Re-organizing R&D for innovation – latest trends in biotech and chemicals

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Talking to people in chemical and biotech-pharma  is painting a new picture of re-organizing the research work-force for invention and discovery in biological,pharmaceutical, agro-chemical and chemical industry in the US.

Increasingly, organizations with large PhD scientist forces are realizing that they are not entrepreneurial enough when compared to the smaller, more entrepreneurial,  say bio-tech firm. In other words, keeping with established new product development theory large organizations are realizing that they are not able to really deal with the fuzzy front-end of innovation. Bigger organizations have just too much of bureaucracy and politics to allow entrepreneurial action in-house that is absolutely required for the fuzzy front end.

When it comes to product design- organizations have used product design firms like IDEO for products from tooth brushes to electronic gadgets.In contrast,advanced chemical and pharmaceutical discovery involves huge domain knowledge gathered over years of meticulous lab work that are  proven through scholarly publications.

Bigger organizations in the US are deciding to stay with their basic managerial skills like say supply chain and marketing ,distribution that are highly embedded and relational ( eg. you know the doctors and pharmacies where you will sell the pharmaceutical  product, you have the processes and people in place) but are going in for simply buying a promising drug from a smaller biotech firm that employs say 5 scientists. It's far more cheaper to buy a relatively more developed idea than try to do it from scratch in the large organization employing 150 scientists.The biotech firm that succeeds in finding a buyer for its invention experiences a similar windfall like the Internet boom-time of the late 1990's.

How exactly, the post-doctoral employment of scientists will pan out in the future, is not yet clear. In the past, many PhD's in the sciences could find employment in large firms that would afford a long "no-marketable discovery" career. This is changing….

We wonder if  smaller biotechs would be able to afford fresh PhD's….. and yet keep up scientific work at Universities that contribute to theory and not put too much pressure on immediate market application. Interesting to watch as we go forward and innovation accelerates in the biological,chemical and pharmaceutical space.

The Checklist Manifesto and Business Processes

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I recently finished reading "The Checklist Manifesto" by Atul Gawande. According Gawande The Checklist Manifesto checklists greatly help in avoiding mistakes in surgery and in aircraft cockpits particularly where team work is a pre-requisite to success.

Almost all forms of work are amenable to checklists and a general process.If everyone follows the process then the higher order knowledge work can kick in,more effectively. Thus during surgery the right anesthesia in the right dose by the the anesthesiologist and consideration of say prior blood pressure is essential for the surgeon to do his or her job.

As Gawande points out surgeons and specialists balk at following a checklist. "Invasion of professional freedom" they say. The point is  that if the processes work at the routine level (eg  blood pressure confirmed and checked) then the surgeon can deal with a new problem that might be apparent let's say when the abdomen is opened up.

Gawande recounts Sully Sullenberger's landing on the Hudson and explains that it is because of checkists and great co-ordination that Sully Sullenberger was able to excel and rise to a new level of pilot performance and get the plane down on the Hudson and save all lives. Clearly, fear of death at least allows one high knowledge profession ( Pilots) to follow checklists !

Any other high knowledge professional (scientist,engineer,professor,doctor,manager,lawyer, investment banker etc.) does not have imminent personal "life at stake" like the airline pilot. So there is a disdain for both process and the underlying humble checklist that Gawande advocates.

Quality accreditation (eg ISO 9000)  and  outsourcing are two  events that force organizations to define their processes and in effect create checklists.For example, recently when a local manufacturer decided to outsource forgings it realized that it never had drawings made because it was all in house and there was really no systematic drawings available to give to suppliers. In any case, drawings were developed and eventually advanced engineering scientists could wrap their minds around higher order problems rather than trying to deal with internally made forgings that worked well but the informality had its toll in confusion and time.

All in all Gawande's book is a good read and inspiration for managers. If you have a play book and a checklist to get the basics right, you really start playing the game !

“If it stinks,put a lid on it ! ” and Toyota problems

The Wall Street Journal reports a Japanese proverb “if it stinks,put a lid on it!” (February 5, 2010).

The concept of “face saving” and “shame” is critical to the eastern cultures,and yet unfathomable to the Westerner. Even to those Westerners who are the most open to Eastern cultures.Geert Hofstede compares Japanese and US cultures and yet the concept of shame is beyond the Hofstede dimensions. For example,Japanese attitudes to the disabled has been studied by academics for quite some time. In Japan, the disabled and weak have a hard time being acknowledged by their own families.The families are ashamed of their unfortunate relatives and would rather put a metaphorical “lid” on them.

Since this blog takes a managerial view, we sympathize with Toyota’s predicament and sincerely wish that their US competitors  like GM, Ford and Chrysler sell some more cars for the sake of the economy, even as  Toyota loyalists reel from the shock of all this news.

Here is an apology from the Toyota chief in Japan, difficult for all CEO’s but more so in the Japanese culture. All Asians and cultures that subscribe to “If it stinks,put a lid on it”  should hopefully change their internal organization cultures to address “stink” issues expeditiously and upfront. As an MBA case instructor will tell you management actions are short immediate term, medium term and long term. Inaction or “putting a lid” is equivalent to taking the really long term view and as John Maynard Keynes  is reported to have said “in the really long term, we are all dead!”  Toyota’s immediate short term problem is to assure its very large customer base that brakes and accelerators, do not have a mind of their own.

About StratoServe.

The clean “Vendor Master” problem- when strategy meets execution.

Attended a great talk by Matt Marthinson on working capital on Tuesday (January 2010). Among  other very useful things Matt explained the concept of “vendor master”  in the context of working capital in ERP systems.

The vendor master as supply chain professionals know and marketing professionals may not realize is the master data organizations maintain by individual supplier. This data really drives all kinds of things like RFP’s,Purchase Orders, Payment Terms and the very welcome “check in the mail”(See B2B Buying Process).

With thousands of suppliers large organizations can have all kinds of messy stuff happening. Typical examples are many entries for the same supplier and outdated payment terms. The purchase order is generated from the vendor master and due to general sloppiness the order going out may be completely missing agreed payment terms. The solution?- well- have only a few  individuals handling the vendor master and ensure that it reflects the current agreement with each supplier. 

If you think about it the “Vendor Master” problem is rampant in all kinds of organizations. Marketers really are not up to speed with customer data , schools with student data, associations are not entirely sure of the member data and the list goes on.

Cleaning  master data  and aligning with current strategy sounds boring but is critical to execution  The most well thought out strategy fails when simple things like addresses and email id’s have changed.

About StratoServe

NBC Tonight Show, Jay Leno and New Coke

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The NBC Tonight Show was taken over by Conan O'Brien with a 5 year lead in and Jay Leno was to start a new 10 pm "Jay Leno" show. And then the viewership numbers in the new format started to tumble…

Late night with the "Tonight Show: and the legendary Johnny Carson had sort of established a Classic Coke for the  late night comedy market, on television. Despite the very extensive syndicated data available on this kind of product it is sort of amazing why NBC executives could not really understand  customer (viewer) behavior – at all. Apparently, the Jay Leno lead in to the affiliate local news did not work.

Local news watchers  had been used to waiting for the Tonight Show with Jay Leno but apparently were not waiting for the Tonight Show with Conan as they had enough comedy with the Jay Leno Show at 10 pm. They would switch off the evening news and NBC affiliates were up in arms against the new format of Jay Leno as the lead in to the evening news.

More intriguing is the hind sight comment that Conan's material is more "late night" and really not "main stream" enough for the Tonight Show.

I cannot but compare with the New Coke which failed to understand the meaning of Coke to the American ie a way of life . It now turns out that for the Tonight show time is important and Conan is likely to leave NBC being now shifted to the 12.05 slot after news and a 30 minute Jay Leno segment.

The logic of putting on Jay Leno at 10 pm was more to do with lower costs. Production costs as the single important determinant for marketing decisions reeks of disrespect for the customer. And when the customer feels disrespected s/he votes with her feet or remote as in this case.

The NBC late night fiasco will continue to unfold and provide learning opportunities  to the marketing,media and advertising communities for years to come.

Focus,project culture and close to customer for new product success says McKinsey Study

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A recent McKinsey study emphasizes that organizations that are successful at NPD (New Product Development) have three characteristics:

  1. Focus: They focus efforts and have clarity in goals and scope of the NPD process upfront-before they start or at least before they get underway,
  2. Nurturing Project Culture: That is when team members matrix report to their immediate bosses and project team leaders and successful organizations are able to manage "turf" politics and celebrate team success,
  3. Close to the customer: Successful organizations develop a close relationship with intended customers and do a better job at concept testing,product testing and market testing. Testing implies that successful organizations are able to re-orient their development efforts depending on what the customers tell them.

Of the three success factors identified, in this study, my feeling is that the first one is the biggest problem in large organizations. A series of top managers sign off on pursuing a new product project without devoting the intense attention (mindfulness ?)  required at the early project selection stage of the stage gate process.The McKinsey study is really talking about the middle of the process, by which time the game is already on and there are simply too many careers at stake.

Why top managers remain silent at the early stages and do not commit intellectually, and wake up only later, is an interesting fact of organizational life.  Let me give an example: let's say an organization wants to get on the "green" bandwagon. Top mangers all say "yes" initially and enthusiastically. But when the project team comes back with the best options – suited for the technology-market mix of the organization several top mangers start raising questions about cost,time,competition and so on. Once top managers develop cold feet, the second point in the McKinsey study kicks in and the project  becomes less important than the line job of the managers involved. In all of this vacillation the customer is forgotten.

"It's okay to wake up- late" seems to be the corporate mantra when it is the NPD process. "At least the questions are raised", everyone feels righteously: never mind the disastrous consequences  for the entire portfolio of NPD projects.

Upfront clear scoping ,top management focus and commitment  may feel uncomfortable as in being pinned down too early in the NPD process. But it is really required if NPD is to succeed.

2010 trends for niche markets

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2009 was a really challenging year for businesses in the US and much of the world. However, we seem to have turned the corner at least on consumer spending with retail sales up. US employment is a very difficult problem to crack and let's hope that 2010 will be much better on the employment front in the US.

Health care reform seems to be on track and should create jobs in all parts of the health care delivery chain including the insurance chain. The climate summit also provides a path to green activity and jobs. Best of all, banks have become much more focused on small business and individual customers and are sending out courteous letters about credit card interest rate changes. A little,on the ground diligence and courtesy by the financial sector should help small businesses and jobs a great deal.

The big trend to watch for in 2010 will probably   be the growth of niche markets. It will become more possible and acceptable to tap into the long tail opportunities, more so as corporations downsize,small businesses grow and technology makes things possible.

Happy New Year 2010!

Innovation and the Christmas spirit

Walk into any store, office or organization and you get that festive feeling these days. I wonder why many places are pretty foreboding for rest of the year, probably more so in the unhappy states. People simply hate work, generally, except during the holiday period – when things are distinctly more cheery.

Lots of research on innovation suggests that the early part of the new product development process needs creativity, openness,  freewheeling and a welcoming organization. Later parts of the NPD process requires discipline, structure and process. The later parts of the process need not have a scrooge orientation. In fact, there is evidence that an enabling organization promotes great product development after ideas have been narrowed down. Organizations don’t need huge funding but the Christmas spirit as so many communities in America are demonstrating. Here is a nice post about staying with the Christmas spirit for 365 days in your organization. All parts of your NPD process will improve significantly.

Wish readers a Merry Christmas !

No Superbowl but online advertising for Pepsi

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Pepsi will not be advertising at the Superbowl next year and will be shifting some of this spending to online advertising. Pepsi's brand promise is targeted to the youth and clearly the youth are not expected to watch the Superbowl ads although they should be catching the Superbowl.

This rather innocuous piece of news represents a fundamental shift in American media consumption  habits . Superbowl Advertising is a celebration of  the best  in TV advertising. In fact, reviewing Superbowl Ads is a preferred class activity by Marketing Professors, the Advertising Profession and professional associations related to Advertising and Marketing. Many of  the state professional associations have entire evening meetings to discuss the TV advertising at the Superbowl. This meetings discuss  Ads that were memorable and that were not, would the ad  help the brand and so on.

But guess what? Kids won't watch the  TV ads although they'd probably multitask and catch parts of the Superbowl game. Online advertising at websites where the target market spends time might mean more value for money for companies like Pepsi.Online advertising allows for very precise targeting and  platforms like Google AdWords involve "pay if they see" principle. So the advertiser pays only on click through and not for distracted and fragmented TV audiences. Big changes are ahead for advertising and media in the new year and these changes spell major opportunity for all folks connected. More on these opportunities later ….

In the meanwhile, here is the 2009 Pepsi Max Superbowl ad with greetings of the Holiday Season:

http://www.youtube-nocookie.com/v/gfyO5w1rTRQ&hl=en_US&fs=1&border=1

Climate Change and US jobs- some CEO green options

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The Climate change meeting  of the United Nations at Copenhagen is considered really important by most of the world.  Americans  too have moved up in their climate concerns and are even supportive of paying higher prices for "greener" products if more jobs are created in the US.(More details of the IPSOS poll here).For Americans jobs are issue no. 1 and the focus on climate change is a great opportunity for the CEO to re orient their business quite quickly to be "greener,"  and also create jobs.Here are three options to consider:

  1. Evaluate current products and markets for green: Right from the upstream supply chain to the downstream distribution channel green content can be enhanced without re-defining your target market. I mean, you can stay with your existing customers and enhance the green in your products' content, manufacturing process, packaging and movement. Both domestic and foreign markets will appreciate any moves you make and this may not cost you anything extra. Simply re-routing delivery can save gas without hurting your market. Once you know know the nature of the "green traction" in your existing product market segments there would be the maximum job creation opportunities in new "green" product lines as is the next point.
  2. Creating new "green" products and businesses: This is a big opportunity for small and big companies. If you know how to run a large conglomerate with large industrial customers you can get into wind power generation as UTC has done. Small B2B firms can benefit by proactively seeking "green" opportunities with existing big company customers.
  3. Re-evaluate your company's potential green expertise: Re-evaluating your green expertise and possible alternate markets for your firm's expertise  should help your market and create jobs. For example,reducing auto emissions is a  big opportunity at multiple points in the auto value chain. These include greener cars, greener fuel, car pooling businesses, public transport and associated  emission control equipment,parts and service. If there is some possible application of your company's skill sets for "greening" the auto value chain. Go for it !

It is very likely that Governments will agree to some basics at Copenhagen (after Kyoto)  and  we should see the incentives/disincentives  for promoting green in each country come up in the next ten years before the next climate conference rolls along.  This sure is a great time for CEO's of all firms to start working on green options for their businesses.