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Innovating in a downturn - Open innovation management the future for pharma?

18 March 2010

To help identify key success factors and share learnings in open innovation management, PA Consulting Group has been speaking to R&D and marketing professionals from sectors ranging from pharmaceutical and medical device to large engineering and consumer products firms. It broached subjects across the whole range of Open Innovation (OI) strategy, from the potential pitfalls to the opportunities presented by working with external expertise. Below is a summary of the key themes that emerged.

Leading from the top - adopting a clear strategy

Most companies agree that OI is key, but relatively few have so far adopted a structured or company-wide approach to it. Several felt that it can be difficult to gain buy-in and resources for OI projects. Those involved in OI can feel marginalised, under pressure to show results or even anonymous company-wide, said PA.

The view among those PA spoke to is that successful OI requires leadership, both from the top of the business and all the way through the heads of function. With relevant, respected members of the company seen to be championing it, the process is much easier. Leadership was also seen as critical to building the essential outward-looking culture - an engaged, enthusiastic chief executive or head of function can do much to engender a similar attitude in employees, and get OI accepted.

“There is strong support right from the top. The CEO has made a statement saying that it is crucial to strategy," said the head of innovation, at a consumer products company.

Optimising the approach - gaining value from OI

Most feel that OI is a strategic necessity in sustaining innovation leadership. Some respondents in the PA survey also saw OI as a possible cost-saving response to the present downturn, and all agreed that making the right decision on which OI initiatives to pursue - as with all activities - was magnified in the current economic climate. 

Few companies, though, are currently able either to construct and appraise an objective business case for OI or to implement a reliable way of measuring the value that OI brings to the business.
“I understand the need for open innovation in principle. It’s not always clear, however, how working in this way will generate real value for our company,” said the director of drug delivery, medical device company.

Choosing the right resources - internally and externally

OI is an outward-facing activity requiring skills such as relationship building, negotiating and the ability to pioneer novel legal arrangements that are not always possible to resource in-house. Choosing the right external partner, however, is especially critical in the current climate.

Despite this, training in OI is not prevalent. Not only that, but it is unclear exactly what form this would take, or whether to even do it. Skills in OI is an area where companies think they have work to do.

The people PA spoke to argued both sides of a debate, some believing that the only way to learn about OI is on the job, while others suggest that formal training is an important part of OI’s acceptance and its success, while accepting that training in OI is still very much ad hoc.

“We put one person in position to lead the effort, but if you want to make it work, you need an entire team of people who all understand different aspects of open innovation across the entire company," said the head of R&D, pharmaceutical company.

To view the original online article, please click here.

To visit PA's Technology & Innovation service page, click here.

To visit PA's Technology & Innovation pages, click here.

To visit PA's Healthcare pages, click here.

To visit PA's page on Open Innovation: leading in a collaborative world, click here.


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