Most executives assume that innovation is just about products. It’s not. Innovation is about creating value. There are plenty of ways to do that without developing new products: Treat customers better, deliver products in a new way, source products differently, or change the sales pipeline.
It’s always eye-opening when I work with manufacturers that only associate innovation with an invention like the iPhone. Nobody ever calls shortening the supply chain innovation, but it’s an important one. Finding a new way to source products, develop a new partnership or use new materials opens up a world of innovation.
The pharmaceutical industry may be missing the boat by failing to use existing products often enough to create positive innovation. New drugs cost millions of dollars to develop. Pharma companies are in the business of saving lives. Drugs are one way to save lives, but there are other avenues. Mechanical devices save lives but also can be pharma focused.
Narrowly defining a business can cause it to become stagnant. Often innovation becomes more available to companies when they redefine themselves with a broader stroke.
Over the years, I’ve worked with pharma clients such as Eli Lilly and Company. The company has consistently formed alliances and partnerships that allow it to develop innovative medicines at lower costs. In the 1980s, we conducted a thought-leadership panel that sparked interest in a new area, infectious diseases.
Former GE chief executive Jack Welch was known for saying his company needed to be No. 1 or No. 2 in key markets. But he changed his tune in the mid-1990s because the focus was too narrow. The new GE limits its total market share in any one segment to 10 percent. The move led to more opportunities in multiple markets and forced the company to be even more aggressive. Successful companies are always looking for the next big thing. Is yours?