Join Masterclass webinar: “Beyond-the-Pill” Disruptive Innovation within Pharma, Feb. 23, 2016

The pharmaceutical industry struggles with the fundamental changes of the healthcare systems worldwide. For many reasons, the traditional mindset and business models of the past are failing today. New approaches are needed for innovation “beyond the pill” to stay profitable and ahead of competitors.

But how to change a large organization bottom up and from within?

Sign up for the Masterclass: “Beyond-the-Pill” Disruptive Innovation within the Pharmaceutical Industry webinar hosted by the Intrapreneurship Conference at 5-7pm CET (11am-1pm ET) on February 23, 2016!

Intrapreneurship Conference

Why?  The pharmaceutical industry struggles with the fundamental changes of the healthcare systems worldwide. For many reasons, the traditional mindset and the business models of the past are failing. New approaches are needed for innovation “beyond the pill” to stay profitable and ahead of competitors.

But how to change a large organization bottom up and from within?

This session offers you a unique birds-eye and worms-eye view on pharma innovation and its shortcomings under the current paradigm, before diving into real-life case studies of intrapreneuring, disruptive transformation and strategic innovations within and beyond a Global FORTUNE 500 pharma company.

Join this masterclass and learn on how to bring intrapreneuring and transformation to life in a large pharma company.

Driving Innovation in Healthcare: New Executive Intrapreneuring Workshop

Experience the new two-day intrapreneurial journey to transform you organization with exponential results!

Don’t miss EBCG’s intense and hands-on Intrapreneuring Workshop “Building an innovation framework to design, launch and execute business projects” in the Driving Innovation in Healthcare series in the “Golden City” of Prague, Czech Republic, on April 6-7, 2016.

Sign up before December 23, 2015, to save during the special promotion period.


 

 

Read Intrapreneuring Case Study “Leading Innovation” by Ivey Business School!

The prestigious Ivey Business School of the Western University in Ontario, Canada, published an insightful new teaching case study on intrapreneuring and corporate innovation titled “Boehringer Ingelheim: Leading Innovation” in which the case writers, Professor J. Robert Mitchell, Ph.D., and Ramasastry Chandrasekhar, follow the footsteps of the newly appointed innovation director.

Meant to raise questions and serving as a learning opportunity for graduate students in academic program around the globe, this case study lifts the corporate curtain a bit to show how innovation through intrapreneuring really happens and decision points along the way.

Outline (by Ivey Publishing)

The newly appointed director of Innovation Management & Strategy at Boehringer Ingelheim, a German-based multinational pharmaceutical company, is finding his way forward in his firm’s new, first-of-its-kind role, which is central to the company’s growth rejuvenation strategy. His job has a threefold mandate: to build internal networks, to establish internal structures and to leverage internal ideas. His biggest challenge, however, may be transforming the organization’s DNA. The blockbuster business model that has characterized the company for decades is no longer appropriate. Instead, the firm needs to develop healthcare products available to end users over the counter. This shift in strategy requires innovative changes in distribution, delivery and customer focus. To accomplish this goal, he needs to institutionalize innovation so that it becomes sustainable. But in doing so, he must also identify the metrics for assessing progress. The case provides an opportunity for students to step into the shoes of an innovation leader, to develop an innovation roadmap for the organization in the face of uncertainty and to understand how to engage in innovation leadership at various levels of a global enterprise.

Learning Objective

This case has two key objectives. First, this case provides students an opportunity to grapple with the difficult decisions associated with innovation in an uncertain environment. Second, this case highlights that anyone has the ability to cultivate an entrepreneurial mindset and to lead innovation. The case divides the attributes of an innovation leader into five components: observing, questioning, experimenting, networking and associating. It shows the real-life experiences of a manager doing seemingly routine activities, who evolved into a leader who transformed the DNA of a global enterprise. The case also provides a template of the tasks, responsibilities and value-added changes as an individual moves progressively within an enterprise from an operations manager to a senior manager to an innovation leader. This case can be used either toward the beginning or toward the end of any course that addresses innovation and creative thinking in a large organization. At the beginning of a course, it illustrates the challenges of acting in the face of uncertainty in a large organization. At the end of a course, the case provides an opportunity for students to apply what they have learned about innovation, entrepreneurial thinking and innovation leadership.

Innovation drives Diversity&Inclusion 2.0

The traditional world of corporate Diversity and Inclusion (D&I) is being disrupted by a new take on D&I and combining it with innovation and talent management.  What some perceive as a threat to the D&I establishment may just be the next step of evolution that could invigorate and drive D&I to new heights.

Though not an entirely novel approach (see also How to create innovation culture with diversity!) the new thinking gains traction.  As this could play out in different ways and only time will tell what worked, here are my thought on where we are heading.

Struggles of the  Front Runner

Many traditional D&I programs, let’s call them “version 1.0” of D&I, struggle transitioning beyond a collection of affinity groups, tallying corporate demographics and competing for D&I awards to post on their webpage.  In these traditional D&I programs ‘diversity’ is often understood to be reflected by more or less visible differences among individuals at the workplace while ‘inclusion’ translates to supporting defined sub-populations of employees through, for example, establishing affinity groups.

The United States is seen as the front runner of the D&I movement.  D&I has been around in the U.S. corporate world for decades.  For historic and demographic reasons it hones in on removing obstacles for minorities at the workplace supported also by strict legislature and execution; exercising Affirmative Action, for example.

This legacy in the U.S. lends itself to an inside focus on organizations that became the backbone of the traditional D&I programs.  It comes down to the question ‘what can or should the organization do for specific groups of people’ defined by ethnicity, gender, age, sexual preference, faith, disability, war history and so on.  Apparently, it still is work in progress as, for example, Silicon Valley just recently got on the public radar, which stirred up the debate afresh along the lines of D&I 1.0; see Google releases breakdown on the diversity of its workforce.

Stuck in the ‘Diversity Trap’?

The inside focus and minority messaging of D&I 1.0, however, can be limiting when D&I erodes to a process of ‘doing things right’ by pushing for quotas, ‘checking boxes’ and inflating variations of terminology perceived as ‘politically correct’.  This can in fact be different from ‘doing the right thing’ for the company overall, its employees as well as the affinity groups and their constituency.   It should not surprise that Affinity groups can be (and often get) stigmatized and perceived as self-serving and self-centered social networks without significant and measurable business impact.

Under this paradigm these D&I 1.0 programs struggle to get serious attention, support and funding from executives beyond operating on a minor level to ‘keep the lights on’ more for public image purposes than business drive.  The fundamentals seem to get forgotten: in the end, a business exists to generate a profit, so less profitable activities are likely to be discontinued or divested.  It’s a symbiosis and to say it bluntly: without healthy business there is no D&I program and no affinity groups.  When this symbiosis get lopsided, D&I 1.0 gets stuck in the trap.

D&I 2.0

“Diversity” is catching on beyond the United States in Europe, for example, where many countries do not have share a highly heterogeneous demographic composition, for example.  Here, companies can start with a fresh approach jumping straight to D&I 2.0 – and many do!  It reminds me of developing countries installing their first phone system by skipping the landlines and starting right away with mobile phones.

The 2.0 internal focus corresponds to hiring workers that truly think differently and have different backgrounds and life experiences some of which overlaps with D&I 1.0 affinity roots.  In addition, there is also an external focus putting the staff to work with a clear business proposition and reaching even beyond the organization.  So here a candidate would be hired or employee promoted for their different thinking (2.0) rather than more visible differences (1.0).

While need remains for affinity groups to tend to their members needs within the organization, the “new” D&I 2.0 opens to shift focus to go beyond the organization.  It goes along the lines of a statement President John F. Kennedy became famous for and that I tweaked as follows: “Don’t ask what the COMPANY can do for you ask what you can do for the COMPANY AND ITS CUSTOMERS.

D&I 2.0 gears towards actively contributing and driving new business results in measurable ways for the better of the employees as well as the organization and its customers.  A visible indicator for D&I 2.0 affinity groups helping their constituency beyond company walls is affinity groups identifying and seizing business opportunities specific to their constituency.  They translate the opportunity and shepherd it trough the processes of the organization to bring it to fruition.  For example, affinity groups are uniquely positioned to extending and leveraging their reach to relating customer segments in order to identify ‘small elephant’ business opportunities; see How to grow innovation elephants in large organizations.

The D&I 2.0 approach demonstrates sustainable business value which is why D&I 2.0 sells much easier to executives. It makes a compelling business case that contributes to new business growth, the life blood of every company.

Challenging Transition

U.S. companies stuck in D&I 1.0 are hard pressed to keep up with the D&I 2.0 developments and overcome their inner struggle and resistance.  With decades of legacy, D&I 1.0 programs in many organizations lack the vision and ability to make a compelling business case, to develop a sound strategy as well as capability and skill to implement it effectively.  This is the requirement, however, to truly see eye-to-eye with senior executives and get their full support.  This can become a serious disadvantage in the markets relating to products and customers but also in attracting talent.

In the end, the saying holds true that “talent attracts talent” and all organizations compete over talent to compete and succeed.  Therefore, a D&I 2.0 program combines business focus and talent management while tying it back to the core of diversity and inclusion: Fostering diverse thinkers and leveling the playing field for all employees.  This requires a level playing field that offers the same opportunities to all employees, which is the real challenge.

How do you level the playing field effectively in a large organization?  How this will be implemented becomes the differentiating success factor for companies transitioning to D&I 2.0!

Here is a example 2.0-style for a level playing filed that has its roots in the D&I affinity group space yet opened up to include the entire workforce.  It empowers and actively engages employees while leveraging diversity, inclusion and talent management for innovative solutions with profitable business outcomes.  It may take a minute or two to see the connection between D&I, talent and disruptive innovation but it is at work right here in the School for Intrapreneurs: Lessons from a FORTUNE Global 500 company.

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Previous posts relating to innovation and employee affinity groups / employee resource groups (ERG) / business resource groups (BRG):

Xbox’s Hollywood Bust – when culture eats strategy for breakfast

Shut down

It’s not only successful innovations that can get shut down (see “Shut down! Why Successful Innovations Die“) but also those that don’t get a chance to take of in the first place:  In the small print of Microsoft’s recent announcement to eliminate 18,000 jobs (mainly in the light of the Nokia acquisition) you could also find 200 jobs cut to end the Xbox Hollywood aspirations.

After a history of failures entering the hardware sector, Microsoft struck gold with its powerful Xbox gaming console series powered by popular games such as the epic HALO. Long forgotten seem the times of the “PocketPC” handheld to rival the PalmPilot or the “Zune” MP3 player to dwarf Apple’s iPod.  (Let’s keep the Surface tablets with its awful Windows 8 mosaic tile interface out of the equation for now – even a recent promotion is just a sad parody.)  

Without doubt, the Xbox is a success, Microsoft’s media flagship.  It faces serious competition, so creative and disruptive solutions are needed to dominate the console market.

Beyond gaming

To expand on this solid Xbox console foundation and fend off competitors, the idea was to produce engaging and original video content.  This added value would expand the Xbox platform to broaden Xbox attractiveness and deepen customer loyalty by appealing to its gamer audience in new ways.  The gap between gaming and film converged over the past years when new game productions became sophisticated, quality productions with celebrity actors and voice overs, music by top Hollywood composers, high-end visual effects and not only budgets to rival studio movie productions but revenue exceeding blockbuster movies.

Inspired by, for example, Netflix’s success in producing original content such as “Orange” and “House of Cards,”  this strategy looked very promising.  Well equipped with CBS’ highly accomplished Nancy Tellem and ties to Steven Spielberg, the Microsoft Hollywood team of 200 was up to a great start – or so it seemed.

Two years in, however, the there was very little to show for, so Microsoft finally divested.

– What went wrong?

Culture Clash

A key inhibitor for the Hollywood team, so it turned out, was clashing organizational cultures between Microsoft and the quick-paced and decision-friendly media world Tellem was used to from CBS.  Nanny Tellem learned the hard way that effectiveness of decision-making at the lower hierarchical levels and fast execution was not the strong suit of the established culture, red-tape processes and deep hierarchy of the Redmond software giant.  Down four levels in hierarchy under the CEO, Microsoft’s convoluted processes diluted Tellem’s authority and effectiveness.  It slowed down decisions to a point where the ambitious and energetic start-up became practically shackled and impotent to operate effectively in the media world.

Even the best strategy cannot be executed when unaligned with organizational culture or, as Peter Drucker has put it so famously, “Culture eats strategy for breakfast.”

Culture is what most employees say and do routinely.  It translates into a company’s processes, structures, systems, etc.  This is why failing to understand or outright ignoring culture can be so disastrous for leaders.  From my experience, the magic sauce is in aligning corporate culture and strategy with the passion of competent employees.

Learnings

Microsoft’s Hollywood adventure is just one more example how disruptive innovation struggles when measured and governed by processes of a mature and bureaucratic organization with matrix structure.  With reigns held too close and not leaving room to experiment, innovation suffers, as this missed opportunity for Microsoft demonstrates.

“Hindsight is 20/20” people say and in all honesty, other factors may have contributed too, but looking at it from the outside, perhaps this train wreck could have been prevented had Tellem paid closer attention to the culture of her new employer and ‘how we do business around here.’

Cultural fit with conductive structures and processes downstream are serious business factors that often get overlooked and then backfire for the blind-sided executive.  – Only perhaps there could have been a proper Hollywood ending.

After all, disruptive innovations is a delicate flower that needs some room to flourish – especially in mature organizations.

Want more?

Related posts on organizational culture include:

Balancing Risk of Innovation Project Portfolios

Risk of Disruption

Innovation projects are risky explorations.  Disruptive innovation projects even more so, and individual projects can be quite a gamble.  So, how can you limit the risk across your portfolio of innovation projects?  The goal is to increase the likelihood for the portfolio to succeed overall even if individual projects fail.

(Quick note for project management professionals: I am deliberately not differentiating terms like “portfolio” and “program” here.  My goal is to get the basic idea across.   More particular definitions don’t add value here.)

In mature organizations, incremental improvement can easily be and often is interpreted as ‘innovation’, which makes sense when optimizing a production environment, for example. Here, at the back-end of operations, big “elephant” projects tend to bind the organizations resources (How to grow innovation elephants in large organizations).  The innovation project portfolio I am referring to, in contrast, aims at the disruptive end: the “small elephant projects” with higher risk but the potential of extraordinarily high returns if they succeed.

Why to manage risk

In large organizations you hardly get a “carte blanche” to manage just highly risky projects.  With a corporate focus on predictable, short-term results there is too much concern of the portfolio easily becoming an unpredictable money pit.  You are likely to get shut down after playing around a while without demonstrating clear success in terms of return-of-investment.  Thus, you will need to come up with a strategy on how to compose your project portfolio to keep your stakeholders happy and your experimental playground open.

Risk Categories 

Managing risk across a project portfolio comes down to finding the right blend of high-risk/high-return projects and lower risk projects that come with less impressive potential for revenue or savings.  You also want to include a few projects that produce returns short-term to demonstrate you are making progress and reap some quick wins for impatient stakeholders while the longer-term projects need time to mature.

A common way to approach categorizing projects into into Core, Adjacent and Transformational based on their risk and return profiles:

  • Core projects are merely optimizations to improve the existing landscape of systems, processes, assets or products in existing markets and with existing customers.  These incremental improvements are the “safe bet” and “next small step” that, typically, comes with low risk, predictable outcomes but also limited returns.  They do not need high level sponsorship, are easy to predict and plan resources for, and so they are the favored playing field of mature, large organizations.  These can often be ‘large elephant’ projects seen as ‘necessary’ that the organization more easily buys into.
  • Adjacent projects come with more uncertainty and risks as they usually extend existing product lines into new markets.  Though not an entire novelty it is may be new territory for your company.  Sometime, ‘imitating’ a successful model in a different industry does the trick (read also: Imitators beat Innovators!).
    Adjacencies add to the existing business(es), which requires a higher level sponsorship (such as Vice President level) to move forward, to allocate resources and to accept the risk to fail.
  • Transformative projects are experimental and risky.  They create new markets and customers with bold, disruptive “break-through” products and new business model.  While the risk to fail is high, the returns could be huge when you succeed.  Highest level (C-level) sponsorship and support is crucial for this category not only to persist and get resources during the development phase but also for the mature organization to adopt and support it sustainably.

Finding the balance

When you manage a portfolio of disruptive (read: transformative) innovation projects, you should expect projects not to succeed most of the time.  Instead of calling it “failure,” see it as a learning opportunity.  As Thomas Edison put it so famously referring to his experiments leading to the invention of the light-bulb: “I have not failed. I’ve just found 10,000 ways that won’t work.”

The common rule for playing a safe portfolio is a 70-20-10 mix, i.e. 70% core, 20% adjacent and 10% transformative projects.  This way, many low-risk/low-return core projects keep the lights on while you play with few high-risk/high-return transformative projects.

Experiences

From my personal experience with the portfolio I manage, I leans towards accepting more risk, so you would expect and be comfortable with a lower success rate as a consequence but also higher returns.  To my own surprise, we completed 55% of our projects successfully and ended up discontinuing 26%.  Fortunately, also the average ROI from our “small elephant” projects is substantial and pays the bills for many years out.  Thus, for my portfolio, the 70-20-10 mix is too conservative.

As for how we select projects and fund projects, read also Angel Investing within the Company – Insights from an Internal Corporate Venture Capitalist and School for Intrapreneurs: Lessons from a FORTUNE Global 500 company.

Before re-balancing your portfolio in favor of a majority of risky transformative projects, however, make sure you have continued high-level sponsorship and alignment with strategy and organizational culture of your organization.  – If culture, strategy and sponsorship don’t align to support your innovation portfolio efforts, your risk increases for painful learning without sufficient business success.

> Interested in Project Management? – Don’t miss VASA’s historic project management lesson!

 

Innovation Killers: The Corporate Immune System Strikes Back!

Parallel Universes

Our immune system protects our health and defends us against threats entering our body.  It identifies intruding germs, isolates them from the surroundings and flushes them out of the system to prevent further harm. Our immune system also keeps track of intruders formerly identified to reject them even more effectively should they ever reappear.

Large organization consist of humans who tend to follow behavioral patterns not unlike their inner immune systems when it comes to evaluating new ideas brought forward by an aspiring intrapreneur. Especially, if a new idea comes with a ‘wishlist’ of demands is needed from us to make it happen; typically, time and money.

Joining the Dark Side

It’s our human nature: we approve ideas we like or that further our objectives while we tend to reject ideas that don’t match our liking, beliefs, commitments or that cause disruption to our equilibrium or budget. Disruptive ideas come with uncertainty and may require uncomfortable or additional efforts on our side. The outcome may appear risky, could waste precious resources or have other undesirable repercussions for us.  The fear of losing something is stronger than the incentive of gain. And often enough, we just don’t fully understand the idea or its implications, don’t take the time or find the impetus to look into its details, so it seems safe and convenient to reject it.

This way, as managers and coworkers, we act as a part of the organizational immune system. We become part of the reasons why mature organizations can’t innovate – we join the ‘dark side,’ so to speak.

Our body remembers a previous intruder in order to respond even faster the next time – and so do we. Interestingly, though, we tend to remember better who presented the idea that we rejected rather than what the idea was about. So when the ‘quirky guy’ shows up again after a while with the next idea, our suspicion is already kindled, and we more easily reject this next idea too.

Facing Defeat

For intrapreneurs it is crucial to avoid the “No,” because it is hard to turn it into a “Yes” again later on. This is why we teach How Intrapreneurs avoid “No!” at the School for Intrapreneurs: Lessons from a FORTUNE Global 500 company, a highly effective talent and leadership development program.

Too often an intrapreneur lets their enthusiasm take over and confronts us straight on with their ideas bundled with a request for resources of sorts. Most often, this discussion ends quickly with a “No,” when we perceive this ‘frontal attack’ as a threat to the status quo, the establishment, and the well-oiled machine that the manager runs; and so it triggers the ‘corporate immune system’ leading to rejection.

Stepping Stones to Success

So, just short of having “The Force” of a Jedi, how should an intrapreneur seek support for an idea from managers, potential sponsors or coworkers? While not ‘one-size-fits-all’ and there is no silver bullet, here is a selection of tried approaches for consideration:

  • Seek support: The trick is to ask in a ways that build support for driving the idea forward – and not necessarily for the whole implementation project at once. Even a small step is better than none. For example, supporting evidence can help to raise curiosity and deflate resistance. Find out if a similar approach worked out in another company or industry; it helps to emphasize validation elsewhere. It can help to frame and position your offer to a potential sponsor.
  • Build trust: Additional ‘selling tips’ I picked up from Gifford Pinchot III., the Grand-Master of intrapreneuring himself, suggest a more social approach that includes building a personal relationship first: It is much easier to connect from a position of mutual trust and openness to find support building the supportive network by asking for advice or references before you ask for resources.
  • Just a test: Cautious managers may open up when they hear the intrapreneur is not intending to change anything, just ‘trying something out,’ so not to threaten their established processes, investments or power-structures within the organization. Emphasizing the ‘experimental’ and non-threatening nature of the idea helps to prevent triggering the immune system at this early stage.
  • Gathering Insights: Successful intrapreneurs listen very closely to what the responses to learn from them. Rather than asking a closed question that puts them in a Yes-or-No cul-de-sac, it is much more insightful to carefully phrase questions in a way that the gate-keeper already solves the problem, or provides an answer or approach to the problem the intrapreneur is trying to solve.
  • Know the Goals: The larger a support network an intrapreneur can built for their idea, the better. Rather than the direct manager, it may be more informative to work with people who have insights into the goals and priorities of the organization, which may be sources of resistance. This way, the intrapreneur can learn about possible conflicting goals (for example, “do more with less” or “stability versus creativity”) that need to be known and understood in order to be addressed and dealt with constructively.
  • Show Gratitude: And finally, it is important for intrapreneurs to pay respect and express gratitude no matter what the outcome is of their conversation. A ‘thank you’ goes a long way and keeps the door open to talk more and possibly receive support in the future.