GCI0903_Clash of Chaos

36 Business GCI March 2009

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F or most large companies, fostering innovation is a challenge. It means drastically rethinking processes, human resources management, even goals. Because chaos is at the core of creativity, just maintaining that creative process or reinstating it takes

some measure of chaos. Ideas need room to come to life, to � ow and expand. At some point, something has to give:

Control, processes and structure will have to recede to give way to the creative process. Here is how major players in the life science industry have managed to maintain a measure of chaos, while preserving their corporate sanity.

Innovation is no longer a choice. It is a key to survival. Here’s how to get started.

BY MARIE ALICE DIBON

Seven Pillars of Good Chaos CreationVery few people � t the description.

According to Frederic Lucas-Conwell, CEO of Growth Resources, Inc., a California company helping � rms managehuman resources, only 5% of people are happy making decisions or taking the lead in a chaotic, uncontrolled environment.

A leading U.S. biotechnology company Genentech, headquartered in San Francisco, understands that and carefully pro� les its new hires. It emphasizes excellence and creativity for R&D; for operations, a successful candidate will be able to execute and comply.

“We hire the best people, because good people tend to have good ideas,” explains

The Clash of

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1 Start with People

When it comes to the chances for success of an innovation policy, most, if not all, hinges on people. From top to bottom, people are at the heart of innovation.

Creation loves chaos and hates control. Artists, composers, Nobel Prize winners, inventors or researchers are not generally characters most likely to come in every day, sit at a desk, do the same thing for eight hours and go home happy. The ability to handle control is not their best feature.

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Joe McCracken, vice president of business development for the company. “But we also favor di� erent personalities for di� erent jobs. For research we seek out individuals who want to explore new frontiers, whereas for manufacturing we seek out individuals who are happy performing the same tasks each day. Indeed, when $3 million is at stake in a batch of Avastin, you really don’t want a ‘more creative type’ introducing some new idea into the process. You want someone who can follow standard operating procedures (SOPs).”

“In fact, there are no SOPs in research,” continues McCracken.

No process control? Exactly.

2 Let Go of Control

Not only does Genentech have no SOPs in research, it also lets go of all control on a � � h of the researchers’ time. “We allow employees in research to spend 20% of their time on ‘skunk projects.’ � ese are secret projects,” says McCracken. “� ey don’t have to tell their bosses what they are doing.” And it pays. Many of Genentech’s star projects originated from this program.

Control is not something Daniel Maes, senior vice president of R&D at � e Estée Lauder Companies, Inc., likes a lot either.

“In the creative process, if you start encountering blocking elements, you are dead,” he emphasizes. “When we decide to work on something, we only pay attention to intellectual property—which can really come back at you later on—but that’s it. � e bottom line is: We have complete freedom without any control, any guidance or any limitations but our own.”

“I never felt restrained in the 32 years of my career at Clarins,” says Lionel de Benetti, head of research and member of the board at Clarins. “� ere is a culture of innovation here at Clarins that includes giving us total freedom.”

And that is another key point.

3 Maintain or Create a Culture of Innovation

In order to be innovative, you have to be innovative as a company. An individual or a department alone will never be enough to move things in the right direction.

“For Clarins, the driving force behind product development has always been

innovation,” continues de Benetti. “We are constantly reminded that nothing should stop us from moving forward. � is we really owe to Jacques Courtin-Clarins, the founder of the company.” � at is a common denominator in most of the innovative companies interviewed. At the core was a creative founder. All gave that initial impulse to their companies that have then worked to maintain this unique culture.

What made those founders so successful was also their legendary curiosity and open mindedness; their ability to look out, rather than in, which they imprinted onto their companies.

4 Bring in New Ideas and New Blood

Creative companies are open to the outside. � ey create systems and structure themselves so as to remain open-minded and open to outside teams and people. � ey also treat open-mindedness as a quality, not as a threat.

Renaud Jonquières, global marketing manager of pharmaceuticals at BioMérieux explains, “Not only do we o� en acquire companies that are not quite within the bounds of our expertise, because they are innovative, or bring to the table rupture technologies that will add value to our existing o� ering, but we have been on occasion going in totally di� erent � elds in order to solve speci� c problems. If you want to foster innovation, you have to be extremely open-minded,” says Jonquières.

At Estée Lauder, suppliers are brought in constantly to present new technologies and educate sta� . � e company also partners heavily with outside labs, private � rms or from academia. � ey give grants to very prestigious research teams and collaborate on numerous projects. � at is another way to interface with the outside. Going out is important.

5 Send Them Out

Not one large dermatology or major cosmetic science meeting goes by without a presentation from Estée Lauder’s labs. “We have the ability to publish our work early on, and that is very important,” emphasizes Maes. Pushing people out, making them interact with the outside world and with di� erent teams is essential. First, it will keep

peace in the house, as creative people tend not to be the easiest to manage, and even more so when they feel restrained.

Exposure to others, especially unfamiliar people and teams, creates instability. Most creative personalities are not unphased by it. In fact, it makes them more productive.

“Teams function better in a creative fashion when people inside them don’t know each other very well, whereas teams that have been constituted for some time lose their creative edge, but will be perfect to organize and execute,” explains Marc Dangeard, a business coach working with entrepreneurs in California’s Silicon Valley, who closely observes innovative companies and helps them grow.

With all that movement, one thing is for sure: � e process doesn’t seem too intensive. How can people be productive if they are constantly moving around?

6 Accept Waste and Failure

Innovation is a costly process. Along the way, a lot is produced, little is used.

“To get one good idea, you need to go through a hundred of them. � e company has to accept the extraordinary level of waste that comes with the innovative process,” explains Growth Resource’s CEO Lucas-Conwell.

� e story is the same at Estée Lauder.“We never say no to a new technology.

We review absolutely everything that comes our way, and that is a lot,” says Maes.“� en, a maximum of 10% of all the ideas that we have or select are going to see the light.”

Sometimes, even failures are important. “We launched Expertise 3P last year, and it didn’t do as well as we had hoped,” acknowledges Clarins’ de Benetti, “but we believe in that technology and it will probably succeed at some point. We will then have been the � rst company to ever launch a product of that nature. Moreover, in our industry, failure doesn’t have the same consequences as launching the wrong car would, for instance.”

� at is also the conclusion that � omas Goetz drew when he published an article last year in Wired magazine titled, “Mind the Gaps.” According to Goetz, “Scientists rarely publish the results of failed experiments. Science gets skewed because only positive correlations see the light of day.” � ere is a lot to be said about the value of failure.


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� e challenge, of course, is to get this through the heads of upper management, especially in a world where quarterly � gures dictate the strategy of public companies. Waste might also mean lesser short-term results. Only those who are able to think long-term can envision an innovative process taking place in their companies.

7 Accept Delays

Clarins decided to pull out of the stock market last year for that very reason. “� e market is short-term, and sometimes even very short-term. � e vision of our strategy for the group is rather mid- and long-term,” said CEO Christian Courtin in a recent interview.

Claude Bébéar, founder of Axa and generally considered to be the godfather of French capitalism, explained in the wake of the recent Bernard Madoff scandal in an interview for the French magazine l’Express, “For a few years now, companies have had to suffer the diktat of the short-term, [imposed by the markets]. Everybody knows that quarterly results have no meaning for the companies, yet more and more CEOs are obsessed by it, to the point of sacrificing certain investments to better their results.”

The Devil InsideIt goes without saying that chaos creates fear and unrest in the corporate structure. In the wake of creating chaos, there are obstacles within the corporate structure that go beyond the challenges brought to bear on R&D.

“Innovation will question established roles and processes and has very heavy political implications at times,” explains Lucas-Conwell. “Many people have no interest at all in letting innovation succeed. � ose people might be brilliant and very well structured, yet will do everything in their power to sabotage it, all the while looking supportive.”

“We do get pressures all the time from other departments,” adds de Benetti of Clarins, “but arbitration is always in our favor. We are very [well] supported by our upper management.”

Support is key among the many things to take care of in order to make chaos livable and to avoid the clash.

Managing Chaos

1 Support It

Support goes along with the culture. In companies where there is a culture of innovation, support is a no-brainer to upper management. It is in the company’s genes to support innovators, usually because the initial impulse was modeled by the founders.

Genentech has managed to maintain that culture, as did all the companies interviewed for this article. For any company, there is a need to make sure that innovation is something that occurs at all levels and is supported as such. Surprisingly for some, structure is paramount to the success of such policy.

Why is structure so important? If chaos is an important part of innovation, chaos itself cannot run through the entire structure without destroying it. And it really doesn’t have to.

2 Keep It on the Edges

“In a large structure, innovation should happen at the edges of the company, where you can a� ord to let things in and your creators out, for optimal interaction and confrontation of ideas without jeopardizing the heart of the structure,” explains Dangeard.

� e key is to create a gradient of creativity. Inside the company are your processes, your execution teams, development, production, accounting, manufacturing—well-structured and controlled—and as you get closer to the outside, you � nd the creative people.

Creativity is also very dependent on the company’s ecosystem. “� e ecosystem is essential to the success of innovation,” explains Lucas-Conwell. “Silicon Valley is a perfect example of it. Here, more mature companies absorb small innovative companies. � ey can constantly regenerate with that pool of ideas. On the other hand, small companies are driven by venture capitalists and attorneys who allow them to exist all the while facilitating their own survival and successful exits.”

So innovation remains on the edges, but what happens there, where ideas � ow in

a totally uncontrollable manner? How to make sense of it all? Organize.

3 Streamline

“We try to manage the � ow of ideas,” explains Maes. “It is like a funnel; we look at everything, then there is a � rst step where we eliminate a whole bunch of technologies because even a� er looking at them closer, they just don’t � t us right now. � en we will test them. And again, a bunch get dropped because the tests come back disappointing. Everything that we drop is cataloged.” What’s le� , Maes says, is read again and experts in the technology are called. � e company has a “journal club” whose members are assigned a technology about which they acquire knowledge on and then present it to their colleagues in the lab. Everyone is educated about everything that goes on. “We bring in experts and also marketing. It is important to involve them early on,” he says.

And that is another key to innovation success.

4 Implicate Early and Educate

“With very new technologies, people’s brains must be injected with new notions and vocabulary early on,” Maes continues. “You have to prime the pump. I talk and see how people react. I try it in di� erent ways. With very new technologies, it is not only about evaluating, you have to do the PR work.”

� at is a strategy that biotech and pharma are starting to understand. Both Roche and Genentech have early commercialization programs. At Roche, a marketing person is embedded right on the R&D site to become involved as soon as the product starts taking shape.

5 Set High Standards, Measure Success

It must be understood by now that this is an exercise in balance. However talented they are, development people must live up to the needs of the corporation. If you want to be a free agent in a large company, you must not only be able to communicate with the rest of the chain and defend your ideas,

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but also be able to understand what you are working for.

“Not every researcher has that special skill,” says Fred Dorey, an attorney with Cooley Godward Kronish, the very � rm that incorporated Genentech 30 years ago, and is also the � rst president of the Bay Area Bioscience Center. “� ey have to be really tuned in to the business side of things. It is not a very common instinct, but it is necessary to corporate work.”

Knowledge is power. It is energy, too.

When people’s minds are

stimulated, they feel energized.

HOW TO KEEP UP A SUCCESSFUL INNOVATION POLICY DURING CHALLENGING TIMES:

1. Be creative if you want creativity to come to you.2. Be fl exible and agile inside and outside the organization.

HR: New hires are rarely on the company agenda during a recession:

n Constitute horizontal teams to manage projects. If properly executed, this allows you to use existing personnel where you would have hired new people, to create new teams and stronger relationships, and to foster better communications within the organization.

n Use outside consultants. More fl exible than even temporary workers when it comes to work load, they also can work on commission and be ready immediately if you have worked with them before.

Keep eyes everywhere:

n Commission people to be on the lookout for new technologies to in-license in different fi elds, in different countries.

n Foster your network for opportunities. Suppliers, clients, workers, industry relations and former colleagues all have ties that may be useful to you.

n Read the trade press from industries that are adjacent to yours—scientifi c journals, science popularization magazines, biomedical journals, to name a few.

Be open to new technologies that can help save money and accelerate processes:

n Technologies that can help your design process:

• Use the social media for customer-driven design, inexpensive and effi cient market test and crisis prevention.

• Use Web-collaborative tools to keep in touch with the best everywhere and to manage international teams.

n Technologies that can help your lab and production lines function better:

• New toxicity tests, but also activity and compound screening technologies are now available to the consumer products industries after having been validated by the biomedical industry for years (in silico biology, high throughput screening tools, etc.).

• Some of those companies are small and need to land contracts to survive as the activity in biomed stays very competitive, and industrial partnerships are one way to keep afl oat.

MARIE ALICE DIBON, PHARMD, is the principal at Alice Communications, Inc., helping companies in the life science sector to develop innovative technologies.

At Lauder, suppliers come in and share with sta� what their technology does.

Knowledge is power. It is energy, too. When people’s minds are stimulated, they feel energized. Internal communications can also go a long way.

Several years ago, a research team at Estée Lauder put together a newsletter to tell the rest of the company about research: the technologies, the outside partnerships, the di� erent labs and the life of R&D in general. It also created a lot of enthusiasm inside the labs. Not only did the team get great feedback from the di� erent divisions that would be excited about the technologies and also better understand R&D processes and deal with the department more easily, but people

Lucas-Conwell of Growth Resources, Inc., agrees. “Innovation has to be useful, otherwise it isn’t innovation, it is just an idea.”

“Publication rates and actual product outcomes don’t necessarily go together,” adds BioMerieux’s Jonquières. “Some researchers publish a lot, and their research leads to virtually no product development.”

Yet, there has to be a measure of success.“With freedom comes accountability,”

explains McCracken. “We set very high standards on how much our researchers publish and how projects advance internally.”

Measuring publications and scienti� c progress is de� nitely a way to evaluate people and also to motivate them.

6 Motivate People

“For us, the biggest motivation is whom we work for in the end: the patient,” continues McCracken. “So we have patients come in and talk to us. We frame letters from patients, put them on the wall. Our mission is to help patients.”

inside the team were motivated as well. Taking time to communicate is well worth the e� ort.

Innovation is not an easy proposition. Managing chaos takes skills, open mindedness, patience and will. For some it takes a whole culture shi� . For everyone it takes faith.

But it’s not like you really have a choice. It is not a matter of whether or not you need innovation, but rather of whether or not you want your company to survive this race at all. Innovation is no longer a plus, it is now part of any company’s survival skills. n GCI


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