How To Prevent Failure in Pharma & MedTech Innovation

As the saying goes, “success has many fathers, failure is an orphan.” This sentiment rings true as it relates to innovation in the healthcare industry. There are many reasons that innovation initiatives can fail in healthcare and more specifically within large pharmaceutical and med tech organizations.

It is impossible to outline all reasons that innovation initiatives fail, here are a few of the challenges and barriers that I have seen that are common to many large organizations that I think can be considered early on to ensure positive outcomes.

Annual Budget Cycles

Establishing successful innovation is not an annual plan it is a long-term commitment. Unfortunately, most commitments to innovation fall prey and victim to modern portfolio management and budget planning. Early stage innovation is by virtue non-revenue producing and if your innovation is not a stand-alone and is incorporated within your normal product lifecycle management process, it will likely suffer from annual review and budget cuts. ??

Where possible, advocate for innovation initiatives to be managed outside of the normal business planning process or in the least negotiate a minimum amount of time to build and establish a pipeline of innovation and digital products for the market.?

Turf Wars

Every war in the history of the world has been over land. The same is true in corporate life.?A turf war is defined as two or more areas within an organization competing or having a dispute over a shared area of interest or responsibility. Commercial teams that work in digital, research and development, or partnering teams are all interested and require a stake in the strategy and development of an innovation plan. Without clear definition for an innovation team and roles and responsibilities it can make the organizational set-up a bit muddled, which will lead to muddled results.

I recommend development of a clear strategy and design of new departments and organizations with a clear charter, mandate and definition in order to provide a foundation for growing an innovation program that does not conflict with other parts of the organization.

The Matrix Organization

The matrix organization was born from the aerospace industry in the 1950s to address the need to manage large, complex projects – like building a plane. However, innovation is not building a plane - it requires small, agile teams working quickly to understand unmet needs, jobs-to-be-done and testing, and experimenting. Matrix organizations can often lead to chaotic work environments and frustration.?Simple decisions require discussion, there are issues with role clarity, and confusion over accountability. For those employees assigned multiple projects experience increased workload. Good ideas need room to be cultivated and that is difficult to do in an environment where a person is allocated 80 percent across four projects, they do not have a direct leader who can serve as a sponsor and they do not have colleagues who have time to join them to pressure test ideas. It is a model where ideas can go to die. Clearly, this is not an ideal formula for inspiring teams, building urgency and speed to drive innovation. ?

Where possible - leverage a mix of internal and external resources and dedicate them to the innovation process.

Fractional Teams and Resources

An unfortunate byproduct of matrix organizations is assigning fractional resources to projects. Subject matter experts often split their time across multiple projects. Allocating 10 percent of time to a project is neither agile nor helpful in most cases. This obviously does not lend itself to speed and agility when multiple resources are able to provide less than 50 percent of their time to a project. ?

Similar to challenges in matrix organizations – I would highly recommend dedicating core resources that can build and drive the innovation process.

Outsourcing

It is impossible to see success if you are fully outsourcing your innovation activities. You may be able to outsource components and/or bring in external talent with the necessary skill set to assist in the transformation, but success very rarely comes when outsourcing this work to a third party unless objectives and incentives are properly aligned. ??

Bureaucracy

Many organizations still maintain traditional hierarchies. A top-down decision-making style can present challenges for innovation programs that require people, resources and frequent decisions regarding progress of projects. Processes, paperwork, and endless alignment meetings to revisit decisions made a month ago can contribute to false starts and frustration regarding implementing innovation programs.

Early alignment and management of expectations along with frequent communication can help avoid most bureaucratic challenges.

Lack of Training

Henry Ford reportedly said, “The only thing worse than training your employees and having them leave is not training them and having them stay!” Innovation is not an accident and the processes, tools and activities to drive innovation require training. There is much to learn, know and understand - lean design, agile, research methodologies, new product development frameworks, it can be a lot to know and understand. A lack of training and implementation of best practices through real-world experiences can make the implementation of successful innovation challenging. Innovation strategy should include a comprehensive change management and training program.

Leadership Turnover

While employee turnover is expected, turnover of key leadership positions can often be the death knell. Innovation, unfortunately, can provide the environment for turnover because it contains all the elements of corporate scrutiny – people, budget, teams working on projects with little visibility, long development cycles and lack of revenue. Leadership in innovation roles often have unique skill sets and have the ability to provide air cover, buy time, and sell progress – all at the same time. Innovation leaders also seem to be highly poachable to other organizations. If a leader leaves or is only provided a short window to show results it can create a crack in the foundation of an innovation program that is difficult to overcome.

It is impossible to prevent turnover, but making sure that a bench of talent is trained and ready to step in helps prevent a loss having a major impact.

Expectations Mis-Alignment

All problems are communication problems. Ensuring that there are clear expectations for innovation programs is critical. ?Expectations are often tied to objectives within a calendar year. Every organization sets objectives, goals, key results, at the beginning of each calendar year. However, innovation rarely, if ever, follows a neat 12-month trajectory. This mis-alignment in expectations can be challenging to overcome in a world where an organizations’ performance is measured externally on a quarterly basis and internally annually.

Buy-In and Alignment

In principle, the notion of buy-in and alignment on an idea is useful. Test the idea with multiple people, departments and groups to see if they see the problem the way you do. Does the problem need a solution and is the need urgent? However, where it can be problematic is developing the business case, the presentation and spending what can seem like an inordinate amount of time presenting the problem over a period of months to different teams, groups, and corporate decision-making bodies all in an effort to gain alignment. This can be an exhausting exercise, and for many, the idea of having to run the gauntlet to qualify to get the project submitted for budget approval can be exhausting. Do this multiple times and you can see why good ideas never leave the drawing board. ?

Innovation practices should be safe space and an area where you can “move fast and break things.” Processes that prevent speed and agility should be evaluated for effectiveness or removed.

Organizational Complexity

If you work in a large, global organization, which most pharma companies are, then you are familiar with the complexity that comes with working with colleagues all over the world. Employees committing a small percentage of time, with different reporting lines, annual objectives and working in different time zones provides inherent challenges towards realizing speed and agility.

Culture

Perhaps one of, if not the most, underappreciated aspects of corporate and innovation success is culture. Now more than ever in the post-pandemic world where there is high prevalence of burnout, zoomed out, and quiet quitting. Mental health management is a very real issue that needs to be fully recognized and effectively managed. Culture sets an expectation for behavior and performance. It certainly aids in attracting talent, engagement in the work and overall productivity.

Half Measures

Innovation programs require full support from allocation of people and budget in order to be successful. Cultivating a systematic program, initiating innovation from unmet needs and jobs-to-be done and moving those opportunities though a development and review process takes time. It requires organizational discipline and a time horizon of 2-3 years or more in order to see some products come to life, enter the market and begin to realize revenue. ?Too often, changing priorities, budget constraints and impatience lead to cutting innovation projects too soon.

Vanity Projects

Innovation projects can also coincide with ambitious leaders who are interested in having the title and internal prestige of heading up innovation activities rather than the actual work required to establish a long-term framework for driving innovations in the organization. These types of innovation programs are not built to last and often fall apart after a few years. ?Silicon Valley tours, dotting the office with new whiteboards, establishing a corporate VC to invest in start-ups that would be difficult to integrate, or creating competing innovation teams are all vanity innovation efforts that may appear to be steps forward, but ultimately will not yield the success intended.?

Buzzword Bingo

Many organizations are chasing the latest trends and superficially pursue and adopt the activities that appear to be on the cutting edge, without considering their capabilities to deliver results to the patient. For example, driving omni-channel marketing when you are really still just trying to master email and social media programs. Innovation programs often fall into the same trap of chasing an idea rather than establishing a strategy, structure and process for sustained results.

Summary

In the end, there are many reasons that lead to the success or failure in pharma and medtech organizations. The above list represents potential barriers and challenges to be aware of that can prevent success, lead to dysfunction and in many cases deliver lackluster results or outright failure in an organization – they can all be avoided with careful planning, diligence and a thoughtful approach to establishing an innovation program.?There are many business axioms that come to mind, but I will leave you with prior planning prevents piss poor performance and organizations are perfectly designed for the results they get.?

Please, tell me what you think.