline $35,594 6 AstraZeneca $32,981 7 Johnson & Johnson $24,368 8 Eli Lilly & Co. $22,608 9 Abbott Laboratories $22,435 10 Bristol-Myers Squibb $21,244 11 Takeda Pharma $17,257 12 Teva $16,689 13 Boehringer-Ingelheim $14,058 14 Bayer Schering $13,853 15 Astellas $12,311 16 Daiichi-Sankyo $11,338 17 Otsuka Pharmaceutical $9,935 18 Gilead Sciences $8,102 19 EISAI $7,710 20 Mylan $6,106
*Dollar amounts are in millions
Laura Høeg Hagen Copenhagen Business School 2013 95
8.2 Thesis Synopsis
Master’s(Thesis(Interview(0(Novar3s’(Employment(of(Intangible(Assets(as(a(Means(to(Create(Sustainable(Compe33ve(Advantage(
The$thesis$is$structured$according$to$a$$reconfigured$Balanced$Scorecard$strategy$$framework,$which$through$its$reconfigura:on,$allows$an$assessment$of$communica:on$as$the$focal$driver$for$genera:ng$value$within$Novar:s.$$$This$$reconfigura:on$is$intended$to$treat$the$intertwined$elements$of$external$and$internal$communica:on$in$a$manner$in$which$revenue$growth$and$increased$produc:vity,$respec:vely,$can$be$deduced$based$on$the$added$value$of$the$various$communica:on$mechanisms.$$$Theories$of$innova:on$communica:on$will$be$applied$in$order$to$assess$the$role$of$communica:on$in$Novar:s’$innova:ve$prac:ces,$both$in$terms$of$R&D$and$actual$innova:on$of$the$corporate$communica:on.$
Introduc3on(to(the(thesis(
General(Communica3ons(Structure(• Ensuring$dissemina:on$of$key$messages$within$the$
organiza:on$• Overall$communica:ons$model$• Level$of$individualiza:on/autonomy$across$various$
countries/regions$
Metrics(&(Measuring(Communica3on(Impacts(• Methods$of$measuring$and$managing$internal$and$
external$communica:on$efficacy$• Poten:al$feedback$loops$and$applica:on$thereof$
Assessment(of(Communica3on(Direc3onali3es(• Efficacy$of$the$downward,$upward,$and$horizontal$
flow$of$communica:on$• Contribu:ng$elements$of$the$communica:on$strategy$
$$$
(
Communica3on(Media(&(Innova3on(• Communica:on$channels$and$alignment$with$
communica:on$objec:ves$• Communica:on$innova:on$process$
Organiza3onal(Commitment(• General$employee$commitment$to$effec:ve$
communica:on$• Poten:al$control$/$incen:ve$mechanisms$to$ensure$
effec:ve$communica:on$
External(Communica3on(• Target$audiences$and$priori:za:on$$Future(Challenges(&(Opportuni3es($
Laura$Høeg$Hagen$M.Sc.$In$Business$Administra:on$&$Organiza:onal$Communica:on$
Copenhagen$Business$School$2013$
Points(of(discussion($
Mo3va3on(The$intent$is$to$a+empt$to$determine$how$and$to$what$extent$intangible$assets$(communica8on$and$innova8on$approaches)$cons8tute$value$crea8ng$mechanisms$within$the$organiza8on$and$whether$these$contribute$to$its$
overall$compe88ve$advantage$in$lieu$of$tradi8onal$market>based$posi8oning$strategies.$
Laura Høeg Hagen Copenhagen Business School 2013 96
8.3 Interview Guide – Nathalie Ponnier, Head of Global Communications
1. General Communications Structure
a. How is Sandoz’ internal communications structured in terms of ensuring the dissemination of key messages to all Sandoz employees? E.g. cascading communications model, network model etc.
i. How does it differ/compare to Novartis’? ii. How individualized is the communications structure in different
regions/countries?
2. Measuring Communication Impact a. Do you use any frameworks to measure the impact of intangible assets, in
particular, of effective communication within the company? For instance, the Balanced Scorecard?
i. If so, which metrics do you use? ii. Are the results linked to the company’s overall financial performance?
Employee performance? Annual KPIs?
b. What feedback loops / mechanisms do you use to ensure that the overall communication is perceived as intended and thereby produces the correct results?
i. Internally? Externally?
c. Do you employ external consultants to facilitate effective communication internally?
i. What are the benefits & pitfalls of doing so?
3. Assessing Communication Directionality a. On a personal level, how well do you think the downward flow of
communication functions? i. Which elements of the communication strategy contribute to this?
b. How well does the upward flow of communication function?
i. Which elements of the communication strategy contribute to this?
c. How well does the horizontal flow of communication function? i. Which elements of the communication strategy contribute to this?
4. Communication Media
a. What communication channels are used at Sandoz? i. Are the objectives of the overall message types compatible with the
channels? How so?
b. How would you describe the process of innovating communication/communication mediums at Sandoz?
i. What is lacking? What needs must be addressed?
Laura Høeg Hagen Copenhagen Business School 2013 97
5. Organizational Commitment a. How would you describe the overall organizational commitment to effective
communication? i. From a Sandoz standpoint?
ii. From a Novartis standpoint?
b. Is it your impression that employees strongly adhere to communication rules /
guidelines?
c. What mechanisms are set in place to strengthen / ensure employee commitment to effective communication? (E.g., Training, sanitizing regulations, etc)
i. Do you personally sense that there is an internal awareness of how effective communication can contribute to the goals of the company?
6. External Communications a. Who is your primary audience for external brand communication? E.g., end-
users, doctors, MoHs, etc.? i. (What is the underlying rationale for this targeted segment?)
b. How is corporate branding prioritized compared to product branding /
communications? i. What is the underlying rationale for this prioritization?
c. In your opinion, what factors could influence and optimize corporate branding
/ product branding?
7. Challenges / Future Focal Points
a. The pharmaceutical industry is facing numerous serious issues, such as
deteriorating pipelines, image degradation, stringent regulatory bodies etc. i. In your opinion, to what extent to these issues affect the day-to-day
communication practices at Sandoz/Novartis?
b. What do you see as the primary challenges for executing effective communication at Sandoz / Novartis today?
i. Internally? Externally?
Laura Høeg Hagen Copenhagen Business School 2013 98
8.4 Transcription of Interview with Nathalie Ponnier
Nathalie Ponnier (N): Laura, hi. This is Nathalie.
Laura Høeg Hagen (L): Hi Nathalie, Laura here. Thank you so much for taking this call. It really is greatly appreciated.
N: No problem. I hope I can help you. L: Oh, I’m sure you can. To begin with, I’d just like to ask if it is OK that I record this call in order to retain the integrity of the information you provide during my analytical process.
N: Ah, well, I’m not sure what you’ll do with the taping. L: I can send you a copy of the recording if you’d like before I do anything with it.
N: Well, no it’s OK – I know what I’m saying. But it’s only for internal use, and you’re not going to publicize anything off it?
L: No, exactly. It’s completely confidential. I can send you the confidentiality contract that outlines the confidentiality measures.
N: OK, let’s just go ahead and we’ll see.
L: Great. To begin with I’d just like to begin by asking a little bit about the general communications structure. How is Sandoz’ internal communications structured in terms of ensuring the dissemination of key messages to all Sandoz employees?
N: OK – so what do you want? Kind of an organizational structure? L: Yes, that would be great.
N: OK, so we have an internal communications function, who has various responsibilities in terms of change management, associate communication and also executive communication. And then we have a person who is responsible for writing all the executive communication. Then we have someone who takes care of frontline management communication – we have 9000 people working in manufacturing, so there we have a specially dedicated person who takes care of that communication. Then we have overall associate communication with intranet and different channels, and there are also people working on this one. In addition to that, we also have a function called country communication, who works with the professional communicator in the countries to ensure that the strategies and communications that we send out on a global level gets disseminated and implemented and executed locally.
L: OK, great. So how individualized would you say that the communications structures are in these different countries and regions? Do you try to maintain a very stable and standardized structure?
Page 1 of 11
Laura Høeg Hagen Copenhagen Business School 2013 99
N: Yes, it’s a very stabile and standardized structure. Actually, it has grown, you know, so it wasn’t that ideal in the beginning, but it has grown through the years in order to perfectionize it, to make sure that messages get where they’re supposed to be and reaches the intended audience.
L: Right – that actually takes me to my next line of questioning. My next question is: Do you use any frameworks to measure the impact of effective communication within the company? For instance, the Balanced Scorecard?
N: Yes. Of course it is always good to say we want to have scorecards. The thing is you need to employ one person to collect all the data – so you know, what we put the emphasis on is to have something automatically generated, so you don’t need a person to collect all the data. So what we have is a global employee survey, which is conducted every second year. There are a couple of areas such as immediate management, communication effectiveness, senior management, understandings of the targets and objectives of the divisions. So there are a couple of questions that trigger this, where you can see it. Then we of course have a PAL survey on the intranet, checking on certain messages. And we have a Townhall, so people can really generate feedback immediately. This is a webcast; there is a personal one, and then the webcast. And then every month, we have a call where we check on the feedback on the communication returns. This is of course with communicators, and they have surveys on site.
L: Individually at the various regions and countries?
N: Yes, exactly. L: So the results of these metrics that you use, are they linked to the company’s overall financial performance? Employee performance? Annual KPIs?
N: Not directly to financial performance. But the communications objectives are linked to business objectives. So if I meet my objectives, which is of course effectiveness and efficiency of communications, then this has clear contributions to the company’s financial performance, or rather to the business objectives. I’ll give you an example: If we make quality our no. 1 priority, because we are working only on a culture change program, so we are doing a lot of communications, a lot of change management, myself and the HR department and the quality department, all of us together will have a significant impact on the overall performance.
L: Interesting. So you mentioned how you use these surveys for feedback to ensure effective communication internally. How would you measure the effectiveness externally.?
N: Externally, we have quite some challenges. From a Novartis standpoint, we’re not so much encouraged to in interaction, however, we try as much as we can in terms of creating a dialog. Also, we have journalists that we work with, and who also give us feedback so that we can see the coverage. But you’re absolutely right, this is very difficult to measure. Of course, if we do media, then we measure the quantitative stuff,
Page 2 of 11
Laura Høeg Hagen Copenhagen Business School 2013 100
so how much has the message been picked up, where has it been distributed. You know, the quantitative stuff is very much given in how you measure it. So you do a press release, how many followers do you have on twitter, how many likes on facebook, how many followers you have on LinkedIn – that’s all fine, and we’re increasing that, but in terms of positive reputation there is a survey from Novartis, which is done on stakeholders, such as pharmacists, wholesalers and so on, but that is the overall reputation and on Sandoz, which gives us quite an indication – but whether this is always tied back to the media, hopefully, but not always.
L: Right. So this qualitative data that you try to accumulate with surveys, do you ever try to do focus group studies with end-users, or it is mainly targeted towards wholesalers and pharmacists?
N: You mean patients? L: Yes.
N: Well, that difficult, because actually we’re not allowed to talk directly to patients. And we’re not allowed to go into interactions with patients, so it very difficult. That’s why the interaction we have is through the brand, through the Sandoz brand – and that works, but not in terms of feedback. But the feedback we have from a communications standpoint, we do not directly communicate with patients because we’re not allowed. However, our patients watch our website, and we can only work with the limited feedback we’re getting. So we try to go through ‘secondary people’, or secondary audiences, who are wholesalers, pharmacists, doctors – you know, the second target group we have.
L: So you would say that the primary target group is end-users or patients, but that you use doctors and pharmacists as secondary links to reach them?
N: Exactly. We try to do it directly, but as we use and go into financial media or business-to-business media, we do not use public media so much, unless there is something we have to communicate from a brand perspective.
L: OK. And so how would you describe the prioritization between corporate branding and product branding?
N: I can only speak for Sandoz, because for Novartis it’s a bit different. For us, you have to see that we have about 25.000 SPUs (Strategic performing units) every year. We launch a product every day in every country – somewhere. We’re in generics, so we do not have time to prepare a huge campaign, because you have a window for the opportunity – once you have the marketing authorization, you have to capture the market immediately. And end-user communication is not allowed in Europe like it is in the US. So of course, what we are now doing is that we communicate more the brand. So people know, whenever they get a product from Sandoz, they know it’s quality. From a Sandoz perspective, we absolutely try to prioritize the brand communication over the product communication. So from a Novartis standpoint, there’s a difference. They have 6-7-8 big products, and they communicate primarily the products. These
Page 3 of 11
Laura Høeg Hagen Copenhagen Business School 2013 101
are blockbuster drugs, and they have invested millions in to the campaigns and everything – they go much broader.
L: So you mentioned that these regulatory restrictions are the largest hindrances in your dialog with end-users or patients. Are there any other factors that you think could influence or optimize this corporate branding or product branding?
N: In which regard?
L: In external communications. For instance, you say that regulations state that you can’t contact patients directly. If these regulations weren’t applicable, that might open some doors for you and you would be able to conduct more targeted communications with end-users.
N: Yes, but it’s really really difficult. Of course we wish we could communicate more directly to patients, but is that necessarily a good thing that everyone can go directly to patients? Like in the US, where there isn’t somebody who is scientifically educated or can make the right decision. I’m not against an educated patient, and at the moments, the patient is much more educated and knowledgeable from the internet than they were before, which is good. Being a patient myself, I also always read everything or go to the doctor for advice. But is it good that everybody can advertise directly to the patients? I think it would open a pandora’s box. From my perspective as an employee, I think it would be great connecting directly with patients, but we wouldn’t be the only ones. We would be amongst the crowd. And that would make our marketing expenses and efforts skyrocket. If you look at marketing budgets for just one product, like in pharma and how much they spend, we wouldn’t have the opportunity or possibility to compete with that. Would I encourage that the healthcare system allows substitutions in some countries, yes that would be great, and I think the patient education needs to be stronger. But would it be ideal if the promotions would be open to patients, I’m not sure. I think I would rather go through doctors and physicians, pharmacists, and yes this is a difficult stakeholder group, but they have the education. We’re talking about education here, and you know, we’re the right ones here, we’re the good ones.
L: It’s a very interesting point you make there, because the marketing and external communications efforts within the pharmaceutical industry is a lot different restricted that in a lot of other industries.
N: Yeah, they are. I mean you can really hammer it if you’re doing a product promotion. Let’s just say that it would be great if it wasn’t all that strict, especially in Germany – in Germany they have the strictest regulations. On the other hand, if it doesn’t apply for us, it doesn’t apply for anyone. Then you have to see what kind of pandora’s box you’d open if you made it possible for direct patient communications.
L: Yes, I mean, when I go to the States, and you’re just bombarded with these commercials for different medical products, and it’s kind of scary with all these pitfalls that they mention, leaving the decision up to the consumer or patient rather than an educated doctor
N: Yes, exactly.
Page 4 of 11
Laura Høeg Hagen Copenhagen Business School 2013 102
L: Right. So just back to the internal communications. I’m not sure if you can answer this in terms of confidentiality, but I was wondering whether you employ any external consultants to facilitate effective communication internally?
N: No. L: No, you can’t answer that?
N: No, I can answer that, but no, we don’t use any external consultants for this. I would tell you if there is anything I cannot answer. I can tell you very frankly that the only external consultant I hired was actually to put together my strategy, to help me facilitate putting it together. So that was the only external consultant. I mean , I have of course PR agencies, but they are not really consulting, but more implementing media stuff for external stuff. But not for internal. Of course, I’m working with agencies, helping me with campaign, but not the typical consultants.
L: Ok, great. Then I just want to address the communication directionality within Sandoz. I know within Novartis it gets very big and complex with all these different subsidiaries and departments. But on a personal level as Head of Global Communications, how well do you think the downward flow of communication functions when you have to pass on information?
N: In my function, it works quite well, but I have a small organization. I basically know everyone myself. You know, I have an organization of about 70-80 people. We have a call once a month, I write letters, I have one-on-one’s with several countries, direct reports, we have global comm meetings twice a year – I know everyone. And if I need someone to do something, I call them directly. And as I said, they organization has country communications where everyone has really close contact. I mean, I have a couple of organizations where I have 2-3 people, but even these people, I see them quite regularly – twice a year. So I would say from a function perspective, and I know it also from the GES results, my function received a very high score for immediate management and senior management guidance. And whether they know what the role of communication is, the objectives – they scored better than anyone else.
L: That’s very good, especially for a communications function, that’s a good overall indicator. On a broader level, when receiving information from for example the ENC members or anyone further away in proximity from your function, how does the downward flow of communication work?
N: I think it goes from N to -4. N meaning my boss, and then I’m at -1, and then -2, -3 and -4. I think overall we’re doing quite well up until -4, and then it doesn’t get completely disseminated. And we’ve identified that as a difficulty. So when it comes through frontline managers or individual contributors, then it doesn’t actually reach everyone.
L: OK, so there is a problem in terms of proximity from the source of the message?
Page 5 of 11
Laura Høeg Hagen Copenhagen Business School 2013 103
N: Exactly. The further away, not even just site wise, because it doesn’t matter if you are from a distant country, it has more to do with the organization. It goes from N -4, -5,-6, and these are less informed and they still do not get the right information. It also has something to do with having access to a computer.
L: OK, so that’s a critical criteria?
N: Yes, when it really comes down to direct manager communication. So when you get your information from your direct manager and you don’t have any other possibilities, then it gets difficult.
L: And when you say, N as in your boss, would that be Jeff George, or do you have someone in between?
N: Yes, Jeff George is my direct boss. L: OK, great. And so how about the upward flow of communication in terms of feedback from lower levels in order to assess and improve?
N: Do you want an example of what we do?
L: Yes, please. That would be great.
N: OK, so we have an online channel where we have direct access to the SEC, meaning my peers and myself and also my boss. It’s called after SEC. Also people use the opportunity to write directly to them – that’s very easy. In some functions, we have talent meetings and breakfasts meetings with associates. We also do meet-and-greets with my boss with people from special functions. So he invites people from a special function and then they have an informal opportunity to meet him. We visit sites and have talent meetings there and Town halls. My boss has lunch with them, and people, no matter who they are, can sign up for it – 12 people at a time, and there he checks for feedback. When I go to a country, I have meetings with associates as well. So for example, he’ll meet with Head of Manufacturing in a country and go to the laboratory and speaks with the people there. So it’s not formalized, but we’re doing a lot in order to gather feedback, because we have found out that the formalized processes don’t work that well.
L: OK, and when you say formalized processes, you mean the overall communications structure in terms of a cascading communications model, or?
N: Well, we have blogs that we distribute, and we have a normal structure where people can send back feedback in terms of collaborating, asking questions. And then we have Townhalls, where people can send in questions through Webex. And we ask them questions on the Townhall. So this is the more formalized feedback structure. That works, but again it stands and falls with people who do not have access to a computer. Also, we have it at 2:00 PM, so the timezone plays a vital role.
Page 6 of 11
Laura Høeg Hagen Copenhagen Business School 2013 104
L: Alright. And then just the last question within communication directionality is how well you think the horizontal flow of communication works? I mean, across Novartis subsidiaries, or even within Sandoz itself, but across functions, departments and divisions, making sure that they’re aligned in terms of business objectives and performance indicators?
N: You mean the people within the communications function? L: Well, it could be people in communications, but also just when moving information from one department to another that may not have a person responsible for communications.
N: All the communications people are within my department. So they help develop, help tech ops. I’m not sure I understood your questions. Do you mean how I’m aligned with them?
L: I’d like to hear your opinion on it. For example, when you have to communicate with other departments without having a communications-based content. Like when IT needs to collaborate with HR for training etc,
N: Yes, we work with them. They come to us, and we help them set it up, write messages. We work with all of them very closely. So they come to us and say ‘I need to send out this message’. Or ‘I have a restructuring project – can you help me set up the communications for it?’ How do we do that? For instance, stakeholder mapping, stakeholder alignment, stakeholder discussions. We then work on the entire communications strategy – they don’t do it alone, they come to us. They know this, to come to us.
L: Good to hear. So moving on to a little bit about the media used in Sandoz. I know that you rely a lot on the website, and you have the Sandoz TV. Are there other medias you use, other than facebook, twitter, LinkedIn?
N: Yeah, the normal traditional way, like TV interviews or white papers. The we of course have social media. Let me think. The website is one of our strongest communication tools, but also press releases and all the regular things you use. And like I said, facebook, LinkedIn, we’re now working with instagram and pinerest. We use quite a lot. And of course Sandoz TV – we’re putting up some patient videos, which are focused more on education. And we have several websites that we work with.
L: Interesting. And internally – other than the intranet, e-mails and telephone?
N: Yes, we have Webex calls. Meaning special calls with 150-200 people. Then we have leadership meetings. Also, we have forums – you know, like moderated social media platform forums, but we’ve only tried it twice at the moment. It’s like an idea farm, where you put up one question, and then people start debating it. What else do we have? I know if I speak to my internal communications person, she’ll say I’ve forgotten this and that. We have the blogs and letters, but this goes over e-mail. Then we have the poster campaigns with promotional articles at the different sites – like flyers, especially for sites that don’t have internet. That’s about it.
Page 7 of 11
Laura Høeg Hagen Copenhagen Business School 2013 105
L: Alright. This forum you talked about seems like it’s a great way to inspire innovation, not only within strategy and business conduct, but also within actual communication medias. What do you do to make sure you’re up to date on communicating effectively and implementing innovative solutions?
N: Oh, I have very skilled people. I have an e-communications person who is really up-to-date on all the challenges out there. The problem is that we cannot use every channel available, because we have a very restricted IT system that needs to fit all of Novartis. Actually, I have super capable people that really make sure that they are up-to-date, and they go to many conferences and work very closely with IT. Yeah, I mean, I can really only say that I have very good people, and we have a great working relationship with Novartis. So when they come up with something new, we are the early adopters – we try to try new things very fast. And we work very well with IT as well, and they come up with really good ideas too.
L: OK, at the moment, would you say that there is anything that is lacking or any needs that should be addressed in terms of innovating the communication systems?
N: Yes, I think there is a collaboration function that is missing. There is a system that is called Yammer, which is an external system. If we could have something similar but internally, that would be great. Somewhere where people can just bounce ideas off each other, interact and work with each other, talk to each other across boundaries and functions.
L: So one of the main problems is that communication isn’t often boundary spanning, and people don’t cross these boundaries in sharing and generating knowledge?
N: No no, we have that in Yammer, but it’s and external provider. So everything that is shared there is available externally, and this is not very good for Novartis. It is very much used, but what I would like it to have this channel and opportunity, a new platform that people can use, but internally hosted in order for them to be more open. It’s really like a chatting platform where people can join others, interact. ‘Hey, I have a question on this and this, where can I find the answer?’, and then you get 25 answers. It great, but it’s an external platform, and not encouraged by Novartis due to its external hosting, which is dangerous because you cannot really talk about and discuss confidential things. But I think it’s a super platform where people are encouraged to participant cross-divisionally, cross-functionally and share ideas. It’s an internal community, where you can say, ‘Hey, I’ve read this fantastic article’ – like what you do on facebook with your friends. I think this sharing is missing – a collaboration platform.
L: Interesting. So it seems as if there is quite a bit of commitment to cross-functional and cross-divisional communication. So from a Sandoz standpoint, how would you describe the overall organizational commitment to effective communication?
Page 8 of 11
Laura Høeg Hagen Copenhagen Business School 2013 106
N: Super high, absolutely high. It’s a top priority. Everybody really tries to effectively communicate. Are they all successful – I’m not sure. But they really try hard. All the people I know, try hard.
L: And does HR offer any training on effective communications?
N: No, we do the training. What they do is more in terms of management capabilities, so how managers should communicate. Like have monthly meetings, have one-on-ones, send out letters. But that’s more overall management capabilities. For internal communications, we are the ones training people in it, and we give advice and consult on that. And HR really loves that we do it.
L: I’m sure they do. So what about from a Novartis standpoint? Do you think the organizational commitment differs from Sandoz to Novartis?
N: I don’t think so. I mean I’ve been to various divisions, and when I look at for example Pharma, I think they have a really high commitment to effective communications, absolutely. Also V&D, very high commitment. They’re all good people, all good communicators. So to be honest, I think there is a high commitment to good communication, because they all know how key it is to have associates as educators.
L: So it’s your impression that employees strongly adhere to any communication rules or guidelines that you set?
N: Yes, more or less. I mean, when you have 150.000 people, you will always have black sheep there. But most of them do. The problem is more their self-awareness. That everyone thinks they are a good communicator – but are they really? So anyone who thinks they can write an e-mail, thinks they are a good communicator. Which isn’t always necessarily the case. So training is self-awareness is important – some people are good at communicating, some people are not. People need to have a very good self-awareness and say ‘Ok, I’d rather learn how to do it better, or I’ll find someone who can help me with it, or I appoint someone else who can do it for me.
L: So you have any mechanisms or elements that serves to strengthen and ensure employee commitment?
N: We have communications trainings on how to better communicate, on how to convey difficult messages to associated, how to respond to difficult questions, how to better work in a townhall. Because you have people who have a natural talent for communicating, and people who have to learn it the hard way.
L: OK. So you mentioned before that people know that effective communication is really important. Does this mean you personally sense that there is an internal awareness of as to how effective communication can contribute to the goals of the organization?
N: Yes, absolutely! In my division, this is clearly perceived as a value-adding element and that it’s key. Either in terms of a crisis, where it’s necessary that we phrase
Page 9 of 11
Laura Høeg Hagen Copenhagen Business School 2013 107
something the right way, that we have the right stakeholder analysis. It really is perceived at adding-value in all areas – definitely.
L: Yes, also just in terms of knowledge sharing cross-divisionally and cross-functionally as you say. I just have a few more questions, and then I’ll shortly be through my list. The pharmaceutical industry in general is facing numerous serious issues, such as deteriorating pipelines, image degradation, stringent regulatory bodies etc. In your opinion, to what extent to these issues affect the day-to-day communication practices at Sandoz?
N: In terms of regulations? L: Yes, as a whole in terms of regulations, deteriorating pipelines, image degradation. There are a lot of things that have come into focus within the pharmaceutical industry in the past couple of years that haven’t always been there…
N: It’s really just making it more difficult, because as you say, regulations being stricter, it makes it more difficult to communicate in a proper way to different stakeholder. So I think you need to precise, you need to be more targeted, you need to be more effectual, more transparent. I mean as I said, the patient is already very educated so you need to leverage this education. So I think that everywhere that is heavily regulated it is clear that it is more difficult to communicate. But it’s also an opportunity to be better than competitors.
L: Definitely. Do you work closely with the regulatory department?
N: Yes, we work very closely with all departments, with legal, HR, regulatory. Absolutely, because we need approval of the things that we’re saying and can’t do that without regulatory.
L: Right. What do you see as the primary challenges for executing effective communication at Sandoz today both internally and externally?
N: Externally, it’s that I want to do much more, but I can’t. I want to do much more, but I’m not able to. I think this is really the external environment as you said. Internally, I think we have a lot of topics to communicate and there might just be a information overload – it’s just too much. We have to many priorities, we have so many things going on, so many changes, so many projects, and people are just under water with all the messages they’re receiving.
L: And do you think that these many different channel that can be used internally to convey message add to the problem, or does it make it easier to distinguish between all the different messages?
N: The latter. I agree with the latter.
L: Great, so that was basically it. My last question is whether you’d be willing to answer any potential follow-up questions at a later time? Either in writing or by phone?
Page 10 of 11
Laura Høeg Hagen Copenhagen Business School 2013 108
N: Ok, yes of course. No problem – just send them to me. If you intend to quote me, please let me know beforehand so I can review them.
L: Yes, definitely – no problem. I’ll do that. Well thank you very much for taking the time to answer these questions. It’s been very helpful.
N: You’re very welcome. And if you have any other questions, please feel free to send them to me.
L: Thank you, I very much appreciate that. Have a good evening. Bye bye.
N: Thank you, you too. Bye bye.
Page 11 of 11
Laura Høeg Hagen Copenhagen Business School 2013 109
8.5 Interview Guide – Murugasan Nielsen, Managing Partner at NotaBene
1. Based on your experience within Novartis, what is your overall perception of their communication-based performance?
2. As a Communications consultant and trainer, what are the most common communicative issues within Novartis you hear about from participants?
3. In your own words, how would you describe the LEAD Program?
4. What was your role at the 2013 LEAD program?
5. What are some of the main issues you encountered during the program in terms of the
participants’ communicative performance?
6. In your own opinion, what does ‘effective communication’ mean?
Laura Høeg Hagen Copenhagen Business School 2013 110
8.6 Transcription of Interview with Murugasan Nielsen
L: Murugasan, thank you for taking the time to do this interview. To begin with, I just have a few questions pertaining to your overall experience with Novartis and their communication-based performance, and then I’d like to move on to your role in the LEAD program and your personal experiences there.
M: Sure. L: Ok, based on your experience as a communications trainer for Novartis, what is your overall perception of their communications-based performance?
M: That’s a big questions, considering the breadth of individuals that I deal with. I don’t think I can give you one questions to cover all of that. It’s sort of a nuance based on the various departments that I work with. From the technical part of the organization, we have Modeling & Simulations, which I’ve been working with. Also, I’ve worked with lawyers, patent lawyer, clinical folks, Public Affairs, Ethical Compliance etc. So I’ve worked with a whole breadth, including Market Access, who are the marketing folks. So there is a clear distinction between the market-focused people who are exposed to regulatory, payors – payors being the EU, or whoever is paying for the medication – they’re clearly far better communicators and outward facing than say Modeling & Simulation people, who are highly intelligent on the numbers and data. So I don’t think there is a clear way of saying good or bad, but clearly there is a more consumer facing, outward facing segment.
L: So you’d say that the communication is quite fragmented in the sense that it isn’t standardized across different functions and divisions and background?
M: Ok, so I think I was answering to something else. What I was answering to was more the fact that their performance is based on who they are as individuals, not so much what is related to the overall organization or what they should be doing. That’s not my answer. It’s not like there is a standard way of doing things, not that there shouldn’t be, but there is a clear tendency from the top – but the question is, how many of them are exposed to that? There is a drive from the top to apply this methodology that I’ve been rolling out in the organization for the past few years.
L: Ok, but you do see a clear differentiation between the various groups of people that you teach?
M: Yes, that I do. There is a complete difference there. L: Alright, as a communications consultant and trainer, what are the most common issues that you hear from participants, if you’re able to talk about that?
M: Sure. We so these surveys prior to a workshop, and we ask around 7-10 questions about what the challenges are, both internally to colleagues, to executives, what is the hardest as it relates to communication. And it all boils down to, how do you communicate something that is complex in nature, which a lot of it is, into something
Page 1 of 5
Laura Høeg Hagen Copenhagen Business School 2013 111
that is simple, short and succinct. That’s what they’re always asked to do, but they’re not sure how to do it. Because at the same time they want to drill into the details and they want to have the facts and so on. So that is definitely one of the hardest things. They find it tedious – a little bit off my topic – but one of the things I keep hearing is that there are too many meetings, the time crunch, too many e-mails going back and forth. What I see with Novartis is that there is a high level of stress, and it’s a performance driven organization, which means that the people are under pressure continuously, which I see to a lesser extent in other organizations.
L: Ok, so there seems to be a misalignment in the resource allocation in the sense that everybody seems stressed or pressured to perform?
M: I don’t know if it’s necessarily resources.
L: Well, resources in the form of human capital?
M: Well, they will claim it is, but I think it’s a performance question. Everyone is tiptoeing around because they want to do the right thing, impress the right people, communicate the right thing to the right people. So I think there is a lot of bureaucracy and politics involved, which is something that we’re not directly engaged with, but I can clearly sense it from what is expressed during the workshops.
L: Right. Are there any other issues you can think of?
M: Not issues. I would compliment them on one thing though. On the most part, they are highly competent individuals relative to other organizations. I think the definitely have a very strong organization.
L: And what about in terms of their commitment to communicating effectively? I mean, you conduct these trainings, which shows that somewhere in the organization there is a commitment to effective communications.
M: So I would say that there are a lot of excuses as to why they’re not doing it, but what it really comes down to is that they all want to be more effective, they all know they have to be – it’s preached from the top, from the managers. But there is an excuse, and some of them are sort of a joke in terms of why they’re not reinsured. For instance, they’ll say, well they (the audience) want all this information, which is fact isn’t true. The problem is that they don’t know that the reason they want all this information and details is because they just want to make sure that whoever is communicating it actually looked into the details – they’re testing them, and that’s where they are lacking the ability to say, ok, how do I show that I’m an expert on this subject matter in a different way. And even though they want to go into the details, well, take them into the details, but make sure that you go up to a higher level. And that they have a hard time with.
L: Ok, great. In connection with your role as a communications trainer for Novartis, you were part of the LEAD program. Could you in your own words describe what the LEAD program is about?
Page 2 of 5
Laura Høeg Hagen Copenhagen Business School 2013 112
M: Sure. So let me just back up a little bit. Up until now I’ve been delivering trainings for a number of organizations (divisions and departments), which then goes into the HR pool, which Frank Waltmann, one of the heads of training and the LEAD program, was exposed to in terms of what we did in the other parts of the organizations. The success of that he had then heard of, and he thought it would be interesting to bring in NotaBene to run the program for the LEAD participants. S my understanding of the LEAD program, the function of it for Novartis as a global organization is how they can go about retaining and growing growth markets and employee capital. I think that is the essence of it. And what they’ve done is they have elected around 30-35 people, and they work on an innovative project, that’s what the call it at least. In my opinion, I’m not sure how innovative it is, but nevertheless, it’s all innovative projects. They have individual assignments, and they’re scattered around growth markets, and then they have group projects – I think there are 6 per team and they get together 4 times over the course of the year to work on this project together, and then they have to come up with what could be pricing for a certain market, it could be market penetration, branding – pretty broad, but something that is considered a different way of doing what is done right now. It could be tackling the bottom on the pyramid. So it’s pretty broad what they’re looking at. And these assignments they have to bring forward to the Novartis Executive Committee, and either they get support for it, budget requests, help to actually roll out that program, and this is the goal of it, and they do this at the end of the year, which is where we help the LEAD participants to present their assignments. Does that answer your question?
L: Yes, it does, definitely. You mentioned something about the content of these proposals not actually being all that innovative. Could you elaborate a bit on that?
M: Sure. To me there wasn’t really an eye-opener. I mean we’ve all heard of the bottom of the pyramid challenges, and in my opinion, just by dumping the prices, and then saying: Ok, we’ve made it affordable to growth market countries, really isn’t all that innovative. Because at the end of the day, Novartis as a company still has R&D and the cost behind it and the patents behind it. It that then they way? Because there might just be a parallel import that will take place immediately. And I couldn’t really see what was the innovative perspective in it. Really a solid business model, something that I could see would really work or hold potential was missing. Something that was transparent, but yet it wouldn’t be abused. This was really my whole challenge with it as one example. Some of the other ones, like multiple branding of the same product, I don’t know how innovative that is. It’s sort of a misguiding marketing gimmick, a scheme almost that I’m not too much in favor of. I mean now I’m giving you my personal opinion on these things. Things that I don’t really see as being innovative. I’m sure we do it in all different industries, so the level of innovation I’m not sure of in terms of how innovative it actually is.
L: Great, thank you those examples. So during the program, what was your experience with how the participants fared from your perspective as a communications consultant?
Page 3 of 5
Laura Høeg Hagen Copenhagen Business School 2013 113
M: There I have to say that I was surprised. Considering that these are individually picked by Joe himself. So they must have done something to perform at some level. But I would say that of the 30-35 folks, I would probably give – I’ve made notes on it – less than a handful an A. Is there anybody I would give an A+? I doubt it. Then a lot a people fell into the C group, not really all that impressed by them. A few B individuals. But to tell you the trust, I would have failed a third of them, even after there performance at LEAD, and then F as in attitude wise. There were couple of them where I though, this can’t be for real. This is the biggest opportunity of their life, probably the biggest project you’ve worked on, the biggest exposure you’ve had, and then you’re sort of nonchalant about it, and like ‘I’ll just wing it’.
L: So there were some self-awareness issues with the some the participants?
M: Big time. Big time. L: Did they think that they were better, or above the need for help?
M: Well, just winging it in the sense that they were like, ‘I don’t need preparation, I know what I’m talking about’. That was one piece. The other piece was, ‘ I really haven’t figured out what I’m going to say, I’ll just say something’. I just think that that’s completely wrong, and that they’re just wasting everyone’s time. Then it’s better just to withdraw your commitment as say, ‘I don’t really have a great project and I’d rather not participate’. That I think would be better than what some of them did. And then there was simply some of the folks whose level of English just wasn’t up to par, which I think there should be some level of screening for, and at least they need to be able to comprehend and speak some level of English that is sufficient.
L: Well, English is the corporate language at Novartis, but do you know to what extent this is applied in local and regional offices or whether they speak the native language?
M: So, it’s probably like most global organizations where as soon as you have a room full of local folks then you turn it into your own language. Sure enough, e-mails in English because they have to be tracked and so forth for the most part they’ll keep that in English. A lot of these guys probably speak their local languages wherever they are.
L: Ok, great. So if you could personally, without any restraints, change one thing about the LEAD program, what would it be?
M: I just saw the end product. So the next round which will be LEAD III – the one we participated in was LEAD II – I’m hoping to be involved much earlier, because I think their way of looking at innovation, and as I pondered on before – is it really innovative? And what is the level of innovation, let’s try to define that first. So some sort of threshold saying, ok this passes as new thinking, something that can benefit the organization or the stakeholders, whoever that might be. So one change from my perspective would definitely be on the communications side. One the level of English as I already mentioned, but also helping them throughout the process. They have their 5-10 minutes depending on whether it’s their individual or their group presentation,
Page 4 of 5
Laura Høeg Hagen Copenhagen Business School 2013 114
and here it is vital that they ace it during those 5-10 minute sessions. Because that’s all they get to present. Now that means that they need to have this communications tool - which is what we preach – they have to nail it, have it down pat.
L: Meaning they have to have it from they very beginning?
M: Exactly, from the very beginning so they know what the framework is about and so they’re not surprised by it at the end of it, and feel, how am I going to work this in last minute in the 11th hour.
L: Ok, so you’d say that the main troubles with the LEAD program is the selection process, there may be some faults here, a little bit about level of innovation content as well as their basic communication skills?
M: Absolutely. Well it’s a little bit more about the communication skills, but it’s also about the analytical skills that go into the communication. We call it Problem Disaggregation. So when they come up with this recommendation, what is that based on? What alternatives have they actually considered? Why are they dismissing some of the alternatives? That goes into the piece on innovation, and how do you decide what is innovative.
L: Ok, so my last question is really just how you personally define effective communication? So many people work within communication and marketing, but they define it so differently that benchmarking it can be very difficult.
M: Communication is a broad term, especially when you say corporate communications, that’s very broad. The area that we focus on, and that I really think is important especially as it relates to the LEAD program and interacting with executives pretty much within any organization, is the ability to be sharp, to the point, but being able to communicate at a high level that gives insight. What I mean by giving insight is that it answers the so-what. So if you have something to say, tell me the so-what of whatever content you might have at a high level that provides meaning to me as an individual. That I think is the important piece. Because you could have done the best research, have the greatest idea, but if it doesn’t mean anything in my world, or the one that you’re communicating to, it becomes moot, and it has no point. So I think that if you can turn it around and make it interesting, make it insightful, and answer the so-what to your audience, then you have their attention.
L: Alright, well that was it for my questions. Thank you very much for participating in this interview. It’s really a great help.
Page 5 of 5
Laura Høeg Hagen Copenhagen Business School 2013 115
8.7 Public Perception Survey Summary
The survey summary below includes quantitative responses only. For the sake of brevity,
quantitative responses have been omitted, which is evident in the few missing questions, all of
which pertain to elaborations of the previous question.
Page 1. Welcome!
Page 2.
1. Please indicate your gender: % of Respondents
Number of Respondents
Male 46.67% 56
Female 53.33% 64
Number of respondents 120
Number of respondents who skipped this question 6
2. Please indicate your age: % of Respondents
Number of Respondents
> 18 0.83% 1
19 - 25 30.00% 36
26 - 35 55.83% 67
36 - 45 2.50% 3
46 - 55 5.00% 6
< 55 5.83% 7
Number of respondents 120
Number of respondents who skipped this question 6
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
1 of 20 8/25/13 5:43 PM
Laura Høeg Hagen Copenhagen Business School 2013 116
3. Please indicate your nationality: % of Respondents
Number of Respondents
Danish 80.00% 96
American 5.00% 6
British 4.17% 5
Swedish 0.00% 0
Norwegian 0.83% 1
French 2.50% 3
Italian 1.67% 2
German 0.00% 0
Austrian 0.83% 1
Australian 1.67% 2
Canadian 0.00% 0
Albanian 0.83% 1
Russian 0.83% 1
dutch 0.83% 1
Pakistani 0.83% 1
Number of respondents 120
Number of respondents who skipped this question 6
Page 3.
4. Are you familiar with the pharmaceutical company, Novartis,and/or its subsidiaries Sandoz and Alcon?
% of Respondents
Number of Respondents
Yes 50.00% 60
No 50.00% 60
Number of respondents 120
Number of respondents who skipped this question 6
Page 4.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
2 of 20 8/25/13 5:43 PM
3. Please indicate your nationality: % of Respondents
Number of Respondents
Danish 80.00% 96
American 5.00% 6
British 4.17% 5
Swedish 0.00% 0
Norwegian 0.83% 1
French 2.50% 3
Italian 1.67% 2
German 0.00% 0
Austrian 0.83% 1
Australian 1.67% 2
Canadian 0.00% 0
Albanian 0.83% 1
Russian 0.83% 1
dutch 0.83% 1
Pakistani 0.83% 1
Number of respondents 120
Number of respondents who skipped this question 6
Page 3.
4. Are you familiar with the pharmaceutical company, Novartis,and/or its subsidiaries Sandoz and Alcon?
% of Respondents
Number of Respondents
Yes 50.00% 60
No 50.00% 60
Number of respondents 120
Number of respondents who skipped this question 6
Page 4.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
2 of 20 8/25/13 5:43 PM
Laura Høeg Hagen Copenhagen Business School 2013 117
5. How did you become familiar with Novartis? % of Respondents
Number of Respondents
I have bought / been prescribedmedication from Novartis
10.14% 14
Friends or family have bought /been prescribed medication from
Novartis 10.14% 14
Television commercials 7.97% 11
Online advertisement 5.07% 7
In-store advertisement (E.g., atpharmacies)
2.90% 4
Business engagements (E.g.,doctors, nurses, Novartis employee,business-to-business engagements,
etc.)
7.97% 11
I am not familiar with Novartis 41.30% 57
General knowledge. 0.72% 1
The company has been mentionedat lectures at CSR. I've read about
the company or its products in anewspaper.
0.72% 1
Heard about it during my studies atUniversity.
0.72% 1
I have worked in thepharmaceutical industry
0.72% 1
I'm not sure how I know Novartis,but I guess it's from a mix of
LinkedIn/online advertisement andthe fact that I have family members
working in the industry (NovoNordisk)
0.72% 1
Some children in my workplace usesome of their products
0.72% 1
A sexy girl 0.72% 1
Had a friend that worked forNovartis.
0.72% 1
They sponsored my football teamas a kid.
0.72% 1
Min arbejdsplads har dem somkunder (PR bureau)
0.72% 1
knew someone who worked forNovartis
0.72% 1
Drove by their office on thehighway many times.
0.72% 1
By driving past a building withNovartis signs out front.
0.72% 1
general knowledge 0.72% 1
Word of Mouth 0.72% 1
Kender nogen der arbejder der 0.72% 1
I know that they conduct animaltesting.
0.72% 1
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
3 of 20 8/25/13 5:43 PM
Working in marketing andconsumer goods, I am of courseaware of the different companies
that operate within the largerindustries, such as Novartis. I notsure if I could name a brand that
they own, but the company is wellknown in the pharma industrie.
0.72% 1
As a business student, I am familiarwith Novartis because they were
used as case-company inassignments on business ethics or
diversity management
0.72% 1
I'm not familiar with Novartis 0.72% 1
Number of respondents 118
Number of respondents who skipped this question 8
Page 5.
6. If yes to 5a or 5b, please indicate which brand of medicationyou or your family/friends bought or were prescribed:
% of Respondents
Number of Respondents
Sandoz 10.62% 12
Alcon 0.00% 0
Novartis Pharma AG 9.73% 11
Not applicable 77.88% 88
No 0.88% 1
Voltaren Gel 0.88% 1
Number of respondents 113
Number of respondents who skipped this question 13
Page 6.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
4 of 20 8/25/13 5:43 PM
7. Can you name any of Novartis’ products?
If yes, please list. If no, simple write 'No'.
1. No
2. no
3. No
4. Voltaren Gel
5. Not off hand
6. No
7. Voltaren
8. No
9. No
10. No
11. No
12. No
13. No
14. NO
15. No
16. No
17. Panodil Nicotinell Sandoz Mucolysin
18. No
19. No
20. No
21. No
22. No
23. No
24. No
25. No
26. No
27. I can't give a name, but some of the different birth control pill brands I use are produced by Sandoz
28. No
29. no
30. Glivec Ritalin
31. No
32. Otrivin
33. No
34. Venlafaxin sandoz Omeprazol
35. No
36. No
37. No
38. No
39. No
40. No
41. no
42. No
43. No
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
5 of 20 8/25/13 5:43 PM
Laura Høeg Hagen Copenhagen Business School 2013 118
90. no
91. no
92. No
93. NO
94. No
95. No
96. no
97. No
98. No
99. No
100. Alnoc
101. No
102. no
103. No
104. Nicotinell
105. no
106. no
107. no
108. No
109. No
110. NO
111. No
Number of Respondents 111
Number of respondents who skipped this question 15
Page 7.
8. Have you actively sought additional information aboutNovartis? (E.g., accessed and read their policies, annual report,etc.)
% of Respondents
Number of Respondents
Yes 0.90% 1
No 99.10% 110
Number of respondents 111
Number of respondents who skipped this question 15
9. If yes, please elaborate:
1. As mentioned this was research as a student rather than a patient. But I have looked into their level ofexecutive women/environment for working mothers, and legal issues with the development of one of theirproducts (which I have forgot the name of)
Number of Respondents 1
Number of respondents who skipped this question 125
Page 8.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
7 of 20 8/25/13 5:43 PM
Page 7.
8. Have you actively sought additional information aboutNovartis? (E.g., accessed and read their policies, annual report,etc.)
% of Respondents
Number of Respondents
Yes 0.90% 1
No 99.10% 110
Number of respondents 111
Number of respondents who skipped this question 15
9. If yes, please elaborate:
Number of Respondents 1
Number of respondents who skipped this question 125
Page 8.
10. What is your general perception of the pharmaceuticalindustry?
% of Respondents
Number of Respondents
Positive 10.09% 11
Moderately positive 29.36% 32
Neutral 37.61% 41
Moderately negative 14.68% 16
Negative 7.34% 8
Other (Specify) 0.92% 1
Number of respondents 109
Number of respondents who skipped this question 17
11. Please state the reason for your answer above:
Number of Respondents 59
Number of respondents who skipped this question 67
Page 9.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
4 of 7 8/27/13 12:23 PM
12. What is your general perception of Novartis? % of Respondents
Number of Respondents
Positive 4.63% 5
Moderately positive 8.33% 9
Neutral 34.26% 37
Moderately negative 1.85% 2
Negative 0.93% 1
I am not familiar with Novartis 50.00% 54
Number of respondents 108
Number of respondents who skipped this question 18
13. Please state the reason for your answer above:
Number of Respondents 32
Number of respondents who skipped this question 94
Page 10.
14. Which of the following statements do you believeencapsulates the pharmaceutical industry most effectively?
% of Respondents
Number of Respondents
Frontrunner in the betterment ofhealth and healthcare worldwide
8.38% 15
Frontrunner in the betterment ofhealth and healthcare, primarily in
Western regions14.53% 26
Transparent and ethicallyresponsible while maintaining
profit-maximizing objectives5.59% 10
One of the most innovativeindustries worldwide
18.44% 33
Profit-oriented industry withquestionable ethical and social
standards31.84% 57
Lack of transparency in businessoperations and clinical trial results
16.20% 29
Poor management of adverseevents
1.68% 3
Good management of adverseevents
2.79% 5
Other (Specify) 0.56% 1
Number of respondents 103
Number of respondents who skipped this question 23
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
5 of 7 8/27/13 12:23 PM
Laura Høeg Hagen Copenhagen Business School 2013 119
12. What is your general perception of Novartis? % of Respondents
Number of Respondents
Positive 4.63% 5
Moderately positive 8.33% 9
Neutral 34.26% 37
Moderately negative 1.85% 2
Negative 0.93% 1
I am not familiar with Novartis 50.00% 54
Number of respondents 108
Number of respondents who skipped this question 18
13. Please state the reason for your answer above:
Number of Respondents 32
Number of respondents who skipped this question 94
Page 10.
14. Which of the following statements do you believeencapsulates the pharmaceutical industry most effectively?
% of Respondents
Number of Respondents
Frontrunner in the betterment ofhealth and healthcare worldwide
8.38% 15
Frontrunner in the betterment ofhealth and healthcare, primarily in
Western regions14.53% 26
Transparent and ethicallyresponsible while maintaining
profit-maximizing objectives5.59% 10
One of the most innovativeindustries worldwide
18.44% 33
Profit-oriented industry withquestionable ethical and social
standards31.84% 57
Lack of transparency in businessoperations and clinical trial results
16.20% 29
Poor management of adverseevents
1.68% 3
Good management of adverseevents
2.79% 5
Other (Specify) 0.56% 1
Number of respondents 103
Number of respondents who skipped this question 23
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
5 of 7 8/27/13 12:23 PM
15. Please state the reason for your answers above:
Number of Respondents 37
Number of respondents who skipped this question 89
Page 11.
16. Do you believe that better communication and more publiclyavailable information would change your perception?
% of Respondents
Number of Respondents
Yes 29.70% 30
No 18.81% 19
Maybe 51.49% 52
Number of respondents 101
Number of respondents who skipped this question 25
17. Why?
Number of Respondents 47
Number of respondents who skipped this question 79
Page 12.
18. If you could change one thing within the pharmaceuticalindustry today, what would it be?
% of Respondents
Number of Respondents
Pricing policies 10.00% 10
Marketing policies 2.00% 2
Third world access to medication 48.00% 48
Level of transparency 22.00% 22
Public communication andpresence
6.00% 6
Nothing 6.00% 6
Other (Specify) 6.00% 6
Number of respondents 100
Number of respondents who skipped this question 26
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
6 of 7 8/27/13 12:23 PM
Laura Høeg Hagen Copenhagen Business School 2013 120
15. Please state the reason for your answers above:
Number of Respondents 37
Number of respondents who skipped this question 89
Page 11.
16. Do you believe that better communication and more publiclyavailable information would change your perception?
% of Respondents
Number of Respondents
Yes 29.70% 30
No 18.81% 19
Maybe 51.49% 52
Number of respondents 101
Number of respondents who skipped this question 25
17. Why?
Number of Respondents 47
Number of respondents who skipped this question 79
Page 12.
18. If you could change one thing within the pharmaceuticalindustry today, what would it be?
% of Respondents
Number of Respondents
Pricing policies 10.00% 10
Marketing policies 2.00% 2
Third world access to medication 48.00% 48
Level of transparency 22.00% 22
Public communication andpresence
6.00% 6
Nothing 6.00% 6
Other (Specify) 6.00% 6
Number of respondents 100
Number of respondents who skipped this question 26
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
6 of 7 8/27/13 12:23 PM
Laura Høeg Hagen Copenhagen Business School 2013 121
8.8 Danish Pharmacy Survey Summary
The survey summary below includes quantitative responses only. For the sake of brevity,
quantitative responses have been omitted, which is evident in the few missing questions, all of
which pertain to elaborations of the previous question.
Page 1. Velkommen!
Page 2.
1. I hvilket omfang kommunikeres der direkte fra Novartis til dedanske apoteker? % of
Respondents Number of
Respondents
I stor grad 17.65% 6
I mindre grad 73.53% 25
Slet ikke 8.82% 3
Number of respondents 34
Number of respondents who skipped this question 13
2. Uddyb gerne:
1. Vi modtager email ved afregistering/tilbagekaldelser. Brev ved lancering af nye produkter
2. savner en besvarelse midt i mllem. Jeg ved de kommer af og til, men snakker ikke selv med dem. Det erprimært rygestop
3. kun via post, ikke med konsulentbesøg
4. Mest vedrørende håndkøbslægemidler f.eks. Lamisil
5. Kun ved konsulent besøg
6. forgår hovedsagligt med infomails
7. (sygehusapotek)
8. Jævnlige konsulentbesøg i størrelsesordenen 4-5 gange årligt med info om nye produkter,markedsføringsaktiviteter mv
9.
Ovenstående spørgsmål krævede et svar. Jeg har valgt "slet ikke", men det er misvisende. Jeg havde brug forsvarmuligheden "ved ikke". Jeg kan ikke svare generelt på Novartis information til "de danske apoteker".Jegkan højst svare ift kommunikation til det apotek, som jeg er ansat på. Dette apotek er et sygehusapotek, ogjeg har i min stilling ikke viden om hvilken kommunikation, der er direkte til os fra Novartis.
10. i perioder er der meget kommunikation og andre gange hører vi ikke noget i flere måneder.
11. Kun når nye produkter markedsføres modtager vi evt mail eller brochurer. Vi har praktisk talt ikke noget medfirmaerne at gøre i dagligdagen
12. Jeg har ikke i de sidste 5 år været i direkte kontakt med novartis
13. primært håndkøbspræparater
14. Der kommer en konsulent fra Novartis der har med OTC produkter at gøre. Fra hende får vi nyheder ogsalgsdata, samt gode ideer til forbedring af rådgivning/salg. Hun kommer 4-5 gange om året.
15. Otrivin og Lamisil ellers husker jeg ikke noget
Number of Respondents 15
Number of respondents who skipped this question 32
Page 3.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
1 of 8 8/27/13 12:42 PM
3. Hvilke kommunikationsformer benytter Novartis sig af, når dehenvender sig til de danske apoteker?
% of Respondents
Number of Respondents
Personlig kontakt gennemrepræsentanter
29.85% 20
Brochurer 25.37% 17
E-mails 14.93% 10
Nyhedsbreve 22.39% 15
Telefonkontakt 2.99% 2
Breve 1.49% 1
gennem kæde 1.49% 1
Se spørgsmål 2 1.49% 1
Number of respondents 32
Number of respondents who skipped this question 15
4. Uddyb gerne:
1. Det kan godt være der er mere kontakt, end jeg lige husker.
2. Vi bliver bombarderet, hvilket er utilfredsstillende . (sygehusapotek)
3. Sjældent nyhedsbreve
4. det ville være fint hvis Novartis benyttede e-mail lidt oftere, når der er langt mellem konsulentbesøgene. brevemed posten er ikke at foretrække
5. Måske også alm post - husker det ikke
Number of Respondents 5
Number of respondents who skipped this question 42
Page 4.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
2 of 8 8/27/13 12:42 PM
Laura Høeg Hagen Copenhagen Business School 2013 122
5. I hvilken sammenhæng samarbejder I mest med Novartis? % of Respondents
Number of Respondents
Ved produktlanceringer 29.17% 14
Div. opdateringer (fxproduktsikkerhed, anvendelse mv.)
18.75% 9
Produktkampagner 22.92% 11
Feedback ift. salg, tilfredshed mv. 12.50% 6
kun skriftligt 2.08% 1
reklamationer 2.08% 1
? 2.08% 1
se kommentar 2.08% 1
ved spørgsmål omkring håndteringaf deres produkter. Ved forkert
opbevaring af medicin eller direktespørgsmål omkring håndtering fra
sygehuspersonale.
2.08% 1
ekstra fokus på svære områder 2.08% 1
Ingen kontakt 2.08% 1
Se spørgsmål 2 2.08% 1
Number of respondents 31
Number of respondents who skipped this question 16
6. Uddyb gerne:
1. Vi får deres informationer og får svar på vore spørgsmål. Vi har ikke noget "samarbejde". Kampagnerkommunikeres via kæden.
2. primært ved tilbagetrækning af produkter og længerevarende leveringssvigt
3. Ved spacing efter planogrammer
4. (sygehusapotek)
5. Bestilling af brochurer, produktreklamationer - ellers ikke
6. Ingen kontakt
7. produktlanceringer er det lidt småt med, men for f.eks. venoruton har vi ikke haft den store interesse.
Number of Respondents 7
Number of respondents who skipped this question 40
Page 5.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
3 of 8 8/27/13 12:42 PM
7. Hvordan vil du/I betegne Novartis’ kommunikation i forhold til:
Megettilfredsstillende
Tilfredsstillende
Hverkentilfredsstillende
ellerutilfredsstillende
UtilfredsstillendeMeget
UtilfredsstillendeNumber of
Respondents
Kvalitet 6% (2) 48% (14) 41% (12) 3% (1) 0% (0) 29
Kvantitet 0% (0) 39% (11) 53% (15) 7% (2) 0% (0) 28
Tilstrækkelig information 3% (1) 48% (14) 44% (13) 3% (1) 0% (0) 29
Responstid (fx vedfeedback ellerhenvendelser)
10% (3) 28% (8) 57% (16) 3% (1) 0% (0) 28
Number of Respondents 29
Number of respondents who skipped this question 18
8. Hvorfor? Uddyb venligst ovenstående svar:
1. Der er så længe mellem henvendelser at det ikke er et relevant spørgsmål
2. responstid er vigtig-vi har måske kunden stående i skranken! Føler ikke stort behov for tættere forbindelser.Samarbejdet vil altid være præget af ønsket om salg- fra begge sider.
3. Jeg ingen holdning. Vi ser materiale fra mange forskellig firmaer og jeg har ikke en holdning til materialespecialt fra Novartis. Uanset, så er meget af det spildt, da vi selv kan finde mange af oplysninger iproduktresume. (sygehusapotek)
4. mangler en ved ikke - vi gør det som sagt stort ikke
5. Jeg har valgt midtersvaret i mangel af kategori "VED IKKE" Se spørgsmål 2
6.
Det møde jeg har med konsulenten er af passende længde og med passende mængde information. Jeg villeikke være tilfreds med længere møder eller mere insisterende information/salgstaler. Tid til møder medkonsulenter er begrænset, og vi er overfor kunderne forpligtigede til at sortere grundigt i den information vi får,og ikke lade os forblænde af et enkelt firma. Vores konsulent respekterer dette og er meget ærlig i sinkommunikation.
Number of Respondents 6
Number of respondents who skipped this question 41
Page 6.
9. Mener du/I, at Novartis kunne forbedre deres kommunikationmed danske apoteker?
% of Respondents
Number of Respondents
Ja, meget. 11.11% 3
Ja, til dels. 37.04% 10
Nej 51.85% 14
Nej, slet ikke 0.00% 0
Number of respondents 27
Number of respondents who skipped this question 20
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
4 of 8 8/27/13 12:42 PM
Laura Høeg Hagen Copenhagen Business School 2013 123
7. Hvordan vil du/I betegne Novartis’ kommunikation i forhold til:
Megettilfredsstillende
Tilfredsstillende
Hverkentilfredsstillende
ellerutilfredsstillende
UtilfredsstillendeMeget
UtilfredsstillendeNumber of
Respondents
Kvalitet 6% (2) 48% (14) 41% (12) 3% (1) 0% (0) 29
Kvantitet 0% (0) 39% (11) 53% (15) 7% (2) 0% (0) 28
Tilstrækkelig information 3% (1) 48% (14) 44% (13) 3% (1) 0% (0) 29
Responstid (fx vedfeedback ellerhenvendelser)
10% (3) 28% (8) 57% (16) 3% (1) 0% (0) 28
Number of Respondents 29
Number of respondents who skipped this question 18
8. Hvorfor? Uddyb venligst ovenstående svar:
1. Der er så længe mellem henvendelser at det ikke er et relevant spørgsmål
2. responstid er vigtig-vi har måske kunden stående i skranken! Føler ikke stort behov for tættere forbindelser.Samarbejdet vil altid være præget af ønsket om salg- fra begge sider.
3. Jeg ingen holdning. Vi ser materiale fra mange forskellig firmaer og jeg har ikke en holdning til materialespecialt fra Novartis. Uanset, så er meget af det spildt, da vi selv kan finde mange af oplysninger iproduktresume. (sygehusapotek)
4. mangler en ved ikke - vi gør det som sagt stort ikke
5. Jeg har valgt midtersvaret i mangel af kategori "VED IKKE" Se spørgsmål 2
6.
Det møde jeg har med konsulenten er af passende længde og med passende mængde information. Jeg villeikke være tilfreds med længere møder eller mere insisterende information/salgstaler. Tid til møder medkonsulenter er begrænset, og vi er overfor kunderne forpligtigede til at sortere grundigt i den information vi får,og ikke lade os forblænde af et enkelt firma. Vores konsulent respekterer dette og er meget ærlig i sinkommunikation.
Number of Respondents 6
Number of respondents who skipped this question 41
Page 6.
9. Mener du/I, at Novartis kunne forbedre deres kommunikationmed danske apoteker?
% of Respondents
Number of Respondents
Ja, meget. 11.11% 3
Ja, til dels. 37.04% 10
Nej 51.85% 14
Nej, slet ikke 0.00% 0
Number of respondents 27
Number of respondents who skipped this question 20
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
4 of 8 8/27/13 12:42 PM
10. I bekræftende fald, hvordan?
1. Fint med produktinformationer af og til Ellers går kommunikation gennem kæde/kampagner
2. personlig henvendelse efter aftale
3. Telefonisk eller aftalt møde kan bedre apotekets kendskab til Novartis produkter
4. (Sygehusapotek)
5. Det er da en af de producenter, der gør det rigtigt godt ....
6. Mere selektiv i forhold til kontakt. Vi har kun brug for information ved nyheder eller nye forhold - ikke blotgentagelser af allerede kendt stof for at markedsføre/ reklamere.
7. løbende kommunikation
8. Har valgt "Ja til dels". Se dog svar til spørgsmål 2
9. Niveauet er passende
10. i og med at vi kun får informationer omkring OTC produkter, kunne den receptpligtige del godt løftes. f.eks iforhold til bivirkningsindberetninger, studier etc.
Number of Respondents 10
Number of respondents who skipped this question 37
Page 7.
11. Hvor vigtig vil du/I betegne et godt kommunikationsforholdmellem de danske apoteker og medicinalvirksomhederne?
% of Respondents
Number of Respondents
Meget vigtigt 33.33% 9
Vigtigt 55.56% 15
Hverken eller 7.41% 2
Ikke vigtigt 0.00% 0
Slet ikke vigtigt 3.70% 1
Number of respondents 27
Number of respondents who skipped this question 20
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
5 of 8 8/27/13 12:42 PM
13. Hvad er din/Jeres overordnet opfattelse af de følgende medicinalvirksomheder?
Meget positivt PositivtHverken positivt
eller negativtNegativt Meget negativt
Number ofRespondents
Novartis 19% (5) 50% (13) 30% (8) 0% (0) 0% (0) 26
Pfizer 15% (4) 46% (12) 34% (9) 3% (1) 0% (0) 26
Novo Nordisk 19% (5) 46% (12) 30% (8) 3% (1) 0% (0) 26
Sanofi 15% (4) 38% (10) 42% (11) 3% (1) 0% (0) 26
GlaxoSmithKline 15% (4) 57% (15) 23% (6) 0% (0) 3% (1) 26
Number of Respondents 26
Number of respondents who skipped this question 21
14. Uddyb gerne:
1. Fin. God respons ved reklamationer og behov for support i tilfælde af farmaceutiske/tekniske spørgsmål
2. Vi anser firmaerne for lødige
3. Bruger dem sjældent, men de hjælper altid ved behov
4. GSK er for salgsfikseret når de snakker med os, nogle gange også på den forkerte side af loven
5. Vi har ikke set Pfizer (rx) Novo eller Sanofi i ihvert fald 10 år på mit apotek De har fravalgt konsulenter åbenbarti forhold til apotekerne.
6.
Der bliver sendt en del papirmateriale ud (alenlange produktresumeer som kan hentes på nettet). Det ergammeldags, miljøsvineri og ryger desværre i papirkurven. På sygehusapotekerne er der centralelægemiddelinformationsafdelinger. Det er relevant at henvende sig til dem, men ikke hver enkelt farmaceut. Deter informationspam og det er generelt for alle medicinalfirmaer. (sygehusapotek)
7. Ingen negative oplevelser med ovenstående firmaer
8. Sanofi har vi ingen forhold til
9.
kommentar til næste spørgsmål Jeg har ingen anelse om hvor stor en andel Novartis har af apotekets salg, ogheller ikke nogen ligetil måde at finde ud af det - sorry, så lang tid har jeg ikke til at svare på dette skema.Apotekets salg af receptpligtige midler afhænger af takstfastsættelsen 2 gange om måneden. Apotekets lagerstyres via vores grosists VMI system. Apotekets OTC salg styres til dels af indkøbskædens(dit apotek) valg forstamsortiment. Generelt har vi en del novartisprodukter i fokus (voltaren og nicotinell), lamisil og scopoderm erde eneste i deres kategorier, og står derfor for hele salget.
Number of Respondents 9
Number of respondents who skipped this question 38
Page 9.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
7 of 8 8/27/13 12:42 PM
Laura Høeg Hagen Copenhagen Business School 2013 124
15. Hvor stor en andel af Jeres salg, er produkter fra Novartis,herunder Sandoz og Alcon?
% of Respondents
Number of Respondents
Under 10% 4.17% 1
Mellem 10 - 20% 16.67% 4
Mellem 21 - 30% 12.50% 3
Mellem 31 - 40% 0.00% 0
Mellem 41 - 50% 4.17% 1
Mellem 51 - 60% 0.00% 0
Mellem 61 - 70% 0.00% 0
Mellem 71 - 80 % 0.00% 0
Over 80% 0.00% 0
aner det ikke ! 4.17% 1
ved ikke 12.50% 3
xxx 4.17% 1
det kan i selv trække tal for. Det harkonsulenter gjort hidtil
4.17% 1
Ved ikke 4.17% 1
30%,kun et gæt 4.17% 1
aner det ikke! 4.17% 1
Vil jeg gætte på - Jeg ved det ikke 4.17% 1
Ander det ikke 4.17% 1
det har jeg ikke tid til at undersøge 4.17% 1
Ves ikke 4.17% 1
det er ikke til vores afgørelse. Detafhænger i hovedparten af
Amgrosudbudet. 4.17% 1
Kender ikke fordelingen 4.17% 1
Number of respondents 24
Number of respondents who skipped this question 23
Page 10. Mange tak for dit input!
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
8 of 8 8/27/13 12:42 PM
Laura Høeg Hagen Copenhagen Business School 2013 125
8.9 Danish Doctors Survey Summary
The survey summary below includes quantitative responses only. For the sake of brevity,
quantitative responses have been omitted, which is evident in the few missing questions, all of
which pertain to elaborations of the previous question.
Page 1. Welcome!
Page 2.
1. On average, how often do you engage with pharmaceuticalcompanies?
% of Respondents
Number of Respondents
Daily 0.00% 0
1-2 times per week 50.00% 2
1-2 times per month 25.00% 1
1-2 times every 6 months 25.00% 1
1-2 times a year 0.00% 0
Number of respondents 4
Number of respondents who skipped this question 1
2. On average, how often do you engage with Novartis (includingAlcon, Sandoz etc.)?
% of Respondents
Number of Respondents
Daily 0.00% 0
1-2 times per week 0.00% 0
1-2 times per month 0.00% 0
1-2 times every 6 months 0.00% 0
1-2 times a year 25.00% 1
Other (Specify) 75.00% 3
Number of respondents 4
Number of respondents who skipped this question 1
3. Please elaborate if relevant:
Number of Respondents 1
Number of respondents who skipped this question 4
Page 3.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
1 of 4 8/27/13 12:50 PM
Laura Høeg Hagen Copenhagen Business School 2013 126
4. Which media does Novartis primarily use to communicate andengage with you / Danish healthcare professionals?
% of Respondents
Number of Respondents
E-mail 0.00% 0
Telephone 0.00% 0
Face-to-face meetings withrepresentatives
0.00% 0
Letters 33.33% 1
Other (Specify) 66.67% 2
Number of respondents 3
Number of respondents who skipped this question 2
5. Further comments:
Number of Respondents 2
Number of respondents who skipped this question 3
Page 4.
6. What is the nature of the communication between Novartisand yourself in general? % of
Respondents Number of
Respondents
Product marketing 0.00% 0
Information on safety andapplication
66.67% 2
Drug performance evaluations 0.00% 0
Other (Specify) 33.33% 1
Number of respondents 3
Number of respondents who skipped this question 2
7. Please elaborate:
Number of Respondents 2
Number of respondents who skipped this question 3
Page 5.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
2 of 4 8/27/13 12:50 PM
4. Which media does Novartis primarily use to communicate andengage with you / Danish healthcare professionals?
% of Respondents
Number of Respondents
E-mail 0.00% 0
Telephone 0.00% 0
Face-to-face meetings withrepresentatives
0.00% 0
Letters 33.33% 1
Other (Specify) 66.67% 2
Number of respondents 3
Number of respondents who skipped this question 2
5. Further comments:
Number of Respondents 2
Number of respondents who skipped this question 3
Page 4.
6. What is the nature of the communication between Novartisand yourself in general? % of
Respondents Number of
Respondents
Product marketing 0.00% 0
Information on safety andapplication
66.67% 2
Drug performance evaluations 0.00% 0
Other (Specify) 33.33% 1
Number of respondents 3
Number of respondents who skipped this question 2
7. Please elaborate:
Number of Respondents 2
Number of respondents who skipped this question 3
Page 5.
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
2 of 4 8/27/13 12:50 PM
8. How would you rate the quality (I.e., sufficient information, quantity, reliabilityetc.) of Novartis’ communications compared to other pharmaceuticals?
Number of Respondents 3
Number of respondents who skipped this question 2
Page 6.
9. What are the main challenges in terms of communication and engagement withNovartis?
Number of Respondents 3
Number of respondents who skipped this question 2
Page 7.
10. Do you believe Novartis could improve their communicationwith Danish healthcare professionals? % of
Respondents Number of
Respondents
Yes 33.33% 1
No 66.67% 2
Number of respondents 3
Number of respondents who skipped this question 2
11. If so, how and why?
Number of Respondents 2
Number of respondents who skipped this question 3
Page 8.
12. Do you prescribe Novartis medication to your patients(including Sandoz, Alcon etc.)?
% of Respondents
Number of Respondents
Yes 66.67% 2
No 33.33% 1
Number of respondents 3
Number of respondents who skipped this question 2
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
3 of 4 8/27/13 12:50 PM
8. How would you rate the quality (I.e., sufficient information, quantity, reliabilityetc.) of Novartis’ communications compared to other pharmaceuticals?
Number of Respondents 3
Number of respondents who skipped this question 2
Page 6.
9. What are the main challenges in terms of communication and engagement withNovartis?
Number of Respondents 3
Number of respondents who skipped this question 2
Page 7.
10. Do you believe Novartis could improve their communicationwith Danish healthcare professionals? % of
Respondents Number of
Respondents
Yes 33.33% 1
No 66.67% 2
Number of respondents 3
Number of respondents who skipped this question 2
11. If so, how and why?
Number of Respondents 2
Number of respondents who skipped this question 3
Page 8.
12. Do you prescribe Novartis medication to your patients(including Sandoz, Alcon etc.)?
% of Respondents
Number of Respondents
Yes 66.67% 2
No 33.33% 1
Number of respondents 3
Number of respondents who skipped this question 2
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
3 of 4 8/27/13 12:50 PM
Laura Høeg Hagen Copenhagen Business School 2013 127
8. How would you rate the quality (I.e., sufficient information, quantity, reliabilityetc.) of Novartis’ communications compared to other pharmaceuticals?
Number of Respondents 3
Number of respondents who skipped this question 2
Page 6.
9. What are the main challenges in terms of communication and engagement withNovartis?
Number of Respondents 3
Number of respondents who skipped this question 2
Page 7.
10. Do you believe Novartis could improve their communicationwith Danish healthcare professionals? % of
Respondents Number of
Respondents
Yes 33.33% 1
No 66.67% 2
Number of respondents 3
Number of respondents who skipped this question 2
11. If so, how and why?
Number of Respondents 2
Number of respondents who skipped this question 3
Page 8.
12. Do you prescribe Novartis medication to your patients(including Sandoz, Alcon etc.)?
% of Respondents
Number of Respondents
Yes 66.67% 2
No 33.33% 1
Number of respondents 3
Number of respondents who skipped this question 2
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
3 of 4 8/27/13 12:50 PM
8. How would you rate the quality (I.e., sufficient information, quantity, reliabilityetc.) of Novartis’ communications compared to other pharmaceuticals?
Number of Respondents 3
Number of respondents who skipped this question 2
Page 6.
9. What are the main challenges in terms of communication and engagement withNovartis?
Number of Respondents 3
Number of respondents who skipped this question 2
Page 7.
10. Do you believe Novartis could improve their communicationwith Danish healthcare professionals? % of
Respondents Number of
Respondents
Yes 33.33% 1
No 66.67% 2
Number of respondents 3
Number of respondents who skipped this question 2
11. If so, how and why?
Number of Respondents 2
Number of respondents who skipped this question 3
Page 8.
12. Do you prescribe Novartis medication to your patients(including Sandoz, Alcon etc.)?
% of Respondents
Number of Respondents
Yes 66.67% 2
No 33.33% 1
Number of respondents 3
Number of respondents who skipped this question 2
eSurveysPro.com - Survey Summary Report http://www.esurveyspro.com/SummaryReport.aspx?surveyId...
3 of 4 8/27/13 12:50 PM
Laura Høeg Hagen Copenhagen Business School 2013 128
8.10 External Industry Conditions – Porter’s Five Competitive Forces
The intent of this appendix is to briefly outline the opposing strategic view which is currently
undertaken by a large majority of the pharmaceutical industry in order to juxtapose the two
dominating strategic positions. The epistemology and management of intangible assets largely
adheres to the resource-based view, whereby an internal focus is prioritized over that of
external positioning strategies. Conversely, market-based positioning strategies are based on
external industry conditions, where strategy development is created based on these
parameters.
One of the strongest contributors to the field of strategy, both within the practitioner as well
as the academic function is Michael Porter. His development of the Five Competitive Forces
has become a hallmark element of business development and strategy worldwide. The main
premise of this framework is that the role of the strategist is to understand and cope with
competitors in order to secure profits and gain as well as maintain competitive advantage
(Porter, 2008: 79). Beyond rivalry between competitors, four additional forces contribute to
the structure of industry competition, and thereby lay the foundation for resulting strategic
approaches and potential mitigative responses:
1. Threat of New Entrants: New entrants to an industry bring new capacity and a desire
to gain market share, which in turn puts pressure on incumbents in terms of prices,
costs, and the rate of investment necessary to compete (Porter, 2008: 80). This threat
largely depends of the barriers to entry, which are defined as advantages that
incumbents possess relative to new entrants (ibid). For instance, barriers to entry in the
pharmaceutical industry are generally quite high due to patents, capital requirements
necessary to compete with big pharma, and extant government relations.
2. Bargaining Power of Suppliers: Powerful suppliers are able to capture more value
for themselves by charging higher prices, limiting quantity, or shifting costs to
industry participants (Porter, 2008: 82). In the case of big pharma, these corporations
are often viewed as suppliers themselves within the healthcare industry, and by
offering differentiated, patented drugs with distinctive medical benefits, they hold
Laura Høeg Hagen Copenhagen Business School 2013 129
more power over hospitals, healthcare maintenance organizations, and other drugs
buyers, than companies offering generic products (ibid).
3. Bargaining Power of Buyers: Conversely, powerful customers can capture more
value for themselves by forcing down prices, demanding better quality (thereby
driving up costs), and generally playing industry participants off against each other
(Porter, 2008: 83). Within the pharmaceutical industry, this force is dominated by
governments in the form of regulatory restrictions, from which big pharma often
attempt to diminish channel clout through exclusive arrangements with the buyers
(ibid).
4. Threat of Substitute Products / Services: Substitute products limit an industry’s
profit potential by placing a ceiling on prices (Porter, 2008: 84). This is most evident
in the form of generic competition within the pharmaceutical industry, which has
become more frequent over the past decade due to patent expirations. The primary
responses to this threat has been differentiation through product performance and
brand management, or simply the acquisition of these competing generic firms, as was
the case of Novartis’ acquisition of Sandoz in 1992.
5. Rivalry Among Existing Competitors: Rivalry within an industry takes many forms,
such as price discounting, new product introductions, service improvements etc. High
rivalry limits the profitability of an industry, and is considered greatest when
competitors are numerous or are of roughly equal in size and power (Porter, 2008: 88).
The pharmaceutical industry is considered highly rivalrous due to its oligopolistic
nature.
The Five Forces above portray a substantial external basis for strategy development as a result
of industry conditions. While these forces are considered important areas of
acknowledgement and monitoring, it is argued that the intrinsic resources of an organization
hold more potential in terms of a foundation for successful strategy development and
implementation than credited. Accordingly, Novartis’ intangibles assets from a resource-
based view is applied as the primary implications for strategy in this thesis.
Laura Høeg Hagen Copenhagen Business School 2013 130
8.11 Novartis’ Organizational Structure
Chairman(Board(of(Directors(
Dr.(Daniel(Vasella(
CEO(
Joseph(Jimenez(
Corporate(Strategy(&(External(Affairs(
Paul(van(Arkel(
Human(Resources(
Dr.(Jürgen(
BrokatzkyHGeiger(
CFO(
Harry(Kirsch(
General(Counsel(
Dr.(Felix(Ehrat(
Group(CommunicaLons(
Michelle(Galen(
Chief(Compliance(Officer(
Dr.(Peter(Kornicker(
Group(QA(
Erwin(Vanhaecke(
Pharma(
David(Epstein(
Sandoz(
Jeff(George(
Vaccines(&(DiagnosLcs(
Dr.(Andrin(Oswald(
NovarLs(InsLtutes(for(Biomedical(
Research(
Dr.(Mark(Fishman(
Alcon(
Kevin(Beuhler(
OTC(
Brian(McNamara(
Animal(Health(&(CSR(
Dr.(George(Gunn(
Audit(&(Compliance(
Peter(Elam(((
Chairman(Audit(&(Compliance(CommiTee(
Prof.(Srikant(Datar(
Corporate(Secretary(
Dr.(CharloTe(PamerHWeiser(
Chairman’s(Office(
Dr.(MaThias(
Leuenberger(
ENC(Members(
Permanent(ENC(
ATendee(