Making it all happen: Implementing innovation

FDIN Open Innovation Seminar Paul Isherwood

26th November 2009

How true is this quotation?

“Everything that can be invented has been invented”

Attributed to Charles H. Duell, Commissioner of the

United States Patent and Trademark Office, 1899

Charles H. Duell (1850-1920)

The long nose of innovation

Most valuable innovations take a long time to develop

An idea may well start with an invention - the bulk of the work and creativity is in that idea's augmentation and refinement

Those who can shorten the nose by 10% to 20% make at least as great a contribution as those who had the initial idea

Long noses are great for sniffing out those ideas sitting there neglected, just waiting to be exploited

Bill Buxton, Principal Scientist at Microsoft Research, Business Week, 2 January 2008

5Ps overview – innovation strategy

PURPOSE – why you need to innovate

PROCESS – which development stages should you use

PEOPLE – what human resources are needed

PARTNERS – how external partners can help

PERFORMANCE – which targets & metrics are key

Source: Open Innovation in Action, Andrew Gaule, H-I Network, October 2006

Agenda

PURPOSE – GSK business, brands, strategy, objectives

PROCESS – expanding external and internal networks to generate ideas and fuel the pipeline

PEOPLE – culture changes, innovative behaviours, innovation awards

PARTNERS – OI benchmark survey, OI vs. collaboration, incremental vs. radical, breadth of innovation

PERFORMANCE – OI brochure, business drivers, external website, new product launches (better, faster, more!)

Agenda

PURPOSE – GSK business, brands, strategy, objectives

PROCESS – expanding external and internal networks to generate ideas and fuel the pipeline

PEOPLE – culture changes, innovative behaviours, innovation awards

PARTNERS – OI benchmark survey, OI vs. collaboration, incremental vs. radical, breadth of innovation

PERFORMANCE – OI brochure, business drivers, external website, new product launches (better, faster, more!)

GSK company mission

Market Leading Brands Driven by Science Based Innovation

CEO 2009 Objectives

Continue to pursue business development / acquisition opportunities to support global diversified growth and continue to look for bolt-on acquisitions for our consumer business.

Make significant progress in doubling Consumer, to include an ambitious strategy for globalizing Nutritionals, looking for external switch opportunities and expanding rapidly in Emerging Markets

CEO 2009 Objectives

Continue to pursue business development / acquisition opportunities to support global diversified growth and continue to look for bolt-on acquisitions for our consumer business

Make significant progress in doubling Consumer, to include an ambitious strategy for globalizing Nutritionals, looking for external switch opportunities and expanding rapidly in Emerging Markets

GrowthGrowthGrowthGrowth

Accelerate InnovationAccelerate Innovation

Marketing ExcellenceMarketing Excellence

Geographic Expansion

Geographic Expansion

New Business

New Business

GSK Four Growth Platforms

Our business will be differentiated by GSK’s superior science and marketing capabilities

GSK Launches Lucozade in China

Agenda

PURPOSE – GSK business, brands, strategy, objectives

PROCESS – expanding external and internal networks to generate ideas and fuel the pipeline

PEOPLE – culture changes, innovative behaviours, innovation awards

PARTNERS – OI benchmark survey, OI vs. collaboration, incremental vs. radical, breadth of innovation

PERFORMANCE – OI brochure, business drivers, external website, new product launches (better, faster, more!)

Open Innovation: Finding Great Ideas in Surprising Places

Universities

Internal Sources

Suppliers

SearchPartners

New New Innovative Innovative Products, Products,

Market Market ModelsModels

Open Innovation: Using the capabilities of the Open Innovation: Using the capabilities of the outside world to accelerate innovationoutside world to accelerate innovation

Leveraging Open Innovation

Pharmaceuticals• Neurology• Anti-infectives• Oncology• Respiratory• Cardiovascular• Metabolic• Vaccines

Consumer Healthcare• OTC• Oral Care• Nutritionals

Open Innovation

Enablers

Open Innovation – External

External TechnologiesGSK Technology

Scouts

SearchCompanies

ExternalNetworks

Want Find Get Manage

CultureChange

ENIGMA rollout day – September 2007

Who was there? 75 external organisations (150 people)

• Ingredient & packaging suppliers

• Research associations & institutes

• Development organisations

• Process equipment manufacturers

• Environmental companies

• Academic institutions

• Consultants & inventors

• Competitors & industry representatives

Q & A session, networking, mingling, conversations etc

How does ENIGMA work?

A cross functional group committed to managing the relationships between GSK and its external network

Increased quality of dialogue with external network that can help us deliver solutions to our business drivers

• GSK relationship owners

• Agreed levels of engagement

• Appropriate levels of dialogue

• Regular innovation exchanges

• Idea generation sessions

• Stretching innovation agendas

Innovation focus – ideas submitted quarterly, cross functional team reviews, timely feedback and action

Getting unusual suspects to solve R&D puzzlesHarvard Business Review May 2007

ENIGMA Think Tank – March 2009

2 key technical challenges identified by brand/R&D teams

Bring together scientific experts to creatively explore issues

24 organisations attended – academia & industry contacts

Plus innovation experts from OUTSIDE food & drink

6 GSK facilitators from R&D, Marketing & Procurement

Brainstorming type activities to stimulate creative thinking

Several potential areas identified for further investigation

Connectivity → Interactions → Idea sharing = Networking

ENIGMA Think Tank – March 2009

SPARK Network

GSK Consumer Healthcare’s innovation ecosystem

Virtual team of innovators from around the world

Share best practice and provide access to innovation resources

Formed early 2007 – one global telecom a month since

Facilitate I*3 meetings (Insights, Ideation, Innovation) – unique creativity sessions designed to build future pipelines

Top 50 original, business building ideas showcased & voted on

Innovation sans Frontieres

2 teams of 12 creative individuals – budget, tools & resources

Free reign to innovate with no senior management input & outside normal process

Tasked with generating several “big ideas” in the most innovative & creative way possible

7 months to fully develop ideas from concept to prototype

Opportunities identified were progressed to next project stage

MIDAS – Prospecting for Gold

Started in 2005 by group of R&D people with passion for innovation

Inclusivity – everybody involved

Quickplace database for submitting & comparing ideas

Finding others with common interests stimulates further idea generation

Sessions held covering brainstorms & innovation tool teach-ins

Focused science presentations by experts on current areas of interest

Ideas – three simple questions

Is there a consumer need?

Can we crack the technology?

Can we make money on it?

How do you combine what’s needed from the customer with what’s possible technically?

When those two things come together you can create products that delight your customers

Agenda

PURPOSE – GSK business, brands, strategy, objectives

PROCESS – expanding external and internal networks to generate ideas and fuel the pipeline

PEOPLE – culture changes, innovative behaviours, innovation awards

PARTNERS – OI benchmark survey, OI vs. collaboration, incremental vs. radical, breadth of innovation

PERFORMANCE – OI brochure, business drivers, external website, new product launches (better, faster, more!)

GSK High Performance BehavioursCluster Behaviour

Innovative Thinking

Seeking information, managing complexity, generating ideas, developing options, depth & creativity of thought, encouraging innovation

Information Search

Creating Business Solutions

Flexible Thinking

Engaging & Developing People

Valuing & respecting others, coaching, creating trust, empowering others facilitating groups,

developing people and building teams

Building Relationships

Teamwork

Developing People

Leading People

Communicating a compelling vision, influencing others, generating passion, energising others,

building confidence & belief

Influence

Building Confidence

Communication

Achieving Excellence

Getting results, driving excellence, customer focus, making targets, galvanising action, delivering the

bottom line

Enable & Drive Change

Continuous Improvement

Customer Focus

R&D Innovation Awards

Nominated by Leadership Teams:

• Guru

• Fusion

• Innovation maestro

• Process innovation

• Risk taker

Nominated by peers:

• Demonstrates functional area expertise

• Pushes the envelope in building the pipeline

• Cuts through red tape to deliver results

• Breaks down barriers to drive our growth

Agenda

PURPOSE – GSK business, brands, strategy, objectives

PROCESS – expanding external and internal networks to generate ideas and fuel the pipeline

PEOPLE – culture changes, innovative behaviours, innovation awards

PARTNERS – OI benchmark survey, OI vs. collaboration, incremental vs. radical, breadth of innovation

PERFORMANCE – OI brochure, business drivers, external website, new product launches (better, faster, more!)

Open Innovation Benchmark Survey

NineSigma helps companies develop & maximise value from their open innovation programmes

Survey sent to R&D executives and business unit leaders in Dec 2008

More than 100 innovation leaders responded to the survey

Some of the significant findings include:

• Increasing importance of external partnerships in the next 5 years

• Different barriers to adoption reported by small and large companies

• Predicted increase in spending on external innovation from 2008 to 2009

• NPD & Basic Research are cited as current focus areas of OI efforts

http://www.ninesigma.com/

Open Innovation vs. Collaboration

Open innovation: much more explorative

• Believing that good ideas can come from anywhere

• Casting the net wide for ideas – more you invite the better the output

• Aims to identify opportunities, explores possible futures

• Thrives on connections, accidental discovery & good luck

Collaboration: has a specific purpose & can be quite directive

• Generally sets out to address a problem already identified

• Knowledge of capabilities, expertise, strengths of partners

• Different values, backgrounds & cultures can present problems

• Does not happen naturally – needs hierarchies & planning

Incremental vs. Radical Innovation

Incremental innovation: Step forward along a technology trajectory

• Moving from the known to the unknown with little uncertainty

• Using existing methods and technology to generate minor improvements

• Short term focus

Radical innovation: Entirely novel approach to achieve a breakthrough

• Often involves working outside mainstream paradigms

• Requires larger leaps of understanding

• Demands a new way of seeing the whole problem

• Considerable change in basic technologies and methods

• Higher risk, higher reward

Breadth of Innovation

Innovation should be considered in its broadest view when seeking ideas or input

In an innovation supported growth model, growth can come from a number of areas:

• Ingredients

• Products

• Packs

• Processes

• Claims

• Routes to market

• Regulatory compliance

All are valid

Agenda

PURPOSE – GSK business, brands, strategy, objectives

PROCESS – expanding external and internal networks to generate ideas and fuel the pipeline

PEOPLE – culture changes, innovative behaviours, innovation awards

PARTNERS – OI benchmark survey, OI vs. collaboration, incremental vs. radical, breadth of innovation

PERFORMANCE – OI brochure, business drivers, external website, new product launches (better, faster, more!)

Open Innovation Promotional Booklet

What problems are we trying to solve?

Open Innovation External Websitewww.innovation.gsk.com

Brand Claim

Doesn’t scratch like

Colgate

4 times faster

50% moreweight

loss

29% hip fracture

reduction

Brand Claim

5 times faster thangenerics

Boostsmentalenergy

Brand Claim

25%strongerenamel

Drug-freebetter

breathing

Taller,stronger,sharper

Superiority – New Claims

Consumer – 2009 Major Launches

Nutritionals – 2009 launches

• 7 projects, 24 new products plus updated packaging • Powders, bars, gels, tablets & RTD – less than 1212 Months

Entering new categories – 2008/09

• Alert – designed to sharpen your mental performance

• Alert Plus – quickly consumed, provides a mental energy boost

Conclusions & takeout from today

PURPOSE – GSK business, brands, strategy, objectives

PROCESS – expanding external and internal networks to generate ideas and fuel the pipeline

PEOPLE – culture changes, innovative behaviours, innovation awards

PARTNERS – OI benchmark survey, OI vs. collaboration, incremental vs. radical, breadth of innovation

PERFORMANCE – OI brochure, business drivers, external website, new product launches (better, faster, more!)

Fusion Fuels Innovation

Process by which multiple particles join together to

form a nucleus, accompanied by release of energy