Study finds link between innovation and revenue

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George Chressanthis
George Chressanthis

A study by Temple's Fox School of Business, with funding and benchmarking data from TGaS Advisors, offers for the first time, according to researchers, empirical evidence of the link between a company's culture from a commercial-operations standpoint and revenue performance.

“If you acquire one of these companies, this study would say…the culture is what makes [it] productive,” says George Chressanthis, PhD, who led the study team.

Chressanthis, a Fox professor of healthcare management and marketing, and colleagues found that the average company that lifts its cultural innovation by a .5 standard deviation yields an increase in sales-per-rep of $314,000, or a 17% improvement.

Researchers identify two dimensions of culture—innovation (coming up with cool ways to beat the competition) and responsiveness (being able to execute with a sense of urgency and alignment). However, “These two things have to work in tandem…to drive performance,” said Chressanthis.

The findings, presented at the Pharmaceutical Management Science Association (PMSA) 2013 annual meeting in early May, have implications for biopharma companies on the hunt for acquisitions to make up for productivity challenges and revenue lost to expiring patents.

Execs evaluating potential targets should check for their underlying culture of innovation in commercial operations, in order to allow a quantitative investment to realize its full return. And if they do witness a unique culture, says Chressanthis, “What you don't want to do is disturb that.”
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