Drive innovation by unlocking middle management


For many companies across a variety of industries, the rate of product innovation is a major driver of competitiveness and shareholder value.  When high levels of R&D spending and new innovation strategies do not turn into product wins, leaders will naturally question how innovation is spawned, cultivated and commercialized.  While idea generation and marketing are crucial, one important way to increasing innovation may lie with the R&D process itself.  New research on the drug industry from the consultancy Booz & Co. suggests that midlevel managers may hold the key to improving the odds of innovation success.

Despite dramatically rising R&D spending over the past decade, drug companies have little to show for it.    Moreover, increased pharma consolidation has saddled large firms with bloated R&D departments that suffer from cumbersome bureaucracies and diseconomies of scale.  A variety of process, structure and collaboration strategies have been tried to improve R&D productivity – the ratio of R&D inputs to product outputs.  Unfortunately, most of these initiatives have not met expectations.  Not surprisingly, one industry leader dubbed the past 10 years the “lost decade.”

Booz studied R&D productivity in 15 leading academic-based pharmaceutical firms.  The study concluded that breakthrough innovation and problem solving occurs when individual scientists connect their own subject matter expertise to similar work being undertaken by their peers. One example of this was when Albert Einstein credited the discovery of his theory of relativity to his discussions with his peer, the engineer Michele Besso. 

Typically, organizations attempt to generate rich scientific interactions by executive decree, through traditional networking activities or by changes in their management systems, such as new measurement tools or reward schemes. Unfortunately, these strategies often fail to meet expectations, for a variety of reasons.  For example, in large companies the R&D leaders who set priorities and control resources are often too far away from the action:  the most creative scientists; high potential opportunities in technology adjacencies and; the mechanisms that generate deep and regular collaboration. Furthermore, even the most cutting-edge innovation strategies will suffer if the people implementing and managing them can not (or do not) exert the right kind of leadership.  I’ve witnessed these subtle organizational barriers in such diverse industries as consumer goods, software, telecom, aerospace and healthcare.

According to Booze, firms should focus on elevating the performance of middle managers in order to trigger serendipity-based innovation.  This key group has the mandate and ability to identify, connect and manage the crucial interactions between scientists, product developers and customers.  Business leaders can optimize middle management performance through a variety of measures, such as:     

Enable and empower midlevel leaders

  • Remove overlapping roles and responsibilities to avoid duplication and political strife while ensuring key activities are being executed;
  • Ensure senior, middle and project managers have the appropriate authority and autonomy to avoid decision making paralysis;

Optimize information rights and collaboration

Enhance the function

Improving middle management productivity is a tall order for any organization, but especially for those in dynamic, knowledge-intensive sectors. To be successful, senior leaders will need to adopt an innovation approach that combines talent management, organizational design and cultural tweaking.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Advertisements

5 comments so far

  1. Greg Lowe on

    Great post. You capture a great target for organizations to build and train their middle managers. But often times it’s not just what they need to become, but how they get there that is missing. Recently I wrote a post that helps companies develop strategies to start to focus these individuals on developing open leadership skills: http://greg2dot0.wordpress.com/2011/06/20/social-management-team/ I think both elements are necessary for success.

  2. […] 2) refocus around fundamental consumer needs and; 3) remove organizational barriers within the structure, process, and […]

  3. […] Providing this autonomy was critical in ensuring the researchers were empowered and not hamstrung by organizational barriers to creativity.  Forcing collaboration was essential to mobilizing the necessary brain power, breaking down […]

  4. […]  Going forward, the company created a more rigorous decision making process for evaluating and implementing its creative ideas.  For example, it developed a vetting process that required each new innovation to be financially […]

  5. […]  Going forward, the company created a more rigorous decision making process for evaluating and implementing its creative ideas.  For example, it developed a vetting process that required each new innovation to be financially […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: