Having worked with a number of large global pharmaceutical (or ‘life science’) organisations, one of the issues raised consistently with me over the last few years has been how to deal with the lack of new medicines coming through their ‘pipelines’, and what these firms should do to get research & development teams to be more innovative. The perceived dearth of innovation from existing R&D teams has caused a number of such firms to take very dramatic steps to try to ignite these engine rooms. In 2011, Pfizer closed down it s big R&D facility in the UK ; while more recently, Astra Zeneca has announced the relocation of its UK R&D centre in Alderley Park.
This is, of course, not just a big pharma challenge. Creativity & innovation is now a sought after, critical capability for many organisations, especially where rapid change can spell business disaster.
Fostering creativity and innovation is not easy to do but HR maturity provides us with a useful way of considering how to rise to the challenge. For example, two academics at Cornell University look at creativity from different angles. Diane Burton considers the organizational systems (Maturity Pillar #3) aspect of how to leverage the power of relationships and is looking at the HR function and HR’s role in creating and sustaining innovative organizations. Jack Goncalo looks at creativity & innovation through the lens of individuals and how to harness ideas within us all, from eccentric virtuosos to the best team players (see: http://www.youtube.com/watch?v=TcOwlk3dkAY ). In this respect, Jack’s work talks very clearly to the importance and value that is gained from being a true learning organisation (Pillar #3). In looking at more Maturity Pillars, we also see that innovation and creativity is fostered through each one in some way, (i.e. a firms view of its’ human capital, the nature of communication, the focus on quality & improvement, trust, engagement & co-operation, and performance management).
However, there is a very serious constraining factor which impedes a firm’s ability to be innovative even if it has a holistic, whole system view and approach to its operations; even if it truly operates as a learning organisation; and even if it’s mature in the other ways outlined above. This comes from the nature of its value proposition (Maturity Pillar #1).
For our global life science organisations, despite a growing rhetoric to the contrary , the typical primary focus of these organisations continues to be on providing returns to shareholders in the form of earnings/profits growth – heeding the voices of Wall Street and the motivations of most investors. CEO’s and senior executives still get their biggest potential reward from rising share prices, and particularly with their tenure highly uncertain, this is most easily achieved by growing earnings quickly. This is deeply unfortunate, because if firms within healthcare are really driven primarily towards financial performance, what does this mean for R&D divisions and what they are incentivised to produce?
According to the truly excellent management book by William Hopper and Kenneth Hopper (The Puritan Gift), the greatest companies in the US operated at their best during a period when their value proposition centred on creating products that were valuable to society. They point to the “laboratories” of these firms (such as AT&T, GE, & Du Pont), which produced an almost constant stream of new products, where a multitude of nobel prizewinners were found, and where R&D people were often paid to do what they wanted in the pursuit of both ‘pure’ and ‘applied’ scientific progress. The firms, during a fifty year period of the 20th Century are described as “holistic organisms”, carefully balancing the needs of customers, employees, scientists, and shareholders and other interested parties and where “knowledge… was to be pursued for its own sake, as well as its usefulness”. If more firms operated on this basis today, I suspect that the innovation conundrum would be a lot easier to overcome.