Pharmaceutical Executive Europe - January 2008 - (Page 14)

14 Corporate Strategy Walking the Line It’s not innovating that’s the most difficult — it’s creating value whilst innovating. Brian D. Smith explains. or a knowledge-based sector such as pharmaceuticals, innovation is the engine of wealth creation. Almost all business plans involve the application of new ideas to increase sales, reduce costs or change the key ratios in some way or other. And yet innovation is surrounded by more platitudes and truisms than almost any other subject in business. As one of my academic colleagues once said, many books on innovation are no more than ‘management pornography,’ full of false promise that says more about the readers’ naivety than anything else. This fog of fiction makes real innovation management more difficult, so it is worth taking a step back to understand what innovation is, why it is so difficult and how, in practice, good firms make it happen. F Understanding innovation The first important piece of clarity is to separate innovation from its parents: invention and insight. Invention is the creation of new knowledge and mostly applies in scientific or technical fields. Insight is the uncovering of knowledge and applies mostly in human fields, like management and markets. Both have their origins in what the philosopher Arthur Koestler called ‘bisociation,’ in which two different planes of thinking intersect. The key point is that neither invention nor insight creates wealth until it is applied, and it is this practical application that we call innovation. A second key point is that innovation can take numerous forms. Most often, we think of innovative products or services, either in the core technology or in the way they are presented. Just as valuable, and more common, is innovation in management processes. Quality systems, alternative strategies and new organisational structures are all innovations. Finally, innovation is not always of the radical, disruptive kind from which industry legends are made. More often, it is more common, if less glamorous, for innovation to be incremental, with each little improvement building on the next. Innovation, then, is the application, rather than the creation, of new knowledge; it can be done anywhere in the value chain, from research to consumption; and it can happen in leaps or in baby-steps. But why is innovation so difficult, and what does management research tell us about why it fails?

Table of Contents for the Digital Edition of Pharmaceutical Executive Europe - January 2008

Pharmaceutical Executive Europe - January 2008
Contents
From the Editor
News and Analysis
Calendar
Corporate Strategy: Walking the Line
Executive Profile: The Pharmacist’s Friend
Q&A: An End to Drug Counterfeiting
Healthcare Cost Assessment: Ready to Make NICE?
Pricing and Reimbursement: Through the Reimbursement Barriers
Generics: India Inc.
The Mix: New Models of Excellence
Last Word: Mid-size Matters

Pharmaceutical Executive Europe - January 2008