For the next low-hanging innovation fruit, pharma could learn from CPG
A recent Financial Times article by Andrew Jack about pharmaceutical companies becoming victims of their own breakthrough successes mirrored what we see in other industries. Since the topic is pharmaceuticals, let's stick with that example and offer a plan for change.
The days of low-hanging fruit have indeed come and gone. After the era of Six Sigma, Lean, Kaizen, etc., companies must incorporate process improvement and basic customer feedback into the way work gets done. So if everyone is doing it, it’s not a sustainable competitive advantage and doesn't lead to growth. Recognizing that, we have to deal with this reality and find new ways to approach growth if we’re ever to end the “crying sessions” as Jack notes.
To start, we recommend looking at the breakthrough innovation capabilities of consumer packaged goods companies. The CPG folks have been dealing with rapid change, evolving regulations, emerging technology and the fickle consumers' “Yeah, but what have you done for me lately?” attitude for decades. Pharma teams could learn a lot from their approach.
Breakthrough innovation is more than having smart people - clearly a lot of brilliant folks work in Pharma. What these smart folks don't have is a change in thinking habits and fresh perspectives that come from interacting with people from different industries, listening to consumers and the tolerance for risk that comes along with these interactions.
As we work with a variety of companies and teams, we've found virtually no one outside of CPG using these incredibly powerful tools for competitive advantage and growth - including pharmaceutical companies. This overlooked opportunity is the new “low-hanging fruit.”
Pharmaceutical companies in general (with some exceptions) have a reputation for being hierarchical, siloed and academic in their approach to organization. These cultural issues can really inhibit the ability to innovate. Rather than promoting the sharing of ideas in new ways, these cultural elements encourage people to keep their heads down, focus on the day-to-day and always take things through the chain of command. They also tend to be so deeply embedded that without a compelling reason to change, there will be no change. Innovative culture is key, because as Ram Charan says, “Without that kind of culture of innovation, a strategy of sustainable organic growth is much more difficult to achieve.”
Imagine a big Pharma company coming out with an imperative that 50% of all new drugs must come from research or work done outside of the company. This would kick off a cultural change provided it has support from leadership - we know this because it's a trick that worked in CPG at Procter & Gamble.
Finally, we suggest that Big Pharma finds ways to innovate within itself as well as with the FDA and other regulatory bodies. Although everyone will have different opinions on what should change, the goal of innovation is to explore possibilities and find a new path. The outcome could really help pave the way for a new era in big pharma, one that provides new low-hanging fruit and the opportunities for breakthroughs.