The pharmaceutical industry is highly innovation-driven, but breakthroughs tend to happen slowly.
And in a world where tech giants like Google, Apple, and Amazon are emerging as potential disruptors, slow simply doesn’t cut it. Two of the largest pharmaceutical companies in the world, Bayer and Johnson & Johnson, have made innovation non-negotiable in their organizations – and are finding success with distinctly different approaches. While Johnson & Johnson has concentrated on looking outside the organization for transformative ideas, Bayer has made cultural change the focus of their efforts.
Founded in New Jersey in 1886, Johnson & Johnson is the largest global healthcare company, with over 76 billion in revenue. Though they are a household name, they felt their brand was losing ground with consumers. The following provides insights on transforming a 130-year-old Enterprise into a Startup.
1. Supercharge the Core
Although most of us know Johnson & Johnson for their products – common household products like baby shampoo and lotion – their consumer division contributes less than 20% to their overall business. It’s their pharmaceutical and medical device and diagnostics portfolios that contribute most, and where the company is placing their big innovation bets. An important goal is to be a transformational medical innovator (not a producer of me-too products), offering another medicine that has incremental value to a patient. With this, the focus is investments in high unmet need areas (ie: cancer and Alzheimers) – that lead to transformational medical innovation.
2. Be Customer Obsessed / Centric
While innovation was happening at Johnson & Johnson, it was too narrowly focused – typically because organizations tend to innovate where their comfortable – which usually means incremental innovation from a product perspective. In contrast, for truly transformational innovation, there is a need to think outside your comfort zone and start from the Customer’s needs and pain points. For Johnson & Johnson, that means leveraging the convergence of adjacent industries – health, digital technology, insurance, finance, and mobility – to create new healthcare models, and better patient experiences and outcomes.
3. Render Yourself Redundant / Obsolete
Johnson & Johnson has a pretty big goal: a world without disease. To them, that means operating in a way that renders themselves obsolete. Recognizing in the healthcare industry the consumer model hasn’t changed in decades, J&J Management determined it’s time for change since disruption is already coming from outside the organization. To demonstrate increasing Innovation prowess, an example is AI can now help a doctor make better, faster, more accurate diagnoses and treatment plans. Extending on this, the company is shifting from medication-focused to early disease interception and prevention – to move from being a ” healthcare company ” to a ” health company “.
4. Embrace Collaboration
At Johnson & Johnson, collaboration is the new innovation. And with many companies jumping in to the healthcare sector, it’s become more important than ever. It’s now recognized – “ Either we fight the new companies getting into healthcare, or we collaborate with them “. With a strategy to fast track progress through collaboration in innovation as well as the delivery new solutions and services, J&J has complimentary teams in – incubation facilities, early-stage investing, venture funding. This is designed to enable J&J partner with startups, entrepreneurs, established companies, and global public health organizations. The J&J JLABS model, now present in over ten cities around the world, gives emerging companies access to research labs and business support with no strings attached – to facilitate partners to focus on developing breakthrough healthcare products – without giving up equity or IP.
5. Empower Innovators to Lead – with Internal and External Resources
Though Johnson & Johnson actively seeks outside ideas and partners, they understand that internal personnel are also important. This recognizes ideas and opportunities can come from anywhere and the need for options to increase the rewards from innovation, plus having a results oriented innovation team to effect change.
Bayer is one of the ten largest pharmaceutical companies in the world. Founded in Germany in 1863, Bayer operates in consumer health and pharmaceuticals, and is a world leader in crop science and animal health. Several years ago Bayer realized that in order to remain relevant, innovation had to move from the sole purview of R&D and become an organization-wide mandate. To embark on a huge cultural shift, Bayer Scientists taught everyone how to experiment, and make ‘ Innovate in what you do ’ the new company mantra.
Bayer began by creating awareness and opportunity around innovation. In the first year-and-a-half, they held innovation days in 20 countries with over five thousand people participating. They also set up a YOUniverse innovation portal where, in addition to learning about different methodologies and tools, participants could post about their projects and learn from one another. Extending on this, a Customer-focused Innovation Contest held over the summer went viral, with 25,000 new users joining the platform in over 65 countries. From this, Bayer realized it’s important to learn how to learn new things, create awareness, be encouraging, etc. such that when people see an opportunity to get involved, they take it, plus connect and share with others who are also involved in new initiatives.
Bayer knew they needed to educate their people in strong innovation methodologies. They decided to start with an ideation tool called Systematic Inventive Thinking and, rather than just put it up on the platform for online learning, they began training local coaches – over 600 worldwide, and growing. These coaches, in turn, run ideation workshops in their countries. Over 4,000 people have taken part so far. As an example of how Bayer is getting innovation traction, when an e-learning program was recently announced around design thinking, more than 1400 applications applied within a week ! And because there were limited spots, it wasn’t a case of people clicking a button to say they were interested – but having to write a short paragraph saying why they wanted to take the training. Additionally, Bayer worked with their HR Departments to implement a common innovation language and mindset in all existing leadership training. Their training efforts earned them a Brandon Hall Award for learning excellence.
When Bayer launched a platform called WeSolve, where employees were invited to tackle various innovation initiatives, often challenges posted were not solved by someone from that department or function, but from someone in a different division. This created awareness of the need to tap into a total internal and external knowledge pool. This has resulted in more and better collaboration with a greater appreciation of the benefits of working together with complimenting and different skills – rather than being an expert or narrowly focused in a specific area. They also set up a Life Science collaboration platform to enable all Bayer Researches across the world to collaborate on breakthrough opportunities and technologies. With the Bayer 5x5x5 Startup Challenge, 5 teams of 5 people work full-time on a problem for 5 weeks – which has resulted in 4 patents so far.
4. Connect & Empower
Bayer asked country and global function heads to nominate a person they wanted to collaborate with to define their local innovation roadmap. That has led to 80 ambassadors around the world who connect via a global network and define, in conjunction with coaches, their particular needs and goals. This was important to respect that while the various divisions and geographies have different needs and objectives, there was a need to have a common language associated with innovation initiatives to fast understanding and minimizing ambiguity associated with doing new things. This includes building roadmaps, running innovation workshops, engaging local colleagues, and making sure things are actually happening. So far, over 1,000 ideas have been generated by these local innovation / change agents.
Fundamentally, it’s not corporate coming in and telling people what to do, but enabling the coaches and many people in the network to contribute to the innovation process – that creates positive energy and positive cultural change.
March 12, 2018 – CAIL – Innovation Industry Commentary