spring 2021
israel’s corporate innovation magazine
powered by
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DISRUPTION ANYONE?
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CROSSING THE VALLEY OF DEATH STARTUPS AND US MILITARY BY SILICON FOUNDRY
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PANDEMIC LESSONS FROM THE SALVATION ARMY
MAINTAINING A CULTURE OF INNOVATION IN THE IDF (ISRAEL DEFENSE FORCES)
Autumn 2021
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EDITOR’S NOTES Dear reader, The team and I are so excited to offer you this edition of The Funnel. If you ask most people whether they like surprises they will answer positively. Reality, however, is that most people look at surprises positively only when things happen that they like. They call other surprises “problems”. Our world is going through a major surprise for almost two years now. In this issue we wanted to focus on matters of innovation in security and military organizations. We found ourselves surprised as we realized to what extent the pandemic impacted such organizations and the corporate world in general. The problem actually turned into a surprise in the sense that organizations discovered new capabilities to innovate. They simply were left with no other choice. Another theme that emerged from this issue’s articles is “Leadership” as desperate times were a call to leaders across the world to take extraordinary steps. Those leaders emerged both from management roles and also from rank and file positions. What organizations can and should learn is that just as they were able to innovate during a pandemic which left them no choice but to do so, they should also embrace innovation during times of apparent calm. This is because experience teaches us that whatever industry we are in these days, it is probably going under some form of disruption. I wish you enjoyable reading, Ahi Gvirtsman
Chief Editor & Co-founder at Spyre
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THE FIVE KEYS TO SUCCESSFULLY WORKING WITH STARTUPS
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DISRUPTION ANYONE?
PANDEMIC LESSONS FROM THE SALVATION ARMY
MAINTAINING A CULTURE OF INNOVATION IN THE IDF (ISRAEL DEFENSE FORCES)
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HOW DIGITAL INFRASTRUCTURE HELPED MODERNA SPEED ITS COVID-19 VACCINE TO MARKET
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THE INNOVATION PROFESSIONAL AS THE ORCHESTRATOR OF CHANGE
CROSSING THE VALLEY OF DEATH STARTUPS AND US MILITARY BY SILICON FOUNDRY
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THE FIVE KEYS 6 THE FUNNEL
TO SUCCESSFULLY WORKING WITH STARTUPS
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ELENA DONETS, CO-FOUNDER AND COO AT SPYRE - INNOVATION ECOSYSTEM DESIGN
HOW STARTUP TECHNOLOGY CAN BE INCORPORATED INTO EVEN THE MOST CONSERVATIVE OF ORGANIZATIONS. MANY ORGANIZATIONS SEE THE VALUE OF INCORPORATING STARTUP TECHNOLOGY INTO THEIR WORK PROCESSES AND ROUTINES. IT IS, HOWEVER, VERY CHALLENGING TO TAKE SUCH A PROMISING OPPORTUNITY THROUGH THE ARDUOUS STEPS OF GETTING BUY-IN, CIRCUMVENTING THE MANY PITFALLS AND EVENTUALLY MAKING IT TO THE ORGANIZATION’S OFFICIAL WORK PLANS. THE MORE CONSERVATIVE AN ORGANIZATION IS, THE HARDER IT IS TO ACHIEVE THIS, ESPECIALLY WITH ANY CONSISTENCY. MY PARTNERS AND I HAD THE OPPORTUNITY TO WORK WITH SUCH A HIGHLY SECRETIVE AND COMPARTMENTALIZED ORGANIZATION. THE CHIEF INNOVATION OFFICER OF THIS ORGANIZATION SAYS THAT “YOU COULD BE SITTING IN AN OFFICE NOT KNOWING WHAT THE PERSON IN THE NEIGHBORING CUBICLE IS WORKING ON”. DESPITE THIS HIGH LEVEL OF INHERENT RIGIDITY, THE ORGANIZATION WAS ABLE TO FACILITATE A VERY HIGH NUMBER OF PILOTS AND DEPLOYMENTS IN A SYSTEMATIC WAY. BASED ON LEARNINGS ACCUMULATED FROM OUR WORK WITH THIS PARTICULAR ORGANIZATION AND NUMEROUS OTHERS IN DIFFERENT SECTORS, FOLLOWING ARE FIVE KEYS FOR SUCCESSFULLY WORKING WITH STARTUPS IN ORGANIZATIONS.
KEY2
KEY1
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DECISION MAKERS
SEPARATE THE PAIN FROM THE TECHNOLOGY When organization stakeholders or open innovation teams identify a startup they like, it is very common to strive to a pilot where they can test the technology in the field. This “Let’s kick the tires” approach focuses its attention on the question “Does the technology work?” A much better approach, however, is to identify a real pain point that will be resolved by the technology, thereby affecting an important KPI in a significant way. A much better question to ask first is “Assuming the technology works, will it resolve a significant problem for the organization?”. Such an approach also keeps the door open in cases where the technology isn’t the best solution since once an interesting problem is identified, there is motivation to continue seeking solutions in the form of startup technology.
ASSIGN AN OWNER It’s common to see stakeholders in organizations getting excited about a startup they encounter at a demo day and then stating they’d like to see this pursued further. The startup team then finds itself having to work with a multi-headed monster in the form of various functions, each with its own questions, objections and demands. Startups usually have a deep understanding of their professional domain but zero familiarity with the inner workings of their potential customer. Having an internal owner to the venture significantly increases the chances of success. In cases where this owner is the one who came up with the idea of how to apply the startup to the organization, chances become even higher since people are much more dedicated to ideas they came up with.
KEY3
When promoting startup-based organizational ventures, the ultimate goal is having decision makers prioritize a venture over other tasks that are in the endless backlog. Give them control over which opportunities make it into an evaluation stage preceding a decision about a pilot. The key here is building a sense of ownership with decision makers so that once a pilot is proposed they’re excited and curious about the outcome. If a pilot is successful we want decision makers to effortlessly make the decision to go ahead with deployment. This gradual building of buy-in and the formulation of clear rules of engagement increase the level of consistency and significantly increases conversion ratios. At one of our clients, a naval port, we were able to achieve, using these principles, almost 50% conversion from startups of interest brought into an acceleration program to successful pilots adopted by decision makers. That’s one successful pilot to every two startups that began the accelerator. A correct involvement of decision makers was key.
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KEY4
A STRICTLY DEFINED PILOT Pilots tend to be loosely defined and focus on applicability (“Does the technology do what the startup claims it does?”). A much better approach is to design a pilot that can demonstrate the actual impact of the technology. For example, a startup that was tested by a food manufacturer offered an augmented reality interface for maintenance procedures so that its personnel would have the ability to perform the numerous and varied procedures even if they were relatively new to their job. This is a typical approach to knowledge management and the natural tendency would be to design a pilot that tests the usability of the technology and the level of user satisfaction of maintenance personnel. However, in this case the focus was correctly placed on how this technology will increase production. And so, the pilot was designed as an experiment, focusing on a particular machine, performing the maintenance procedures that were causing it the most production delays and demonstrating after three months that its total production time increased compared to the three preceding months used as control data. Defining pilots so strictly as if they were scientific experiments is key to getting more such pilots approved and serving as a “contract” between decision makers and the innovation team. There are higher chances that successful pilots will then be approved to proceed to actual deployment.
ALIGN WITH STRATEGY
KEY5
Open innovation managers tend to think that the technology they bring via scouting and the level of excitement that it generates will then drive decision makers to do the right thing. Our experience is that it will mostly lead to pain and frustration. Before embarking on any sort of open innovation agenda, the first thing to do is to identify the executives that will approve deployments of successful pilots at the final spot of the process. Then you should have them define the goals for open innovation i.e. what KPI’s they wish innovation to push forward in ways that serves their purposes. Executives will take ownership of open innovation deployments, allocating budget, resources and attention at the expense of the endless list of items on their backlog, if they see how it significantly impacts outcomes they care about. Other than that, you’ll be dealing with theatre with no real purpose. Working with startups can be an incredibly gratifying and impactful experience when done correctly. Follow the five keys above and you will be much further along the road to success.
Sharon Bussey, Territorial Mission Strategist for the Salvation Army
m o r f s n o s s e L ic m Pande
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n o i t a v l a S the Army Steven Bussey, Territorial Mission Strategist for the Salvation Army
Founded in 1865, the Salvation Army was created with the mission of bringing relief and humanitarian aid to people in need. In that 156-year span, the organization has supported communities through several disasters — from the 1906 San Francisco earthquake to Hurricane Katrina in 2005. However, the COVID-19 created an unprecedented global crisis that required the charity’s response. “During the Great Depression, we had a 700 percent increase in services,” says Steven Bussey, Territorial Mission Strategist for the Salvation Army. “[During the pandemic] we saw, like an 800 percent increase in services. So [COVID was] greater than the Great Depression, in terms of some of the economic fallout.” During the pandemic, the Salvation Army worked with under-booked hotels to provide people shelter. When COVID-19 vaccianes became widely available to the public, the organization converted its community centers into distribution centers. That’s all in addition to its longstanding missions of tackling food insecurity and housing instability. Steven and Sharon Bussey, a married couple, both serve as Territorial Mission Strategists for the Salvation Army. In their respective roles, they oversee the Eastern North American division, and Salvation Army locations everywhere from Maine to Puerto Rico. Innovation Leader sat down with the pair to discuss lessons from the pandemic, making budget adjustments amidst a health crisis, and implementing strategy changes across an entire organization.
When the COVID-19 pandemic initially spread across the United States in March of 2020, the Salvation Army created new initiatives to best help those affected. Drive-through and delivery grocery services were created. Testing centers were established. The team also sought creative ways to lift families’ spirits while they were confined to their homes. “We saw a Christmas drive-through so that people receiving food items also had the opportunity to have a socially distanced photograph with Santa Claus,” Sharon Bussey recalls. “[In the summer,] usually children would come to a camp for a week… So instead, what they did is they packaged items in a box and delivered them to all of the children who had registered for camp, and then did an online session with them.” According to Steven Bussey, the pandemic united communities. Both volunteers and employees were committed to generating and implementing new ideas to meet growing needs. “There was this accelerated experimentation that was taking place in many different locations,” Steven Bussey says. “There was a natural sharing of ideas.”
Meeting Needs on a Tight Budget
During previous crises, Salvation Army locations in one geography could divert resources to specific communities in need. However, COVID-19 affected communities across the globe simultaneously. “But the problem with a pandemic is that it wasn’t space bound [to one geographic location], it was everywhere,” Sharon Bussey says. The pandemic also challenged the Salvation Army’s revenue stream. The organization generates revenue from its stores and adult rehabilitation centers. However, these in-person offerings were largely shut down. Bussey said the organization had to continue to fulfill its mission on a tight. “I think that those are moments where you have to close your eyes and take a step of faith… We made a firm commitment that we would not stop doing what we were called to do,” Sharon Bussey said. “And so we actually cut down on any sort of other area that would limit us [or divert resources]…to basically say, ‘whatever we do, let’s serve those who were in need.’” For a 150-year-old organization like the Salvation Army, long-term strategy is a vital part of organizational success. According to Steven Bussey, players in the for-profit space leverage competition and have developed ways to experiment and scale new ideas. These companies provide a strategic model for the Salvation Army to follow.
“If you are truly listening to your customer, [or in our case] the people who you’re seeking to serve…and then you find a way to…see consistent patterns or threats,” Steven Bussey says. “[Then, you can say,] ‘Okay, we need to address those things, those risks, and find ways to be able to solve those.’”
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This featured article is brought to you courtesy of innovation leader www.innovationleader.com
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AHI GVIRTSMAN, CO-FOUNDER AND CHIEF KNOWLEDGE OFFICER AT SPYRE - INNOVATION ECOSYSTEM DESIGN
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DISRUPTION, ANYONE?
BY THE TIME YOU REALIZE THAT YOU’RE BEING DISRUPTED, IT’S TOO LATE. WHAT CAN WE LEARN FROM THE PANDEMIC ABOUT HANDLING DISRUPTION?
YOU ARE STANDING NEXT TO A POND THAT HAS A SINGLE WATER LILY IN IT. AFTER ONE MINUTE, THERE ARE TWO WATER LILIES IN THE POND. AFTER ANOTHER MINUTE, THERE ARE FOUR AND SO, THE NUMBER OF WATER LILIES IN THE POND DOUBLES ITSELF EVERY MINUTE. AFTER AN HOUR, THE POND IS COMPLETELY FILLED WITH WATER LILIES. QUESTION: HOW MANY MINUTES PASSED SINCE THERE WAS ONE WATER LILY IN THE POND UNTIL IT WAS HALF FULL WITH LILIES?
When the COVID-19 pandemic hit early 2020, the world population got a firsthand experience of what an exponential phenomenon looks like. The graphs below demonstrate the cumulative number of deaths in three countries. In two of them, Italy and Iran, it is clear that by the time governments realize that they are experiencing an exponential event, it’s too late to do something to stop it. For us humans, it is very difficult to intuitively grasp the behavior of such occurrences because we don’t experience them regularly in our daily lives. This had tragic ramifications in many countries around the world. Countries that have learned a lesson since then keep a constant eye on the rate of rise in infections, severe cases and deaths in order to “flatten the curve” early.
Cumulative coronavirus deaths
The answer to the question above is that the pond was half full after 59 minutes. If you got it wrong, don’t feel too bad. Many people do. This isn’t intuitive for us humans.
Netflix Revenues, 1999-2013 ($ millions)
Italy
Iran
South Korea
500 400 300 200 100 0 Feb. 24
March 2
March 9
Sources: Johns Hopkins CSSE; Italian government
$ 4500 $ 4000 $ 3500 $ 3000 $ 2500 $ 2000 $ 1500 $ 1000 $ 500
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$0 1999
Now, let’s talk about the exponential nature of business disruption. Take a look at the two graphs below. Both demonstrate the exponential nature of a company disrupting a market. On the left, you can see Amazon’s revenues from their launch of AWS and on the right, you can see the revenues of Netflix from the moment it started till it became the market leader. $6,000M $5,000M $4,000M $3,000M $2,000M $1,000M
Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
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$0M
AWS Revenue
AWS Operating Income
As for Netflix, in 2000, its founder had a meeting with the CEO of Blockbuster, the indisputable leader of that market and offered him to acquire Netflix for $50M. In 2006, Netflix crossed the $1Billion mark and in 2010, Blockbuster went bankrupt. Think about it for a minute. In 10 years, a company goes from being nothing to a global leader that causes its predecessor to go bankrupt. Let me ask you a question. If I placed you in a time machine and sent you to the year 2006 as the Blockbuster CEO with the knowledge you would be disrupted and go bankrupt in four years but no knowledge of the exact cause, what would you do? What could Blockbuster management have done about it in 2006 even had they known? Four years considering the lifespan of companies is merely a blink of an eye. Going back to the pandemic analogy, what management teams must do is to constantly survey the landscape and understand the opportunities and threats that are out there. The answer may have to do with flattening someone else’s curve or leveraging a trend to ride a curve of your own.
For example, let’s say that a transportation company offering a taxi service to and from airports realizes the disruption imposed by Uber in time. What can be done? Here are a few ideas: Since the appeal of Uber is that it orders the service via an app, the company can develop an app that allows the transaction to be cashless and the ordering much faster. It could make sure that its drivers wear a uniform and give the passengers a VIP level service in order to differentiate from the more variable nature of Uber driver quality. The point is that when disruption hits, a company has to keep asking itself what it means and adjust, then ask again, and adjust again. In other words, companies that are being disrupted must adopt an entrepreneurial mindset and practices. This doesn’t mean that the entire organization has to now transform itself all at once. A company that has 1,000 employees, a management hierarchy and a certain employee evaluation and compensation system in place all created around the existing way it does business, will not change itself fast enough. What it can do is create enclaves of entrepreneurship within the company that with the right guidance will cause the company to try numerous options, fail and correct course in parallel to what it already does while leveraging the resources and strengths that it has as an established company compared to any newcomer.
MY FINAL MESSAGE TO YOU IS THAT REGARDLESS OF THE INDUSTRY YOU’RE IN, IF YOU ARE NOT ACTIVELY DISRUPTING RIGHT NOW THEN SOMEONE ELSE IS DISRUPTING YOU. REMEMBER! BY THE TIME YOU REALIZE THAT YOU’RE BEING DISRUPTED IT’S TOO LATE TO DO SOMETHING EFFECTIVE ABOUT IT. YOU MUST ACTIVELY SEEK THOSE POTENTIAL DISRUPTORS AND BREAK THEIR CURVE BEFORE THEY BREAK YOURS.
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Those graphs look very familiar, don’t they? At the time that Amazon launched its AWS business, there were many companies making money off of data center equipment, physical data center services, data center consulting and so on. The impact of cloud computing and the impact of AWS and its counterparts on those industries cannot be overstated.
Maintaining a culture of innovation in the IDF 16 THE FUNNEL
(Israel Defense Forces)
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Michal Frenkel Head of the innovation branch at the innovation combat methods division of the IDF (Israeli Defense Forces)
For many organizations, the Covid-19 crisis served as a wakeup call to establish internal mechanisms and systems that would make it more flexible and open to innovation. We had a conversation with Michal Frenkel, Head of the innovation branch at the innovation combat methods division of the IDF (Israeli Defense Forces), to discuss the experience of the IDF during the pandemic and what learnings other organizations can adopt from that experience.
Tell us a bit about your role and what your branch does within the IDF. Coincidentally, my branch was founded in early 2020 just as the pandemic reached Israel, which was perfect timing. Historically, the IDF has a culture of soldiers in compulsory service and officers in the field at various areas of the organization trying to solve problems in unusual ways in order to get results. So while there’s already a history of innovation in the IDF, the innovation branch aims to establish structures and mechanisms that can support such efforts.
Can you give examples of such structures and mechanisms? During the pandemic, we had dozens of projects taking place independently at various units in the IDF being led by soldiers and commanders in the field in a bottom-up dynamic. The main role that I undertook at that moment was to connect the various parties to one another and to related parties external to the IDF, such as the ministry of health and the ministry of defense. This with the purpose of making sure that everyone knew what the others were doing, could help each other and also avoid duplications i.e. working on the exact same thing in parallel. At one point in time, for example, we had five or six projects trying to manufacture ventilators which were at a shortage. We actually were running a Whatsapp group which created a flat model of sharing and communications for this purpose. So that is one example of the way the innovation branch seeks to support innovation activities.
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Another example would be that from our position my team and I had visibility to what was happening in the field and at the same time, we had access to decision makers. This means that we could generate awareness among decision makers regarding projects that were taking place and had promise and as a result, similarly to a non-formal VC, provide executive support and funding to projects that needed it urgently. Another thing we did was to remove bureaucratic barriers as we did for the project that sought to establish a Covid testing lab within the IDF. This amounted to establishing a new unit within the IDF at a very high level of urgency since at the time civilian testing capabilities were limited and the IDF did not want its testing requirements to come at the expense of the civilian population. Moreover, the purpose was to provide the civilian population with the capabilities that this project would deliver. Many people think that the most important thing for innovation initiatives within organizations is money. Generating executive visibility for such projects and assisting with obstacle removal can be much more important and challenging than acquiring funding. I can say that what began as informal activities driven by the Covid crisis has matured since then into more established procedures that are being implemented today.
What would you say are the key learnings you took from the Covid crisis that should be applied for the longer term? There are three key learnings that I think are relevant:
If no one is doing it - solve it yourself Whenever I speak to commanders and soldiers, I tell them that the IDF is filled with people who get up in the morning and are driven to do whatever it takes to accomplish the job at hand. One must always look for problems that need solving and if no one is working on a solution, they should become that person and solve it themselves.
This is great but is the need real? Whenever I encounter an individual with an idea I start by giving them positive feedback and then ask them about the validity of the need they’re addressing. Is your idea solving a real problem? During Covid, it was all about talking to doctors and verifying that the problem being solved was a real one. This becomes more challenging when the problem you are solving is not directly related to your daily activities and your area of expertise.
The value of expertise One of the essential things for innovators to understand is the value of expertise. One can have the best of intentions and a tremendous drive but at the end of the day, there’s a need for domain expertise related to the idea being promoted. During Covid this would have been lab experts, Doctors, virologists etc’ and now as innovation is being applied to other areas in the IDF we have learned the value of connecting people to the experts that they need in order to be successful.
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So having learned these lessons, can you share some of the activities that you are doing today in order to apply them going forward? We just launched the IDF innovation center in cooperation with the digital division and the R&D division within the ministry of defense. It serves as an innovation hub with several tracks, each having a certain number of innovation projects being driven by dedicated teams. We are about to open this to any soldier in the IDF who will be able to get accepted by proposing ideas that can have a significant potential impact. If you get accepted, you become an entrepreneur in residence and get the opportunity to turn your idea into reality. Another platform we are establishing is one of exposure and recognition which is the chief of staff innovation award. This allows recognition of members of the IDF for innovation related efforts and this, in turn, creates awareness at the soldier and commander level that innovation is important and that it receives executive attention and priority. In addition, we have a network of innovation leaders across the various corps of the IDF whose job it is to identify and collect ideas from the field and to empower the soldiers with those ideas, connect them to experts and help them in various ways. We as the innovation branch of the IDF serve as the hub that connects these innovation leaders together and assists where needed. We also are the address for those leaders in cases where there’s a promising idea that is significant enough in scope to be a candidate for the IDF innovation hub that I mentioned earlier. We have found this approach so effective that we’re now starting to recruit dedicated innovation leaders as an
official role in addition to those leaders who emerged in the field, which are usually in permanent positions and are doing this in addition to their official role. So the IDF will soon have a population of full-time, dedicated innovation soldiers serving as leaders across the organization, serving as ambassadors, connectors and professional supporters of innovation. I imagine that in a hierarchical, mission-driven organization like the IDF, the average commander doesn’t have the bandwidth or patience to be open to innovative ideas that often sound far-reaching when first presented. How do you deal with such a challenge? Firstly, the fact that the current IDF chief of staff is very openly promoting innovation serves as a strong leadership push from above that is very clear to commanders across the organization. Secondly, we offer commanders training and personal development programs to provide them with the knowledge and skill they need to encourage innovation and promote it. We are in the process of establishing an innovation college in cooperation with the Israeli open university where IDF commanders will be able to complete an MBA majoring in innovation management. Any final message to your innovation management peers in other organizations? I believe that innovation management in hierarchical organizations both military and civilian have a lot to learn from one another. It should be encouraging to innovation managers in any organization that the IDF can promote and execute innovation. If it’s possible in such challenging environments using leadership and consistent efforts, it should be possible in every organization.
MARCELLO DAMIANI, CHIEF DIGITAAL AND OPERATIONAL EXCELLENCE OFFICER, MODERNA THERAPEUTICS
How Digital
Infrastructure Helped Moderna
Speed Its COVID-19 Vaccine
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to Market
Marcello Damiani recalls lining up at a make-shift clinic to receive his first dose of the COVID-19 vaccine earlier this year. The clinic was set up at a Moderna Therapeutics plant in suburban Boston, which had been firing on all cylinders to make tens of millions of doses a month. Damiani was surrounded by fellow Moderna Therapeutics employees who helped design and test the vaccine, and would be getting a shot of their own product. It was an emotional, anxious, and exciting moment for Damiani, who has been a central player in enabling Moderna to successfully design and produce products based on messenger RNA, a molecule that can hold “instructions” for training the body to fight viruses like COVID. (The company also has products in development for Zika, the flu, and cancer treatment.) “You can imagine the mountains we had to climb, with this rapid scaling up, and the maturing of everything we had in place,” Damiani says. But in addition to feeling overwhelmed by the pressure and expectations, he and his colleagues were also excited, “because you could feel that the outcome of everything we were working on would impact you personally.” Damiani is the biotech company’s Chief Digital and Operational Excellence Officer — a title that was crafted out of the company’s desire to apply information technology in a way that would make Moderna an agile and data-driven company. “When I joined Moderna, we could have decided tvvhat I was called the CIO [Chief Information Officer] of the company. But what we focused on is how information technology is going to help Moderna improve its product, increase its scale, improve its efficiency, and improve drastically the quality [of products] that we’re building, and how we’re going to build a very data-centric company, and how we’re going to use algorithms to help the company do all those improvements.” In a recent interview with Innovation Leader, Damiani shared insights about how that focus helped Moderna shepherd its COVID-19 vaccine to emergency approval in the US in December 2020; the challenges presented by the need to scale up the company’s manufacturing operations; his key principles when it comes to deploying new technologies; and more.
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This featured article is brought to you courtesy of innovation leader www.innovationleader.com
Can you talk about some of the things you had to do to support the creation of the COVID-19 vaccine? Since 2013, we’ve been implementing digital solutions to support our scientists and how they proceed with ordering messenger RNA and designing their sequences and so on. First, we used the cloud everywhere; everything sits in the cloud. We were, I believe, the first biotech doing that. We drive our manufacturing from the cloud. It provides huge flexibility should you implement a new facility, or a new line somewhere else. All you need onsite are the real-time, latency sensitive systems. We developed what we call the Drug Design Studio… Our scientists…go to this [web] portal, and they select either existing messenger RNA sequences, or protein sequences, or they can design them from scratch. … They have access to all the chemistry that we have for them. At the end of this process…instead of going to the lab [to] pipette them manually, they push a button and send this data to the central automated preclinical manufacturing that we have in place. At every step of this process, and the preclinical manufacturing, you’re collecting data. We have implemented lots of algorithmics to optimize the [mRNA] sequences for production. Some are easier to produce than others, so we use machine and algortithmics to suggest same sequence, but change a nucleotide, so that you can optimize your production.
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We have implemented [all the data we have collected and algorithms we built] into the Drug Design Studio to help the scientists. We did the same on the automation side in preclinical. … We used many of those algorithms to build the COVID sequence, so we didn’t waste any time. If we had to do COVID in 2015, we would have failed maybe once or twice before we were able to produce it, because the sequence has its own complexity. But with everything that we built and the data that we had…we were able to produce it right the first time in the right quality…
What challenges did you run into while your production facility was being scaled up? Moderna On the science side…I would say the scale-up was minimal, because we had everything in place. We were a research company, very focused, very digitized… We were set for [making smaller quantities of products for clinical trials], and we had to scale up Norwood, our facility [in Massachusetts], to [an] international facility with bigger volumes, more lines, and so on. But we had originally built it fully digitized and paperless. We had connected it with quality systems, so you can release the product only after you have quality reviews. Everything was in place. We used that setting to produce COVID vaccines – we had to scale up the quantities, the number of lines, but all the rest was already existing. In 2015, we would have failed maybe once or twice…but with everything that we built…we were able to produce it right the first time. But that’s only a small piece, because if you want to deliver on a global basis, you need to scale up all your supply chain. At the same time, we needed to build our capacity in Europe for international [distribution] using external partners… We needed to work as well on our [clinical trial operations in 2020]… We worked a lot on diversity, making sure that we had a full representation of the population at risk in the US in our clinical trials. … Prior to COVID, we had integrated with the…systems [of] PPD, [a global contract research organization] who managed the clinical trials for us… Having this integration in place allowed us to collect real-time information about every site that was having a healthy volunteer coming, and real-time data about the population that we were recruiting… We corroborated this data with additional data from the public database about diversity — the address, population, and the area, and so on. This has helped us in real-time manage the clinical trials, adjust, and adapt to make sure that it was as representative as possible…
What was your strategy when it came to using data for projects like the Drug Design Studio?
Have any new best practices emerged over the past year that you now plan on continuing?
The most important principle for us is integration. We wanted to make sure that all the data flows between the different systems… My experience from prior life was that many companies fail because they create silos of data. What they do is they put people and humans in between those silos, creating lots of inefficiencies translating data from one place to the other. That leads to very bad decision-making, because you don’t trust the data anymore. … We had a system of records that define, let’s say, HR data… We integrated the HR data into the Drug Design Studio, so we don’t have to keep all the names of the users inside Moderna — again — in the Design Studio.
We had to mature our processes to make sure that they are consistent, reliable, robust before we can go out to the world. … As you can imagine, now that we have all those processes, whether it’s on the supply chain, whether it’s manufacturing, whether it’s on the commercial side now, they not only serve COVID. They will serve any other product that we are working on. That’s the beauty of the platform we have and how we built it.
The next part is around, can we integrate our instruments? Instruments generate lots of data. Usually what happens is that data goes into an Excel spreadsheet, and then you need to analyze them. … We integrated the instruments into the information system. The holy grail is how you apply algorithmics and machine learning to this data. But we didn’t go for boiling the ocean, blue sky kind of projects. The next thinking was, can we use robotic automation? … This is where operational excellence comes into play as well. … If you automate too early, and your processes are not stable, you slow down the changes because automation becomes very rigid. So what we adopted is, we start with islands of automation. We can connect those islands as the processes mature. As we interconnect them, afterwards, you have the full automation… The holy grail is how you apply algorithmics and machine learning to this data. But we didn’t go for boiling the ocean, blue sky kind of projects. We took very pragmatic, specific problems we needed to solve, and looked for places where humans weren’t as good as machines.
We probably wouldn’t have not invested so much in digital and automation if we didn’t have this platform [for mRNA-based vaccines and drugs]. If you’re doing it for one product, the business case doesn’t stand up to invest as much in digital. The strategy was, we have a platform; we want to build multiple products; and let’s build it from Day One as digitized as possible.
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INTERVIEW WITH ANTONIO SALVADOR, CAREER BUSINESS UNIT DIRECTOR AT MERCER
The innovation professional as the orchestrator of change
ONE OF THE COUNTRY’S LEADING DIGITAL TRANSFORMATION OFFICERS, ANTONIO SALVADOR, DIRECTOR OF CAREER’S BUSINESS UNIT AT MERCER BRASIL CONSULTANCY, IS ONE OF THE VOICES IN THE MARKET THAT HAS ALWAYS HIGHLIGHTED THE STRATEGIC ROLE OF ORGANIZATIONAL CULTURE IN THE DIGITAL TRANSFORMATION OF COMPANIES. IN THE RECENTLY RELEASED “TRANSFORMAÇÃO DIGITAL — UMA JORNADA QUE VAI MUITO ALÉM DA TECNOLOGIA” (DIGITAL TRANSFORMATION — A JOURNEY THAT GOES FAR BEYOND TECHNOLOGY), WRITTEN IN PARTNERSHIP WITH DANIEL CASTELLO, HE TALKS ABOUT THE IMPORTANCE OF EACH COMPANY MAKING THE CHANGES ACCORDING TO ITS CULTURE, AND NOT ONLY FOLLOWING THE MARKET TRENDS.
IN THIS CHAT WITH THE FUNNEL, SALVADOR WARNS FOR THE ROLE OF THE INNOVATION PROFESSIONAL, WHO MUST LEAD THIS PROCESS AS A CONDUCTOR, BUT CAREFULLY NOT TO CAUSE RESISTANCE AMONG THE OTHER PROFESSIONALS IN THE ORGANIZATION. “I SEE A LOT OF INNOVATION LEADERS WANTING TO APPEAR IN THE PHOTO, AS IF HE/SHE WERE THE ONES BRINGING THE NEW THING TO THE COMPANY. THIS CREATES HUGE RESISTANCE IN OTHER PEOPLE AND PREVENTS THEM FROM GETTING SUPPORT, MAKING CHANGE DIFFICULT,” SAYS SALVADOR, WHO IS ALSO A PROFESSOR, AN ANGEL INVESTOR IN STARTUPS, AND HAS WORKED AT GRUPO PÃO DE AÇÚCAR, HP, AND PWC.
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ANTONIO SALVADOR, DIRECTOR OF MERCER’S CAREER BUSINESS UNIT AND AUTHOR OF THE BOOK “TRANSFORMAÇÃO DIGITAL — UMA JORNADA QUE VAI MUITO ALÉM DA TECNOLOGIA” (DIGITAL TRANSFORMATION — A JOURNEY THAT GOES FAR BEYOND TECHNOLOGY), TELLS US ABOUT OBSTACLES AND PATHWAYS TO UNLOCKING INNOVATION IN COMPANIES.
You recently released, in partnership with Daniel Castello, a book on digital transformation. In practice, what is digital transformation and how should it be applied?
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Digital transformation is about creating value for the consumer, for people. The added value that wasn’t there, which was probably only created because of this world of possibilities that we are living now — and then, it has to do with technology. The data and Artificial Intelligence explosion is making it possible to generate value that was not possible before. In the book, we tried to reflect a little on this, because it’s not just about applying Artificial Intelligence, using data or having an e-commerce site. There is already a template, a manual on how to do things. But, what can be seen is that the greatest barriers for companies to succeed in digital transformation are in strategy, execution, people, and culture. And, the more we investigated the subject, the more we realized that the great barrier is really in people. Because resistance to technology, especially in relation to the immediate impact it has, has always been there. What happens today is that everything is faster.
How does one develop a culture of innovation in companies?
How should the innovation head behave in this process?
There are many factors. I think there are lenses that you need to look through in order to make the best decisions, considering what’s relevant to you. And, for me, the first one is coherence. You cannot simply replicate what Google does. “Oh, are we digital now? Then, let’s switch to shorts, paint the walls yellow, put on some beanbags, and now we are digital”. You need to be coherent with what you believe. Do you like to wear a tie? Then, wear a tie, but also respect those who don’t want to wear one. Another important thing is that you need to understand how all these seismic movements that are happening in the world impact your reality and have conversations within your company, within your work group, that allow your professionals to discuss this. How do you change something? Talking, understanding.
The innovation professional must be the big orchestrator of the change. But, he needs to have a finger inside and a finger outside the organization. He cannot just take the pulse of what is happening in the market. Because sometimes what you see in the market is not applicable, it is going to generate great internal resistance and then, it does not generate value. If you don’t add value, sorry, go do something else. The innovation head has to have a very strong change management skill and a controlled ego, because his/her goal is to make others who appear in the picture shine. I see a lot of innovation people wanting to appear in the photo, as if he/she was brought the new thing to the company. This creates a great deal of resistance in other people and prevents you from getting support, making change difficult.
Another very important point for all companies that are in the process of transformation is to define which are the two or three emblematic decisions that will point the company’s direction. The matter of education is important, but in an environment full of adults only education is not enough. It’s no use saying you’re going to innovate if your incentive system is all focused on delivering the old. And these decisions can be new processes, or removing people who are harmful to the company, who are not aligned with the future you are preparing. These major decisions are the most varied. Start with what you consider that transmits the right message and is in line with your culture. What should companies take into consideration when structuring their innovation processes? There is a maxim in boards of directors which is as follows: you can kill a company by not recognizing that it is in crisis. Identifying the crisis is very important. But also you cannot treat a company that is not in crisis as a crisis. You can kill the organization by doing that.
Another important thing for the innovation professional is to know how to lose a battle in order to win the war. There are innovation professionals who are very passionate about the cause. An idea may be brilliant, but it may be too soon to implement it. Is there no other way, another proposal, a middle ground? It all depends on the company timing. What are the main lessons that the pandemic has brought to the world of work? The discussion of technology and digital transformation is here to stay. It was incipient, a huge crisis came and then, it entered the world’s agenda. The home office, understood as another alternative that we didn’t use, is also here to stay. Travel for work, for example, will be drastically reduced. I’ve already had quick trips to Miami, to France. This doesn’t make any sense, since I could participate via videoconference. I think all this is here to stay, as well as automation, the more intensive use of technology. But, I believe we are going to have a regression to on-site at first until we find the balance. Many more conservative companies are still suffering a lot with the virtual. It’s like a pendulum movement: we were in the time of the can’t, then came a moment for the total home office. It will come back a little to the on-site before reaching balance.
Crossing the valley of death Startups and US military
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By Silicon Foundry
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Startups working with the U.S. military face a “valley of death.” Here’s how innovation units are helping to bridge that gap.
Emerging technologies are changing the nature of war—and they’re being adopted by America’s near-peer adversaries. In order to maintain its technological advantage and outpace countries like Russia and China, the United States military is investing in emerging technologies including artificial intelligence, machine learning, quantum computing, advanced air mobility, and microelectronics. According to Bloomberg, the U.S military awarded a record-breaking $445 billion in contracts in 2020. The Small Business and Innovation Research (SBIR) program, which funds startups and small businesses in order to stimulate technological innovation, last year awarded grants to 1635 U.S. firms working with the the Department of Defense (DoD). Even though the U.S. military is committed to equipping its forces with emerging technologies, it can be challenging for technology startups and the Department of Defense to work together. The military technology acquisition process is long and bureaucratic. There can be extensive gaps of two years or more between the time that startups are first granted a prototype award and the time when the military adopts a solution and issues a contract. Defense companies often refer to this period as the “valley of death.” “Startups that successfully fulfill innovation contracts don’t automatically scale,” explained Mrinal Menon and Jeff Decker in a recent Fast Company piece. (Menon is a Stanford MBA candidate and former Naval officer; Decker runs Stanford’s Hacking for Defense Project and is an Army veteran.) “Instead,” they wrote, “[startups] must still compete for funding in a formal budgeting and acquisition process before being eligible for widespread adoption. This ordeal takes two years or more, during which startups should anticipate little or no revenue as they try to push their product through the bureaucracy.” That’s a tough sell for startups that are accustomed to operating quickly and are under pressure from investors to generate revenue. It also impacts the DoD’s ability to work with technology companies in the long term. Research from The Center for Strategic and International Studies shows that between 2001 and 2016, 60% of new entrants into the federal contracts market exited after three years. An ecosystem of DoD-led innovation groups aims to change that by closing the gap between startups and the military in order to foster innovation and ensure that the DoD has access to the leading-edge technologies it needs. There are dozens of DoD innovation groups, each with different value propositions, approaches, and funding sources. The Defense Innovation Unit (DIU) was created by the Obama administration in 2015 in order to accelerate the development and adoption of commercial technology for military use and create stronger relationships between Silicon Valley and the Pentagon. The DIU works with all branches of the military. It is currently led by Michael Brown, the former Symantec Corporation CEO who co-authored a Pentagon study that identified Chinese investment in American emerging technology startups as part of a broader technology transfer effort designed to fortify the Chinese state.
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Brown told Politico Pro earlier this year that the DIU has made a concerted effort to scale. The organization now has dedicated teams that identify critical national security problems and scour the innovation ecosystem for commercial solutions with military applications. But he said there’s still work to be done to make it easier for startups and the DoD to work together.
One way to break down those barriers: put innovators and Armed Forces personnel together in the same space. That’s what Capital Factory, an innovation hub with offices in Austin and Dallas, Texas, is doing at its Center for Defense Innovation. “Our goal is to go beyond bridging the “Valley of Death” and activate the existing Texas ecosystems that can contribute the necessary substance to fill in the valley,” said Jorge Manresa, CVP of Industrial Capacity Expansion for Federal and Defense Programs at the Center for Defense Innovation. “The symbiotic relationships we create between our national security components, the startups, academia, investors, as well as state and local non-profit resources, can work to create a unique collaborative ecosystem to overcome many of the known barriers to entry.” Branch-level innovation units also aim to make the military acquisition process easier, faster, and more transparent for technology companies. Army Applications Laboratory (AAL), which works out of Capital Factory’s offices in Austin, is the Army’s innovation unit. Their model: assemble cohorts of companies and task them with solving Army problems. Dr. Casey Perley, AAL’s Director of Insights and Analysis, told Silicon Foundry that the organization’s goal “is to get the best technology to the warfighter. We have to break down barriers so that companies that haven’t traditionally worked with us can share their ideas.”
AAL identified three barriers to partnerships between the Army and technology companies: access, transparency, and speed to capital. The organization works to overcome them by posting calls for proposals on social media, simplifying and expediting the application process to participate in its programs, and being upfront with companies about the path to revenue. AAL made its contracts deliverable-based, “which is a big deal,” Dr. Perley said, “because it allowed companies to invoice their first payment the second week they worked with us. That meant that companies weren’t paying out of pocket to work with the DoD.” AAL also created SPARTN SBIR, a program that connects technology companies to SBIR funds, because those dollars are, in Dr. Perley’s words, “incredibly flexible”—there are fewer requirements for SBIR funds, and budget cycles aren’t determined years in advance. Dr. Perley points to AAL’s recent Fire Faster cohort, which sought to automate the process to reload self-propelled Howitzers, as a success. Fifteen participating companies received $200,000 in funding and were given eighteen weeks to develop a concept brief and present it to Army stakeholders. The companies spent time at Army base Fort Hood, where they discussed their ideas with Army personnel and saw a field artillery battery fire live in order to gain a deeper understanding of the problem they were working to solve. At the end of the program, five companies—most of which had limited or no experience working with the DoD—received direct-to-Phase II SBIR contracts to build prototypes. “To us,” Dr. Perley explained, “that showed that if you level the playing field and reduce these barriers to entry, non-traditional companies can really shine.” The prototyping process can take 18 months to two years to complete. Since AAL is just two years old, it remains to be seen whether any of its program participants will go on to gain longer-term contracts and have their technology widely adopted across the Army. “Technologies from two of our five completed projects are being used by soldiers right now,” Dr. Perley said. “They haven’t been adopted at scale yet, but there’s been additional revenue for those companies, and they’ve made that impact on the war fighter that is our ultimate goal. While we don’t have the data to show transition at scale, because we’re too young, we do believe that all of our metrics are pointing towards a lot of our technology continuing to have that transition potential.” When it comes to the DoD’s broad quest to adapt emerging technologies, Dr. Perley is hopeful. “The calls for flexibility in acquisition, the calls for being a better business partner, aren’t just coming from the innovation units. It’s coming from people all the way to the top. It’s coming from people in Congress. I believe it can be done.”
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“While I’m very proud of what we’ve done at DIU, we’re not frictionless compared to [technology companies’] other customers,” Brown told Politico Pro. “There are still things that make it a little more difficult working for DoD than other commercial customers they might work with. So we’re continuing to try and break even more barriers down so that more companies will consider us.”
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