Register (at the bottom of the webpage) to join Global CEOs, Top HR and Key Influencers share strategies at the
Cheung Kong Graduate School of Business 601 Lexington Ave. 26th Fl. New York, NY 10022
‘Leading in an Ambiguous World’
How to stay ahead and aligned in today’s fast changing markets, talent compression, regulatory shifts and technology disruptions. A fast paced, highly interactive collaboration among global leaders on emerging trends.
How to build a Global Customer & Client Centric Organization- the 8 key behavioral and operational dimensions
How to create a Culture that supports Innovation and Intrapreneurship
2020 – The Next Practices in Global Talent Development and Mobility
Staying ahead of Regulatory Shifts and leveraging Technology for Operational and Market Advantage
Join my session on “Building a Sustainable Innovation Ecosystem in a Global Corporation” in the Innovation Culture & Ecosystems track on March 21.
What my session is about?
Large pharmaceutical (and other) organizations struggle with the tectonic shifts and fundamental changes across the landscapes worldwide. The traditional mindset and business models are failing. A rejuvenating and holistic transformation effort is needed to get nimble again and adapt to the new reality.
How do you change a stagnant innovation culture and create a sustainable ecosystem within a global organization that stands the challenges of real life?
As an example, this case study discusses the comprehensive yet practical approach that mobilized hidden talent and resources transforming Boehringer Ingelheim, a Global FORTUNE 500 pharmaceutical company, from within on a global scale. It generated exponential returns and fundamentally changed the culture of the organization from leadership training and managerial decision-making down to bringing grass-root ideas to a break-through and new career paths for employees.
What is the Problem?
The issue is universal and not limited to a pharmaceutical or healthcare company: There is no lack of great ideas aiming beyond incremental improvement at the grassroots of large organizations. There is also no lack of funds or support for break-through ideas on the top of the hierarchy; in fact, leadership is constantly seeking for good ideas. However, there are many obstacles bringing them together.
One problem is how to connect the people with great, disruptive ideas with the ones that have the authority and resources to making them happen in the organization?
A second problem is how to find and vet the ideas that have a game-changing potential and develop them with limited risk?
The third problem is that even with executive support it can be hard to implement a new idea against the resistance of the organization, which rejects them as disrupting the equilibrium of the status quo.
The proposed session illustrates and discusses the real-life experiences of building and operating a holistic and sustainable framework that successfully addressed the issue, overcame resistance on many levels, and yielded an exponential return-of-investment. It resulted in a visible and measurable way changed innovation mindset and changed behaviors throughout the organization to bring disruptive ideas and projects to life.
Where do I find more Information on the Topic?
Visit my blog OrgChanger.com to read more about intrapreneuring with case studies and real-life success stories!
German innovation gets trapped in the very mentality focusing on building quality products ‘Made in Germany’ that the country got well known for. Holding on to vertical product improvement, however, obstructs crossing industry barriers, convergence, developing game-changing business models, and coming up with breakthrough innovations with potential for exponential growth and returns.
Germany – Land of the ‘Hidden Champions’
A recent research study of the Centre for European Economic Research confirmed Germany leading by far with 1,550 hidden champions. Companies are commonly considered a hidden champion if they are no. 1 or 2 on the world market, make less than EUR 1.5b revenue and their name is not overly well unknown in the general public.
Note that mid-size companies make up 80%(!) of German industry and resemble the backbone of the German economy altogether. According to the Berlin School of Economics and Law, 90% are focused on B2B.
See if you recognize a few examples for hidden champions that are leading global players:
Dixi / ToiToi (portable toilets)
EBM-Papst (motor and fan manufacturer)
Enercon (wind energy)
Krones (bottling machines)
Recaro (car and airplane seats)
Trumpf (laser cutters)
Inside the Vertical Tunnel View
Among the 1.500+ market leaders only two German companies are leading software companies (Software AG and SAP). The vast majority focuses on more tangible product innovation leaving this digital industry somewhat isolated, underdeveloped and vulnerable like an economy’s Achilles’ Heel.
You get a good sense for a vertical bias in product innovation, when you read German open job postings for innovation lead position of sorts: As an innovator in an automotive company, you require a solid background in engine engineering, for example, or as an innovation leader in a chemical consumer goods company, you will not be hired without in-depth knowledge of adhesives, for example. It becomes painfully obvious how the vertical product innovation fosters a mindset of inbred solutions and can miss out on transformative opportunities beyond the own domain, bridging and converging industries.
Point being: Innovators are usually hired from within a vertical industry. This leaves little room for creative influx from the outside. Since meaningful innovation ‘happens’ at the cross-roads of disciplines in a horizontal cross- pollination of different industries and domains. This inflexible German practice lends itself to incremental improvement of products rather than disruptive transformation of businesses, entire industries or even across industry arenas. Within a vertical mindset, ecosystem cross-pollination withers and innovators are less suited, prepared, capable, or enabled to disrupt.
Digital Transformation “Made in Silicon Valley”
When it comes to digital transformation, German companies got disrupted and steamrolled mostly by large-scale digital disruptors coming out of the United States from either California or the East coast technology ecosystems with huge global impact and a different approach:
The world’s largest taxi service owns no taxis (Uber)
The most popular media owner creates no content (Facebook)
The largest movie house owns no cinemas (Netflix)
The largest accommodation provider owns no real-estate (Airbnb)
The largest software vendors don’t write apps (Apple, Google) and so on.
The above examples differ from traditional products not only by bold out-of-the-box thinking but also by paying close attention to the customer. Their business models rest firmly in the digital world with a software business and an internet backbone.
Uber and Airbnb offer digital platforms – that’s it, no tangible goods. Nonetheless, they shake up the established industries of transportation and hospitality in ways unheard of. They also reap exponential returns by creating new digital arenas that generate highest recurring revenue in the digital space.
Missing the Digital Train?
Back in Germany, its 1,500+ hidden champions flourish in a robust economy, so Germany must be doing something right overall with a vertical focus set on tangible quality products within industries. Good money is still made in Germany by holding a steady course of vertical product improvement.
This practice also goes hand-in-hand in hand with protecting and not challenging enough the traditional sales-driven business models to avoid cannibalizing the status quo for next generation innovations. It reminds of the Kodak-Eastman story having invented the first digital camera but rejecting the technology in order to protect the business around the existing analog film products – and we all know what happened to Kodak.
A Digital Transformation Divide
Truly putting the customer in the center and embracing digital business requires a radical transformation of the existing business and its operations. The critical interface between IT and Marketing, for example, often is not well developed in Germany, where traditional companies lack understanding of the digital potential and struggle with developing new, digital business models in time.
It is not a question but painfully obvious that -with the current mindset and strategy- Germany misses the train on digital transformation. While the world moves online, many companies in Germany failed or simply ignored the emerging technological opportunities to develop digital business models consequently, in a structured fashion and timely.
In fact, German companies practically ‘gave up’ across entire industries including media, travel and retail. In a recent wake-up call, the German government asked companies and industries to focus on digital transformation in a widely proclaimed initiative called “Industrie 4.0” ‑ a race to catch up internationally. And catching up is much needed: the narrow German ‘inside focus’ presents a vulnerability to be exploited by foreign disruptive players. The gap widens steadily as the competitors advance fast, build up huge resources and become increasingly experienced to develop and apply digital transformation with new business models.
Pessimism with an Insurance Mindset
The high level of disruption and uncertainty does not come easy to less flexible German mindset: Having experienced hardship many times during the not-all-that-distant history, Germans tend to seek and value predictability and safety. Anxiety and fear of the unknown forms an undercurrent in the mindset of German society, which is expressed by seeking refuge in insurance policies to prepare for any unknown future events.
As an example, not only do Germans over-insure their daily lives with a myriad of insurances, Germany also holds on to one of the largest amounts of hospital beds and bunkers per capita. You find more hospital capacity in the Berlin-area alone than in all of their neighboring country, The Netherlands!
In general, start-up funding is not as easy to come by as in the U.S., for example, where venture funding is a more common practice. When I arrived in Germany a year ago, I came across a serious government program that ‘supported’ a new start-up or entrepreneurs with grants tied to a projected positive return-on-investment (ROI) within the first year. Now, building a profitable business from scratch within in year is an unrealistic goal. Consequently, the desperate entrepreneur in need of funding would have to submit a bogus business plan right of the bat, which is a set-up for disappointment down the road. So, either the government program is not meant serious (unlikely) or is designed by people not knowing the first thing about starting a business (likely).
Techno-Fear and Over-regulation
Overall, the German mindset tends to be more critical regarding new and unfamiliar technology. Seeking to avoid risk comes with a tendency to ‘over-regulate’ in the sense of applying regulations just because it is possible to regulate rather than because it is necessary to come up with regulation.
Since a long time, Germany has the strictest data privacy laws. Domestic law protects the individual by granting them the right to control their personal data online and offline. These regulations are rooted in the country’s dark experiences during its Nazi-past but is also is a reflection of the outspoken suspicion among the broader population towards digital data technologies and their application. Thus, Germans tend to be more reluctant to share personal data on social media out of fear of exposure and losing control.
The protective (domestic) legislation means well but can only be effective in a closed system, which the (global) internet is not. In a digital world international boundaries are artificial. Given the nature and proliferation of digital technology and interconnectivity of people around the globe, keeping up the aspired high standards proves increasingly cumbersome if not impossible.
The German island can hardly be defended effectively over time. It may protect the citizens from some harm locally but in return also isolates them and denies them access to the benefits of a technology that ever progresses globally.
Losing the Entrepreneurial Spirit
Given a rather pessimistic Germany mindset that is reluctant to fully immerse in the digital world, digital-resistant citizens appear poorly prepared for ‘moonshot’ visions, embracing the opportunities of Big Data Analytics or the vast potential of the Internet-of-Things (IoT).
The present German ‘generation of heirs’ inherits the wealth created by their parents’ generation during the famous post-WWII decades known as the economic “Wirtschaftswunder” boom. Very much in contrast to the U.S. or Asia, many Germans do not share the venturing spirit anymore. They show reluctance to trying out something new such as building a business as an entrepreneur for several reasons:
Firstly, Germans tend to prefer a detailed plan before actively exploring an opportunity and strictly sticking to the plan during implementation. Besides the favorable element of thorough planning, this approach also reflects a deeper fear of failure and seeking a sense of security and predictability. Deviating from the plan is often interpreted as a failure.
But then, which plan ever is perfect and stands the test of a dynamic reality? Sadly, the debate then quickly tends to turn to finding a culprit when things go sour rather than making adjustments to keep moving on.
Secondly, German hesitation and even a good amount of pessimism roots in stigma of a business failure, which seems to stick more in German society than in the United States. More than 9 out of 10 start-ups fail, but when a startup fails in the U.S this does not automatically translate into personal failure of the leader. It is much more seen as a learning experience, while a German CEO gets easily branded loser.
Surrounded by the ‘insurance thinking’ mentioned earlier it will be hard for the former CEO finding support for a future business or even employment in Germany after a venture failed. In consequence the German CEO is more motivated to beat a dead horse rather than cutting the losses and move on.
Summary – Brakes on Digital Innovation in Germany
For all these reasons, visions tend to be smaller in Germany. They are more designed to control risk than seizing exponential business opportunities. Thinking too small, not disruptive enough and too focused within an industry prohibits to compete with the digital global players that emerged with exponential business models, such as the Googles, Apples, Amazons, Airbnbs, Ubers, and so on out there.
What keeps the brakes on the German innovation machine is the in-bred mindset and vertical tunnel vision with a focus more on products instead of customers, and the risk-avoidance and fear of applying digital technology to its full potential. It traps many German companies in a self-limiting disadvantage compared to American or Asian competitors, which prove more venturous, flexible and generally optimistic.
The U.S., in particular, entrepreneurs come not only with a more flexible and optimistic mindset, but can also tap into unique startup eco-systems in place (Silicon Valley, Boston and NYC areas primarily) with easy access to bright minds, cross-pollination and venture capital.
There remains demand for physical, quality products in the future, such as the machinery, tools or cars we value today as Made in Germany, so the 1,500+ hidden champions look into a bright future. Their reluctance to embrace the digital age, however, and transform to embrace new digital business models, however, may steadily push them to the sidelines as industries and arenas change beyond their input or control.
Beginning in 2012, Boehringer Ingelheim launched a global initiative to encourage more intrapreneurial spirit of employees and offer them a platform that enables generating and implementing disruptive innovations across the organization to either decrease expenditures or increase revenue. With a focus on developing and executing game changing ideas, part of this initiative is focused on providing associate-level executives with the tools they need to evaluate their ideas and best position them when pitching them to more senior management.
Frame your idea for a successful pitch
Create a compelling business case that resonates with senior management
Break through the red tape: navigating around internal barriers and finding allies
ePharma is the incubator for cultivating a diverse and innovative digital marketing plan to help you move your commercial initiatives forward.
Augment your expertise, dissect current biopharma trends, and uncover new opportunities at ePharma. Get the tools to build robust, cost efficient marketing campaigns over three days of tactical and strategic learning.
New for 2015:
Discover how innovations such as wearables, mHealth apps and nano technology impact health and patient care and what the best plays are for an integrated marketing campaign.
Learn how to pitch your entrepreneur product to a venture capitalist. Highlights include a checklist for sellers to address the needs of users.
Hear out-of-industry case studies from retail and publishing highlighting the success of using digital and traditional mediums.
Come to discuss my talk about “Changing employee mindset to boost collaboration and engagement for extreme business results”
How to overcome innovation hurdles in large organizations
How to build an entrepreneurial culture within your company to respond to change quickly
Measuring success beyond money – behavior change for best practices and boosting ROI
Workshop at 3:30pm on March 6, 2015
And take my Intrapreneuring Workshop “Building an innovation framework to design, launch and execute business projects”
The workshop participants experience the role of an intrapreneur to bring a project to life using disruptive methods and collaboration.
Innovation Barriers and Assessment
Becoming an Intrapreneur
Resistance, Sponsor and Team
Prototyping, Pitching and Investor Insights
About the Conference
Pharma companies stand on a cross-road for a few years now. They can choose to stick to their old ways that will probably slowly kill their business or successfully adapt to the reality of continuously shrinking pipelines and growing obstacles.
The 5th Annual Pharma PPM Toolbox will provide you with fresh ideas and solutions from experts who work hard to keep up with uncompromising market demands.