June 2007
	Lessons Warren Buffett Can Teach Pharmaceutical Marketing Researchers By Richard B. Vanderveer, Ph.D., Group CEO, GfK U.S. Healthcare Companies About a month ago, I had the opportunity to join my 20-year-old son, Evan, in participating in one of the most enjoyable and seminal business experiences of my life. Since my son is an investor in Berkshire Hathaway Inc., I had the chance to journey to Omaha, Neb., with 27,000 other shareholders to listen to 76-year-old Warren E. Buffett, Chairman and Chief Executive, and his 83-year-old sidekick Charlie Munger, Vice Chairman, answer questions peppered at them from the audience. While the answer to each question was fascinating, my most important take away was how they all fit together, in a way in which I genuinely believe pharmaceutical marketers and marketing researchers can learn from. First, for those few readers not familiar with this dynamic duo, you should know that they are two of the originators of “value investing.” Rather than making wild bets on dot-coms or other flyers, Warren and Charlie specialize in buying sound stocks and companies (e.g., Geico, Dairy Queen, etc.) at good prices, and holding onto them for the long run. The system works well enough that Warren constantly runs neck and neck with Bill Gates, one of his board members, for the title of wealthiest man in the world. Keep it Simple The themes that ran through the day of Warren and Charlie resonated with me, because they reflected experiences I have had and lessons I have learned over my more than three decades in pharmaceutical marketing research. For example, as Evan and I left the arena that afternoon, drained but exhilarated, I asked him what the most important lesson was that he had learned. Without a moment’s hesitation, Evan responded that it was things that predictably work well are usually simple. Warren himself commented from the podium that the only math required for him to be a successful value investor was addition, subtraction, multiplication and division. If calculus and complicated models were required, he said, he would still be back at his first job delivering papers. As an aside, I flew directly from Omaha to Savannah to attend the, as always, excellent PBIRG meeting. I can assure you that it was quite a culture shock to move directly from the presence and pronouncements of a man who makes billions virtually on his gut instincts to a series of presentations in Georgia that appeared to be attempting to increase the complexity of data analytics for the simple sake of doing so, rather than adding any new insights to the pharmaceutical marketing process. The Value of Attention The superiority of experience over mere words was also reinforced for Evan, and for me, that day in Omaha. Adjacent to the stadium was a huge exhibition floor, with every inch filled with products manufactured by companies owned by Berkshire Hathaway. Rather than just exhibits, these were actual sales venues, where one could get Geico insurance, buy a pre-fabricated house or have a refreshing Dairy Queen in the middle of the day. OK, I’ll even confess that in a moment of weakness, I bought a pair of cowboy boots (at a shareholder’s discount) from one of the Berkshire Hathaway boot subsidiaries. And I love them! Warren also took full public relations advantage of this meeting, orchestrating photo ops of him playing table tennis with Bill Gates, him playing the ukulele with a string group, etc., as the high spots of the show, rather than the usual boring spreadsheets and endless numbers presented at most annual shareholder meetings. In fact, the hoopla began at the very start of the meeting, when an announcer’s stentorian tones over the arena’s loudspeaker system announced that Mr. Buffett was about to take the stage. Picture the reaction, at 8:30 on a Saturday morning, when out walked Jimmy Buffett, who opened the meeting with a series of ballads about Warren, Charlie and Berkshire Hathaway. Thinking back to all the lectures I have given on the importance of gaining attention as the first, most important and also most difficult task in communicating to our customers, I realized how much of a master of accomplishing this goal Warren Buffett is. Omaha wasn’t a meeting, it was an event. Cocktail parties, barbecues, significant sales at Warren’s famed jewelry store – you could feel the pounding of the event all weekend long, from one end of Omaha to the other. Buffett's Advice In summary, the lifetime lessons I learned, or had reinforced, that will put me in good stead for the balance of my career in pharmaceutical marketing and marketing research include: Keep it simple. If complex analyses are needed to make a deal make sense, it probably doesn’t. As Buffett and Munger have said, if you can’t explain something in simple terms you probably don’t understand it. In other words, we in pharmaceutical marketing should spend less time in a state of analysis paralysis and more on focusing on the things that feel right. Don’t do much, but do what you do with vigor. Buffett and Munger walk away from most of the deals they encounter, but when they see one they like they invest a lot, both in time to thoroughly understand the deal’s prospects and cold, hard cash if they decide to move forward. That made me think about one of my clients who, during the start up of the dot-com era, had made investments in some 26 different pilot projects related to the use of the Internet in pharmaceutical marketing, with an average ante of about $250,000 per pilot. Warren and Charlie would take one look at that situation and say no commitment of sufficient funds to yield success, no time to focus on each of these projects, no likelihood of success. Finally, get into things for the long haul. Consistent with the principles listed above, Buffett and Munger don’t look for a quick return on investment. Rather, their philosophy of “value investing” causes them to take a rather substantial position in only a few investments and to take it on and to ride it up. So much of the pharmaceutical industry’s sales and marketing efforts are based on brief Plan of Action (POA) cycles, with the desire on the part of the pharmaceutical marketers always to keep things fresh and changing, rather than constant and dependable. Listen to Warren and Charlie, and they will tell you that change is the enemy of success in business, since one never knows how things are going to change. Far better, they believe, is to identify a basic need that doesn’t change very much over time (like their Dairy Queen line) and to continue to meet these needs consistently. The pharmaceutical marketplace is littered with programs that were introduced, positively received by physicians or other customers and then abandoned by the manufacturers. We can learn a lot from Warren and Charlie. Want to learn more on this topic? Please contact: