On April 20-21, 2016, Singularity University, the most innovative and forward-looking institution, has chosen to host their SingularityU Germany Summit in Berlin—one of the most vibrant cities in the world. SingularityU Germany Summit is a local Chapter and community organization of Singularity University. It is one of the largest two-day events in Europe aimed at bringing awareness about exponential technologies and their impact on business and policy to thought leaders and executives from breakthrough companies.
What can you expect at SingularityU Germany Summit?
Leading experts from the global high-tech community will present the latest trends and cutting-edge developments in Mobility, Organization, Manufacturing, Artificial Intelligence, Computing, Robotics, 3D Printing, Machine Learning and Design Thinking. Together we strive to inspire and empower European leaders and influencers in using exponential technologies to solve today’s most pressing issues. SingularityU Germany Summit is an ideal platform to network for both alumni as well as first time attendees, leaders, government representatives, entrepreneurs, investors, NGOs.
500 attendees ranging from CEOs to young innovators from across the globe are expected to attend the event. Together we will explore issues such as: How can technological evolution be transformed into a sustainable and value-based growth for any industry? What ethical standards and responsibilities do global leaders have to account for?
Meet me in Bonn, Germany on April 14, 2016 for the 7th installation of DeTeCon’s Life-Science meets Telco series.
This year‘s event focuses on a very special aspect of the Digital Transformation – the cross-industry collaboration and exchange.
How can digitalization be implemented to make a difference in every patient’s life? What best practices from other industries can be transferred to the pharmaceutical and healthcare industries? These and many more questions we will answer at this year’s event.
You can expect a great atmosphere for networking as well as exciting discussions on:
What is the role of the Digital Transformation for Pharma?
Importance of the collaboration between Life Sciences & ICT: current changes in ICT.
Don’t miss this opportunity! Save the date and stay tuned for more information!
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?
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.
Join me at the 5th Annual Pharma PPM Toolbox in Basel/Switzerland on March 5-6, 2015!
Presentation at 3pm on March 6, 2015
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
Implementation considerations
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.
This video addresses the question: How can the pharmaceutical industry reskill representatives to be knowledgeable consultants to physicians?
Today, sales expertise is not enough. The pharmaceutical representative needs to be a broker of information. Physicians now have very limited time – and dictate when they can meet with representatives, from whom they need comprehensive information that they can pass along to their increasingly educated patients.
In this video, Jo Ann Saitta, Chief Digital Officer of the CDM Group, Stephan Klaschka, Innovation and Healthcare Consultant, and moderator, Richie Etwaru, Chief Digital Officer at Cegedim, examine this shift and the challenges pharmaceutical companies may face in properly retraining their people. These challenges include: adopting a culture of learning agility; integrating silos of information; having the ability to serve up dynamic content; and training representatives to utilize technologies that will maximize their brief but demanding visits with physicians.
Use this linkto watch all 10 videos in the series on YouTube directly – enjoy!
10 Inevitable Changes in Pharma 2015 – Communication moving to Collaboration
Angela Miccoli
Wendy Mayer
10 Inevitable Changes in Pharma 2015 – Content moving to Context
James Corbett
Craig DeLarge
10 Inevitable Changes in Pharma 2015 – Care moving to Cure
Michael DePalma
John Nosta
10 Inevitable Changes in Pharma 2015 – Compliance moving to Culture
Bill Buzzeo
Gus Papandrikos
10 Inevitable Changes in Pharma 2015 – Supply Chains moving to Supply Constellations
Ray Wang
Aron Dutta
10 Inevitable Changes in Pharma 2015 – Customization moving to Configuration
Tracy Maines
Krishna Cheriath
10 Inevitable Changes in Pharma 2015 – Customer moving to Consumer
Paul Kandle
Mark Stevens
10 Inevitable Changes in Pharma 2015 – Calls moving to Consults
Jo Ann Saitta
Stephan Klaschka
10 Inevitable Changes in Pharma 2015 – Cloud moving to Crowd
Les Jordan
Krishnan Sridharan
10 Inevitable Changes in Pharma 2015- Charity moving to Cause
Read this insightful “Taking the entrepreneurial approach” interview conducted by Eyeforpharma on the impact of hierarchy and how executive mindset inhibits adapting to the rapidly changing commercial landscape. It outlines how “intrapreneurs” and internal “angel investors” can get large, mature organizations moving again!
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.
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.
This third post illuminates a very successful implementation of venture capital approach in a large organization to work around “red tape” and get more risky projects funded.
However, it’s not over! Please check in occasionally for more innovation and intrapreneuring-related posts in the future!
CURE serves as the bioscience cluster of Connecticut, a diverse network of small and large life and healthcare sciences companies, ranging in scope from therapeutics, to healthcare technology, to medical devices. Universities, government agencies, scientists, educators, mentors, students, entrepreneurs, business experts, service providers and investors join in to begin nucleate the breadth of the network.
As participants in CURE, we educate, cultivate entrepreneurship, support the build of bioscience companies and collaborate to ensure a sustainable, high-value bioscience and healthcare community that improves our quality of life and keeps the Connecticut community strong.
Meet me at the Intrapreneurship Conference 2014at the “Kennispoort”-building of the Eindhoven University of Technology, John F. Kennedylaan 2, 5612 AB Eindhoven, The Netherlands, from December 10-12, 2014! Contact me you are interested to attend, as I may be able to get you a discounted ticket!
Intrapreneurship is the most powerful engine for growth. With innovation being priority #1, how are you implementing and leveraging innovation from within?
Now being organized for the fourth time, the Intrapreneurship Conference 2014 is the premier global event for Corporate Innovation Managers, Intrapreneurs, Business Managers, HR-Managers and Innovation Consultants. This is not just another conference on innovation, where you will be listening to motivational speakers all day. We intentionally keep the number of available seats at a level that enables you to really connect with everyone.
Discuss the best and next practices in implementing and leveraging intrapreneurship. We have carefully curated a program for you that includes all relevant topics in the field of intrapreneurship, and invited experienced intrapreneurs and experts to co-create an impactful learning experience for you.
You will leave the conference with a clear action plan and practical tools for the next step in implementing intrapreneurship. Plus, you will meet like-minded people to connect, share and collaborate with – as most Intrapreneurs are the lone mavericks in the corporate jungle.
CURE and Yale, in collaboration with Boehringer Ingelheim, presents “Patients and Big Data in Healthcare: Deriving Value and Accelerating Innovation.” In an increasingly digital age, healthcare stakeholders can access significant amounts of data and knowledge using various platforms. Critically, this “big data,” represents a vast quantity of complex and diverse information. While payers, providers, healthcare experts and the pharmaceutical industry have the capability to analyze this data to gain insight, this information can be overwhelming to patients. This BioHaven event, moderated by Richard Foster, has convened a panel of experts to explore the topic of “big data,” the role of the patient in data analytics, the role of payers and what actionable data represents. Further discussion will explore the state of the art, including discussing national hospital systems using big data and local ones in CT and at Yale. Finally, the discussion will conclude with discussion about effectively incorporating big data into operations and where the field is headed.
Special kudos to my valued colleague Faye Lindsay, who was instrumental in pulling this event together!
Some of the topics the moderator and panelists will consider:
Defining and Exploring the topic
Tell us what “big data” means to you and why it is important. Give us one example which illustrates the best use of big data to date.
What is the role of the patient in data analytics? Does it benefit them? Do they naturally do it? How error prone are the data they provide directly?
What is the role of the payer in all of this. Can they get the data they need to better set rates? Will “big data” help or hurt the payers?
What is actionable data? What are the three major areas where we are making progress?
State of the Art
Where is the best state of the art in using data to improve outcomes in the US? How do we know that is true?
What hospital systems or MCOs are most advanced?
How are we doing in CT compared to other states? How do we know?
What is the state of the art in healthcare info tech/big data in the US. Where? Why? What do we need to do to catch up?
Unanticipated Consequences
Will all this measurement result in intense, and from time time, unproductive rivalries between docs, or hospital systems?
How can the providers use “big data” and not put at risk the effectiveness of current medical care delivery processes which have takes years to define and perfect?
Specific Subtopics
Big Data and the bottom 5%
We know we spend $1.35 T on 5% of the population. Do we know who they are and how we can best treat them. How much can we expect to reduce the cost, or improve the quality of the health care delivered to these patients?
Big Data and Quality
Integrating Big Data into Operations, effectively
What is coming?
Who is controlling the pace of advance in Big Data these days – Academia (who), the Payers (who?), the providers (who?) the Feds (who and who in HHS/CMS?) What about the role of the National Cancer Hospitals. Or other specialized (by disease/condition) providers (e.g. DaVita)
Moderator:
Richard N. Foster, PhD, Emeritus Director, McKinsey and Co; Lecturer, Yale School of Management.
Dr. Foster is an emeritus director of McKinsey & Company, Inc. where he was a Director and Senior Partner. While at McKinsey he founded several practices including the healthcare practice and the private equity practices, the technology practice and innovation practice. From 1995 to 1998 he led McKinsey’s worldwide knowledge development.
At Yale, Dr. Foster teaches “Managing In Times of Rapid Change” and serves as the Executive in Residence at the Yale Entrepreneurial Institute. Dr. Foster’s research interests are in the relationships between capital formation, innovation, and regulation. Dr. Foster has written two best-selling books: Innovation: The Attacker’s Advantage (1986) and Creative Destruction (2001), both of which were cited as among the “ten best books of the year” when they were published by the Harvard Business Review.
Dr. Foster’s work has appeared in Business Week, the Wall Street Journal, the New York Times as well as several dozen articles in research and popular journals. Dr. Foster was recognized as one of their ten “Masters of Innovation” in the past century. He was the external leader of the Concil on Foreign Relations Study Group on Technological Innovation and Economic Performance which led to the publication of Technological Innovation Economic Performance (2001, Princeton University Press).
Panelists:
Harlan Krumholz, MD, Harold H. Hines Jr. Professor of Medicine (Cardiology) and Professor of Investigative Medicine and of Public Health (Health Policy); Co-Director, Clinical Scholars Program; Director, Yale-New Haven Hospital Center for Outcomes Research and Evaluation.
Dr. Krumholz’s research focuses on improving patient outcomes, health system performance and population health. His work with health care companies has led to new models of transparency and data sharing. His work with the U.S. government has led to the development of a portfolio of national, publicly reported measures of hospital performance. These measures also became part of several provisions of the health reform bill. He is currently working with leaders in China on government-funded efforts to establish a national research and performance improvement network.
Dr. Krumholz is an elected member of the Institute of Medicine, the Association of American Physicians, and the American Society for Clinical Investigation. He is a Distinguished Scientist of the American Heart Association. He serves on the Board of Trustees of the American College of Cardiology, the Board of Directors of the American Board of Internal Medicine and the Board of Governors of the Patient-Centered Outcomes Research Institute.
Rishi Bhalerao, MBA, Director of PatientsLikeMe, a free patient network and real-time health research platform.
At PatientsLikeMe Rishi manages major relationships with industry partners. Prior to joining PatientsLikeMe, Rishi spent several years as a management consultant with the Boston Consulting Group (BCG), and more recently, as an innovation consultant, at a firm started by Prof. Clay Christensen of the Harvard Business School. He earned an MBA from the Ross School of Business at the University of Michigan and also holds undergraduate and graduate degrees in Engineering.
You Xi
Director of Business Analytics at Boehringer Ingelheim Pharmaceuticals (BI)and leads a team of analysts conducting analysis across all BI’s portfolio and communicating findings and strategic insights to internal stakeholders (Marketing, Sales, Managed Markets, Sr. Management etc.).
The key deliverables include using various data sources to measure performance, build promotional mix optimization modeling, behavior segmentation, portfolio optimization, etc. Prior to BI, You was a consultant at ZS Associates and then held various management roles in the pharmaceutical industry including Takeda Pharmaceuticals and Novartis.
Michael Matteo
Mike Matteo is chief growth officer at Optum, where he is responsible for creating and enabling growth across the company. Matteo focuses on the needs and opportunities of Optum’s customers and how the company can deliver creative, innovative solutions that meet their objectives. Prior to bringing his passion for modernizing the health care system to Optum in 2012, Matteo served for four years as chief executive officer of UnitedHealthcare National Accounts, where he expanded the company’s industry-leading position in the large-employer marketplace. Prior to becoming CEO, Matteo led business development efforts for UnitedHealthcare National Accounts, where previously he worked in product development and was instrumental in designing and launching the company’s first consumer-driven product innovations. He joined UnitedHealth Group in 1997 as a strategic account executive, helping many of the company’s largest employer clients meet their health care objectives.
Before joining UnitedHealth Group, Matteo was with Physicians Health Services, where he served the needs of major clients as an underwriting director and senior account executive. He began his career serving in multiple roles with Traveler’s Insurance Companies. Matteo graduated magna cum laude with honors from the College of the Holy Cross, and participated in the Columbia University Executive Management Program. He is on the boards of the MetroHartford Alliance, Hartford YMCA, and Connecticut Science Center, and served as chairperson of the Greater Hartford Arts Council Capital Campaign.
Why is this a billion dollar question? – The traditional business model of the pharmaceutical industry is broken. The focus shifts to incentivize patient-centric outcomes, prevention and behavior change in the global battle against a mounting wave of chronic diseases such as diabetes. In search for a new business “beyond the pill” the pharmaceutical industry joins other stakeholders in the healthcare system to align and pull in this same direction. First data-driven results are highly anticipated – well, here they are, so don’t miss this milestone event!
My first post “Why large organizations struggle to innovate” looked at innovation obstacles in large organizations. This second post discusses on how to overcome these obstacles and followed by another successful approach covered in my next post in few weeks.
CURE serves as the bioscience cluster of Connecticut, a diverse network of small and large life and healthcare sciences companies, ranging in scope from therapeutics, to healthcare technology, to medical devices. Universities, government agencies, scientists, educators, mentors, students, entrepreneurs, business experts, service providers and investors join in to begin nucleate the breadth of the network.
As participants in CURE, we educate, cultivate entrepreneurship, support the build of bioscience companies and collaborate to ensure a sustainable, high-value bioscience and healthcare community that improves our quality of life and keeps the Connecticut community strong.
“Why large organizations struggle to innovate” is my first post in a mini-series as a guest blogger for CURE. This first post looks at obstacles large organizations face to innovate, while the following posts will look at ways on how to overcome these obstacles over the next few weeks.
CURE serves as the bioscience cluster of Connecticut, a diverse network of small and large life-sciences and healthcare companies, ranging in scope from therapeutics, to healthcare technology, to medical devices. Universities, government agencies, scientists, educators, mentors, students, entrepreneurs, business experts, service providers and investors join in to begin to nucleate the breadth of the network.
As participants in CURE, we educate, cultivate entrepreneurship, support the build of bioscience companies and collaborate to ensure a sustainable, high-value bioscience and healthcare community that improves our quality of life and keeps the Connecticut community strong.
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.
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.
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.
One of my favorite and most successful approaches to building a powerful intrapreneuring ecosystem is internal corporate venturing!
It is an exquisite tool to cut through the crust of ‘red tape’ that bureaucracy builds up over time. Internal corporate venturing or “Angel investing” allows for nimble decision-making with a lean process to give disruptive innovation ideas a chance again in a large company.
How does it work? Think of becoming a venture capitalist within the company: You invest in ventures within the organization and help building ‘intraprises’ in contrast to funding start-up enterprises outside the company. The difference is a you don’t venture for your own profit but for the better of your organization.
The idea here is to seed-fund promising disruptive ideas that otherwise would not be implemented or even seriously considered. These opportunities –typically‑ were rejected by the ‘corporate immune system’ previously, when an employee with an idea approached their line manager or a governance committee of sorts requesting approval to ‘try something out.’
Often enough, there is no clear return-of-investment (ROI) predictable for these early ideas. What you may be looking for is rather risky and experimental, a proof-of-concept (POC). The metrics for payoff and ROI of disruptive ideas does not follow the same approach we are used to measure the more predictable returns of common cost reduction and incremental improvement projects. Disruptive POC projects often don’t have an ROI projection when you explore technology of sorts or its application that may become a game-changer for our future business.
In my experience, communicating the POC nature of the project over focusing on ROI can actually help! It prevents the ‘organizational immune system’ from kicking in early on, since there is little threat to established practices. Why? It does not come across as competing with ‘big elephant’ projects over significant amounts of governed resources following the conventional processes of the company’s machinery. Instead, we just try something out! It’s a little experiment that doesn’t change anything, so it poses no threat to established practices, investments or the power-base of individuals defending their fiefdoms.
Having said this, there is of course a commercial end to all projects. After all, we have no resources to waste and will have to demonstrate down the road that our ‘experiments’ pay off somehow. Our working assumption is that the disruption should lead to a ten-fold (10X) payoff – at least.
Personally, I prefer aiming at a bold 100X ROI target; two orders of magnitude, that is. It sets an ambitious target and -if things work out- a great success story. It’s a powerful point to make for disruptive innovation as part of our innovation ecosystem and shifting the mindset within an organization. Sharing these success stories with executive stakeholders is crucial (for future support) as well as with employees (for future ideas).
Interestingly, what employees are looking for more than funds is authorization to do what is right and worthwhile for the company. Often, the obstacles are perceived and only exist in peoples’ minds. These barriers are formed by many factors over time, such as the management style they experienced and organizational silos that mold a company’s culture as well as the employees’ mindset.
In this particular company, a lean oversight board makes funding decisions. It is composed of a diverse team of more forward-thinking executives and a very lean decision process. The team acts as enabling ‘go-keeper’ for accelerated innovations instead of pushing the breaks as ‘gate-keeper.’
The little monies offered for trying something new only help smoothen the path for innovators in the company. The most important part is them feeling empowered and “authorized” to take action that overcomes complacency, inertia and organizational paralysis. On the spectrum of strategic innovation roles, the board serves as a “sponsor” and sometimes as a “coach,” when an idea aims to overcome internal barriers to increase efficiency, for example.
The purpose of this governance board is to enable the exploration of disruptive ideas by giving internal innovators a chance. The focus is on projects that can be characterized as early stage experiments to explore transformative enabling technologies and value-adding services of higher risk or less predictable outcomes than conventional project portfolios in the mature organization would feel comfortable with.
Naturally, this approach comes with an elevated risk of failure when projects do not produce profitable outcomes or simply prove infeasible or poorly timed. This ‘price’ is accepted as long as it generates learning.
The potential damage is low, since we are talking about swift and low-cost experimentation: try often and fail fast. Thus, these risky projects complement regular and more conservative project portfolios in the various businesses of the organization. In addition, the innovation project portfolio is somewhat risk-balanced, which avoids having too many high risk projects that may jeopardize the likelihood of profitability across the portfolio. Reality is that also the disruptive innovation project portfolio has to demonstrate tangible returns over time, so the mature organization sees the economic benefit of experimenting and not shut down this ‘playground.’
Branding the projects as experiments with a proof-of-concept (POC) endpoint helps to calm the ‘organizational immune system’ and to argue that these risky ‘small elephant’ projects complement the other ‘big elephant’ project portfolios across the organization.
Here are my experiences as an internal corporate venturer or ‘angel investor’ from the past years: First of all, I don’t have much money to spend. The budget I have for this kind of ventures is pathetically meager – and I overcommit it all the time! Nonetheless, I came in under budget once again by 46% last year. It sounds like an oxymoron, and since I don’t have a money tree growing in the backyard, how does this work?
The secret is in the psychology of acting as the “first investor.” Think of this way: when someone wants you to invest into their idea first with nobody else having made an investment before you, you are skeptical and most hesitant to put down your money, right?
All I do is to commit paying for an idea in full to overcome this initial threshold and get things started. What typically happens next is that an executive from the business affected by or potentially benefiting from the project hears of my investment, reconsiders and wants to get on board too – as a second investor. Once the ‘innovation guys’ have put money down first, the investment in the idea appears less risky to the business executive, so either we split the bill or the business takes on the cost completely!
I’ve seen it happen many times with managers turning around 180 degrees after they had rejected the idea previously. This is how to deal with them: to save (their) face, don’t point out their earlier resistance but rather thank and recognize them for their support and foresight as valued contributors to change and success for the organization. Celebrate them as enablers, win them over as allies and keep the connection for future collaborations!
Alignment and validation
Don’t be mistaken, funding by the business is not only crucial given the fact that my funds are few. It is even more important because it validates that the idea makes sense to the business. It aligns with strategy and goals of the organization but also helps implementing it once the business has ‘skin’ in the game! Otherwise, even if I funded a project alone, the intrapreneur running it would have a hard time getting it implemented without the support of a business sponsor.
So all it takes is making it easy for business executives to invest in a good ideas by making them feel comfortable not to invest first, which reduces their perceived risk and lowers their threshold to act.
Key Learnings
The lean innovation governance board is an instrument for reasonable oversight that benefits from diverse perspectives.
The “Go keeper” instead of “Gate keeper” process is crucial as is the willingness to accept risk of failure for disruptive projects.
The model proves highly effective to get around a convoluted “red-tape” bureaucracy as well as generating a surprisingly high return-of-investment (ROI) – even without the latter being the primary focus.
The “first investor” psychology validates the alignment of ideas with business needs and strategy while opening the flow of funds from the businesses and facilitating the implementation.
This internal corporate venturing or “angel investing” approach became a beacon of hope for employees and a very profitable innovation engine for the organization that starts to change the organizational culture to the better.
Open offices are not a new invention. They have been around for a long time as hallmark of start-up companies that simply cannot afford glitzy corporate skyscrapers with plush corner offices (yet). Open offices emerged less by deliberate design than driven by need.
Start-ups typically run on a vibrant culture of passionate people wanting to spend time together to create something great, everyone works together closely in the tight space available. Information flows fast and freely. Recreational elements and other services offered remove the need or motivation to leave. Employees hang out to work maximum hours as a team in a fun, inspiring and supportive environment. Productivity is up and work gets done.
Start-up open office (source: theepochtimes.com)
Growing pains
Large companies are attracted by this powerful value-proposition for open offices – or so it seems. Mature organizations struggle with their increasing size that, over time, entails increasing specialization and complexity with a stifling system of red tape and inertia.
While jobs are large in small companies and come with broad scope and high accountability, which are diluted when jobs narrow in large companies by increased specialization over time. Functional silos emerge and sub-optimize often to the detriment of other business functions.
This siloed corporate world only contributes to a climate that works against diverse collaboration and inhibits breakthrough innovations; and business results degrade from 10x to 10%. (See also 10x vs 10% – Are you still ready for breakthrough innovation?)
Cutting costs is a questionable driver
The reasons for large organizations moving to an open floor plan are often glorified and communicated as a measure to increase creativity and productivity in an appealing modern working environment: employees connect casually and spontaneously at the ‘water cooler’ to network and innovate together again.
The true and paramount driver for tearing down the office walls, however, is often more sobering: it comes down to simply cutting costs by reducing the expensive office footprint. Fitting more people into less space comes at a price for the workforce.
Cost savings only get you so far. It’s an easy approach but not a sustainable business model for productivity. What do you really save if productivity goes down? How sustainable is your business then? Sacrificing productivity for cost savings is a narrow-minded approach lacking long-term perspective and, therefore, not worth it. That is unless your goal is to achieve short-term gains without consideration for the future of the business, which is a disqualifying business perspective altogether.
The popular phenomenon in large companies is a move for the wrong reasons (the better driver being increased productivity) and entails serious consequences that jeopardize the company’s productivity, workforce satisfaction, and even the bottom line.
Design constraints
It gets even worse when the new environment is retrofitted space with structural limitations, founded in the legacy of existing buildings and investments, and if no flanking measures taken to enable effective collaboration needs.
A design from scratch has the potential support the collaboration needs and flow of the workforce best. This is an advantage start-ups have when they can shape and rearrange loft space to their immediate needs without limitations carried forward.
Size matters
Controlling cost is necessary and reducing office footprint is an effective business measure. Aetna, for example, has nearly half of their 35,000 employees working from home already, which saves ~15% to 25% on real estate costs – that’s about $80 million saving per year.
Do not get me wrong, there are undeniable benefits to open office spaces – when applied for the right reasons in the right context, with right priorities and proper execution. The point I am making is that cost reduction alone is not a worthwhile driver if it sacrifices productivity. There comes a point where a hard decision has to be made and if you prioritize cost savings, you sacrifice productivity and other aspects automatically.
Open Office Plan (source: Foundation 7)
What does it take?
Unfortunately, the start-up company model with open office space and its agile and enthusiastic does not scale for large organizations. The corporate one-size-fits-all approach does not do the trick for several reasons.
Let us look at aspects that make the open office work:
Tear down cost center walls
Make presence easy
Level the (remote) playing field
Embrace work style differences
1. Tear down cost center walls
Proximity favors who needs to work together closely. In a start-up company, staff is few and jobs are big. This ratio flips in large organizations where many employees work in highly specialized functions. With increasing specialization comes complexity that leads to functional silos. The employees become separated by every rising departmental and organizational walls.
In large organizations, work space is typically paid for by department and charged to cost centers. Staff gets corralled this way and kept separated in functional clusters that are easier to administer but counteract productivity, streamlined workflow, and diverse collaboration cross-functionally. After all, it wouldn’t make sense to have any department operating completely independent from the rest of the organization.
These artificial and structural boundaries make no sense (unless you are an accountant, perhaps). Therefore, trade the urge for financial micro-management for what makes the workforce more productive, as this is the most important aspect of collaboration and, ultimately, the bottom line.
2. Make presence easy
Make it easy for your employees to go the extra mile. Now here is where large companies can learn from how start-ups: offer incentives for employees to hang out and remove reasons for them to leave to maximize time to work and collaborate.
The list seems endless: free beverages and food, services such as laundry, hair dresser, spa or receiving deliveries, exercise equipment, healthy snacks, child and pet care, and other useful perks that cost-cutting companies often omit.
Sounds like a waste to many large companies. But is it really? You get more out of your employees’ carefree working along longer than by pinching the free coffee and have them leave during the day or early to run their necessary errands.
3. Level the (remote) playing field
It may sound counter-intuitive but when cost saving rules, the open office space often only works when not all employees are around at the same time. If all employees showed up on the same day there may not be enough room and resources (seating, access to power and networks, etc.) to fit and accommodate everyone, since the physical office footprint is now too small ‑ a Catch-22.
When only a subset of employees can be present in the office at any given workday, the rest has to work remotely forming an –at least- virtual organization. Consequently, the random personal connection “at the water cooler” becomes less likely as does spontaneous cooperation by “pulling together a team” since your pool of physically available staff is limited.
Management needs to take deliberate and determined measures to level the playing field for remote workers by giving them the same opportunities as colleagues present in the office. Why? “Out of sight, out of mind” is a powerful and human nature. If not managed effectively, it only becomes worse when remote staff easily is continuously overlooked when it comes to projects staffing, development opportunities and promotions, for example. The resulting inequities undermine workforce cohesion, effectiveness, and talent development.
FastCompany recently came up with a list of reasons by workers arguing against open offices, which is a good indicator where the pain-points are. Representative or not, the list tends to resonate with people that experienced first-hand working in a corporate open office environment.
The key complaints are about
Distraction – hard to concentrate with surrounding noises of all sort; loud speaking coworkers; interruptions of coworkers stopping by at any given time
Discomfort – no privacy; by-passers looking at your screen and documents; food, bodily and other odors; white-noise generators blamed for headaches; spreading contagious illnesses; having to talk to people when you don’t feel like it; “hiding” by wearing earphones
Workflow obstacles – competing over quiet spaces, conference rooms or other rare resources; no place to store personal items or personalize the space.
In summary
One size does not fit all and it does not do the trick for large companies, in particular. So if you have to downsize office space or accommodate more employees, take a sound and sustainable approach by making productivity the driving priority and not cost.
After all, we are human beings that work best when we have control over our work environment and schedule. When we perform at our best, it is also for the better of the company as a whole. Flexibility, empowerment and inclusion go a long way – otherwise, mind FastCompany’s warning: “What was supposed to be the ultimate space for collaboration and office culture was having the opposite effect” – also for the bottom line.
OrgChanger.com 