Innovator Interview: Rob Spencer, Pfizer by futurethink

Rob Spencer

Senior Research Fellow, Idea Management & Innovation Pfizer

the innovator’s interview May 2009

The Innovator’s Interview highlights unique innovations from a wide range of industries, and is an opportunity for futurethink and some of today’s leading innovations to share insights and ideas.

the innovator’s interview

Rob Spencer the background

This Innovator Interview series highlights leading innovators at Fortune 500 companies. In contrast to past interviews, focusing on a single innovation, this series examines the state of innovation at global organizations. We spoke with both innovation leaders and practitioners, within varying business units and organizational structures, across a broad range of industries both for–profit and not–for–profit. The interviews offer a unique insider’s view into the world of innovation—what makes it work, what holds organizations back, and what critical advice new innovators need to know to be more successful with innovation overall.

the interview futurethink spoke with Rob Spencer, Senior Research Fellow - Idea Management & Innovation, Pfizer, to learn more about how Pfizer approaches innovation. He shared why we need to better focus on the real problem we’re solving, the issue with suggestion boxes, and why we senior leadership needs to get beyond ‘endorsement’ and embrace ‘engagement’ around innovation to be successful.

You take a slightly different approach to innovation than other innovators that we’ve spoken with. I am deeply passionate about innovation, but I don’t use the word “innovation” in relation to what I do, because it has so much negative baggage associated with it. The hardest part of my job isn’t coming up with new ideas; it’s having a laser-focus on identifying and defining valid business problems right from the start. Too often, we spend our time focused on getting ideas, but we should first be asking ourselves: what exactly is the problem that we’re trying to solve? Only then can we know the real need we’re addressing, the real opportunity before us, and the real mechanism for change that adds lasting value – both for the customer and for the company. The problems that my team define when working with the business owners (division heads) are often very complex and scientific. There’s almost no limit to the type of problem we tackle. Whatever form it takes, identifying the core problem and defining it with the appropriate business owner within the company – that’s the massively important thing. Not defining the problem is when you get silly innovation initiatives – like running a suggestion box. That’s not problem solving and that’s not true, proactive innovation, in my mind. It’s a band-aid for innovation; it’s not going to result in anything productive or sustainable. You have to remember that Pfizer, and other pharma companies, typically invest $1.4 billion in R&D into a product before they ever make a dollar. And it takes 12 years to get your new drug to market. What this means is that we have a small number of products that are of immense complexity – where the investment and risks are high. And add to all this that we’re all very regulated. So, we live and die on patents. And when our patents expire, the generics have had five years of knowing it’s a $1

the innovator’s interview

Rob Spencer

billion product opportunity, and they have five years to gear up for it. So, the day the patent expires, the generic products are literally on the shelf in the pharmacies and we lose 50 -70% of our cash flow within a couple of weeks of the patent expiring. That’s not true of any other business. That’s why ‘reinvention’ is our constant focus, why innovation is so critical…and why defining the problem correctly at the start of innovation is so important. How exactly do you help define problems? I work with groups that want to innovate by giving them unique, tested tools to answer questions – and I give them access to a broad network of colleagues and external contacts to get help in the process. I have a broad education and experience in the business, and I come with a reasonable network of individuals who know me or know of me – at least enough to answer the phone. Typically, when approached by a business leader at Pfizer who has a problem, we have a 30-60 minute conversation; and in that time, we frame up the problem, and ask them who else they have gotten input from when thinking about their issue. If it’s just the usual suspects, I push them a bit. I say, ‘Who are your internal suppliers – and have you spoken with them about this? Who are your internal customers? Who are your stakeholders?’ Getting them more diversity of data points is where we really add value. And what defines a good problem for you? It’s one where it’s serious enough to matter to the business. It’s got to solve a true customer or business problem and create true value. We can’t waste our time on fluff.

“Too often, we spend our time focused on getting ideas, but we should first be asking ourselves: what exactly is the problem that we’re trying to solve?...Not defining the problem is when you get silly innovation initiatives – like running a suggestion box. That’s not problem solving and that’s not true, proactive innovation, in my mind. It’s a band-aid for innovation; it’s not going to result in anything productive or sustainable.”

What in your experience are the biggest challenges in making innovation happen? One of the critical challenges is upper management’s willingness to embrace detail. And the second thing is middle management’s willingness to change or feel the imperative to change. What is the biggest indicator of a healthy and successful innovation program? Having serious senior management sponsorship and engagement. In other words, it’s never about the software or a technology quick-fix; it’s about the people leading the effort showing they care and participating in the process. When we receive a request to start an innovation effort, I contact the senior most lead on the project and have a 30-60 minute conversation with them. You can learn a lot in this short timeframe; primarily, whether the leader is simply endorsing a project, or if they are truly going to be in engaged with it. What has been a really surprising source of ideas? Where does the ‘aha’ usually come from for you? It comes from reaching out to other ‘silos’ in the organization to get a different perspective; a different twist or perspective on your problem. For example, there might be a finance question where the guys in Britain who are addressing the complexity of EU law have done some

the innovator’s interview

Rob Spencer

very interesting things around cost cutting. But the guys in San Diego don’t have a clue how to effectively cost cut. Put them together, and they solve each other’s problems – one might not know the other’s business, but they may have tackled a parallel challenge in a way that’s relevant to the other. My group is all about creating mechanisms to define their problems, and providing the networks and channels across different ‘silos’ to get a wide swath of answers and ideas to help. The key is to use technology to facilitate the discussion, not see it as the end-all solution. Your network and knowing how to tap it is the secret to success, not installing an IT solution and assuming that innovation will ‘happen’. What do you think the role of an innovation team or an innovation office should or should not be? An innovation team or office shouldn’t be part of IT. It shouldn’t be about technology as the magic elixir. In fact, I wouldn’t even call it an innovation office – again, innovation as a word has too much baggage. You might call this group ‘New Product Development’. You might call it ‘Allocation’ – it depends on your corporate culture as to what suits best. Whatever the group is called, it should focus on problem definition at the front end of the process. It must be less about helping groups brainstorm and more about problem refinement. How do you move innovation forward? Deadlines. I love deadlines because they really drive things.

“My group is all about creating mechanisms to define their problems, and providing the networks and channels across different ‘silos’ to get a wide swath of answers and ideas to help. The key is to use technology to facilitate the discussion, not see it as the end-all solution. Your network and knowing how to tap it is the secret to success, not installing an IT solution and assuming that innovation will ‘happen’.”

How would you say that innovation today works differently than it did 20 or 30 years ago? The biggest difference – and it’s a positive one – is the internet technology available to support your efforts. Technology is just an unbelievably cool enabler. It saves time, money, provides you with a diversity of perspectives, and lets you do innovation internally and externally. My purview is 80,000 people, with a focus on the 15,000 in our R&D division. Ten years ago, it would have been completely laughable to say that I could help these folks innovate, let alone ensure that they were all involved in some way in the process. With technology, I can talk to each of them effectively and include them in the process – and in many more ways that are a lot more fun than a conference call or a meeting where we are all staring at a PowerPoint presentation. How is innovation inhibited in your industry? We are highly regulated. We cannot get the voice of the customer like other industries can – there are too many restrictions on this for us. We also can’t just ‘recommend’ alternative uses for our products like, say, a packaged goods company can. So, the opportunity identification, really, for us is in knowing the science behind something deeply. And that’s why our innovations aren’t incremental ones, but are really big breakthroughs. How do you maintain the momentum around innovation? One good thing about this industry is that because of the nature of patent law and the relative openness, which is by regulation, is that

the innovator’s interview

Rob Spencer

when you file patents, when they’re published (the US publishes patents 18 months after filing, the EU 12 months after), everybody sees all your stuff. We have a good feel for each other’s pipelines. Because of that, we have a pretty good crystal ball – we know when our patents are going to expire, and we know when our competitor’s patents will expire. So, that, as a sense of forward momentum, is more than most industries. Patents drive momentum – it’s life or death for us. In order to get people participating in innovation, do you have any kind of reward system in place? You do recognition – not rewards. We feel strongly about this. Recognition makes sure that people are into innovation for the work – for the value it can achieve and the good feeling you have when you make a difference. It’s not simply about money. Recognition for us can take many forms, but it’s things like electronic newsletters and other visible communications. What would be a tip that you would give to new innovators that would help them be more successful in their efforts? Lead with the business problem and get that right before coming up with ideas. Attach the problem to a dedicated business sponsor who can shape it and move it forward with passion and resources. If you get the problem and sponsor right, all the rest becomes easier.

What can you learn from Pfizer to better innovate? • Problem–defining vs. problem–solving: How much time do you spend understanding the root causes of the problems you’re trying to solve vs. simply brainstorming and coming up with new ideas? • Having multiple idea channels: What methods or channels do you use to get ideas? Do they reach people both inside and outside the organization? • Engaging senior management: In what ways does senior management in your organization engage in innovation? How can this be improved?

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