What Viagra can teach you about strategy

In the late 1980’s the pharmaceutical company Pfizer was testing a new drug for men in their laboratory in Kent, England. The drug was sildenafil citrate and was developed to treat pulmonary arterial hypertension. About a year later it was ready to be tested on human patients in clinical trials, but it turned out to be not as effective as researchers predicted. However, for some reason the majority of male subjects did not want to let go of the remaining Sildenafil pills, even though the test was over. Pfizer quickly understood why: The drug gave the men a noticeable increased erection. With an open mind, researchers at the company moved forward to learn more about this unintended side effect. They launched a new clinical trial to use the drug for erectile dysfunction disorder, and the trial proved successful. A new drug, Viagra, was born and approved for use by the U.S. Food and Drug Administration in 1998.
Hereafter, it went crazy. Pfizer received letters from men all over the world writing: “It has stopped me killing myself” or “It has stopped me hitting my wife.” Sales figures broke all records, and Viagra soon became
one of the highest money grossing prescription drugs ever produced. The rest, as they say, is history.
The power of error
The invention of Viagra highlights the dilemma which almost all companies face when developing their strategy. Most competitive advantages are not born in the boardroom. They are often born in the process of failing with the deliberate strategy and adapting to the opportunities and problems you meet along the way.
Professor Henry Mintzberg has described how any strategy springs from two very different sources. The first source is anticipated opportunities – the opportunities that you can see and choose to pursue. In Pfizer’s case that was to produce a drug treating high blood pressure. When you put in place a plan focused on these anticipated opportunities, you are promoting a deliberate strategy. The second source of options is unanticipated – usually a cocktail of problems and opportunities that emerge whilst you are trying to implement the deliberate plan or strategy. At Pfizer, what was unanticipated was the ineffectiveness of the original drug and its highly surprising side effects. As Jackie Corbin, one of the Pfizer researchers has put it:
“We had no intention of creating a drug that could stimulate men’s erections when we first started. We did not even intend to create a pill”.
Stay open
The interesting thing is that the random process driving the creation of Viagra is identical to the process driving almost all winning strategies. Walmart is another great example. Many people consider Sam Walton, the legendary founder of Walmart, as a god-gifted strategist. We assume that he started his company with a clear plan to revolutionize the retail industry. That’s not what really happened. At the time Walton owned one store in the small town of Rogers, Arkansas, he intended to build his second store in Memphis, thinking that a larger city could support a larger store. But he ended up opting for the much smaller town of Bentonville, Arkansas, instead – for two reasons. Primarily his wife simply refused to move to Memphis to live. Secondly Walton realised that having his second store near his first would give him advantages with logistics and efficiency. That decision turned out to be a success and helped Walton develop the strategy he carried with him for many years: open large stores in small towns – thereby pre-empting competition from other discount retailers. However, this was not as he imagined his business in the first place. In other words: his strategy emerged along the way.
So what’s the point?
It is a big mistake to believe that strategy is a discrete analytical event going on the boardroom. It is much more dynamic than that. It is a continuous, diverse, and unruly process. No one in Pfizer imagined that the tests of a high blood pressure drug would lead to a blockbuster drug treating erectile dysfunction. The opportunity arose along the way, and Pfizer’s management team was quick enough and brave enough to seize the opportunity, and ultimately they turned a failure into a massive success.
Obviously, you create strategy based on the best numbers and analysis available at the time, but the real strategy is often developed in the process of execution. That’s the big dilemma, which many managers find themselves in. On the one hand, you have to have a strategy that you deliberately focus on keep everyone working together and in the right direction. At the same time, however, that focus can easily cause you to overlook what could actually turn out to be the next big thing. The question is therefore: How do you as a manager make sure you stay open? Do you have the courage to refuse a strategy that does not work and replace it with an emergent one? How can you capitalise better on unsuccessful attempts to find a competitive advantage?
After all, no one wants to walk past the next “Viagra”.

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