Monthly Archives: May 2012

Every November the Cambridge Healthtech Institute hosts a portfolio management conference for the life sciences industry that spans both operational and strategic portfolio management. We find it to be the best portfolio management conference in the U.S., and to steal a page from movie critics, “If you only go to one portfolio conference this year…” The speakers are very good, the interactive breakout sessions facilitate terrific, focused discussions, and the CHI staff does an excellent job running the conference.

Highlights from the 2011 conference:

• Beau Bush from Johnson & Johnson gave an excellent talk on how portfolio management is playing a growing role in shaping their company’s strategy.
• Grant Morgan from Allergan presented an effort he championed that has successfully aligned future resource needs with their R&D pipeline.
• I spoke about emerging best practices in project valuation and portfolio management, focusing on the trends that enable portfolio groups to impact high-stakes R&D decisions.

Full disclosure: We are a sponsor of this year’s conference, and we will be speaking on “Using Portfolio Management to Effectively Manage (and Not Manage) Innovation.”

We sponsored the 2012 Industrial Research Institute (IRI) Annual Meeting this month, and the primary topic was how to drive innovation in large organizations. These organizations have become large because they’re very good at some “thing”, which for the sake of simplicity we’ll call a core competency. This core competency is typically focused on a particular type of execution: flow manufacturing, deep-water oil extraction, packaged goods marketing, etc. The company’s processes, systems, and people are finely tuned around its core competency, and as a result the company culture has evolved to support it as well.

This evolved culture allows the company to execute on its core competency (hopefully) better than anyone else, with a focus on consistency. Consistency requires control (be it financial, supply chain, quality, etc.), particularly within a global organization. A culture of control is a complete anathema to innovation. Innovation requires creativity, open-mindedness, and the freedom to fail. When a company’s standard management practices are applied to people or departments tasked with innovation, the results are stifling at best and disastrous at worst.

The general consensus at the conference was that the solution is to separate the innovative part of the organization from the rest, precisely to enable it to develop different practices and a different culture. In one of the first talks of the conference, Dave Edwards from Avery Dennison spoke about how his company achieved far better results by separating out the early-stage R&D function and bringing in external managers to run it. His experience was echoed by many others at the conference, and there was a distinct lack of success stories from companies who tried to foster innovation without this separation.