Is it difficult to incorporate a strong commitment to finding and funding innovation in an organization as big and unwieldy
KP: It depends on the kind of innovation you are talking about. Making incremental improvements to adjust to payer expectations
is actually something that large organizations do quite well because it is ongoing and requires scale. But truly disruptive
innovation is hard to accept in any institution, of any size. That kind of innovation poses a direct challenge to the business
model—it's a signal blow to the status quo. Seeing it coming often requires you act on the basis of gut instinct rather than
facts. Without the standard metrics, it is often harder to move a "game-changing" initiative forward through the organization.
How do you create a management culture that promotes and encourages in-house innovation?
KP: Pfizer has a history of leadership in product innovation—it is written in our DNA. The struggle for any large enterprise
like Pfizer occurs where innovation is perceived as disruptive, challenging the status quo in some fundamental way. Overcoming
that and embracing change requires significant persuasive efforts from top management. This includes laying forth a clear
vision of why change is necessary so everyone understands that their future depends on acknowledging it. At Pfizer, we've
done that by having CEO Ian Read and all top management reinforce three fundamental truths: company R&D structure and investment
flows will not be the same in five years as it is today; the commercial "go-to-market" model will need to adapt to a much
more stringent environment, dominated by price-sensitive payers; and that the bottom line depends on furnishing evidence that
our products improve clinical outcomes for the patient and support objectives in public health. Ian Read has been deliberately
explicit about this.
The second element is providing employees with the tools that enable them to suggest and then execute a good idea. A good
example is the Innovative Communities initiative we launched in cooperation with Microsoft in September 2010 (see sidebar).
It allows a colleague to put a proposal together, solicit the support of other colleagues, and create a community—a constituency—to
declare, "We think there is an opportunity here." The group then drafts a business plan and is required to obtain the endorsement
of a member of the ELT, who becomes the initiative's champion and agrees to fund it. You might see this as a bit process-oriented,
and I concede it is. But people forget that innovation requires discipline as well as creativity. A good idea is nothing unless
you can execute to produce a result.
Your experience suggests that an innovation platform must be grounded on the ability for sponsors to build internal coalitions
for change that will attract the support of senior management. A program built around the colleague "suggestion box" is doomed
KP: Yes, this is a critical point. We had an earlier program called http://Pfizerideas.com/ that gave colleagues the opportunity to suggest changes in process and pitch ideas, to which others could react to in real
time. This did not really work because there was no mechanism for follow-through; it became a bin for the collection of best
practices but nothing more. It actually made innovation seem like a diversion from business fundamentals and fostered an impression
among many colleagues that the company was not serious about embracing change. It is frustrating to come up with a good idea,
invest in the background work, and then discover there is no channel to take it forward. The Innovative Communities project
is designed to rectify this imbalance.
Another criterion for a strong innovation culture is distinguishing between a genuine innovation—the game-changer—and something
that is more incremental: what we call "continuous improvement." For example, we might hear from colleagues who want to eliminate
unnecessary forms or requirements for approvals. This we would refer to our Six Sigma teams under the rubric of what I call
the "just do it" category. Winning support and then implementing a real innovation—one that might pose a painful adjustment
for some part of the business—is a far more complex task.
How do you define success in your role on the Executive Leadership Team? What do you expect to have accomplished in the next
two to three years?
KP: We are all about strategy—defining the themes and building the platforms that bring us to the next stage of growth. In that
regard, our first priority is fixing what Ian Read calls our "innovative core." That means finding creative ways to develop
first-in-class drugs, tap our existing therapeutic portfolio to address unmet medical needs, and ensure all patients across
geographies and incomes obtain access to our products. So we have to innovate around things like cooperation with academia
to generate new drugs and complementary technologies like diagnostics; to build new approaches to reimbursement based on an
integrated evidence base responsive to demands from payers for more clinical differentiation; and to invent new delivery and
distribution systems that inform clinicians and patients and speed access to the patient, at lower cost.
In addition, we have to strengthen our awareness of how we interact with other parts of the health system, particularly once
our medicines are out on the market. In what ways do our medicines shape the patient experience? Is partnering the best way
to stay relevant here? Answering these questions well will be the basis for our success, particularly if we can continue to
find and execute good deals with other companies.
Internally, it's a function of keeping our BU leaders and chief science officers happy while not relinquishing the role of
advocate for the best interests of the full organization. It's a careful balancing act. And today is a great time to be a
leader because change is irrevocable in this industry. It has to be embraced as a positive. Showing fear and sowing pessimism
is not a management skill that is going to work in the years ahead.