Novo Nordisk, the Danish pharmaceutical company and a market leader in insulin, could only sit, wait and watch their leadership position erode. After all, they were the market leader and of course the competition was going to copy them and close the gap.
Novo Nordisk had developed an insulin that was almost an exact copy of human insulin, the gold standard in the diabetic market. However, the competition was fast developing an almost identical product eroding Novo Nordisk’s competitive advantage. Doctors had no further reason to favour Novo Nordisk’s insulin.
Before the competition could close in, Novo Nordisk wisely shifted the competitive landscape away from the doctor to the user. In the 1980’s diabetics still had to use a syringe to draw their insulin from a vial. Diabetics typically retreated to the bathroom, tested their blood glucose, drew the insulin from the vial with a syringe and injected their insulin. Turns out that handling syringes and vials of insulin evoked unpleasant feelings among the diabetic community for obvious reasons and more importantly, accurately delivering the correct amount of insulin is imperative. However, the needles were small and difficult to read and both children and older people alike struggled with this very important process. Done incorrectly, it leads to ineffective treatment and possibly a diabetic coma or insulin shock.
In 1985 Novo Nordisk shifted their attention toward the user community and launched the NovoPen – a special pre-filled cartridge and needle that looks very similar to fountain pen. In fact, many male users often stuff the NovoPen into their breast pocket like a pen. In place of the ink cartridge the NovoPen has an insulin cartridge which contains roughly a week’s worth of insulin. By twisting the pen the diabetic dials up the correct amount of insulin to be injected. For the injection itself, the ‘pen’ has a simple mechanism (like a retractable ballpoint pen) and with an easy click the client can administer the insulin. Simple and easy with no more vials and syringes, the NovoPen was an instant winner. Later, Novo Nordisk would introduce a disposable pen and has since launched other improvements to assist with better managing the disease.
While others were still trying to perfect their version of the gold standard insulin Novo Nordisk moved the competitive landscape. Novo Nordisk still dominates the market today not with superior insulin but with a superior delivery system.
Too often we get fixated into thinking that we’re selling a drug, a service, a medical image, a geological image, machine components etc. However, behind each product or service there are often several layers of customers as distributors, doctors, agents etc. all interface with the ultimate payer and user. In Novo Nordisk’s case the product was fine; however there was room to improve from the perspective of the end user.
Many companies get caught up in making only incremental improvements to their products. However, only introducing incremental improvements over a long period of time leads to markets with similar competitive products and razor thin margins. One must challenge the status quo and look to the customer and ask what real need is the product or service filling and what could we do to fulfill that need better?
In your business:
- Are there attributes in your product or service that customers no longer need or appreciate and can they be reduced or eliminated to reduce cost?
- Are their attributes that your customers want more of and can they be enhanced to increase value?
- Is there open space with one or more of the customer groups (remember there can be many layers of them) where a system or attributes can be added to enhance the value of your product or service?
For Novo Nordisk, changing the delivery system from a syringe and vial to a “click and a small prick” changed the whole market – how will you change your market?