​Return on pharmaceutical R&D investment is steadily dropping over the past decade from 10.1 % in 2010 to 1.8 % in 2019. 

Also, cost to bring a new product to market has increased by 67 % since 2010 according to a research study report published by a leading Management Consulting firm. 

This data needs a serious investigation into- How to arrest the ROI drop and more importantly, how to increase pharmaceutical R&D ROI?

A root cause analysis of this problem could show one or many cause(s), for example- low R&D productivity, poor infrastructure, ineffective workflows, inefficient processes, poor decision-making, increased number of generic players, time taken for drug discovery thru product launch in market is higher than planned, higher number of clinical trial failures, changing patient needs, etc.

Regardless of the cause(s) of the problem(s), a sure way to increase ROI is to introduce a culture of continuous improvement in the R&D department later expanding across the entire organization.

There are more than eighteen scientific and proven continuous improvement methodologies which can be implemented in pharma R&Ds and across the organization. Some of the popular ones being Lean Six Sigma, ISO, TRIZ, Hoshin, Kaizen etc. You can know more about different continuous improvement methodologies here.

Note that continuous improvement initiatives must be customized for each company in order for it to be effective. So, a natural question that pops up is- How to start continuous improvement campaign at the R&D workplace? This is a vast topic and can run into several pages, but I shall touch upon it briefly here.

How to start Continuous Improvement campaign in pharma R&D?

Continuous Improvement initiatives must be customized for every company. A continuous improvement technique found successful at company A may not produce equally good results at company B, despite the two companies belonging to the same industry vertical.

The choice of continuous improvement methodology depends on the organizational size, culture, set of problems, product mix, financial status etc. You can know more about how to choose a continuous improvement methodology for your organization here.

Here are 9 easy steps to follow in order to initiate continuous improvement at your R&D site-

1. Customize ROI data for your organization- Plot a graph of return on your R&D investments for the past decade.
2. Map processes. Build Swimlanes.
3. Build strategy road map for your continuous improvement campaign. Identify teams and key players.
4. Conduct a Root Cause Analysis of the ROI data and R&D processes to identify root cause(s) of the problem.
5. Run Kaizen Events to find potential solutions.
6. Apply solutions and monitor results.
7. Standardize processes.
8. Improve continuously.
9. Celebrate success!

Tip: Use appropriate continuous improvement tools judiciously at each of the above steps to take smart decisions from time to time.

​Note that after strategy, a significant success with continuous improvement campaigns is achieved by using the right tool at the right time. There are over hundred proven Continuous Improvement tools to work with. You can check out more on Continuous Improvement tools here.

A PDCA (Plan-Do-Check-Act) cycle is extremely helpful to ensure rapid success with continuous improvement initiatives.

A common question I get while leading continuous improvement projects is- Our company is ISO certified. Do we still need to go for Kaizen?

And my response to that query is- Yes definitely. The reason being ISO methodology focuses on ‘control of processes’ underlying quality and compliance to standards. While Kaizen focuses on ‘improvement of processes’ not just quality processes but ALL processes including technical and business processes.

Having ISO and not running Kaizen along with it is like eating only a part of the pie. In fact, I would say, in order to get the maximum benefits from ISO certification, practice Kaizen.

Just 15 minutes of daily Kaizen brings stupendous rewards. I have a separate blogpost describing difference between ISO and Kaizen. You may want to check it out here.

Kaizen is a Japanese technique of process improvement. Kaizen implementation does not need big budgets and also it is super effective.  You can check more about Kaizen for pharmaceutical, medical device and biotech industries here.
​​
Are you planning to start a culture of Continuous Improvement for your workplace?

This multi-part blog post series presents practical answers to frequently asked questions on improving business entities. 

Its objective is to assist business leaders in these trying times, whether they are learning the basics of continuous improvement, planning their first business improvement project, or evangelizing process-oriented thinking throughout their organization.
​
So let’s get started…

Business process improvement or re-engineering campaigns are broadly classified as - Breakthrough, Streamlined and Continuous improvement.
 
Breakthrough Improvement is a methodology that incorporates vital improvements to the main areas of the business. It is a quicker and more intense method of improvement. It is common for breakthrough improvements to be conducted by a few employees whose purpose is to come up with a new method of problem-solving. It is common for long-lasting and continuous problems to be solved through Breakthrough improvement technique by dedicating time and effort into coming up with a solution for a designated time. Breakthrough improvement has large and obvious advances, but the results can also be extremely varied. A popular example of Breakthrough improvement is Six Sigma methodology.
 
Streamlined Improvement refers to the improvement of a process by reducing and shortening the number of steps in a process in order to lower its intricacy. It is beneficial since it helps cut back on costs, uses time more effectively and efficiently, as well as improves supervisory observance. A popular example of Streamlined improvement methodology is 5S.
 
Continuous Improvement focuses on undergoing constant improvements that take place over time. These increments allow for less disruption to the organization and allow individuals to perform necessary tasks on the agenda in steady and continual stages. Many organizations find that, performing small continual improvements has a profound effect in the long run. A popular example of Continuous improvement methodology is Lean.

Out of the three types of business process improvement, Continuous improvement is often preferred, since the small changes end up adding more 'value' than that of a Breakthrough improvement.

My recommendation is that organizations must invest time in Continuous-Breakthrough improvements (for example Lean Six Sigma) in order to truly excel. Continuous as well as Breakthrough improvement can have a better chance of working properly if-
​

• Both data and facts are used.
• Employees are involved and encouraged to find solutions.
• Methods are established and duly implemented.

 
Both Breakthrough and Continuous improvement methods use PDCA (Plan-Do-Check-Act) sequence for successfully running the process improvement campaigns.
 
Organizations can benefit from using both Continuous and Breakthrough improvement methods. The use of either improvement method depends on the circumstances and the desired outcome. 

Another possibility is for organizations to perform a series of Breakthrough improvements that allow employees, to progressively make continual improvements in their everyday work life. Organizations that choose to implement this method often reach more desirable results than those that choose either Continuous or Breakthrough improvement.

Another important business improvement technique is Kaizen.

Kaizen is a Japanese technique of improvement. Translated, Kaizen means 'make better'. 

Note that, contrary to popular belief, Kaizen is not a type of Continuous improvement technique. Rather, Kaizen creates a culture of continuous improvement. Therefore, if you wish to initiate and sustain continuous improvement at your workplace, then start with Kaizen.

Kaizen is a business process improvement methodology in itself. Kaizen is also an effective change management technique. Therefore, if a company practices Kaizen alone (and doesn't go-in for any Breakthrough, Streamlined or Continuous improvement campaign), yet it will achieve efficient and effective workflows. 

​In fact, I would suggest that if a company doesn't wish to go for any formal process improvement technique due to whatever constraints, be it- limited resources, less number of employees, regulations etc., then go for Kaizen. 

Tip: As it requires minimal cost for implementation (while giving phenomenal returns), Kaizen is especially beneficial for startups.   
​
Moreover, Kaizen can be practiced both by individuals as well as corporates.

Further, Kaizen can be implemented in all types of organizations viz. manufacturing, services, educational institutes, government offices, non-profit associations etc. Kaizen implementation exhibits fastest returns in both big and small organizations (regardless of organization's culture or industry sector).

There are nine types of Kaizen. You can check more about Kaizen here.

Tip: Coupling Kaizen along with Continuous improvement technique such as Lean, augments rewards exponentially.

I shall discuss more FAQs concerning effective & efficient business process improvement in upcoming parts of this blog post series. If you have any such questions about business process design or continuous improvement, please feel free to drop it in the comment section below.

By the way, if you run a company that is facing a challenge to thrive in these difficult times, I would suggest that you please revisit your business processes in order to accelerate growth and bring a quick turnaround. ​

Note that there are over 18 different time-tested process improvement techniques. And one does need to wisely choose when, which and how to apply each of these improvement methodologies to their business.

This multi-part blog article presents practical answers to frequently asked questions on improving business entities. 

Its objective is to assist business leaders in these trying times, whether they are learning the basics of continuous improvement, planning their first business improvement project, or evangelizing process-oriented thinking throughout their organization.
 
A common question faced by me during my practice as a Continuous Improvement Expert is- What is the difference between Business Process Improvement and Business Process Re-engineering? I will answer this question (in FAQ 1), but this and many such common queries drove me towards writing this blog post series...
 
So, let us begin with the first FAQ …

A business process defines the various activities involved in achieving a particular goal. Business processes briefly describe the chain of events that are involved in an activity or a group of activities such as- running a business, manufacturing of products or selling products or services.
 
Business Process Improvement (BPI) and Business Process Re-engineering (BPR) are two widely used terms while attempting to modify business processes in order for organizations to sustain and grow.
 
As the name implies, both BPI and BPR deal with business process modification, however, they are two widely different terms. Allow me to ask few questions to explain these terms:

• Is your process broken?
• Does it have a high impact on your company’s strategic direction?
• Is it antiquated?
• Does it fall far below ‘best-in-class’ or desired ‘state-of-the-art’?

 
If your answer to the above questions is ‘Yes’, then its BPR, meaning- those said processes have to be re-engineered or re-designed.
 
BPR technique assumes that the current process is irrelevant, does not work and therefore needs overhauling completely from A to Zee.
 
For all those business processes that do not need re-engineering, but essentially need modification for benefiting the business, it is BPI - business process improvement.

I shall discuss more FAQs concerning effective & efficient business process improvement in upcoming blog articles. If you have any such questions about business process design or continuous improvement, please feel free to drop it in the comment section below.
 
By the way, if you run a company that is facing a challenge to thrive in these difficult times, I would suggest that you please revisit your business processes in order to accelerate growth and bring a quick turnaround.

Keywords and Tags:
​
#businessprocessimprovement #businessprocessmodification #businessprocessreengineering #PDCAcycle #kaizen #processimprovement #breakthroughimprovement  #streamlinedprocessimprovement #continuousimprovement

Transforming organization in this era of Covid-19 induced crisis features on To-Do list of every business leader. 

In the previous part of this article, I had commented briefly on how product portfolio can facilitate successful business transformations. Further product portfolio is built on four pillars-

1. Company’s definition of a new product.
2. Portfolio project management technique employed.
3. Product development pathway.
4. Marketing & Sales processes abilities to gain market share.

Part 1 of this article covered pillar 1- Company’s definition of a new product, Part 2 covered pillar 2- Portfolio project management technique employed, while Part 3 covered pillar 3- Product development pathways.

In this part, I shall elaborate on pillar 4- Marketing & Sales processes ability to gain market share.
 
The fourth important parameter of building a profitable portfolio is introspecting and assessing your marketing & sales process(es) efficiency and effectiveness.
 
Start by asking questions such as- Where is sales growth coming from? Are sales happening from new products or from new markets or are they happening from growth in existing markets or increase in market share? How do you want your product portfolio to look like in coming 3 to 5 years? What is your historical level of R&D spending as a percentage of sales?
 
Answers to these questions will throw light on your organization’s operational capacity and capability to develop and sell new products.
 
Also, it is vital to establish which products must be developed for self-commercialization and which should be licensed out on fee-for-service basis. Doing this will amplify portfolio’s productivity and profitability.
 
Further, modifying all underlying business processes involved in the sales & marketing of products, by using suitable process improvement techniques will maximize company’s revenue. For example- A struggling pharma company increased 30% of its market share in mere 3 months by implementing Kaizen to its sales and distribution process. Know more about Kaizen for pharmaceuticals here.
 
There are more than eighteen scientific and effective business process improvement methodologies to choose from.
 
For instance, using Lean Kaizen or Agile Kaizen in improvements of processes underlying sales, marketing and distributions functions is a sure and effective way to get fastest and highest ROI.
 
Lean identifies waste and hence improves profit figures. Agile increases quality & speed of product development, while Kaizen improves process efficiency & effectiveness and increases rate of returns.
 
To ensure portfolios are managed to give best rewards, it is vital to prune it regularly. Further advanced analytics may be used to identify optimal combinations of pruning candidates. 

A strategic mix of ‘new’ products is vital for profitable portfolio. Equally important is effective portfolio’s project management process. Kanban integrated with traditional project management techniques bring out the best rewards.
 
Applying Lean, Kaizen and other process improvement techniques to technical and business processes (regardless of industry sector) brings about successful business transformation. And applying Kaizen to sales, marketing and distribution processes augments increase in revenue.
 
Moreover, all three product development pathways that is Incremental change, Me-too and Disruptive development pathways are beneficial for digital products as well as the physical products such as toys, cosmetics, non-medical machinery, chemicals, over-the-counter pharmaceuticals, herbal supplements, consumer health products, telecom, healthcare etc.
 
Equally important is to identify right product candidates from the product mix to develop the line extensions for.
 
Driving process improvement to create incremental changes along the value stream increases market share of existing products. For example, Hoshin integrated with Kaizen may be used for product development processes to improve product features. As Hoshin encourages voice of customer, it brings about customer-centric product development.
 
In fact, one market research study revealed that the built-in kitchen traditional RVs (Recreational Vehicle) provided were going unused. Instead, RV owners relied on outdoor grills. The company therefore developed a slide-out kitchen that was a hit with customers and increased RV sales.
 
With cashflow drying up due to the challenges posed by the pandemic, companies more than ever before need to re-balance their product portfolios and increase efficiency of underlying processes to create value to customer, transform businesses, accelerate growth and generate higher revenues for the organization.

​And, now is the time to get started …

Transforming organization to accelerate growth in this era of Covid-19 induced crisis features on To-Do list of every business leader. 

In the previous parts of this article, I had commented briefly on how product portfolio can facilitate successful business transformations. Further product portfolio is built on four pillars-

1. Company’s definition of a new product.
2. Portfolio project management technique employed.
3. Product development pathway.
4. Marketing & Sales processes abilities to gain market share.

Part 1 of this article covered pillar 1- Company’s definition of a new product, while Part 2 covered pillar 2- Portfolio project management techniques employed.

In this part, I shall elaborate on pillar 3- Development pathway.
​
Broadly, new product development can happen via three development pathways namely-

1. Incremental change.
2. Copy the competitor.
3. Disruptive development.

In Incremental change pathway, product development happens thru adding one or more features on existing products.
 
In this case the companies see opportunity to sell items or services that are fundamentally like what they’re already selling, but with small changes. For example- an additional size of a mobile phone, a lower strength of a medicinal product, a new flavor of a chewing gum or new fragrance of a toothpaste or shampoo etc.

Copy the competitor pathway is also known as ‘Me- too’ or ‘generics’ pathway.

In this case a best-selling product’s features of an innovator company are copied by other players. If the innovator’s product is under patent, the copy-cat product must be developed by circumventing the enforced patents around the product. A point to note is that generics can be launched only after marketing exclusivity of the original product has matured.

​Generic products offer several advantages to the consumer, for example- a generic product is priced significantly lower than the original product price. Generic products are present in all industry sectors.

​The third type of product development happen via disruptive process. In this case companies add entirely new technology to existing products or set up completely new product lines.
 
For example- Apple’s ipod or replacement of meat in frozen meals with plant-based substitutes or a liquid injection offered as a lyophilized powder for reconstitution (to liquid) before administration or drug-products developed via 505 (b)(2) route etc.
 
Underlying this trend is the assumption that companies can exponentially increase customer value by introducing products that match customer’s un-met needs.
 
Incremental change, Me-too and Disruptive development pathways are beneficial both for software as well as physical products, such as- Toys, Cosmetics, Non-medical machinery, Chemicals, Over-the-counter pharmaceuticals, Herbal supplements, Consumer health products, Telecom, Healthcare etc.
 
A point to note is that the rate of adding new features is based on product types. For example- new feature additions are faster for software products than it is for physical products. For example- Social media apps or computer software are tweaked almost every week, which usually occur as auto updates. Such swift changes are unthinkable for physical products be it a machine, chemical, cosmetic or a drug product.
 
However, this can be overcome by focusing on minimum-viable-product design practices and constant iterative improvement, rather than spending years developing a 'perfect' product that could be outdated before it can be launched.
 
So, how can development pathway help transform your business?
 
The Incremental change, Me-too as well as Disruptive development pathways are comprised of several underlying processes.
 
These processes are primarily of two types- Technical processes and business processes. And increase in efficiency and effectiveness of both these types of processes will bring about increase in profit, in turn facilitate business transformation and accelerate growth.

There are more than eighteen scientific and time-tested process improvement methodologies. You can know more about them here.
 
The choice of process improvement methodologies is dependent on multiple factors such as- process type, product type, organizational size etc. 

​Using a combination of 2 or 3 process improvement techniques in strategic ways gives the best and fast ROI.
 
In the next part of this article, I shall discuss the fourth portfolio parameter impacting successful business transformations- Marketing & Sales processes ability to gain market share.
​
By the way, if you run a company that is facing a challenge to thrive in these difficult times, I would suggest that you please revisit your product portfolio in order to bring a quick turnaround.

Transforming organization in this era of Covid-19 induced crisis features on To-Do list of every business leader. 

​In the previous part of this article, I had commented briefly on how product portfolio can facilitate successful business transformations. Further, product portfolio is built on four pillars-

1. Company’s definition of a new product.
2. Portfolio project management technique employed.
3. Product development pathway.
4. Marketing & Sales processes abilities to gain market share.

Part 1 of this article covered pillar 1- Company’s definition of a new product. 

​In this part, I shall elaborate on pillar 2- Portfolio project management technique.

Portfolio project management technique plays the role of a gear in the overall portfolio management. Its function starts right from identifying new products for the portfolio, thru product development & launch and ends after completing post launch product review. Several project management techniques such as- Waterfall, Critical path method (CPM), Event chain methodology (ECM) etc. are being used by companies regularly and they have been effective too.

But in times when a business is going through a cash crunch or market challenges or a pandemic induced crisis, then along with an effective, a super efficient project management technique is needed.

Some of such effective and super efficient project management techniques are- Agile, RACI and Kanban.

​Agile, as the name suggests, improves efficiency of processes underlying project management. This helps with maintaining project’s time-cost-scope balance and products get launched faster. However, Agile technique has few limitations, that is, Agile cant be used in all industry sectors. For example, Agile can’t be implemented in Biopharma, Airline and few other industry sectors. You can read more about Agile here.

RACI is an acronym for Responsible, Accountable, Consulted and Informed. Responsible refers to the individual that is executing the activity. Accountable refers to the person who makes authority decisions and approves work. Consult refers to the individuals that are consulted when activities or decisions are being made or analyzed. Inform refers to the group of people who must be updated on the actions or decisions in a process. 
​
RACI is a beneficial tool for making sure that roles and role responsibilities within a project are clearly defined in its underlying operational process.  Unlike Agile, RACI project management technique can be used by all industry sectors. You can read more about RACI here

​Another important efficient project management technique is Kanban. Kanban is a Japanese process improvement technique.

When Kanban is integrated into the project management process, it augments the process’s efficiency as well as effectiveness. Therefore, Kanban based projects run faster and cheaper when compared to traditional techniques such as Waterfall, CPM, Scrum etc. or for that matter even Agile.

Kanban is a vast topic. If I were to write more about Kanban here, perhaps I shall digress from the spirit of this article. Hence, if you would like to know more about Kanban and how to use it for transforming your business, put a comment below this post and I shall write a separate blogpost on Kanban Project Management.

But I shall write few lines more on Kanban here only to emphasize its importance and benefits in portfolio project management.

Kanban has three striking advantages namely-

1. Kanban can be used in ALL industry sectors.
2. Kanban can be used in small as well as big organizations, as against Agile, which shows implementation challenges in large set-ups.
3. Kanban based project management shows up to 20% savings versus Agile. And this can be augmented further by integrating Kanban with RACI.

Hence, if you wish to develop and launch more products, fast, with less dollar inputs, then Kanban-based portfolio project management is the way to go …

In the upcoming parts of this article, I shall discuss the remaining two portfolio parameters (i.e. product development pathway and sales process ability to gain market share) impacting successful business transformations.

By the way, if you run a company that is facing a challenge to thrive in these difficult times, I would suggest that you please revisit your product portfolio in order to bring a quick turnaround.

Transforming organizations in this era of Covid-19 induced crisis features on 'To-Do' list of every business leader. ​

The magnitude and extent of the transformation task will be different depending on the organization’s size, industry sector, market demographics, product mix etc.

​​Product mix or product portfolio is one of the important parameters impacting successful business transformation. 

In this blog article, I shall briefly touch upon how to bring about business transformation by building a profitable product portfolio.

Simply put, a profitable product portfolio is built on four pillars-

1. Company’s definition of a new product.
2. Portfolio project management technique employed.
3. Product development pathway.
4. Marketing & Sales processes ability to gain market share.

Note that the above four parameters are inter-dependent, meaning any change in one parameter will have a direct synchronistic impact on the other three, which in turn directly impacts revenue gains.

So, without further ado, let us delve into them one-by-one…

1.  Company’s definition of a new product:
The meaning of ‘new’ product is different for different organizations. Even within the same industry sector, what comprises a new product is different for different companies. Therefore, to build a profitable product portfolio, it is vital that each company clearly mentions what comprises a ‘new’ product for that company.

The path to building a successful product portfolio commences with defining what constitutes a ‘new’ product for the organization.

Broadly stating (regardless of industry sector), companies classify a new product into following nine categories-

1. The product has at least one unique selling point (USP) such as- new technology, new use, un-met customer need, better shelf-life etc.
2. Product is handled by a new SKU or has a new bar code.
3. Product is new to the world.
4. Product is new to the company.
5. Product is new to the company’s market.
6. Repositioned product viz. new applications for existing product or re-targeting an old product to a new market.
7. Cost-reduced (existing) product.
8. Improvements & modifications to existing product, including line extensions.
9. Patentable product.

Categories 1 to 8 are pretty much self-explanatory, so I shall head straight to category 9- Patentable product.

A patentable product as the name suggests, is an item that can be patented, where the item can be a product, process or a design.

A likely question is- What’s so special about patentable products? Well, it is special because a patent offers monopoly to the patent owner. The patent term is usually up to 20 years. Also, patented products can get marketing exclusivity from 3 to 20 years depending on product type, industry sector etc.

So, if the marketing exclusivity tenure is same as the patent term, it means that there will be no competitor to worry about for twenty years!

Having said that, it must be noted that once exclusivity term ends, generic competitors can pitch-in. Hence stronger the originator patent, difficult it will be for the generics to enter the market. Further, note that all new products cannot be patented, because patentability is established when a product, process or design meets patent eligibility criteria set out by the Patent Act of the country in which the product is sold.

Therefore, more the number of patented products in your product portfolio, faster & higher will be the ROI.

Moreover, the product portfolio is always a mix, meaning products belonging to two or more of above- referred categories are present in the portfolio. Depending on the category of the ‘new’ product, it will require resource inputs such as- budget, talent pool, development time etc.

Hence, a strategic selection and right mix of new products will determine a business’s resilience to thrive through difficult times. It will also determine the extent of success with business transformation of struggling companies.

Note that, the goal of portfolio management is to reduce complexity and identify product differentiation characteristic which offers ‘value’ to the customer. This is more so when organizations face crisis conditions such as material shortages, delays due to supply chain disruptions, pandemics etc.

By adding the right transformation tools and processes, companies can actively shape a simple, value-based and profitable product portfolio that can both reduce the burden of risk management now and better serve customers once the crisis eases.
​
In the upcoming parts of this article, I shall discuss on the remaining three portfolio parameters impacting successful business transformations and how to go about positively transforming your business.

Keywords and Tags:
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#businesstransformation #businessturnaround #strugglingcompany #sickunit #portfoliomanagement #continuousimprovement #businessprocessimprovement #processreengineering #processimprovement #processefficiencyimprovement #processeffectiveness #transformingorganizations #transformingbusinesses #newproductportfolio #howtodobusinesstransformation #howtoimprovebusinessefficiency