Magazine
Perceptions
The powerful force behind business decisions
by Steve Snyder
Perception: 4a: quick, acute, and intuitive cognition.
--Webster's New Collegiate Dictionary, G. & C. Merriam Company, 1973
This issue of Contract Pharma contains the annual Salary Survey. Can you visualize the results? I'll bet that some readers will view the salaries of those in management roles and think that there is no way that these individuals deserve that much compensation. That's okay. I am equally confident that some individuals in management positions will view the compensation of those in non-management roles and think that these individuals don't know how lucky they are to have such well-paying jobs. Finally, there will be others who will look at this survey and think that their lives would be so much better if their company simply paid them the average salary in the survey that is most consistent with their job responsibilities. These are perceptions, or rather these are my perceptions of how readers will perceive the Salary Survey.
When you think of it, we form perceptions all of the time.
Before you perceive that I am no expert on this topic, let me state that this is a fact. What I will share with you in this article are my opinions about perceptions and how they impact the preclinical outsourcing industry. If you look at the definition above, it does not mention "facts" or "truth." Our perceptions are our beliefs about various topics. These beliefs may be true to us but they don't have to be based in fact. If I truly believed that my plane would crash, I would not choose air travel as a mode of transportation. All of the safety records, statistics, and probabilities regarding air travel would be meaningless to me as long as I believe that my perception is true. Perceptions permeate our lives. In the business world, perceptions can be the difference between success and failure. This is especially true in the preclinical outsourcing industry. If I believe that I will have a bad outsourcing experience at a particular CRO, it is unlikely that I would ever place my studies there, despite assurances to the contrary.
At this point, I can just imagine that some of our more scientifically-inclined readers are rolling their eyes and thinking, "Oh no, not more of this squishy relationship stuff!" See, that was my perception about how scientists may react to this topic. I could be right or wrong in this belief, however I feel comfortable in stating it because I am a scientist by training as well. In my opinion, our perceptions originate from comparisons that we are making all of the time. We compare everything! I just compared myself to other scientists. We compare: cars, houses, lawns, weather, gender, height, weight, appearance, skin color, religion, sexual orientation, education, sports, teams, finances, countries, clothes, food, neighborhoods, children, spouses, siblings, colleges, pets, companies, medicines, diseases, life experiences, co-workers, managers, jobs, salaries, etc. The list of our comparisons can go on and on. In the preclinical outsourcing industry, sponsors compare their experiences at CROs with each other. In this example, informal networking is where many business perceptions are formed.
I have a comfort zone. I find comfort and security in those things that are familiar to me. There are situations in my day-to-day life that I like and don't like. I am a Baby Boomer. Many of my preferences were formed in my youth with a fair amount of influence from my parents. Some of the beliefs that were important in my youth were ultimately proven to be invalid when I challenged them as an adult. I understand that my parents' guidance then was based in their concern for my safety and well-being. As I have gotten older, I also learned that to grow as a person, I increasingly needed to step out of my comfort zone and try new experiences. I understand today that my perceptions are filters that directly impact how I view or what I believe about the world around me. I have also learned to take the time to seek the truth. Despite my "quick, acute, and intuitive cognition" or "gut feel" as I call it, appearances can be deceiving.
I had some consulting work in northern California last year. Upon getting settled in at my hotel on a Sunday evening, I decided to visit the hotel bar for a beer and a bite to eat. I was greeted by the bartender and we immediately struck up a conversation. Where are you from? How long have you lived there? What do you do for a living? I found his next question to be humbling, embarrassing, amusing, and very thought-provoking. He asked, "How many languages do you speak?" Uh-oh! I had a sinking feeling of where this conversation was going. I responded, "One . . . and not very well." I learned that this gentleman spoke five languages and two dialects. As I reflect on this interaction, I know that I hadn't prejudged this person but I must admit that this was the first multilingual bartender that I had ever met. Several positive outcomes arose from this simple interaction. First, our conversation essentially turned into an educational seminar where I learned a lot about Asian cultures. Second, I periodically reflect on our conversation to remind myself that things aren't always as they appear. Third, I now have someone who is familiar to me that I can chat with whenever I return to that particular hotel. And finally, whether they realize it or not, I will never look a bartender the same way again.
In the business world, pharma and biopharma sponsors have their comfort zones as well. When possible, many seek outsourcing partners that share operational beliefs that are similar to their own internal operations. In this example, familiarity means comfort. Virtual companies may utilize consultants to guide them through preclinical drug development. These companies find their comfort in the consultant's expertise. Many sponsor representatives compare preclinical outsourcing operations to those experiences that they encountered during their careers. While challenging long-held beliefs and seeking diversity may contribute to one's personal growth, many sponsors would find this approach in outsourcing as inviting unnecessary risk. In fact, sponsors seek familiarity, predictability, and a sense of routine (to the extent that is possible) in their outsourcing experiences as they believe that this is a way to mitigate their risk. They perceive that they are in control when, in fact, that is never entirely possible.
As individuals, we form our perceptions and beliefs based on our own unique life experiences. We observe and compare whether we believe that we do or not. In preclinical outsourcing, we have our own unique business perceptions as well. Communication problems occur when sponsors and providers have different perceptions of the same business situation. This is why those CROs that are highly regarded by sponsors are those that effectively address a sponsor's concerns regardless of which party is "right" or "wrong." How CROs react in difficult situations with sponsors is as important as the research that they conduct for these sponsors. Effective CROs help sponsors to maintain their perception of feeling in control.
For sponsors, you need to do you homework when selecting a CRO. There are CROs with slick marketing campaigns that have created the perception of highly effective research operations in the minds of potential clients. However, with some of these CROs, the performance doesn't match the perception. Unfortunately, sponsors that don't adequately qualify their CROs don't learn about this discrepancy until it is too late to take their work elsewhere.
When CROs talk about partnerships with sponsor companies, they may perceive that all things are equal between both parties. Although there is evidence of more effective partnerships emerging in the industry, sponsors and CROs are generally not on a level playing field. The sponsor is the customer who is paying the CRO to provide a service: end of story! In this situation, a CRO can remain frustrated at the inequity of the relationship, accept the inequity, or show the sponsor how a true partnership can be mutually beneficial for both parties. For this last point, the sponsor needs to be open to the overtures of the CRO keeping in mind that to do so would require the sponsor to move out side of its comfort zone.
The most significant and potentially damaging perceptions are those that pertain to the performance of a CRO. Good sponsor perceptions about performance will enhance business. Poor sponsor perceptions often spread like wildfire. For CROs that are labeled with perceptions of poor performance, it can take years to rebuild their reputations. Those that don't may go out of business. I always encourage CROs to understand how they are perceived in the sponsor community. This is the essence of customer service. A CRO that understands its customers' needs and concerns is one that is situated for success. It never ceases to amaze me when CRO representatives tell me that they understand the industry better than anyone else. While this is the perception at some CROs, it is safe to say that the sponsor community doesn't necessarily share this assertion. To be fair, there are sponsors that also believe that they are masters of their outsourcing domain but, here to, the reality is not consistent with their perception.
Okay, so in this article we did discuss relationships. We saw how perceptions can influence everything from how we go about our daily lives to how we make business decisions. Our perceptions may or may not be based in facts but they are true to us until proven otherwise. We also saw how difficult it is to achieve a common ground for the basis of effective communication. If sponsors and providers can't communicate effectively, the opportunity to establish a business relationship based on trust diminishes significantly. Trust is what will help both parties get through difficult times and there will be difficult times. Many business relationships never get to this level because of perceptions. Unless we can remove (or at least become aware of) the filters that form our perceptions and view situations from the perspectives of others, our opportunity for success is doomed to the limits of our own beliefs.
