Are we getting real value out of innovation consultants?

When you stop and think about how innovation has been managed and understood over the years you soon realize how much has changed in this time.  It is very significant, yet there is still much to do. Innovation understanding is changing, certainly for the better and as it shifts our perspectives on where knowledge resides as this is altering.

Today I think we are yet again at yet another crossroads in this innovation understanding and perspective. That is to extract the leading edges required from their innovation activities within organizations. This will require fresh innovation consulting business models to exploit the growing complexity of managing emerging innovation practice to support and extend their understanding.

I’m attempting to get my head around it, let me share some of my thinking here.

There has been a continual shift of where innovation knowledge resides. The external provider, who was the main source of latest insight, hands on practice and leading ideas in the past, I think have been significantly falling behind in recent years, on their contribution and value to organizations.

The advice they are providing is shifting from deep research and repeating practice into investing into offering more the insights of what might constitutes leading edge models to then suggest offerings that generate client value, as a must to understand and have. They have moved from clear ‘leading’ practice proponents to often ‘lagging’ but are exploiting their connections for knowledge insights to offset this.

Innovation knowledge is residing far more in-house of the client

The innovation knowledge needed for completing innovation has transferred more and more within the actual organizations needing to achieve the innovating. Through their constant ‘sets of experience’, working daily within innovation they are building up some essential capabilities and capacities. The external provider has to be able to spot and fill the gaps to offer any value, they are not leading but responding.

With the growing reliance on collaborative tools and the use of technology has meant much more of the complexity of projects has to be managed from within, far too much of the necessary insights and linkages needed cannot come from external resources.

Consultants are being relegated to issues that remain complex but essentially generic, important to organizations but not the vital part of innovation need.  The use of external providers has progressively reduced in high-end value activities into more gap filling ones, as they lack the depth of inside knowledge to pull together the thinking and outcomes needed for delivering the innovation outcomes.

Their value as project specialists has even diminished due to the network need becoming so vital within dispersed organizations and this requires a deepening internal understanding and where the knowledge resides to be extracted.

It seems the role of the consultant has become more marginalised or specialised.

The business model for innovation consulting needs changing. Innovation within consultancies has been seen to be a cheap exercise to support, often not seen as the powerful force for driving the growth and fortunes of the organization as it should have been.

Much of innovations troubles today have been this poor recognition of the need of innovation to ‘reside’ in the boardroom.  It was disconnected from the strategic domain as it was a little ‘abstract’ and intangible, light on established practice.

Today that has changed, innovation needs a much higher focus, it needs to be fully aligned to what an organization wants to do, if it wants to thrive and grow. Innovation is very strategic.

There was also the ‘established practice’ over many years of consulting multiple times across similar issues that were just repeating themselves across many clients that had value that clients were willing to pay for. Often the consultant invested in the costs only once to find the (common) solutions and then set about extracted an increasing yield of return from repeating this multiple times. Today clients see through these practices and are certainly seeking uniqueness to their specific problems. Best practice still extracts from that rather tired model of establishing common practice.

Today innovation needed has to be increasingly unique, for the end results to stand out. This has its implications for anyone providing a service.   The value of best practice might give assurances to the doubters but it is the growing focus on emerging or novel practice that is more valuable to know about.

Also the growing use of open innovation has also enabled more organizations to learn from others and exclude the middle man, by working directly with others tackling similar problems and learning from each other.

Large Consultants are becoming marginalised as they lack the depth of expertise, collaborative inputs that contribute, the notable exception being still in technology application and the expertise and knowledge to link this across global organizations.

The large consulting practices certainly still possess the ‘on-hand’ extra ‘feet-on-the ground’ to augment the repeating work being undertaken within organizations or validating its position. These shift means thinner margins, more chasing to cover growing fixed costs being built up in the broad scoped consulting practice.

Shifting focus on what innovation consultants need to offer.

Consultants working in innovation today, are less ‘innovation factories’ producing the solutions and are often left with more ‘constant’ re-bottling the wine’ to maintain their place. The taste is for consistency not challenging the palate. Consultants can become more advocates for change but this needs a consistency of focus to extract value out of, as the external source of championing change, by providing the knowledge insight.

There is also this rapidly adjusting position into specific ‘knowledge providers’ and validators. Just look at the explosion of thought leadership coming from consulting firms, their ability to hone in and benchmark trends by having access to C-level executives provides a more ‘open’ understanding that internal analysis can ‘pick apart’ and absorb or reject.

Actually in a recent piece of research by www.sourceforconsulting.com they are suggesting the Law of Inverse Audiences for though leadership pieces: the narrower your focus (research or thought piece) the smaller the number of readers but the more interested and engaged those readers are likely to be.

The real insight in this was not so much thinking you know your audience here but the trend that is occurring- to forward this insight onto colleagues as validation or collateral to doubters. Yet the consultant who researched or wrote the piece will most probably never know where it has been used as it’s gone internal. Inside absorption of this external knowledge and what was actually achieved by the consulting firm that undertook this. The old model states “the client will think of us when needed” Will they?

No, the business model for innovation consulting is actually under attack, the position of making money is becoming a whole lot harder unless you shift perspectives and redesign what you can offer so it ‘fits’ far more with the internal needs of clients today.

Are these some of the shifts we are detecting?

An initial work-in-progress list of the shifts in consulting taking place relating to innovation – so what is missing here? This is certainly not exhaustive and not set out to be that, it is attempting to ‘ indicate’ the consistent shifting that has and is taking place in adapting the innovation consulting business model, in search of growth and utilization.

        Old Consulting Models

    New Consulting Needs

Required search for ‘tested’ best practices

Need for emerging and novel practice

Quickly ramp up and replicate work to ‘defray’ costs and extract margin

Starting from scratch, rapid assimilation, pushing to provide increased value and services to get margins

Have established road maps to overlay over multiple projects

Needing to translate unique efforts and contribute to building novel road maps

Established project management and milestone reporting

More ‘ad hoc’ project validation and screening

Sharing established models

Searching for unique models

Building a repository of best practice and replicating these across industry players

Extracting emerging practices to quickly translate and inject into unique approaches

Gather & Extract in a ‘paced’ way

Rapid dispersion and translating the absorbed learning

Defined tried and tested solutions based on established practices

Reacting to adaptive challenges, shaping solutions to search for ‘something’ new

Pushing for broad scope

Forced into narrow scope engagements

We are here to serve as the trusted advisor and wait your call

We need to consistently  search for our meaning and value to have a role to fill

Looser frameworks to extend and explore

Tighter context for value and alignment

Seen as the broad experts

Role of niche provider, resource support appeal

Seen as broader change agents

Needed for managing specific change to handle the continuity and stability challenges in resource thin organizations

Source of original / creative thinker

Source of objective view to quantify risk

Having relevant skills available

Providing general resources

Provider of clear and established methodologies and practices that are accepted norms

Assessing and validating risks for alternative solutions and practices outside the norm.

Initial ‘Go To’ Source of External Knowledge and sole trusted source.

Augmenting Broader Options for External Knowledge from Suppliers, Clients, Journals, Competitors, Universities & Institutions

Provider of Best in Class ‘Classic’ Training and Research and Development Thinking In-house, taking revenue stream

Ad Hoc provider or orchestrator often outsourcing to more specialist providers, sharing revenue stream, more reciprocating.

Stand Alone- all in-house resourced

More Collaborative – bringing in ‘one off’ expertise for specific assignments

Managing challenges in more ‘static and stable’ market conditions.

Coping as much with the constant challenges and challenges of complexity in market conditions

What does the future hold for ‘traditional’ innovation consulting?

Whatever the shifts taking place and I think there are many, the established, more traditional consulting model is not working for innovation. They are being marginalized, left often to catch up with the work going on within their clients. The consultant is not leading; they are following in the practice of innovation. Greater specialization is required and seemingly valued by clients. Knowing what this is becomes the hard part.

There also needs to be further work on what differentiates’ one consultant with another. The client is far more discerning, reacts very negatively to any ‘one size’ fits all approach as innovation activity is unique to each client. The establishment of more Chief Innovation Offices or Vice Presidents for innovation are demanding more from their service providers than ever before. These providers need to be clearly seen as differentiators otherwise that will not get house room.

Shifting sands, covering up old weaknesses

The world of consulting does need to change but many of the client issues still continue to remain the same or in some cases might have even got worse. It becomes  the consultants challenge on more how you can reduce the ‘pressures’ on internal teams or provides real ‘impact’ that supports ‘delivery’ differently than before and can’t be achieved internally alone.

Clients still struggle with a consistent ‘lack of time’ and as we know time is either a friend if you have it or the worst enemy to innovation if you don’t. Just simply chasing for client answers is getting worse rather than better.  Clients are constantly stretched in their utilization of the limited resources they have available to them. They are constantly being distracted away from managing the bigger picture, into side events or having ‘dual’ roles.

There remains this chronic attitude of “I’m not taking any risk or we don’t have a real appetite for experimentation” pervading board rooms. The reality is clients still want tried and tested solutions, yet for me, crazy as this is, they are reluctant to be the experiment lab yet they cry out for the need to be different. How do you ‘square that off’ with what innovation needs to have – a constantly exploring and experimental climate – to find new solutions?

Client budgets seem to be tighter each year, the cost of each innovation undertaken is rising and taking more time and cost as well as the toll for dealing with growing complexity and conflict is demanding. Organizations and the individuals responsible are under growing pressure for innovation to generate real sustaining growth.

Consultants have to manage complexity within today’s dynamics.

Consultants have to work through these dynamics to find their position to offer value and how to figure out what their position is so as to provide the relevant services. This will increasingly call for a far more flexible, agile and focused model than ever before. The pressure on margins, the inability to have more ‘bench strength’ simply waiting around for that client call, the procurement procedures that batter down fees, scope and future options, limit detailed discussions until contracts are awarded makes this harder to work through, yet consultants must.

There are also seemingly more competitors around, in the form of boutique providers of really specialised focus or industry specific expertise, a clutch of independent providers of detailed innovation knowledge and plenty of workshop and training providers, all nibbling away at those finite client budgets that keep eroding the margins and scope for building a reputation for innovation consulting.

Can today’s consulting practice for innovation stand out?

How can they provide real needed and welcomed services to the client? It is getting harder I feel out there for many and the search for different and unique innovation consulting business models is definitely on.

Some are managing this by working on their value position to offer 1) new solutions, 2) adapting solutions that are more evolutionary in their growing understanding, 3) thought leadership that provides new insights and advice to underpin selected competencies and 4) being masters of creative problem solving.

Getting your specialization right

For me I designate these emerging inovation practices as made up of 1) Systems thinkers,2) Structure implementers, 3) Subject Matter experts and those that are 4)Advocacy Catalysts within innovation, or there is a hybrid of all of these, aligned more than likely to a given innovation specialisation.

Whatever the services offered, these still need to be valued by the client (as their clear jobs-to-be-done) and to be positioned and recognized as the service provider who can deliver a higher degree of uniqueness for supporting the specific solutions on these.

I think this is calling for very different innovation consulting business models, more agile, flexible and adapting to unique conditions found within each client.

So if you are an innovation consultant are you mapping your one out or working through the multiple options on your business model canvas yet? I would, as it is not just to survive but to search and find the winning ways to thrive and be recognized as the expert needed.

As for clients, to extract real value from your providers are you clear enough on what you need? Perhaps I can help? I prefer to work in the advocacy space and try to offer subject matter thinking.

Open Innovation, Technology Platforms and a New Business Model- All-in-One Biggie!

Recently I was reminded about one of the most ambitious open innovation projects around- the Innovation Medicines Initiative- set up here in Europe. I think you will find this interesting to pick up upon.

Without doubt this is one of the most highly ambitious and bold initiative I’ve come across.

I think anyone seriously interested in the combination of open innovation, the use of a collaborative technology platform built around a novel new business model within such a highly competitive industry of Pharmaceuticals should watch this initiative with growing interest. It can point to significant changes in the impact and contribution of innovation management.

From its initial concept inception in 2004 and 2005, with the IMI established in 2007 as a Joint Undertaking, it has operated as an autonomous body for approximately a little over two years as I understand it.

Here I provide a fairly concise outline of its evolution and what challenges it is currently facing. It still is too long but it provides the essentials (I hope) on an amazing and bold initative here in Europe and worth reading until the end-really!

Background to the Innovation Medicines Initiative (IMI)

The Innovative Medicines Initiative is the largest public-private partnership aiming to boost pharmaceutical innovation in Europe and to speed up the development of better and safer medicines for patients. IMI is a joint undertaking between the European Union and the pharmaceutical industry association EFPIA. www.imi.europa.eu

With a €2 billion euro budget, IMI supports collaborative research projects and builds networks of industrial and academic experts in Europe that will boost innovation in healthcare. Acting as a neutral third party in creating innovative partnerships, IMI aims to build a more collaborative ecosystem for pharmaceutical research and development (R&D). IMI will provide socio-economic benefits to European citizens, increase Europe’s competitiveness globally, and establish Europe as the most attractive place for pharmaceutical R&D.

The European Commission’s Seventh Framework Programme contributes €1 billion to the IMI research programme. That amount will be matched by mainly in kind contributions (consisting mostly of research activities) worth at least another €1 billion euro from member companies of the European Federation of Pharmaceutical Industries and Associations (EFPIA).

IMI supports research projects in the areas of safety and efficacy, knowledge management and education and training. Projects are selected through open call proposals; the favoured way in EU funded projects
The research consortia participating in IMI projects consist of:

  • large biopharmaceutical companies that are members of EFPIA, and a variety of other partners, such as:
  • small- and medium-sized enterprises,
  • patients’ organisations,
  • universities and other research organisations,
  • hospitals,
  • Regulatory agencies, and finally any other industrial partners.

IMI’s overarching objectives

IMI’s overall goal is to build a more collaborative ecosystem for pharmaceutical R&D in Europe and to speed up the development of more effective and safer medicines for patients.

To reach this objective, IMI is creating unique, large-scale networks of innovation in pharmaceutical research. Joining forces in the IMI research and training projects, competing pharmaceutical companies collaborate with each other and with academia, regulatory agencies and patients’ organisations in order to tackle the major challenges in drug development.

The IMI Research Agenda

This builds on the recommendations in the earlier Strategic Research Agenda to overcome the principle causes of delay in pharmaceutical R&D by focusing on four areas:

  • Predicting safety: more accurately evaluating the safety of a compound during the pre-clinical phase of the development process and the later phases in clinical development.
  • Predicting efficacy: improving the ability to predict how a drug will interact in humans and how it may produce a change in function.
  • Knowledge management: more effective utilisation of information and data for predicting safety and efficacy.
  • Education and training: closing existing training gaps in the drug development process.

To address the main challenges identified, IMI will harness the know-how and expertise available across Europe’s biopharmaceutical sector, by pooling competencies and resources from the public and the private domain.

Expected effects

IMI will make Europe more attractive for pharmaceutical R&D investments and boost the competitiveness of European life science R&D. By directly addressing the challenges facing the pharmaceutical sector in Europe, IMI has the potential to:

  • Modernise the development of medicines.
  • Expand European expertise and know-how in new technologies to attract bio-medical R&D investment to Europe.
  • Anchor R&D jobs in Europe and reverse the ‘brain drain’.
  • Enhance Europe’s economy by strengthening the competitive position of smaller companies, enabling them to collaborate with a multitude of stakeholders.

The strategic imperative for this scale and scope of collaboration was the driving force.

A platform for better coordination, co-operation and collaboration among all the stakeholders involved in developing innovative medicines in Europe was seen as sorely needed. To change the present situation, there was a real need to form stronger links between the stakeholders, more efficient use of modern predictive methodologies and techniques, improved management and sharing of existing knowledge – not yet fully utilised – better exploitation of promising strengths and assets, and upgraded education and training.

Equally the pharmaceutical industry is undergoing sharply worsening working conditions and many challenges. Escalating development costs, patent expiry on major products, increased competition including R&D activities on the global market, the perception of greater risk-aversion among regulators and worsening public image are conspiring to cripple the European pharmaceutical industry. This has been seen as a negative spiral that would become highly detrimental to the European economy as well as to patients seeking relief from disease and illness.

The initial analysis relating to the benefits of a platform approach were expressed as:

  • Exploiting existing strengths and assets in Europe and building on existing structures
  • Ensuring the active involvement of member states of a community of 27 countries across the EU
  • The platform can become as a brilliant vehicle for assembling the stakeholders
  • Improve the necessity of communication for better understanding and collaboration
  • Proper networking as a key to success can break down existing barriers
  • Exploiting the platform to develop common standards and an ongoing innovative culture
  • Ensuring the transparency of all steps and procedures in the platform had real value
  • Better training and education of scientists to do the job in more open, collaborative ways
  • Ensuring balance in selecting disease targets would have a potential greater impact
  • Establish common standards for bench marking would give all equal opportunity to improve.

Recently in 2011 a first interim evaluation report was made by a panel.

At the time of the first interim evaluation, the IMI had operated as an autonomous body for approximately one year, had launched its first two calls and was about to launch the third call. Fifteen projects from the first call had kicked-off and were ongoing, and a further 8 projects from the second call were under negotiation. These projects have been launched in the first few months of 2011.

The in-kind contribution from the EFPIA companies to projects in the first two calls is € 198 million and the financial contribution from the EU budget, disbursed by the IMI JU is € 190 million. This is slightly lower than what was foreseen at the launch of IMI (€ 199.5 million).

The IMI interim reports objective was to is to address the bottlenecks currently limiting the efficiency, effectiveness and quality of the drug development activities needed to bring innovative medicines to the market and provide a clarification of the positive progress made. My extra note here -Just take a look at what they are attempting to address.

  • Through the IMI JU, Europe has succeeded in establishing a new business model between public and private sectors, which unites research strengths across European pharmaceutical industry, academia and small to medium enterprises (SMEs).
  • The consortia formed carry out focussed research addressing problems of immediate relevance to industry and future public health. To have formed and embedded this new, applied, research environment is a significant achievement for Europe.
  • The IMI development has been meaningfully enhanced by its engagement with the regulatory authorities and patients organisations. To have succeeded here is rare, and taken together with the scale of interest of research organisations, is a tremendous illustration of Europe’s strengths in creating consensus and collaboration.
  • By facilitating enhanced cooperation between academic, SMEs, patients organisations, regulatory authorities and the pharmaceutical industry, the IMI enables mutual learning and the opportunity to build understanding of respective rationales and approaches, with benefits to all parties. This is powerful. Although at a relatively early stage, the dialogue now underway across the participating groups aligns well with the IMI  intent.
  • The scientific scope of the initiative is well targeted, embodied in the IMIResearch Agenda, and the IMI JU has had the foresight to ensure that the Research Agenda is updated regularly. The first such review and update was on-going at the time of the Panel’s review.
  • The financial resources available to the IMI JU, totalling €2Bn, make this the largest public private partnership in health research in the world. Yet the research challenges to be addressed with this sum are significant.
  • The Panel was satisfied that the funding is being distributed adequately to help reach the objectives set and also saw appropriate consideration being given to the scope and scale of future projects to best achieve impact from the finite research funding.
  • IMI constitutes a novel model for implementing the concept of “open innovation”. No other European programme has enabled cross-company collaboration within the pharmaceutical sector on the scale that has been achieved with IMI. This step is very important in developing open innovation in the health sector as it has enabled an unprecedented pooling of industrial research assets allowing scientific challenges to be tackled in a manner that could not be done otherwise.
  • In many respects the IMI is an incubator for changing minds on how parties can work together across traditional boundaries and is therefore likely to have an important structuring effect in Europe, fully in line with the Innovation Union objectives

The panel also identified certain weaknesses for the Joint Undertaking bodies to address

  • Internal governance structures are not yet working optimally: e.g. pace of decision making, clarity on responsibilities for key actions, crispness in assignment of accountability for tasks;
  • Proactive communication activities have been lacking, as exemplified by the diffuse and varied understanding various stakeholders have of the purpose of IMI;
  • The advisory potential of several stakeholders, such the European Medicines Agency (EMA), is not exploited fully by the IMI.
  • The lack of identified and used key performance indicators by the IMI JU risks making the output of the whole initiative diffuse.

The Panel therefore came up with seven recommendations summarised below. Each is associated with a precise set of actions detailed in the report but not provided here.

  1. Continuously improve stakeholder involvement in IMI-supported research projects
  2. Continuously ensure EFPIA and Commission commitment to IMI’s success and sustainability
  3. Ensure excellence and exploit new ways to support IMI scientific objectives.
  4. Improve IMI communication
  5. Reinforce and streamline decision making and well functioning processes
  6. Ensure best use of IMI results and IMI sustainability
  7. Develop monitoring and evaluation processes

The EU Commission has issued its response to this report- in summary:

The Commission welcomes the interim evaluation report about IMI. It takes note of the recommendation of the evaluation panel. The Commission is committed to working with EFPIA to implement the recommendations addressed to the IMI Governing Board, where the two founding members work together to give strategic direction and oversight to the IMI.

The Commission is committed to implementing the recommendations addressed to it and is open to collaborating with EFPIA and the IMI Executive Director implementing the recommendations addressed to them. Most of the recommendations can be implemented in the short to medium term and indeed many are already being addressed through actions from the Governing Board and the Executive Office.

Both the Commission and EFPIA are recommended to dedicate enough staff to IMI. The Commission considers that both founding members have shown extraordinary commitment towards the successful setting up of IMI, including the launch of the IMI JU as an autonomous entity.

Considering the number of processes that had to be established, the Commission considers that overall this has succeeded well, while recognising that some delays have occurred. It is inherent in a partnership between partners as different as EFPIA and the European Commission that it takes some time to agree on certain points, especially at the beginning. With the IMI JU Executive Office now almost fully staffed, all operational responsibility has moved to it. Indeed, the Commission is committed to giving the Executive Director full autonomy for this responsibility

My conclusions

Without doubt this Innovation Medicines Initiative is something to be watched. There is enormous learning to be gained as it evolves. It is tackling some incredible and well discussed barriers to innovation on a grand scale. Will it be successful, time will tell but recently the CEO of Glaxo Smith Kline, Mr Andrew Witty was very upbeat.

The industry is reeling from much in disruptive winds blowing and battering at its door. Taking this one imaginative approach on its own will not solve all the ‘ills’ but can provide a catalyst of real change. It can also provide us all with some significant rethinking of what is possible, when something is in crisis, as the Pharmaceutical industry certainly is.

This is a seismic undertaking that could have a profound impact on how we view collaborative innovation and what it attempts to tackle on the scale needed for many challenges we face. We can learn an awful lot from studying this initiative.