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CHARACTERISTIC S OF SUCCESSFUL INNOVATING COMPANIES

Topic 2. Planning and organizational support for the pharmaceutical company's innovation activities. CHARACTERISTIC S OF SUCCESSFUL INNOVATING COMPANIES. Systematic collection of all impulses that could lead to innovation Creativity of employees

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CHARACTERISTIC S OF SUCCESSFUL INNOVATING COMPANIES

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  1. Topic 2. Planning and organizational support for the pharmaceutical company's innovation activities

  2. CHARACTERISTICS OF SUCCESSFUL INNOVATING COMPANIES • Systematic collection of all impulses that could lead to innovation • Creativity of employees • Ability to evaluate the possibility of the innovation idea • Good team work • Project-based approach and ability to manage projects

  3. CHARACTERISTICS OF SUCCESSFUL INNOVATING COMPANIES • Cooperation with external experts (universities, research laboratories…) • Proper rate of risk-taking • Employees’ motivation (the employees are willing to improve the product and the operation of the whole company) • Continued education of employees • Ability to finance the innovation activities

  4. INNOVATION PROCESS • Research and development (R&D) • Production • Marketing Innovation is an opportunity for something new, different. It is always based on change. Innovators do not view any change as a threat but as an opportunity

  5. FOCUS • Use the limited resources in the most effective manner; focus on one of the following: • Operational output • Top-quality products • Perfect knowledge of customers

  6. Why have a strategy?1. To make choices

  7. Reasons to have a strategy:2. To be able to change it

  8. What is a “strategy” anyway?

  9. Corporate Strategy: What is it? • A defining statement containing the intent and direction of the corporation, & delineating the strategic plans to achieve its objective. • A living guideline, that focuses and directs efforts of the corporation. • Constantly tested and modified as required. • Not to be circumvented without deliberate modification. Balances and integrates the following elements: • Vision of strategic direction for long-term strength • Market direction and needs • Competitive effects • Technology strategy • Product strategy • Core competency • Resource alignment Articulates the ways in which the opportunities created by the firm’s capabilities can be exploited.

  10. Basic Strategic Considerations: Key Inputs to Strategy: • Customer inputs – what is working and not working. • Market place analysis – growing needs, emerging applications and significant trends. • Competitive influences and barriers to entry. • Internal competency assessment regarding skills and ability. • Corporate business process benchmarking. • Business strategic inflection point analysis. • Resources available for commitment. Key Outputs of Strategic Dialog: • Business strategy – goals and objectives of the organization. • Technology strategy – technologies to acquire or develop. • Marketing strategy – Why, where and how to focus on customers? • Product strategy – features and functions to be developed. • Intellectual property strategy – How will IPR contribute to strategy?

  11. An Aspect of Good Management • People Management – because IP is generated by people and used by people • Knowledge Management – because a lot of knowledge is informal and may or may not crystallise as recognisable category of IP • IT Strategic Planning – because a lot of IP is IT-related; some of the more complex IP issues arise in IT context • Contract Management – because IP is often created (or improved) in context of a contract (eg, supply contract or joint venture relationship) • Asset Management – because IP is an asset, albeit intangible; it has a value • Risk Management – because there are risks to an organisation flowing from its actions, or failure to act, in relation to IP (including risk of lost opportunity)

  12. IP Strategy should be an integral part of the overall business strategy of an Enterprise • The IP strategy of an Enterprise is influenced by its creative/innovative capacity, financial resources, field of technology, competitive environment, etc. • BUT: Ignoring the IP system altogether is in itself an IP strategy, which may eventually prove very costly or even fatal

  13. Biz Strategy Deliver Revenue Markets Development Design Freedom Manage Competition Protecting Inventions/Recognition Building an IP Strategy Build Your Portfolio • Strategic Patenting • Purchase Patents Deploy Your Portfolio • Design Freedom • Manage Competition • Enter new Markets

  14. RECOMMENDATIONS • Solve the correct problem correctly – be effective and efficient • Manage innovation as a project • Analyze risks • Use models, scenarios, computer simulation • Study examples of succesful and unsuccesful innovation projects

  15. WHAT TO DO • Start with analysis and study of opportunities. • Go among people, ask questions, listen • Effective innovations are surprisingly simple. They must be focused on specific needs and on specific final products. • Effective innovation start on a small scale. • A successful innovation always tries to win a leading position, otherwise you create opportunities for your competitors.

  16. WHAT TO AVOID • Don’t try to be too “clever”. All that is too sophisticated will almost certainly go wrong. • Don’t try to do too many things at once. Focus on the core of the problem. • Don’t try to make innovations for the future but for today. An innovation can have a long-term impact but there must be an immediate need for it.

  17. Three conditions for innovations • Innovation means work, hard, concentrated and thorough work. If these qualities are lacking then there is no use for the big talent, cleverness or knowledge. • Successful innovations must build on your strong points. The innovation must be important to the innovator. • Innovation must focus on a market, must be controlled by the market (market-pull).

  18. COMPANY INNOVATION POTENTIAL A company with high innovation potential scores high in the following areas: • Strategy and planning • Marketing • Technological process • Quality management • Logistics • Human resources

  19. INNOVATION POTENTIAL ASSESSMENT • For a company, it is important to know its innovation potential. It can use the questionnaire • For every of the six areas, there are six question, each with four possible answers. The answers are formulated so that they reflect the existing situation in the company.

  20. A. STRATEGY AND PLANNING • Idea about the company future • Vision and employees • Company innovation programs • Plan modifications • Financial indicators of the plan • Project management

  21. B. MARKETING • Monitoring of current market trends • Evaluation of the market competition position • Customer-orientation • Monitoring of customers’ attitudes to the company product • Market information flow inside the company • Marketing and financial control

  22. C. TECHNOLOGICAL PROCESS • Future company’s competitiveness in the industry • Changes of technologies • Collection of impulses for implementation of technology changes • Evaluation of the return on investment • Calculation of production costs and their monitoring • Creation of resources for development

  23. D. QUALITY, ENVIRONMENT • Monitoring of changes conditioning the quality management in the company • Employees’ personal contribution to the quality system • External quality audit in the company • Monitoring of theenvironmental impact • Impact of quality monitoring on the companyprocesses • Covering of costs resulting from modifications of standards, regulations and legislation in the sphere of quality and environment

  24. E. LOGISTICS • Organization of purchase and distribution channels in the company • Optimization of the company logistics • Information and communication flows between the company and its partners • Flexibility of logistics processes • Introduction of innovations in logistics • Logistics and financial control

  25. F.ORGANIZATION AND HUMAN RESOURCES Employees satisfaction Employees motivation Management and communication Conflict resolution Company information system Company culture

  26. Alternative Strategies for Exploiting Innovation Outsourcing certain functions Strategic Alliance Joint Venture Internal Commercialization Licensing Biggest risks & benefits. Allows complete control Limits investment, but dependence on suppliers & partners Benefits of flexibility; risks of informal structure Shares investment & risk. Risk of partner conflict & culture clash Small risk, but limited returns also (unless patent position very strong Risk & Return Allows outside resources & capabilities To be accessed Few Permits pooling of the resources/capabilities of more than one firm CompetingResources Substantial resource requirements Konica licensing its digital camera to HP Pixar’s movies (e.g. “Toy Story”) marketed & distributed by Disney. Apple and Sharp build the “Newton” PDA Microsoft and NBC formed MSNBC TI’s development of Digital Signal Processing Chips Examples

  27. Uncertainty & Risk Management in Tech-based Industries Selection process for standards and dominant designs emerge is complex and difficult to predict, e.g. future of 3G Technological uncertainty Sources of uncertainty Market uncertainty Customer acceptance and adoption rates of innovations notoriously difficult to predict, e.g. PC, Xerox copier, Walkman • Cooperating with lead users • early identification of customer requirements • assistance in new product development Strategies for managing risk Limiting risk exposure —avoid major capital commitments (e.g. lease don’t buy) —outsource —alliances to access other firms’ resources & capabilities —keep debt low Flexibilility —keep options open —use speed of response to adapt quickly to new information —learn from mistakes

  28. Innovation risk RISK COSTS RESEARCH DEVELOPMENT COMMERCIALISATION

  29. What is a business incubator? • It is a business that provides advice, equipment, temporary premises, or other facilities to those starting up a business and lacking in capital. • There are 4 main types of Business Incubators: Local Economic Development Incubators, Academic and Scientific Incubators, Corporate Incubators, & Private Investors’ Incubators.

  30. Local Economic Development Incubator Model

  31. “Clusters are geographical concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions … in particular fields that compete but also cooperate” • Porter, M.E. (1998) “Clusters and the New Economics of Competition”. Harvard Business Review, Nov-Dec 1998.

  32. Clusters: But why… • • Clusters are important. They can increase innovation, productivity and competitiveness, and boost regional and national economic growth; • • Clusters emerge spontaneously. Clusters can emerge only if and where there is a competitive advantage to begin with; • • Cluster development feeds on start-ups and firms moving into the cluster. Therefore access to capital and a positive attitude to risk is essential; • • Clusters grow because firms share and create knowledge and specialised labour; and because of the presence of a network of support services and a complex fabric of social relationships.

  33. ‘Opening up’ of industrial research process Worldwide search and evaluation of technology and knowledge Value creation: products, processes etc • ‘Open innovation’ Research Campus, with • Venturing • ‘Incubator’ • Technology transfer and support, … New firms, spin-offs Pre-competitive R&D with competitors University-industry cooperation Firm X itself Developing technological core competences within the company X Public-private partnership Joint ventures High-tech SMEs Licensing technologies Firm’s own research lab “More focus and resources for firm’s own competences” “Exploring wider range of knowledge areas” Creating more value faster Firm X In the past R&D Lab of company X Nothing

  34. Hepsera out-license Gilead Sciences GlaxoSmithKline Institute for Medical Research Gateway Fund Vistide out-license (joint venture) Pfizer Cambridge Biotechnology Addenbrooke’s Hospital Founders came out of Pfizer Neurodegeneration Consortium macrolide templates (funding) Biotica Northern Venture Managers Cambridge University Daniolabs (funding) Challenge Fund Babraham Bioscience Inst Technologies Ltd Wellcome Trust (Cambridge University administered) Lorantis (funding) Domantis Babraham Bioincubator Genzyme partnership Abbott Babraham Technix antibodies license Astex Cambridge Antibody Technology arthritis collaboration Cambridge Crytallographic Data Centre Eli Lilly validation licensing virtual screening collaboration Wyeth Amgen AstraZeneca (Cambridge University) licensing

  35. Organization of IP Department • Other factors that affect the decision: • Objectives set for the IP Department • Importance of the IP Dept in the company • Strategic placement inside the organigram • Competitive Strategy of the Company • Type of Technology (Mature or Radical) • Type of Market served by the Company

  36. Organization of an IP Department TOP MANAGEMENT TOP MANAGEMENT CEO TOP MANAGEMENT TOP MANAGEMENT TOP MANAGEMENT CEO TOP MANAGEMENT CEO TOP MANAGEMENT TOP MANAGEMENT commercial dpt commercial dpt commercial dpt legal dpt technical dpt marketing dpt Intellectual property

  37. Organization of an IP Department • It is a company having a defensive stance • IP department takes • No autonomous decisions • No autonomous strategy • It receives guidelines from the department to which it is attached

  38. Organization of IP Department • It is a company of the multinational type, • leading on the market • having large dimensions • The IP department has autonomous decisional power and defines strategies • There exists a Director for IP , sometimes at Vice- President level

  39. Organization of IP Department Directorate IP Secretariat patents trade marks strategies Licensing + litigation professional professional documentation administrative administrative Internal structure of IP dept

  40. Organization of IP Department Use of patents Use of patents Use of patents Use of patents Use of patents Use of patents Use of patents Use of patents Use of patents Offensive attitude Is it core Business? Is it core Business? yes compulsory licences at favorable conditions compulsory licences at favorable conditions compulsory licences at favorable conditions compulsory licences at favorable conditions compulsory licences at favorable conditions compulsory licences at favorable conditions compulsory licences at favorable conditions compulsory licences at favorable conditions no Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Obligation to licence? Coop. agreements Coop. agreements Coop. agreements Coop. agreements Coop. agreements Coop. agreements yes yes yes yes yes yes yes yes yes yes yes yes yes no Licence at market conditions Licence at disadvantageous conditions Licence at disadvantageous conditions Licence at conditions below market Decision process in large companies

  41. Organization of IP Department Use of patents Offensive attitude compulsory licences at favorable conditions Coop. agreements Obligation to licence? Licence at conditions below market yes Decision process in a small company

  42. What is Venture Capital? • Private or institutional investment (capital) in relatively early-stage companies (ventures) • Recently focused on technology-heavy companies: • Computer and network technology • Telecommunications technology • Biotechnology • Types of VCs: • Angel investors • Financial VCs • Strategic VCs

  43. Angel Investors • Typically a wealthy individual • Often with a tech industry background, in position to judge high-risk investments • Usually a small investment (< $1M) in a very early-stage company (demo, 2-3 employees) • Motivation: • Dramatic return on investment via exit or liquidity event: • Initial Public Offering (IPO) of company • Subsequent financing rounds • Interest in technology and industry

  44. Financial VCs • Most common type of VC • An investment firm, capital raised from institutions and individuals • Often organized as formal VC funds, with limits on size, lifetime and exits • Sometimes organized as a holding company • Fund compensation: carried interest • Holding company compensation: IPO • Fund sizes: ~$25M to 10’s of billions • Motivation: • Purely financial: maximize return on investment • IPOs, Mergers and Acquisitions (M&A)

  45. Strategic VCs • Typically a (small) division of a large technology company • Examples: Intel, Cisco, Siemens, AT&T • Corporate funding for strategic investment • Help companies whose success may spur revenue growth of VC corporation • Not exclusively or primarily concerned with return on investment • May provide investees with valuable connections and partnerships • Typically take a “back seat” role in funding

  46. Thank You

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