Innovation

Jun 22

6 minute read

“Innovation shouldn’t take a decade, billions of dollars and a 90% failure rate” - Emma Walmsley, CEO of GSK

R&D productivity has nose-dived over the last five decades in Pharma.

Traditional command-and-control R&D methods simply aren't working. Large pharma is out maneuvered and outpaced by hungry biotech startups who now account for almost 70% of new drugs launched.

The response from big Pharma? Intensive merger & acquisition of promising biotech companies with large price tags.

This isn't sustainable. The pharma industry is changing at pace and even successful M&A shouldn’t be a substitute for changing these underwhelming internal innovation stats.

So where can the industry go from here?

The Pharma companies of the future will not be single entities. We will likely see collaborative decentralised groups of organisations emerging, in the guise of tech trailblazers like Alphabet and Tencent.

This new world is going to need a new type of leadership. The heavily matrixed structures of today won’t work as well tomorrow. They are at risk of stifling innovation and creativity. If big pharma is going to innovate it needs to learn from Building 20.

Building 20, on the MIT campus, became legendary for producing unexpected innovation: Eight Nobel prize winners, the invention of new RADAR systems, the atomic clock, the first arcade video game, the birthplace of the Bose Corporation and more.

It housed a vast array of independent specialist teams who had easy access to the resources they needed. It was the epitome of decrentailsation. Furthermore the building was notoriously hard to navigate. This would often lead occupants astray into different offices and laboratories and provide chance opportunities for collaboration. These informal hallway discussions lead to cross-functional collaboration on new projects.

In short, Building 20 was the opposite of what happens in big pharma; Function leads restricted to their matrixed areas with little opportunity to experience serendipitous moments of collaborative genius. Meanwhile startups are engaged in these interactions all the time.

In Building 20 people were connected to the higher purpose of progress and didn't sweat the small stuff.

The next step towards this type of culture will be training functional leads to become enterprise leaders. Those who will transcend their functional silos and cross the boundaries of internal and external structures in pursuit of more innovation and progress.