The DNA of Disruptive Innovators: Will Pharma be Disruptors or Disrupted?
Deirdre Coleman explores the key characteristics of disruptive innovators and questions the ability of pharma leaders to dispense with traditional approaches and reinvent itself and its vision for the future.
The pharmaceutical industry has enjoyed 60 years of stability and is now ripe for disruption. It has reached a critical inflection point which will see a split between traditionalists and disruptors. The traditionalists will cling to the status quo, seeking out new opportunities based on old models. The disruptors are aware that if they don’t innovate and develop a new business model based around the Holy Grail of affordable, accessible healthcare, they will in turn be disrupted, possibly from new entrants outside of industry.
Google’s recent foray into healthcare (Google has developed a hi-tech lens which tells diabetics their blood sugar levels) is a foretaste of developments to come, as new entrants seek to leverage technology and innovation to redefine healthcare value and its delivery. The “no outcome, no income” model will lead to transformative change within the healthcare industry.
Clayton Christensen coined the term “disruptive innovation” to describe “simple business applications that relentlessly move up market, eventually displacing established competitors”. The question remains, therefore: which pharma companies will disrupt and which will be disrupted?
The DNA of Disruptive Innovators
Innovation means different things to different people, yet it always implies transforming new ideas into renewed sources of value. Efforts to drive innovation can either be sustaining, providing an incremental advantage within the current competitive landscape, or they can be disruptive. Both types of innovation are important because they add value to the company, but disruptive innovation opens up new roads that organizations may not have considered.
In the book “The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators,” authors Hal Gregersen, Jeffrey Dyer and Clayton Christensen delve into the behaviours that successful innovators practice on a daily basis – the five primary discovery skills they dubbed “the innovator’s DNA”. In a recent interview with Hal Gregersen, he elucidated on the common behavioural habits of innovators which can be adopted by anyone or any company looking to bolster their innovation capacity.
“The Innovator’s DNA emerged from an eight-year collaborative study that sought to uncover the origins of innovative—and often disruptive— business ideas. We interviewed nearly a hundred inventors of revolutionary products and services, as well as founders and CEOs of game-changing companies built on innovative business ideas: people like Amazon’s Jeff Bezos, Salesforce.com’s Marc Benioff and Proctor and Gamble’s A.G. Lafley. From our research and observations, we identified five discovery skills that distinguish innovative entrepreneurs and executives from execution focused, results driven managers”, explains Gregersen.
These five “discovery skills” that distinguish innovators from non-innovators are:
- Questioning: Asking provocative questions that challenge common wisdom
- Observing: Scrutinizing customer, supplier, and competitor behaviors like anthropologists to identify new ways of doing things
- Networking: Meeting people with radically different ideas, backgrounds, and perspectives
- Experimenting: Constructing interactive experiences that provoke unorthodox responses to see what insights emerge
- Associating: Connecting the unconnected across questions, problems, or ideas from unrelated fields
“Consistently practicing these actions—questioning, observing, networking, and experimenting—triggers associational thinking to deliver new businesses, products, services, and/or processes. Most of us think creativity is an entirely cognitive skill; it all happens in the brain. A critical insight from our research is that the ability to generate innovative ideas is not merely a function of the mind, but also a function of behaviours. This good news means that if we change our behaviours, we can improve our creative capacity. And we can all learn how to change those behaviours”, confirms Gregersen.
Out with the Old
If all drug companies care about is discovering the next big drug, they will slowly put themselves out of business.
Gregersen is the Abu Dhabi Commercial Bank Chaired Professor of Innovation and Leadership at INSEAD, a leading business school, and regularly delivers keynote speeches and executive workshops around the world with companies like Accenture, Coca-Cola, Daimler, Takeda, Genentech, IBM, Intel, Johnson & Johnson, KPMG, Lilly, Pharmascience, Sanofi Aventis, and the World Economic Forum.In his opinion, pharma needs a fundamentally different approach to adapt to the seismic transformation that healthcare is undergoing.
“If all drug companies care about is discovering the next big drug, they will slowly put themselves out of business. Pharma is a molecule-centric world that has to become more patient-centric. The big challenge for pharma is that they think of innovation with a big “I” and that’s molecule-centric, instead of trying to build a fundamentally different way of doing business.”
“Pharma companies need to create an environment where people are asking questions that challenge the status quo; an environment where people are constantly networking within the industry and outside of industry, observing what new developments and technologies are working and what’s not working; an environment that allows and actively encourages experimentation and risk-taking. The biggest challenge for pharma is to get out of its own way and let go of the old approach. It must come from the top. A CEO’s personal actions send a serious signal that innovation must matter to others. It’s about engaging the entire organisation in innovation – it’s everybody’s job,” asserts Gregersen.
Time Dedicated to Disruptive Innovation
Which pharma companies will be disruptive and which will be disrupted? The answer lies in the willingness to undergo rapid and painful transformation and dedicating the time and resources to discovering new technologies and innovations that will transform how business is done currently.
This is something pharma probably hasn’t even considered, but their biggest threat might come from outside of pharma, from technology suppliers keen to enter into the healthcare space
"It starts with asking new questions; how do we radically change our approach to this healthcare problem? How do we radically deliver a system that’s cost effective, that tackles disease areas in their entirety, in a holistic way? How do we leverage technology to redefine healthcare and its delivery? Disruptive innovators dedicate a third of their time coming up with creative solutions to these questions. One of the most threatening companies to pharma is GE Healthcare. Their data collection systems in houses open up huge opportunities for remote monitoring and delivery of healthcare solutions. This is something pharma probably hasn’t even considered, but their biggest threat might come from outside of pharma, from technology suppliers keen to enter into the healthcare space”, Gregersen concludes.
It’s abundantly clear that business as usual is bust. For change to happen, what disruptive innovation theory tells us is that it’s almost always a new entrant to the industry that figures out a better way of doing things. The engineers in Google X (a special division inside the company that works on future technologies) are hard at work devising a non-invasive solution to monitor blood glucose levels. Google recently acquired Boston Dynamics which has lead to speculation by business commentators that Google are entering into the biosensor area to analyze breath for ketones for glucose monitoring. Google has also acquired Nest, maker of a smart internet-connected thermostat, most likely in a bid to explore the concept of web-connected homes and appliances that would be controlled with a smartphone. Google could soon become an innovative force to be reckoned with in the healthcare sphere. They have built innovation into their DNA. It’s time for pharma to do the same.