Harvard Business Publishing

Great article. The unfortunate reality for pharmaceutical blockbusters is that the Sustainability and Scarcity dimensions do not last. DC Comics owns Batman and Warner Brothers owns the film. In 10 years from now, the character’s value will likely be consistent (over 50 years for Batman), and the film will still be a sellable asset (though dated with a smaller market). Blockbuster drugs enjoy a few years of on-market patent protection at best before generics completely cannibalize the market (not just reduce, as you would expect any product over time) – importantly here, without regard to brand equity and/or loyalty that blockbusters often engender in consumers.

The other limiting factor for drug companies is the Sheer size dimension. With some form of medical treatment already available for many conditions afflicting large populations, firms are competing in building a better iPod until our science evolves where we invent more cures instead of treatments.

So the question I am left with in reviewing the 5 S’s is the relationship between blockbuster and the market: are blockbusters truly blockbusters because they redefine markets? If so, another important S might be Set – they set new standards by which competitors will need to compete.

Jason Burke
http://www.sas.com

I'm guilty but this article has lost all credibility with me with this statement alone:
A blockbuster does not just address an important need. It does so in an exciting and accessible way. Pfizer's Lipitor was not the first cholesterol reducer and was no better than Merck's Zocor, but superior marketing and sales made Lipitor number one. And, in the movie world, remember the magical and memorable special effects in the Star Wars series.

Lipitor was far and away more effective than Zocor in reducing cholesterol. Every study has confirmed this and specifically that it limited mortality events at much hire rates.

By including that statement I've got to include that you've over simplified many elements just to have "sizzle" to the point where its no longer relevant.

Sense.

Does it make sense?

Common sense and dollars and sense.

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Thanks for highlighting the relative performance of Lipitor over Zocor. You are correct that the drugs are not equivalent in their effects and I have amended the blog post accordingly by removing the Zocor reference. Thanks again

Blockbusters can be relative in size, too. At a local level the same five characteristics can play out to great effect. You can make a big splash in a small pond.

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I question the need for Scarcity in the creation of a blockbuster. You may need the scarcity at initial launch of a consumer electronics devices like the iPhone, however to maintain a brand over the years as a block buster takes a lot more than scarcity, it really demands the creation of a portfolio that can deliver to the target audience. Creating a blockbuster implies that all the users of a specific good gravitate to YOUR blockbuster over others regardless of the 4 P's (Price, Place, ,,,) , implying that you need to keep the brand fresh, and the value proposition attractive.

Everyone gravitates to a Latte from Starbucks, there is no scarcity today. The real issue at hand is how to keep the blockbuster going for decades! Think Pampers.

As I read your blog post I couldn't help thinking about Clayton Christenson's innovation market model. It would appear that the blockbuster phenomenon is similar to his "fault line" category where market leaders fail to meet the needs of the changing marketplace. The long tail theory fits well into Christenson's model also in that the successes Anderson describes can be found in innovations around customer experience or customer-touching processes or business model.

All of the examples used in the blog post were products. The concept of a blockbuster from a services industry perspective is challenging. Is it more difficult to find a "blockbuster" in this industry? Sometimes I think so and anecdotal experience would suggest the same, especially if the movie entertainment industry is the comparison. If you compare the services and pharma industries, then perhaps the level of challenge is more equal.

Do you have any examples of blockbusters from a services delivery perspective?

Good article. Just as important to defining a blockbuster is defining the competencies that allow a firm not only to manage the life cycle of a blockbuster, but create the next. I think the challenge with our capital structure is the overwhelming pressure to manage the short term (obvious I know) which leads to the milking of the "one" as opposed to cultivating and truly investing in organization and inputs that lead to future blockbusters. Compounding this external pressure is the internal culture/human element which often shifts from a focus on building the company to managing one's career; especially when faced with the difficulty of creating the next winner. Defining the tools, practices and capabilities to create an organization that can manage the first and creation of the next blockbuster would be of incredible value to leadership.

As good as it sounds, the fundamental premise rests on leadership in innovation and product development. That does not umbrella for all the industries categorically, market capitalisation has oftenly thrived in free market economies. Over the last two decades, an increasing number of industries have evolved from vertical integration to more horizontal structures where firms design and manufacture components that are later assembled by third parties for the final customer. In these horizontal industries, firms may be "complementors," rather than customers, suppliers, or competitors. Classic examples of complementors include Intel and Microsoft. Similar complementor relationships arise in industries such as communications, consumer electronics, automobiles, and health care.

Interesting point of view!

The problem with blockbuster-based business models is that they are incredibly vulnerable. Why has the music/record industry suffered from illegal downloading. Because they were so dependent on a small base of super-star artists and their blockbuster hits.

Pharma is very similar. The day the patent of a blockbuster drug expires you will find generics on the market.

Building a business model based "on the long tail theory" is less risky because you do not depend on a small base of products. Yet, the task of building such a platform is equally challenging...

Scarcity can actually KILL a blockbuster. In my days working on billion dollar brands at P&G, I saw occasions where a product was selling "too fast." If you cannot make enough product to satisfy demand, retailers end up cutting their support (that end-cap goes to something else) then are slow to re-up one you catch up to demand. As a result, a hot product can quickly lose momentum and fail to become a blockbuster...

Brings to mind the old line: “Good companies will meet needs; great companies will create markets.” However, it is the Survivor Bias that allows us to believe that one can create markets and blockbusters deliberately (just as we celebrate the Infinite Monkey's recreation of Shakespeare's works because, like beating the market, we want to believe it can be done). Since HBS has no blockbuster, does this mean that JQ and his colleagues are condemned "to a lifetime of slave labor harvesting the long tail of micro-opportunities"?