I recently finished reading Walter Isaacson's biography of Steve Jobs, the co-founder and visionary leader of Apple. As I
read the book, I sought to glean insights on what it was that made Jobs and Apple so fabulously successful over the past 10
years. The answer, the book makes clear, is Job's fanatical and obsessive focus on the user experience: ensuring that Apple
products had a broad range of features, were fun and easy to use, and made a statement about the person using them. The superior
customer experience that Apple products deliver has enabled the company to grow rapidly while commanding higher prices than
its competitors and earning the best profit margins in the consumer-electronics industry.
For Jobs, one of the fundamental principles for maximizing the user experience was maintaining Apple products as closed systems.
Apple products are designed as an integrated system such that only hardware and software developed or approved by Apple will
work with them, thus ensuring that all elements will work well together. This is in sharp contrast to the PC world, in which
computers running the Microsoft Windows operating system can accept peripheral equipment and run software programs from thousands
of suppliers. The open system environment of the PC world gives the customer far more choices than Apple's closed system,
but is more likely to lead to problems, such as system crashes and the inability to print documents because of compatibility
problems between the various pieces of hardware and software. The open environment also has led to the commoditization of
the products themselves, driving down prices and making the PC world marginally profitable at best.
Applying Apple concepts to contract service providers
The closed-system idea struck a chord because of its potential relevance to the integrated service model taking hold in the
contract services industry. Both large and small bio/pharmaceutical companies are embracing the idea of buying services as
a bundle rather than on an individual basis, for example, having the same contractor develop and manufacture early clinical
supplies of the drug substance and drug product. For small bio/pharmaceutical companies, the bundled model offers the opportunity
to get their development candidates to the proof-of-concept decision point much faster while overcoming their deficiencies
in project management and development expertise. For large bio/pharmaceutical companies, buying a package of services promises
to reduce the costs of identifying, qualifying, and managing a network of service providers by reducing the total number of
providers in the network.
This trend from the "open system" world where bio/pharmaceutical companies themselves had to work out scheduling and compatibility
issues among service providers to the "closed system" of integrated service providers (ISPs) can be transformational for drug
development and for the service providers themselves. For the ISP model to really work, service providers must take ownership
of the entire customer experience. So, executives of CROs and CMOs offering a one-stop-model must dedicate themselves to answering
three key questions:
Question 1: How do customers define a superior experience?
Question 2: Now that we have all of the elements under our control, what can we do to make them work together to provide the best possible
Question 3: How do we demonstrate the value of our integrated offering so as to convince the customer to pay a premium price for it?