Case Study 2: Lotus Notes introduction at Compound UK

1 – Introduction

Compound UK is a multinational pharmaceutical company based in the United Kingdom. Compound concentrates primarily on selling its products to hospitals and general medical practices in the UK. It also looks to develop new drugs by participating in clinical trials with trusted doctors. In the late 1980s the NHS underwent a huge reform with the introduction of an internal market place. As Compound mainly operates in the UK health sector this had a significant effect on how the company operated. The new internal market place and budgetary responsibilities for hospitals resulted in the sales situations for Compound becoming more complex.

Compound’s response was to split the company up into eight regions with the aim of giving each of them greater autonomy in planning and responding in its own area. In addition to this Compound introduced a system to encourage knowledge sharing between departments and employees. The system they used was Lotus Notes. Compound had four main uses for Lotus Notes.

1. E-mail – to enable one-to-one communication;
2. Strategic Selling – to enable employees from different functions to share information on selling techniques;
3. Discussion Databases – to enable employees to talk about the topical issues within the company; and
4. Contact recording – to enable employees to record customer specific information.

The initiation of Lotus Notes did improve knowledge sharing within Compound but a different implementation and usage strategy could have made the introduction more successful.

2 – Benefits arising from the use of Lotus Notes

Prior to the introduction of Lotus Notes only a few groups within the company (such as area managers) worked across boundaries. After the introduction groups (such as the medical staff) who had previously not worked with those in other functions were able to communicate through the system. Whilst this may not have been to the liking of some of the medical staff (as they now were expected to work on complex sales situations and the development of new products) there were those in the company, James Black being one, who saw the potential benefits. Lotus Notes allowed him to liaise more with the representatives themselves, detail what it was he did and what he expected of them and it also afforded him the opportunity to visit doctors with the representatives occasionally.

The actions of people like James Black and others within the company (in no small part due to Lotus notes) made the representatives more comfortable in what was expected of them as part of their job description and encouraged them to contact the medical staff if ever they needed assistance. The system also had benefits for the medical staff themselves in that they themselves were able to see what it was like to be a representative – something they would not have done prior to the introduction of Lotus Notes.

3 – Areas that Compound could have improved

One area that could have been improved was how the directors used Lotus Notes, mainly contact recording, to monitor representative productivity. By launching a performance league table for the representatives in each region an increased amount of pressure was placed on each member of the sales force. This resulted in representatives recording false contacts and selling sheets, which they believed would improve their position in the league tables. Inaccuracies would then be present when directors evaluated potential sales. In addition, if representatives feel they are only being monitored by head office on one part of their job this is the only area they will focus on. The affect of this is that other areas of the company could suffer resulting in an overall lose in efficiency.

Using this kind of performance measurement has proven to be an inefficient means of recording the true performance of sales representatives and could prove harmful to the company in the long term. Therefore the directors should consider alternative means of measuring the performance of its representatives. Essentially whilst recording details of their meetings with doctors and such like may be of some benefit to the company it is not the best way of recording the actual performance of sales representatives. The directors at the company should investigate creating a system that would take into account the sales revenue (and cost of goods sold particularly if the sales price is negotiable) as at the end of the day revenue is what keeps the company alive and not the number of sales meetings or contacts that a representative has.

Directors at Compound could have found more success if they used contact recording to evaluate representative performance but in a more hidden manner. By not informing representatives of their surveillance they would continue to work normally and this would enable their true performance to be monitored. Also without the league tables the representatives would be more likely to record only relevant sales, which is the purpose of contact recording. As it stands contact recording at Compound is just a means for ambitious representatives to make a name for themselves and the figures and numbers present cannot be relied upon.

4 – Conclusion

The introduction of Lotus Notes had its advantages and disadvantages for the company. It was advantageous in that it opened up communications across different job functions – the medical staff could liaise with the representatives and vice versa. This enabled prominent members of staff, such as James Black, the opportunity to be in touch more often with the representatives and identify what he expected of them. However, when it came to recording the performance of the representatives the system was highly flawed. Representatives feeling under pressure by a performance table had a tendency to create false contacts and selling sheets and this resulted in potential sales becoming inaccurate and ultimately a loss of efficiency within the company. To combat this, directors should consider using alternative means of performance measurement (such as actual sales) and perhaps a more hidden approach to monitoring the performance of representatives (rather than something like a performance table).

5 – References

Title: Sharing Knowledge through Lotus Notes in a Pharmaceuticals Company
Author(s): Professor Geoff Walsham and Doctor Niall Hayes
Year: 2000

This project was a collaboration between Rory Linwood and Stuart Nibloe