The COO as change coordinator
Another precedent drawn from financial sector is the importance of changing the mindset in allocating program and project
budgets. Traditionally, project work originates from the requirements of the line business and thus carries a strong ROI component.
Innovating companies have abandoned that hard and fast stipulation and actually insist that a specific portion of the project
budget be earmarked for innovation. The concept has been adopted in funding for product R&D in life sciences, but it needs
to be extended out further, to the entire supply chain, including manufacturing, technology, logistics/operations, sales,
and distribution. This horizontal extension of earmarking for innovation beyond R&D must be a COO responsibility. The investment
governance process must be deliberately designed to fund innovation projects past the idea phase into the championing and
execution phases, avoiding the tendency for progress to stop at the very moment when an innovation is endorsed.
One key example from COO leadership in the financial sector is to design and install an innovation chargeback model, much
like the line of business chargeback models for shared services such as IT network, storage, and human resources. This allows
lines of businesses closest to the customer to take innovation seriously as a shared service, and to better identify, prioritize,
and install voice of customer, outside-in innovations. In this type of operating model, governance changes are many times
best executed by a COO instead of a CIO or CTO. Reorienting innovation funding through the chargeback model also discourages
the use of prioritization measures, which in their short-term focus and reliance on measurement tend to avoid taking a real
stake in something as potentially disruptive as innovation. And stopping "un-innovation" is an important element in innovating.
CFO: the networked partner
Small, sell-side vendors are becoming interesting sources of innovation. Larger organizations are advised to cultivate their
innovation roots by establishing a constant supply of relationships with them. Yet large organizations often lack the insight
and experience to productively engage with this group. CFOs can accelerate internal innovation by designing partnerships where
other "c suite" CIOs, CTOs, and COOs can "make space" for these relationships, in contrast to traditional thinking that selectively
chooses and then displaces one vendor with another. An example of how to make space for new small vendors is creating a quasi-venture
capital company within the larger organization, which can ring-fence investments in small, co-creating mini-ventures, away
from the process and bureaucratic overhead of large organizations. This is already happening in life sciences on the R&D front,
but experience in finance shows it can work effectively to drive innovation in many other critical pharma support functions.
CFOs should take the lead in creating the commercial environment for this larger partnership ecosystem around small vendors.
The CMO: listening and mapping the customer
As many management consulting companies predicted, the Chief Marketing Officer (CMO) is spending more on technology and is
usually closer to the customer than other c-level officers. In the life sciences sector, where many companies have consumer
OTC businesses, listening to customers is not new. However, the issue of where we listen, the veracity of the information
we obtain, the new vocabularies around value that we listen to, and the speed in converting data sourced from just listening
to value creating insight has changed. While this is very much a big data and social media conversation, it is hardly a CIO-
or CTO-only topic. CMOs are consistently pressed to listen to new types of customers, on new types of channels, and around
new streams of data. There is rich potential for this externally focused dialogue to deliver true, "outside-in" innovations.
In life sciences, where the customer can include the physician, the patient, the pharmacist, the payer, and the public, often
all at the same time, listening could not be more important to product success. We know it has never been more complex than
it is today.
Technology enchants us as consumers by serving electronically everything we want: where we want it, when, and how. This expectation
of being emotionally satisfied is increasing, spreading beyond the value delivered to us digitally, to the value delivered
to us physically. Financial services learned the importance of anticipating such "emotional requirements" early in the product
lifecycle. The practice here is to add emotional requirements as a precursor to the business requirements, to satisfy the
consumer's heightened insistence on engaging emotionally with a product.
Achieving this is particularly critical to innovating in medicine, due to the uniquely personal implications of striving to
maintain and improve health—the precondition for all good things in life. Following the models devised in financial services
to make customers more comfortable with a similar personal connection—building a secure, lifetime income—Big Pharma can reboot
its own innovation machine, based on organization designs where innovation is the deliberate driver, not a haphazard result.
Richie Etwaru is Group Vice-President, Cloud and Digital Innovation, at Cegedim Relationship Management. He can be reached at Richie.Etwaru@Cegedim.com