The Innovation Execution Gap

Piloting to Commercial Outcomes

Intrapreneurship Conference 2014

S.F. Fisher

Why Companies Are Betting Against Big Ideas

(Companies) overinvest in incremental innovation, and

underinvest in innovations that would create "must

haves" …innovations that create real growth.

Why?

-Major innovation has a a long tail

-Being attached to an optimistic forecast that fails to

materialize in less than 5 years is a risky career move

Efficiency Market Creating Sustaining

Frees up Cash

Flow- Most

attractive

Least popular Replacement

Innovation

Aligned with

financial metrics-

denominator

domination

Most capital

intensive on the

balance sheet

No new growth

Calls to Action

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In far too many organizations, the big

breakthroughs happen despite the

company. Successful innovations typically

follow invisible development paths and

require acts of individual heroism or a

heavy dose of serendipity.

The global economy vacillates between signs of

recovery and omens of collapse. Businesses seem

paralyzed. Even though they’re sitting on $2 trillion

in cash, they’re risk-averse, strategically

incremental, and notably lacking in fresh ideas.

We think this stinks. The world needs invention

and daring now more than ever. Now is the time

for audacity, not austerity.

The Biggest Obstacle to Innovation? You.

“When you are leading innovation, the world is anything

but predictable. You are creating something that has

never existed before and so you simply don't know how

the world is going to react. By definition, innovation deals

with the unknown…

And that's why you are the biggest problem when it

comes to innovation. If you keep using prediction

reasoning in situations that are simply not predictable,

you're bound to be disappointed and frustrated.

You need a different way of thinking.”

-http://blogs.hbr.org/, Friday, May 11, 2012

Business Building v. Empire Building

5

Rewire the

System

External Partners-

Demonstrate/Decide Model

SP Leadership

BP Alignment

Portfolio Growth

Governance: Ad Board Sponsors

‘Identify ‘zombies and kill them…few people who have the fortitude to admit

that their (initiative) is the same as someone else’s…hold a celebration and

honor those who do. They’re heroes and should be treated as such.’

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SWAT Team:

We recommend starting

in this focused

way rather than setting

up a large innovation

function, which often

creates work for itself to

justify its existence.

Portfolio Approach:

We do recommend the

capacity to handle at

least two ideas at once,

since they inevitably will

be course correction

and failure

Building a Minimum Viable Innovation

System: The First 90 Days

Who is my Customer?

Internal Stakeholders

External Stakeholders

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How well do you know your company?

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Acquire/Divestiture Strategy

Product Life Cycle Investment Correlation

Innovation Initiatives Tracking

Role of VC/BD/R&D/Innov

ation Teams in Growth Gap Fulfilment

Organization Structure

Sponsors with

insights

J&J Review Yielded 93% accuracy

Confidential – for EES internal use9

Business Sustaining/Disruptive

Incumbent/ New Entrant

Good/Bad RPP Fit

Autonomy Prediction Current Status

Mammotome Disruptive New Entrant Bad Yes Survive Survive

Obtech Sustaining Incumbent Good No Survive Survive

Indigo Sustaining New Entrant Bad No Fail Failed

SurgRx Sustaining Incumbent Good No Survive Survive

Pillcam Disruptive New Entrant Bad No* Fail (at J&J) Fail (in J&J)

Phoenix Sustaining Incumbent Good** ? Survive Survive

LGCP Sustaining Incumbent Good ? Survive Survive

Closure Sustaining Incumbent Good No Survive Survive

Mentor Sustaining Incumbent Bad Yes Survive Survive

Gloster Sustaining*** Incumbent/New Entrant

Good Yes Survive/ (Fail if NE)

Survive

Connor Med Sustaining Incumbent Good Yes**** Survive Survive

Sedasys Disruptive New Entrant Bad Yes (now) Survive Survive

** Phoenix: Margins not there.

If can get there, then integrate

*** Gloster : If shift to primacy as

incumbent, will have a better

probability of survival

Summary Observations:

• Sustaining: 80% of the 15 total businesses

• Incumbency: 60% of the 15 total businesses (53% of which required autonomy)

• From a portfolio perspective, EES appears to be innovating “close to the core.”

What went wrong?

Business Accumen

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Market Selection

Gap Definition

Metric and Milestone Relevance

Ecosystem awareness

Sponsorship based on portfolio

approach

Governance: Communication

Formalized

Business Strategy

What went wrong?

JERUSALEM | Thu Nov 8, 2007 3:17am EST

Nov 8 (Reuters) - Israeli camera-in-a-pill maker Given Imaging Ltd. (GIVN.O)

said on Thursday that a Johnson & Johnson (JNJ.N) company has ended

its agreement to market and sell Given Imaging's PillCam in the United

States. InScope, a division of Ethicon Endo-Surgery Inc., will pay Given

Imaging (GIVN.TA) $7.6 million in fees associated with the termination, the

medical device maker said in a statement.

page 11

BusinessSustaining/Disruptive

Incumbent/New Entrant

Good/Bad Fit

Autonomy PredictionCurrent Status

PillCam Disruptive New Entrant Bad No Fail Fail

Traditional Market IntroductionMoney Lost on R&D Efforts Based on Market

Approach

12

Post Market Introduction/Adoption

HTA = €€€ Payor Negotiations

Market Introduction

Commercial Marketing and Sales

External Stakeholder Strategy

Pre-market

R&D, Quality, Clinical, Regulatory Commercial, Operations

€€

Grassroots Market IntroductionR&D Efforts Enhanced by Market Approach

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Post Market Introduction/Adoption

Grassroots HTA Validation Value Offering RefinementExternal Stakeholder

Leverage

Market Readiness- Pre-Launch

Grassroots HTA External Stakeholder Strategy

Pre-market

R&D, Quality, Clinical, Regulatory Commercial, Operations

How long does disruption take?

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BusinessSustaining/Disruptive

Incumbent/New Entrant

Good/Bad Fit

Autonomy PredictionCurrent Status

Sedasys Disruptive New Entrant Bad Yes (now) Survive Survive

US Launch of SEDASYS® System

Commences

Facilities Begin Using New Technology

During Routine Colonoscopy and EGD

Procedures in Healthy Patients

New Orleans – Oct. 13, 2014

Study Shows Efficacy of Computer

Assisted Sedation System; Feasibility

Study Published in GI Journal

October 01, 2008

Johnson & Johnson acquires Scott Lab, Inc.

2004

Trust Triangles: Communicate Value

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Clear goal

TransparencyPragmatism

Value Capture

ExitScale

Proposed Approach:Catalyst Capabilities, Partners, and Ventures

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• Identify/ Gather capability needs across sectors in J&J (coordinated view, tied to 5-7 yr. stratplans)

Cross Sector

Capabilities Tied to

Strat Plans

• Are we market leading or reacting to stated need?

• Innovation Impact Assessment-portfolio diversification

• different courses of action

Segment

• Prioritize based on criteria regarding sense of urgency and feasibility

Prioritize and Filter

•Lead and Connect

•Advise and Refer

Avenue Exploration

• Advise-current capabilities build-JHI/UHS coordination and regional execution on ICB space

Advise/ Refer

•P44, “guided exploration” of digital health ecosystem/compettitivelandscape

•Direct Connection via networks

•Market appropriate? BI/Analytics readiness/success

Lead / Connect

• Expand: Test further proof points

• Pass back: return to partner-disengage

• Business Build Venture

Define Partner Milestones/Engagement

Terms/Exit Options

Sourcing Innovation: Partners before Purchase

Leverage Buy BuildStep 1: Internal review

Step 1: Partner/feasibility test

Step 1: External

partners review-cheaper faster?

Step 2: External partners

Step 2: feasibility

outcomes to drive

investment/buy decisions

Step 2: Internal build-

process excellence focus

Partner demonstrations in white space, digital areas can help expedite insights, regardless of choice in LBB strategy.

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Growth Gap Alignment

‘One area that absolutely cannot be shortchanged is personnel. If you have no one

fully focused on new growth, you’ve decided not to focus on new growth.’

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