Ultimately the fate of Anglo-Swedish pharmaceutical company AstraZeneca, under siege from US giant Pfizer, will be decided by its shareholders. But that hasn’t stopped the potential takeover from becoming a political football, with MPs, ministers, businesspeople and scientists all providing their views.
Some of them are justified in sharing their opinion – the MP for Cambridge Julian Huppert wants assurances to protect the high value jobs coming to the city from AstraZeneca’s proposed new research campus. University of Cambridge Chancellor, Lord Sainsbury, is concerned about the impact of a takeover on scientific research in the area and beyond.
Others however have fewer grounds for comment, but with a general election next year (and a European poll looming), it is a chance for the main political parties to try and differentiate themselves. It is a delicate balancing act, particularly for the Conservatives. On the one hand, they want to demonstrate their free trade credentials, but on the other they champion investment in scientific research as critical to moving the UK away from being a services-based economy. In many ways it is easier for Labour, as they are able to call for decisive action to stop the takeover, without having to actually implement anything.
Pfizer under attack
On the PR front, Pfizer is facing an onslaught from multiple sides:
- The positive tax implications of buying AstraZeneca and moving its headquarters to the UK have been highlighted as a major attraction of the deal, rather than a desire to invest in research.
- It is also hamstrung by previous behaviour – it shut its research centre in Kent (where Viagra was developed), leading to 1,500 job cuts and has slashed staff numbers following other takeovers. Indeed, the ex-CEO of AstraZeneca has said he has concerns that “they will act like a praying mantis and suck the lifeblood out of their prey.“
- A pledge to keep 20% of R&D jobs in the UK in the event of a takeover has led to worries that posts will be cut in the US.
- Finally, its first quarter revenue fell by 9%, $730m below analyst expectations, as patent protection runs out on key drugs.
The reason for much of this ire is actually retrospective. MPs and the general public are still smarting after the hostile takeover of Cadbury by Kraft, and in particular the broken promises on factory closures given to parliamentary committees by CEO Irene Rosenfeld. There’s a public determination not to be made a fool of again driving a lot of political behaviour.
The Pfizer PR strategy
This means that Pfizer is being cautious and taking the time to get its message across, with CEO Ian Read making trips to the UK (note how his Scottish background is being played up), intense lobbying of the government and assurances being given about jobs in the short-term.
However with less than three weeks until the bid deadline of 26 May, expect the tactics to evolve, depending on what will sway stakeholders. In a way AstraZeneca wants Pfizer to turn nasty, so it can claim protection from the Big Bad American, but I think that its opponent’s PR strategy is too clever to fall for that. It will just chip away, giving what appear to be increasingly concrete reassurances in public on jobs, while lobbying investors and politicians behind the scenes, potentially raising its bid without going overboard.
Will it be enough? Time (and PR) will tell, but I fear that the combination of Pfizer’s stealth approach and the short-term focus of many investors, will take the prize.
The internet has radically changed how we bank, removing the need to physically visit and turning a thousand and one redundant branches into All Bar Ones and Wetherspoons. But the actual mechanics of transferring money around haven’t really changed. Through a combination of regulation and the sheer complexity of the financial world most of us still entrust our money to a bank and use their systems to move it around. There are some notable new entrants, such as PayPal, and smaller banks, like Metro Bank, have been launched, but the majority of transactions still go through the same channels as before. The only change being that we do the work ourselves online rather than queuing up for hours in a draughty branch behind the man from the arcade paying in his weekly takings one penny at a time.
But most people recognise that the banking system doesn’t deliver the flexibility or mobility that technology can underpin. So how do you do banking without the banks? One way would be to make it simple to transfer money from person to person using a web-based platform that the majority of the world is a member of. Step forward Facebook, which has applied to the regulator in Ireland to launch e-money across Europe. This would allow people to transfer money to others on the social network as well as to buy things online. The combination of Facebook’s reach and brand could provide stiff competition to the likes of Western Union. However those worried about privacy may baulk at giving Facebook access to their bank details in any way, shape or form.
A second way is to change the currency altogether and allow payments and transfers through new forms of money, such as Bitcoin. However, the danger of an unregulated market has come back to haunt Bitcoin, with exchanges mysteriously emptied of money and government concern that the currency is used to pay for drugs, arms and sundry Bad Things.
Now the banking industry itself has come up with a third way. Paym, has been created by umbrella body the Payments Council and enables money to be transferred by simply typing in the phone number of the recipient, provided they are also registered on the service. Fast, direct and no need to give out your bank details to other people through insecure channels such as email. However it looks like the banks themselves are unconvinced by the possibility of doing themselves out of a job. 20 million account holders of RBS (and its subsidiaries NatWest, Ulster Bank, Clydesdale and Yorkshire banks), as well as First Direct, won’t be able to use the scheme until later in the year, while Nationwide’s five million customers will have to wait until 2015. RBS says it is prioritising getting its IT systems straight, after several high profile meltdowns, before joining.
With more and more of our money transferred online to friends and relatives who are further and further away from us, we need options that make it easy to transfer money simply, and quickly. But given our previous bad experiences with banks, will it be Facebook that steals a march and becomes the new financial hub for the internet age? Either way, consumers should benefit through genuine choice and hopefully better service, whoever they pick.
The industrial revolution mechanised previously craft-based activities, and since then machines have become more and more involved in creating the world around us. But until a few years ago, this mechanisation didn’t affect those of us in the creative industries – after all, our imagination and skills couldn’t be replicated by a machine.
The internet has changed all of that. In some cases it has allowed computers to take on tasks that were previously only done by humans, by applying artificial intelligence and machine learning and breaking them into discrete tasks. You can now get computer-written journalism, which use algorithms to bring together data and organise it into a rudimentary article. In the US, stories about minor earthquake reports are now routinely created and published, based on information supplied by the US Geological Survey. It isn’t much of a stretch to see short sports reports written based on player data and profiles, avoiding the need to send a reporter out to lower league matches.
However the biggest threat or opportunity to the creative industries is that the internet and digital technology has broken down the barriers around previously specialist occupations. Take photography. In the past only professional photographers could afford the equipment needed to create (and manually develop) arresting images. Now, similar levels of performance are available in a smartphone, and PhotoShop can do the rest. News stories frequently use amateur shots from bystanders who happened to be in the right place at the right time, adding extra depth to articles. Design and PR are both equally affected. Anyone can set up as a web designer or copywriter, without necessarily needing to undergo lengthy training.
In many ways this is a good thing – the internet has democratised creative industries that were previously off limits to most of us and enables more people to share their thoughts, feelings and ideas. It uncovers real talents who never previously would have been spotted, whether that is musicians on YouTube or specialist bloggers with a passion for their subject. But what it also does is amateurise previously professional occupations. How can a portrait photographer compete on cost with a bloke and an iPhone? Again, a copywriter on eLance charges much less than a professional. And the overall effect is that there is more stuff out there (words, pictures, videos of cute cats), but quality is far more hit or miss.
Before people start complaining, as someone that makes a living through PR and copywriting I obviously do have a vested interest here. But that doesn’t mean I don’t welcome more competition and the chance for more people to be creative. Far from it. However businesses need to understand that you get what you pay for – in the same way that fixing your car yourself is inherently riskier than going to a garage (unless you are a mechanic), working with amateurs opens you up to potential issues. Do they have insurance if something goes wrong, do they understand copyright, are they using legal images on your new website? There are 101 questions that you need to be sure of, before handing over your money. And it can be pretty obvious when a website has been put together by the managing director’s teenage son or daughter. Businesses therefore need to strike a balance between democratisation and working with amateurs if they are to stand out in an increasingly crowded global market.
Since the rise of the internet, there have been plenty of people predicting the steady decline of mainstream journalism. As people consume more content online they are unwilling to pay either to buy newspapers or to access firewalled content, except for specialist titles such as the Financial Times or The Economist. The result? A huge drop in the number of journalists employed in the newspaper industry – in the US numbers have dropped from over 55,000 in 1990 to under 40,000 today.
However, we are actually consuming as much, if not more, news than ever before. Much of this is in different forms, such as via social media or through news videos. The latest Pew Research Centre State of the News Media report found that a third of Americans now watch news videos online, rising to half in the 18-29 demographic. There’s also been an explosion in the number of digital news firms, creating 5,000 US jobs.
What’s interesting is that these companies are evolving fast. Rather than simply competing with traditional news sources by rehashing stories (or putting out controversial click bait headlines in the case of sites like BuzzFeed), they are investing in original content. Star journalists are being poached from top newspapers, lured by the opportunity to write longer articles without daily deadlines and with greater editorial freedom. Part of this growth is financial – launching a credible digital news site is relatively cheap, around $5m in the US for example.
And the Pew report finds that consumers are getting more involved in the news. 7% of Americans have posted their own news video to a social network or established media outlet and half of social media users share or comment on articles.
The difficulty for traditional publications is two fold – they are still running a print newspaper which has huge fixed costs, while consumers are much less loyal. They’ll click on a link on social media, irrespective of (or not even knowing) its source and then, once they’ve read it, leave the site without necessarily checking out other stories. In the UK the picture is skewed by the credibility and power of the BBC, which has successfully embraced the digital world, helped by its guaranteed funding through the licence fee.
So, what can newspapers do to evolve and change? From what I can see they have five options:
1 Put up a paywall
Given that people spend money on newspapers, why shouldn’t they pay for online content? Hence the rise in paywalls. However with a fickle readership, getting people to commit requires content that they truly can’t get anywhere else, which in turn necessitates investment in journalism, or extras such as Premiership goals in the case of The Sun. It works when the content is original enough or the subscription deal is compelling. On the downside paywalled content is a lot more difficult to share socially, so the overall reach of the title drops as well.
2 Make a go of advertising
Sounds easy – write good stories and advertising will flood in, both in print and online. In theory yes, but we’re back to the fickle readership and the increased competition for advertising pounds. Only those publications that really differentiate themselves (such as the Daily Mail and The Guardian) have grown their online audience enough to deliver a strong advertising revenue. In the print world, the Evening Standard has been able to transition from a paid for to free model, but it has been helped by having an owner with deep pockets.
3 Find a sugar daddy
With newspapers suddenly cheap, there’s been a rush of billionaires investing in them, either as a vanity project, something more sinister or simply because they can turn them around. Jeff Bezos, founder of Amazon, bought the Washington Post, the Boston Globe is now owned by Liverpool FC owner John Henry and Warren Buffett has purchased a whole stable of titles. Even the aforementioned Evening Standard is owned by billionaire Evgeny Lebedev.
4 Become a brand
If you can build a strong reputation for content, you may be able to transform yourself into a global brand. That’s the aim of The Guardian, which has made its name around the world by breaking stories such as Edward Snowden’s revelations. At a more local level it explains the rush of local newspaper groups into local TV, enabling them to share resources and cross-promote.
5 Get someone to write it for you – for nothing
Blog-based sites such as Mashable and the Huffington Post started out without much in the way of original content, but built themselves on contributed blogs. They’ve now expanded to create many more of their own stories, but the model – attracting interesting, informed bloggers looking for the oxygen of publicity – still works equally well on other sites. Both sides benefit, so provided the content is good it adds to a site’s appeal.
Most newspapers have looked at all five of these ideas (some all at the same time), but with varying degrees of success. However, as the Pew report shows, journalism can flourish in the digital age – it just may not be appearing in traditional media outlets.
How do you persuade people to buy your product or service, particularly when there is an increasing number of demands on their time and wallets?
I’ve always been fascinated about how an understanding of human psychology can help marketers to change people’s behaviour. Whether it is nudging people to choose the ‘right’ option or appealing to the herd mind, there is a lot that marketers can learn from the social sciences.
One theorem that can help improve marketing is Maslow’s hierarchy of needs. Originally proposed by Abraham Maslow in 1943 it essentially ranks the varying needs of humans, from the basic to the most complex. The key point is that it is only when one level of requirements are met will humans then move onto the next one.
So at the bottom are physiological needs – breathing, food, water, sleep, excretion. Without these humans simply cannot function. So, if you are selling basic products, appeal to this need, but if what you offer is more complex or higher value, look further up the hierarchy.
Next is safety (security of body, employment, family, resources, health, property). We’ve all seen marketing/advertising campaigns that play to these needs, normally by warning of the dangers that a particular product or service guards against. Insurance is the perfect example.
The third layer of the hierarchy is love and belonging, covering friendship, family and sexual intimacy. This is where sex sells, and also products that deliver a sense of being part of a group. Remember the scene every week in Cheers, where Norm comes in and everyone greets him by name? That’s key to this layer. However too many brands attempt to generate a sense of belonging, but make it too corporate and intrusive, such as Starbucks’ attempt to call customers by their first name when they were buying their latte.
Above belonging is the esteem level (confidence, self-esteem, respect of others, achievement). All humans have a need to feel respected, and clever marketers exploit this by offering products that (they claim) will increase your confidence and earn the esteem of others. Buy our car/mobile phone/bank account and your world will be transformed.
So, what’s at the top of the pyramid? All the previous levels were seen by Maslow as deficiency needs and have to be not just met, but mastered, before humans can move onto self-actualisation. This is much more complex and varies from person to person, but is essentially about achieving your full potential. To do this they need accept themselves, happy in their judgement and have an efficient perception of reality.
On the face of it self-actualisers should be immune to marketing, as they can see through attempts to manipulate their thoughts or feelings. However those on the path to self-actualisation can be targeted with images that show successful people and intimate that they can only be achieved by buying particular products. Think American Express Black credit cards or most celebrity adverts – drink Nespresso and you can be George Clooney!
I’m not saying that the hierarchy of needs is the sole way of planning marketing campaigns or boosting sales. But understanding which level your product best appeals to is a good way of focusing your efforts and going beyond features to look at what the customer is looking for. And that can only lead to better targeted products that consumers actually want, after all.
Everyone understands that the bigger a company gets, the more difficult it is to create and nurture ideas. There are a number of reasons. The sheer size of the organisation mitigates against change – it is incredibly difficult to get everyone to understand a game-changing idea and align themselves behind it. You get a fragmented approach and the whole thing can get mired down in bureaucracy and finger-pointing.
Large organisations are inherently conservative, with people not wanting to rock the boat, while there is fierce rivalry between different divisions/departments which can lead to ideas being squashed if they seem to tread on someone else’s turf. There’s also a fine line between a strong company culture and having too inward looking a focus. Even successful companies such as Facebook have been accused of a lack of perspective – because they solely use (and love) their own products they assume they everyone else believes they are equally awesome. Step outside the organisation and your obsession is just a minor part of the lives of your customers.
The good news is that the majority of organisations do understand the need for a stream of fresh ideas. After all, the world today is dominated by companies such as Google, Facebook and Amazon that either didn’t exist twenty years ago, or were considerably smaller. Competition in every market is increasing and no-one wants to go the way of Nokia or Woolworths.
So how do you align your company to create the best forum to create ongoing ideas? I’m no management consultant, but I’ve seen a few attempts over the last twenty years and it boils down to three broad types:
1 Innovation silos
In many industries (such as pharmaceuticals), where innovation relies on expensive capital equipment it makes sense to create separate, concentrated, research labs. These have the intellectual muscle and resources but can suffer from their sheer size and distance from the business. They can then hit the same problems as any other big organisation, with divisional rivalry and static corporate culture. Alternatively businesses have focused innovation in standalone business units – either skunkworks operations that are locked away from the rest of the organisation, incubators that support promising ideas at arms length or even smaller companies that have been bought and are run as ideas factories. All of these can work, provided management stay true to their word not to meddle or demand fast results, but there’s still no connection with the wider business and its needs.
2 The campus
You break up your monolithic organisation into a campus style environment, with different divisions occupying their own buildings, but close together. Splitting into smaller teams is good for creativity, and you get the economies of scale of having everyone on a single, but large, site. However the ability to cross-pollenate between groups can be limited – unless you happen to bump into someone over lunch you might be completely in the dark about what other sections of the company are working on.
3 The college
What I think is really interesting about the campus model is that it deliberately mimics the university campus structure. While this makes for a good working environment, it doesn’t help spread ideas. So I think companies need to look at a more collegiate model, similar to that of universities like Cambridge. You have two allegiances/bases – your division (essentially your college) and your actual project (your faculty). So you get the chance to mix with people from other divisions and collaborate on joint projects. Some people may find it disorienting, but if projects are scheduled to last 2-3 years the goal is never that far away.
Innovation is vital in every industry, and the size and structure depends on the sector and the market each company operates in. But I think it is time for more organisations to look at the college structure if they want to nurture and develop a stream of ideas that take their business forward over the long term.
There’s nothing as embarrassing as a politician trying to explain complex technology and completely missing the point. And as IT is increasingly seen as ‘cool’ and therefore something they want to be associated with, you can see a growing number of our elected leaders showing their ignorance in public. Following George Osborne’s cringeworthy appearance in the Year of Code video, and David Cameron’s attempted hijacking of Silicon Roundabout, the PM is at it again.
Speaking at CeBIT in Germany this week Cameron started off well, lauding the potential of the Internet of Things, praising the innovation of UK companies such as ARM and Neul, talking about Anglo-German co-operation and doubling funding for the area. But then what example did he trot out to show what it means to the general public? That our fridges can talk to each other, and order a pint of milk when we’re running low. Hardly a New Industrial Revolution.
The internet enabled fridge has been around as long as I’ve been in PR (nearly 20 years) and despite regular press appearances (and some actual products), it has failed to take off. Primarily because it is a stupid idea. Most of us (apart from one of my old housemates), can see when they are running low on food/milk and visit the shops accordingly. If not, are supermarkets expected to drop everything and rush you a single pint of semi-skimmed because your fridge told them to? Hardly economically viable. And what happens if you bought something and didn’t like it – will your fridge keep ordering more until your house is full of Dairylea cheese triangles? How will privacy be managed? Will the device send your eating habits direct to FMCG companies, like a giant ClubCard? What about security?
Poking fun at ill-advised politicians is easy, but the danger with the fridge fixation is it masks the real benefits of the Internet of Things and paints the wrong picture to the general population. We are talking about the ability to monitor our health, reduce the need for hospital stays as patients can be treated in their own homes, better manage our energy use, save us money and create smart cities that share information to make our travel and lives easier and more fulfilling. It is probably true to say that the real innovations of the Internet of Things haven’t even been thought of yet – but will develop on the platform once it becomes prevalent.
Due to the combination of the UK’s existing strengths in low power chip design, Bluetooth, availability of radio spectrum and the efforts of pioneers in the smart home space, there is a real chance that the country (and Cambridge) can become a major player in the Internet of Things. And given that the sector is expected to be worth £8.7 trillion globally when it hits maturity (according to Cisco), it is definitely the right market to target.
To succeed, UK companies need support, a well-defined technology plan that maximises investment in the right areas and a long term vision, rather than lazy examples of machines that no-one wants that will put people off the entire concept, raise potential privacy concerns and stifle acceptance. Install an internet-enabled fridge in Number 10 by all means, but do a better job of explaining the bigger benefits to the wider population if you want the Internet of Things to really take off.
I’ve talked before about the new ways marketers are trying to engage with consumers. This ranges from QR codes to augmented reality and relies on using the one device we always have with us – the smartphone. Being able to pinpoint exactly where someone is, for example the specific aisle of a shop, means they can serve up relevant marketing material that could turn a browser into a buyer. It is no wonder that the likes of Apple and Google are investing in technology that can help make indoor mapping more granular and detailed.
The latest technology to be touted to drive engagement is the beacon. Essentially a small, low cost, Bluetooth-enabled box that can be quickly fitted inside a building, it enables companies to send messages to suitably equipped smartphones in the near vicinity. As beacon technology is built into the latest Apple products, there are already over 200 million iOS devices out there that can act as both receivers and transmitters.
The possibilities are getting marketers, particularly in the US, extremely excited. Companies can automatically send relevant offers if you are in particular areas of a shop, such as in front of their products (or, if you’re being sneaky, in front of your rivals’ products). Airports or train stations could send automatic updates on delays or gate/platforms changes. Beacons can be used to measure dwell time in specific areas and provide offers of help. William Hill is planning to use beacons to send in-app betting messages at the forthcoming Cheltenham Festival, while outdoor advertising companies are looking at how it can drive engagement with adverts. Mobile phone networks EE, O2 and Vodafone have invested to create a joint venture – Weve, to target the space, with Eat trialling their technology. The reason for the interest is that essentially beacons promise the same digital tracking possibilities as online, but in the physical world.
However there are a still a couple of elephants in the room when it comes to mass market adoption. Consumers need to switch on Bluetooth, download an app, enable location services for the app and opt-in to receive notifications. So, even though iPhones now come with Bluetooth on as standard you still need to jump through a lot of hoops to be beacon ready.
And then there’s privacy. Perhaps you don’t want marketers to know whereabouts in the shop you were loitering or what you are buying at a detailed level. As the success of social media and loyalty cards have shown, people are willing to give up some of their privacy in return for a better experience and targeted offers, but none of these are as instant and real-world as beacons zapping a message straight onto your screen in real-time. At the moment all the advantages seem to be skewed towards retailers, with very little concrete benefit for consumers that will make them want to go through the rigmarole of making their phones ‘beaconable’.
At a time when consumers are just about getting their heads round paying for things by swiping cards rather than laboriously typing their PIN, I think beacons have a big job ahead to accelerate consumer adoption. The whole process needs to be made seamless and simple, with a focus on the benefits, rather than looking like another way to invade privacy and sell you more stuff. Only then will beacons deliver the insight that marketers and businesses are looking for.