11 minutes to read With insights from... Dr. Stefan Weiß, MBA Principle Business Consultant stefan.weiss@zuehlke.com Dafina Taqi Professional Business Consultant dafina.taqi@zuhlke.com Digital innovation has become a central focus for pharma and MedTech organisations worldwide. Organisations are pursuing large-scale transformation programmes to embed technology into their processes and create new value through digital models, products, and services. In the realm of pharma and MedTech, where stringent regulation and complex development processes are the norm, digital transformation is uniquely challenging. But the rewards can far outweigh the challenges. Digital models and data-empowered services can transform outcomes for healthcare organisations, patients, and healthcare professionals. In this comprehensive guide to digital transformation in the pharma industry, we address the key opportunities and complexities in this evolving landscape. Harnessing insights from our work with the likes of Chugai Pharma Germany and a leading chemicals manufacturer, we demonstrate why a holistic approach is key to driving impact against your goals. Additionally, we explore why the adoption of innovation management principles is vital for translating strategic planning into execution and outcomes, showcasing the transformative power of digital innovation while navigating the challenges presented by this dynamic landscape. The dilemma of managing digital innovation effectively The lack of a robust innovation framework poses one of the major limitations in the industry’s digital transformation journey. Many organisations find themselves with a high-level strategy only and lack the guidelines, processes and capabilities to translate goals into action – and pilots into operational solutions. Other organisations focus so strongly on strategising that they impede or essentially block pilots from reaching the market. Both scenarios result in reduced output, slow time-to-market, and an inability to fully harness the potential of digital innovation. An innovation framework creates an environment conducive to innovation and is a guide to encourage, foster, and implement digital innovation within a organisation. To facilitate and manage the transformation of innovative concepts, you need structured approaches and systematic methodologies, provided by a framework, to generate tangible outcomes. Adapting R&D with digital innovation to meet market and patient needs R&D is the lifeblood of pharma organisations, with long-established processes shaped by standards and industry requirements. Here, we emphasise the need to adapt digital innovation management in traditional R&D processes – something that’s fairly new to most players and therefore often poorly developed. This new approach requires new processes, roles, strategies, and partnerships that enable pharma businesses to stay competitive, navigate regulatory shifts, accelerate transformation, and maximise value. Pharma organisations need to adopt R&D processes with an integrative innovation approach that includes agile and adaptive processes to harness modern technologies and develop digital solutions that serve the changing needs of markets, patients, and healthcare professionals. To successfully understand, target, and meet customer needs, you need data-driven insights and user feedback to iterate and continuously improve digital products and services. Innovation management is required for both in-house and product & service innovation Over the past years, digitalisation has transformed the way companies operate internally and has expanded the established product portfolio by digital services. Many organisations have already initiated appropriate organisational adaptations to leverage digital innovation within their operations. These activities often include partnerships with innovation hubs, centres, and collaboration with other industry players to stay at the forefront of technological advancements. Interestingly, the management approach of innovation either for in-house or for product innovation share many similarities, including a clear vision where to innovate and how innovation success is defined, an underlying innovation process with roles and committees as well as an innovation ecosystem – either with external partners or internal departments. Generally, innovation management can be described as the 'operating system' that enables companies to manage and develop innovation projects efficiently and effectively. It encompasses the strategic planning, coordination, and implementation of initiatives aimed at driving innovation within an organisation. (See ISO 56000 series standards) Similar innovation management challenges emerge across pharma and MedTech, impeding progress and hindering the successful execution of innovation projects. Challenges for innovation management Let’s explore some of these challenges resulting from the healthcare’s struggle to implement innovation management effectively. Old patterns Old patterns of thinking and acting block innovation Regulatory barriers and stringent quality assurance requirements in the pharma and MedTech industry have created a risk-averse culture that hampers digital innovation management. Professionals in the industries are trained to prioritise compliance and quality, making it hard to develop an innovation mindset and preventing organisations from realising the full potential of digital innovation. The 'fail fast and forward' mantra does not apply to life-saving therapies for obvious reasons. But it’s crucial for the fast, iterative, and user-centric development of digital health solutions. Viewing your digital transformation through a human lens and making mindset, culture, and change management a key part of your innovation management framework is therefore crucial for the success of your innovation activities. Neglecting patient needs Neglecting patient needs and sufficient business models Without a well-defined and strategic innovation framework, organisations miss out on valuable business opportunities. Failing to identify emerging trends, overlooking disruptive technologies, or neglecting to capitalise on market shift, they struggle to stay competitive and meet customer demands. Despite myriads of innovation scouts in organisations, the focus is still too often on the technologies themselves. Organisations overlook and fail to understand the underlying patient needs that must inform a functional business model. Consequently, it becomes iterative, within the innovation strategy, to consider which business goals and models of innovation projects are deemed feasible. By defining upfront desired models, organisations can better prioritise their innovation initiatives and ensure they are driving towards the right objectives. For instance, organisations should think early whether their product innovation projects should follow direct-to-consumer, B2B, or reimbursement pathways – or only follow indirect business models. The same is true for in-house initiatives: should projects increase top-line growth or reduce costs? By considering the business perspective early on, innovation efforts and resources can be shaped and optimised in a way that aligns with the overarching strategy, minimising the risk of investing in projects that don’t generate the desired business impact. A lack of focus A lack of focus prevents business impact Without a comprehensive framework in place, digital innovation efforts lack direction and focus. This can lead to ad hoc, siloed initiatives, conflicting priorities, and a lack of synergy among projects. Therefore, it is crucial to integrate digital innovation in the established business of the organisation. As an example, digital health services need to be integrated in the brand strategy and brand plan. They should not be considered a 'nice-to-have' add-on which are the first projects to be de-prioritisation when budget cuts are made. Anchoring digital innovation in the established business leverages synergies among initiatives, streamlines decision making processes, and makes it possible to allocate the necessary resources. This alignment ensures that digital innovation efforts are directly linked to the organisation’s overall objective, enabling more focused and impactful approach. A lack of senior buy-in A lack of senior buy-in prevents long-term gains A lack of buy-in from senior management for digital innovation initiatives leads to superficial implementation, inadequate planning, and wasted time, effort, and financial resources. Failing to plan ahead and create long-term, sustainable solutions leads to a cycle of constant adaptations and reactive responses rather than establishing a solid foundation for continuous innovation. Without planning ahead, organisations struggle to adapt to evolving market dynamics and face challenges in maintaining a sustainable competitive edge. Addressing these challenges requires not only a strategic mindset but also a cultural change within organisations. This involves fostering a culture that values innovation, encourages cross-functional collaboration, and promotes the integration of innovative thinking into everyday operations. Poor communication Poor communication impedes productivity and employee satisfaction Confusion and frustration among product owners or idea champions involved in digital innovation initiatives can be the result of a fractured strategic plan. Without clear guidelines for the strategic focus and underlying process in terms of selection criteria, decision committees, and business KPIs, employees become increasingly frustrated, impacting their productivity and overall commitment to driving innovation within the organisation. Hence, high transparency and continuous support and communication by the core innovation team is crucial to provide guidance for ideation champions and prevent disappointment of not matching expectations. As we’ve explored, digital innovation can meet severe challenges without a comprehensive and strategic management system in place. The main impact is caused by superficial implementation and lack of foresight in creating long-term and sustainable solutions. The consequences are significant for every company and its success in this industry. To navigate these challenges effectively, it is crucial to understand the concept of innovation management. By establishing an effective framework, companies can better target their resources, develop projects more efficiently, and overcome the pitfalls that arise during the process if executed poorly. Harness existing guidelines around innovation management There seems to be a generally accepted misconception that 'innovation' is per se a mysterious force which is unforeseeable and therefore cannot be managed. In strict contrast to this, innovation management approaches exist and are not new concepts at all. Over the last decades, best practices and approaches for innovation management have been established and refined. This evolution is evident in the development of a standardised approach, such as the international standards on innovation management, which capture the collective knowledge of managing innovation effectively (see: ISO 56002). At Zühlke, we’ve long recognised the importance of embracing these principles and enriching them with real-world learnings from the more than 10,000 innovation initiatives we’ve delivered. To that end, we’ve developed a framework that combines the strengths of the ISO standard with our insights and understanding of the digital innovation management landscape. Our framework is designed to be simple, comprehensive, and highly practical. It gives your pharma organisation a clearly structured approach to managing innovation projects, empowering them to navigate the complexities and challenges of the digital era successfully, Prime your digital initiatives for success with our innovation management framework At Zühlke, we’ve been helping pharma organisation cement innovation management practices with a proven framework for executing faster, improving transparency, and accelerating time to market. Let's take a look at the five dimensions... Vision strategy Offer services Organisation processes Methods tools Partners ecosystems Vision & Strategy The first and most important dimension defines the underlying vision, mission, and strategic focus of the chosen innovation approach. It is crucial to establish a clear vision and value proposition of the endeavour and set specific strategic guidelines that help finding the right way through the innovation jungle. It is fundamental to align the innovation strategy closely with the overall business strategy and goals. Too often, digital health strategies are siloed and not integrated into existing 'core business' strategies. Key areas to define here include targeted markets and regions, therapeutic areas, intended use, associated medical device classes, and strategic fit to the drug pipeline. Our recommendation here is to follow a rolling strategy process where a strategy is defined rather fast and is then regularly adapted based on new learnings. This is far more impactful than a multi-year strategising process that doesn’t account for real-world feedback and developments. Offer & Service The ‘Offer and services’ layer of our framework focuses on transforming innovation outputs into valuable offerings for customers. Here, innovation areas are defined as projects to be executed. Hence, this dimension highlights the importance of translating innovative ideas into marketable products or services that resonate with their target audience. If your organisation genuinely aspires to become patient- or user-centered, you should start by analysing the patient journey and user needs. Your organisation's goals should then be mapped against these user needs to prioritise initiatives. Organisation & Processes This layer encompasses the establishment of an innovation team, the innovation process itself, and the implementation of gates, committees, and criteria to evaluate innovation projects. In this context, forming cross-functional innovation teams, defining easy to understand and MECE roles, and establishing measures to track progress and success are essential. An innovation process itself is not sufficient to execute innovation projects. You need to adapt supporting processes, including contracting with HCPs and patients, social media guidelines, innovation budgeting, invoice procedures, and IT infrastructure accessibility. Remember, if your budget approval process and payment schedule take too long, any partners and startups you’re collaborating with might go bankrupt before the first prototype. Methods & Tools To maximise the effectiveness of innovation projects, organisations should create a method portfolio that encompasses a range of innovation techniques and approaches. Utilising innovation software can streamline and enhance innovation processes. Additionally, ensuring that employees have the necessary skills and competencies to utilise these methods and tools is essential. This dimension requires the implementation of design thinking methodologies, utilising rapid prototyping and validation techniques, and understanding data analytics for informed decision-making. Importantly, methods go far beyond running a design thinking sprint only. Innovation champions need to develop capabilities spanning innovation management, technology, regulation, and the relevant therapeutic area. This is by far not a trivial task and requires close support and collaboration with multiple domain experts. Partners & Ecosystem Collaboration is key to digital innovation, but partnerships create additional complexities and need to be managed carefully to create value for all parties. From the outset, the right collaboration archetypes should be considered, such as strategic partnerships, joint ventures or M&A, as well as open innovation initiatives. Then, the already established landscape of collaboration partners should be evaluated based on clear criteria. This often includes research institutions, patient advocacy groups, and HCP KOLs. Setting partnership goals and clarify the available resources and shared value exchange is key. Additional partners in digital innovation include startups, technology experts, (MedTech) regulatory experts as well as digital health policy makers. In Germany, collaborations with innovation hubs are currently a common approach for startup scouting and engagement. By analysing the hub landscape, you can assess the value propositions these hubs offer to ensure the optimal fit with your organisation's needs. Ideas are easy but execution is everything Once you’ve established an innovation management framework, the real fun begins. While various approaches across the five dimensions may have been outlined and aligned within the organisation, the questions remains whether these are actively integrated into daily operations and in alignment with key stakeholders. The introduction of an innovation management framework will affect employees, with new tasks and a whole new set of skills to learn, not to mention fundamental changes in ways of working. This can create fear and trust issues that could impede your goals. This is why innovation management should be seen and managed as a continuous change journey – similar to digital transformation programmes executed in most organisations, as digital transformation provides the framework for integrating innovations into the fabric of an organisation. It's crucial therefore to constantly, patiently, and closely work with all involved stakeholders, including senior management, innovation scouts, and product and process owners, to ensure a fast understanding of goals and proactive development of the new situation. Only then can the underlying framework realise its real business value and ability to bring innovation projects to life. Tackle digital transformation challenges with innovation management Managing digital innovation poses unique challenges that demand a comprehensive and strategic approach. With a robust innovation framework in place, improvement in output, acceleration of time to market, and translation of digital innovation opportunities into business impact are achievable. If you’re interested in digital innovation management, don’t hesitate to contact us. Get in touch You might also want to check out our related content on: Regulation in healthcare: will AI law impact innovation? Beyond ChatGPT: An Objective Look at Use Cases for Generative AI in Healthcare Software as a Medical Device: key considerations for SaMD success Why Digital Health Platforms are vital for data-driven life sciences and healthcare organizations Contact person for Germany Dr. Stefan Weiß, MBA Principle Business Consultant Dr. Stefan Weiss is Principle Business Innovation Consultant at the Zühlke Group and has a broad background in Neuroscience combined with a profound expertise in economics and innovation management. Before joining Zühlke, Stefan shaped the future of Healthcare and Life Sciences at the Innovation Center of Merck KGaA. He is passionate about the digitalization of the Pharma- and MedTech Industry with innovative solutions and business models by applying his scientific and economic expertise. At Zühlke, he extends technical excellence with domain-specific insights and thereby strengthens the partnerships with Pharma- and MedTech customers Contact stefan.weiss@zuehlke.com +49 89 262 041 401 Your message to us You must have JavaScript enabled to use this form. First Name Surname Email Phone Message Send message Leave this field blank Your message to us Thank you for your message.
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