Developing an Innovation Ecosystem from Scratch with Sergey Zverev from MSD

We want to be recognizing you for the work that you've done at MSD with the emerging markets in your previous role. And we're really looking forward to hearing your experience. So go ahead, Sergey.

So let me really walk you in the next couple of slides through our innovation journey and what we did in the emerging markets region to create the innovation ecosystem. And really these are the two reasons behind that acronym emeas, which stands for Emerging Markets Innovative Access Studio. The key to reasons that we had in mind when we were creating it in 2020 first was to inspire ideation of commercial driven, but out of the box, not business as usual, but out of the box crazy transformative ideas aimed to broaden access to MSD drugs and vaccines. So that's first. Second is to move fast in the journey from idea generation to business to business project through rapid experimentation approach. And we started the journey early in 2020 and it was a bit weird time because all of us, we moved to homework, right, Because Covid just started. So it was like a virtual undertaking. But we really were very bold with very supportive leadership and some of you brought those ideas at the beginning of our call and we got that sponsorship to get started with the studio, with the MIAs, to start that innovation ecosystem thing and the journey. So why we needed the studio, why we needed that platform, that innovation ecosystem, to rapidly experiment. So here, I guess many of you, many of us, we have faced this situation in our professional life when imagine you have a team that runs and starts a project. The team runs that project for maybe a couple of months, in some cases for a couple of years, and then the team fails. The problem is not that the team fails the problem or the challenge is sometimes we don't even understand the reasons why we fail, right? And consciously and unconsciously we all try to avoid failures, right? But failures is exactly what is needed to success, especially to innovate, right? So with that mindset, basically, and here what you see on this slide, that was the code of the corporate leader of the president of the emerging market regions. It reflects that mindset very well. You need to start collecting thousands of ideas, then rapidly test them, learn on them within the next five years, and then in the end, maybe 50 of them, those 50 business models will be okay, five will be good ones and maybe one and two will eventually become our future business models. So that was really, really the purpose and mindset that we got started in 2020. How did we start? So first it was about the team, really. Just build the team, have a team of dedicated 100% to that assignment portfolio managers that work in that virtual studio. And we really what we did, we just called for ideas. So we came to many markets within emerging markets region and we asked just share your innovative ideas for those therapeutical areas, how we could do better, how we can increase access, but not business as usual, but try to bring transformative, innovative ideas. And then those portfolio managers that we put into the studio at the central level in the emerging markets region, they were forming the innovation swat teams. This is what you can see on that slide. So basically the country team is bringing the idea together with the country team and then the portfolio manager joins the team and runs the experimentation journey in the agile way. In that journey we also developed and started using different experimentation tools. So you can see here a business canvas model value proposition canvas. But really what's important is that we built an innovation framework which actually facilitates the experimentation as an end to end process. Starting with discovery sprint, moving to validation and then to the acceleration sprint. And what's really important that with every move basically you de risk your key assumptions, your key hypothesis and that's the only condition to move to the next sprint. Other if you don't do it, you'll never move the key idea, then you'll be killed or retired fast. So the other one is innovation coaches. So what we did as well we embedded external innovation coaches into the SWOT teams and that was another game changers, at least as I think about that, because it brought lots of objectivity and they helped us to challenge the status quo and our assumptions and evidence on a rigorous basis. So the other big thing that we also prioritize was about governance. So if you really want to move fast with the innovation, you need to be simple, nimble and very agile. So it's all about fewer, less layers in the decision making process. So just to give you an example, so when the countries the market submit their innovative ideas to the studio, we try to remove many layers. So if you have a bright idea, just go and use the digital template to submit it. When we reviewed that idea in the studio, we also had few layers just to approve which ideas we take to the studio. And then when we're making decision on the sprints and on the graduation back to the countries, we also were trying to avoid as many as layers as possible. In the end we were able in the virtual framework to launch a cohort one for emea. So we had nine projects to get started with nine teams, nine agile teams working in the studio. But what we also tried to do in Parallel and you can see we called it learning box. We tried to collect all the learnings not only from ideas, from those experimentations, but also around innovation, from framework, around the tools, around the way we are working, around the way we are communicating, just to improve that, to adjust and to pivot moving to this year or to cohort two. So what innovation ecosystem work did we prioritize in this first year? So some of those elements you have seen on the previous slide. But I want to emphasize three key components. One is portfolio and framework. It's really all about creating a funnel of innovative ideas coming from employees and from outside that we put into that framework. That's first. Second is to basically to adjust and to make IMEUS the studio operational, that everyone knows about that, that it has leadership, it has the right governance that I just talked about. So that's what we call innovation programs. And then the last one, it's about exploration culture. So where we are right now, what are the key blockers? So some of the things Fred described in his introduction. So what are these blockers and where we need to put focus to build an innovation friendly culture to help us, to help us run smoothly our experimentation journeys. So a couple of details on each of those three components. So EMEA's emerging markets innovative Access Studio is an example of entrepreneurship program. So what that means that we really call very broadly for ideas to all employees who work in emerging markets regions. There's thousands of people, more than 50 markets and 50 subsidiaries in MSD emerging markets. And a couple times per year we ask just share your ideas using the innovation guidance, some criteria. And of course the key here was as well the way you drive that communication campaign to explain exactly what we need in the studio and what the subsidiaries can get out of it, because they will spend their time on it. Right? So if you are a product manager, if you are policy, government affairs manager, if you commit and send your idea to the studio, you will automatically commit to spend around 20, 30% minimum at the earliest stages, at the earliest sprints on that work. So that was really necessary. And we tried to explain that very well in all the communications that we were making to the subsidiaries on the next one, as I said, it was really about building that funnel. So as you can see, we got in one year more than 180 out of the box commercial models, commercial business models. Out of them we selected using the innovation guidance, around 30 ideas, around 13 innovative ideas. And then because we prioritized the innovation framework, we really started experimenting them in those three agile sprints here you can see that some of them, it's not on that slide, but basically many of the ideas out of those 30, maybe 90%, in the end they just get out at the first sprint because you really go and check first, do our customers want the value proposition that we've built and if it's not the case, you just kill, you just retire the idea from the studio. So we were very brutal on that one, on that criteria and on that future. So some of them survived and made it to validation stage, validation sprint and very few of them got into the acceleration sprint and some finally moved to the exploit part of the organization, back to the countries. So it's all about portfolio management and enhancing the framework to accelerate rapid experimentation. And third one, it's about culture assessment. So what culture we have, do we have innovation friendly culture or not? Because sometimes we just rush into the business without doing that scam. But I really, from my experience, it was critically important to do that. And we made the survey across many employees when we started in 2020 just to check what is the baseline, what we need to work on to improve. And many of the things are no brainers by the way, for many companies, for many multinational companies, we need to be more nimble, agile, enhance our processes to foster rapid experimentation. But for us it was a good baseline. Okay, let's work on some of those blockers and then let's strengthen the areas that are really working well just to make the whole process work. And then it just became a routine practice, just doing that on the regular one year basis. So in the end, to conclude really three things. One, and what we've managed to achieve in one year, a volume of ideas submitted and shared, ideated by the countries, by the subsidiaries and sent to the studio. We had more than 30 discoveries so far per year. In terms of type of innovation, I would say that some of the ideas are truly transformative, some are less, but I mean the teams are getting there. Maybe the one thing that we could further improve is the speed because here it's really very, very important to move really fast in that experimentation journey. In terms of the structure, I mentioned that the key idea was to keep EMEAS at the central level in the region. Ideas are submitted using bottom up approach, but we also experimented with the top down approach where ideas have been generated at the headquarters level. And then I incorporated in the studio just to test and to test them in a rapid way. And last but not least, it's about culture, right? That I mentioned, it's not just culture Assessment in the end of the day it was about cultural change, right? How we can on top of doing things as business as usual, that maybe it will be 80, 90% of what we are doing can also have that time for innovation and for experimentation.

Sergei, based on your experience, what is different in leading innovation compared to other leadership roles you've had?

Thanks, Fred. I think first of all you really start looking differently at the way you ideate projects, bring together the teams and then run them. So I started using more. I would even answer that one, saying what I've learned and I'm using right now in my new roles first is thinking through assumptions or through hypothesis. So whenever you start a new venture, you think about what are your key 10 assumptions, what are the most critical ones, what are the easiest and fastest to check. So in that way you don't need really to take longer time to do a thing. You just really go very quickly, right, for the iteration process. And the second one, I think it's about falling in love in your babies. I think in previous roles I had maybe more tendency to fall in love in my babies and the projects and the initiatives. I think after that role, after that experience, I mean, I try to be more objective. I still have maybe some of them that we all fall in love, but I always try to check myself and just to challenge the start to school.

I love that because we always use experimentation in that innovation process to build, you know, products, services or new businesses. But when you approach it, like you just said, it's also you can use the same process to unlock personal growth. Like if you start challenging the assumptions in the way you work your new role, etc. Then it also unlocks things outside of product services and business model in other areas as well. One more question because I want to know more about this experience you've had with em. Yes. What were the biggest surprises for you in that role?

Let me give you a quick example of the projects that we had in the studio. There was one project that we were able to retire from the studio in six weeks. For me it was really a big surprise because again typically those things in the normal days maybe we, we would have run like in six months right here we were able to retire this in six weeks with very structured learnings. Why it didn't work, I think that's why that was the biggest surprise. And the other one a bit different when we retired the idea because it didn't work, because for different reasons was like for feasibility, mostly reasons. But then the team, the country team, they pivoted that idea, they found the new value proposition, they prototyped it, they tested it themselves using the assumptions driven approach and they got it. Eventually they pivoted it and they transformed and make it a good successful project for the company.

The last question I wanted to ask you on this experience as well is, I mean, you've moved on to another role, as Nick said in the introduction. But if you had to give advice to your successor or to someone who's going to take a leadership position in corporate innovation, what would be that advice? What would you advise them?

One of the crucial factors is to have a strong team of thinkers who think in innovative ways and want to improve the way companies work or whether they have a new startup, they want to do things differently. Secondly, it's about having endorsement and support from the leadership, so it's sponsorship from the leadership and alignment on the strategy. And the third one is really just go and test it. Use the assumptions driven approach and test and learn for what you are doing in your journey. Just don't try to do everything in one day. Use the MVP approach and just try with a few ideas, test them, then scale and move step by step. Also improving your innovation framework because every journey is unique, so all companies and contexts are different.

Sergey, can you just remind us what the EMEA stands for?

Emerging Markets Innovative Access Studio. So it's almost like Commercial Innovation Studio. The idea was to name it Access because an innovative. Because we wanted to broaden access to drive access in a more innovative way. It was like six, eight people, like portfolio managers. So it's not like a big organization that someone could imagine.

Brilliant. And this is what we mean because it's about developing an innovation ecosystem. Right. And it's still. That's what you were doing developing it from the very beginning. So that's what we're talking about.

Yeah, so it's really not needed to have at the central, at the headquarters level, many, many people. What's really important is to develop that culture. So you basically have those innovators in the country in the subsidiaries.

The next part is Hot or Not. And this is very much inspired by a video shared by Gary Vaynerchuk which is called Underrated or Overrated. And this is where I share a concept. And then Fred, you're going to put forward your perspective and Sergey, you'll put forward yours. And of course the audience, we invite you to vote of whether you think 20% time is hot or not. Sergey, would you like to go first on this? What's your perspective?

I definitely Think it's not. I think it should be 100% like innovation focused role, especially if you put it in the center the way we did it.

We wanted some controversy, but I'm going to agree here. Not hot. And Sergey mentioned dedicated people in the innovation team. But if we think about intrapreneurs as well, 20% time is really not a lot. And typically when we see in organization line managers when their staff join an intrapreneurship program and they're committed 20%, what they hear is it's immaterial. They'll do it in the evening, on the weekend, etc. And it ends up being a difficult experience for the entrepreneurs. And I think it would be better. 100% is always the ideal situation, but if we move even to something more like 40%, it forces everyone to get organized for the innovation project. 20%, there's too much of a risk that it sounds like weekend and evening works.

So the next one is bottom up.

Innovation for me I would say not. And the reason is that speaking of things that are hot, we're going to have to light a lot of fire. So we need bottom up, we need top down, we need left, we need right, we need inside, we need outside, we need efficiency, innovation, sustaining innovation, transformative innovation. We need all of it, not only bottom up, but including bottom up of course.

So my first one was really like super, super hot. But then listening to Fred, I really tend to agree that it's somewhere in the middle. So I really agree with what the group, the participants voted because it's great to have button up because you're going to get a volume right of creative ideas. But then it's also good to bring outside in and other views from outside of the organization from what really Fred mentioned. So I am more like leaning towards something in the middle. Nick.

Interesting. And I think the audience is definitely leaning towards hotter rather than not than compared to the 20% time. So interesting there. We'll move on to the last one. Innovation coaches, hot or not, I'll say hot.

Especially at the beginning, you know, especially if you want to develop entrepreneurship. Your intrapreneurs, especially their first time on such a project, they're going to need a lot of coaching and it might get less important over time or when you use different approaches to innovation. But at the very beginning and for entrepreneurship it's super important to have innovation coaches.

I tend to agree on that one. I wanted to argue a little bit but I mean especially at the beginning, I think it's very important just to bring the external perspective to challenge the status quo, just to help to establish the innovation practice. So once you have it in house, then you can decide. But I think in the end of the day, it's just my personal thinking, you will always benefit having some external perspective on what we are doing, whether which ideas you are putting in the system, which ones you are graduating. So more like hot.

That's it. And I think there's agreement with the audience on this one as well. So it's been a very uncontroversial hot or not, but I think still fun and a good discussion all the same. We're moving on to a little bit of an opportunity to reflect ourselves on innovation and how we can help make it happen and develop an ecosystem. And so we've got a couple of questions that Fred's going to lead, but Sergey, you feel free to jump in if you've got your responses as well.

Here. We wanted to talk about rewards and incentives because very often it's an area when we run the culture Readiness assessment using that tool that we showed you. And it went really fast. So I'm not sure you saw the. The assessment that Sergei showed, but, you know, rewards and incentive was one of the points more towards the left, one of the lowest score. And that's typical of what we see in many organizations. So first question we wanted to ask you is what rewards and incentives are there for innovation in your organization, if any?

So we've got recognition, promotion, profit sharing. That's excellent. That's a good start already. But then now we've gone the opposite way and we've said none. At times, even being part of innovation could be career suicide. There you go. That's sad. That is sad. But it's something that we hear quite a lot. The next one, a public recognition and the shield for most innovative projects. So public recognition is good. Yeah, and a shield, I suppose that's pretty positive. So we've got really good, not so good and pretty good in a who in a what time for innovation. That's helpful. At least there's some time recognition and awards. So those are some good things. What do you think about that?

I think, you know, that's very, very aligned with what we see and what we hear a lot. If we think about a program like the one Sergey was talk about, like an intrapreneurship program, basically you want to tap into intrinsic motivators of people. So giving them time, you know, giving them autonomy is often enough to get them started. And then, you know, if they take, if they Take risks and if they explore those ideas and sometimes it's uncomfortable, etc. Of course you want to give them some public recognition and usually recognition from senior leaders is what is the most appreciated. But you don't need equities, you don't need big bonuses at that time. For entrepreneurs at the beginning is what we see a lot.

I just want to comment on that post that at times even being part of innovation can be career suicide. And I really agree with that because innovation is really an overused word like today. Right. So the question is, the key is that innovation and that work that we are doing has to be very pragmatic and focused on the result. Right. You can be friendly, that's great. But at the end of the day it should be, I mean, driven by some objective and really be specific and pragmatic rather than just some fancy innovation stuff. Right. That you are doing without real purpose and objective. And I agree with other comments. I mean I have the same feeling that if you are really, if you want to incentivize, you just need to give that freedom, empowerment and then it's a great career opportunity, especially for those folks working at the corporate companies in the corporate world.

Brilliant. Thank you very much, Sergey. That's a really good point added on there as well. We've got a point from Daniel Alice that says absolutely, there must be a sense of autonomy and psychological safety in the organization to enhance testing new ideas. So that's a nice point there as well. But the first question was what rewards and incentives are there for innovation in your organization? But we've got a part two, Fred. Right?

Yes. So part two is around what rewards and incentives would you like to see for innovation in your organization? Things that maybe are not there yet but you think would make a difference in attracting people to those kind of careers.

We've got books, that's a good start. Hey, there's a great series from Strategize that you should check out if you haven't already. That could help. So books I think is a good, is not a bad start a career path. And Sergey, I think that goes on to a little bit what you were adding on to the last point. Right. We've got budget for taking the project further and career opportunities. I think budget is huge. Right. And time to be able to get on with those projects. That can be the thing. And making sure that the company's set up to be able to do that. What else? Anyone got any other ideas? Academic incentives. Oh, that's an interesting one. Be interested to know A little bit more about that. I don't know if someone can type in the chat or can add a little bit more on that one. That one's quite interesting. Education.

Yeah. While we're waiting for other answers, what I like to differentiating in that area is often, you know, innovation as a project and innovation as a career. So if you're doing innovation as a project and in your mind it's clear that it has a beginning and an end. For instance, intrapreneurship that we talked a lot about today, then tapping into intrinsic motivators is enough in the freedom, the autonomy, the training for people to develop a sense of mastery that's going to and then the recognition by leaders that that's going to be often enough. Now when we move to innovation as a carrier, when you're going to create growth for your organization on a regular basis, then that's when you know the pat on the back might not be enough. And that's where things like, you know, having a career path and you know, on top of the recognition as well, the financial rewards that are aligned with what you contribute becomes important. But not in all situations, but more for this innovation as a career.

And we've got a few more that have come in so to lead the project. Next one recognition, career and money. So all types of incentives as in exploit but fitted to explore. I like that. Maybe you could give some more examples as well. But I like the concept of that.

Well, one thing that I don't know, I mean I don't know what's behind that comment but one thing that's important in this fit to explore is the idea that Sergei was talking about around failure. And failure is part of the road to success. You're going to fail in a lot of ideas. To find out of the thousand ideas, the one future business model as there was on this slide and for that you need to be able to find a way that failure is not traumatic in your organization and that you can have some rewards and incentive not only for the one team that's going to succeed in the end, that's going to create that successful business, but at the portfolio level, rewards for all the teams that contributed and that makes a big.

Difference as well to build on that one and on the last comment as well, I think all companies are doing pretty well in terms of having incentives for this exploit part of portfolio because this is more conventional I would say parts of the business. I mean the question is how fast we can especially if the company is building innovation ecosystem. Right. How we can build those incentives. And I'm not talking only about monetary ones, which are definitely important. But then in this explore part, right, incentivizing failures and giving recognition to the teams, giving them a clear career path because you might be spending a couple of years innovation, maybe then you will move more to the exploit part of the organization, which is absolutely okay. I mean, but just to have that clarity how you're moving across career ladder, corporate ladder, I think it's very, very important.

Another one here, top management not seeing failure as bad when it comes to innovation. That's huge, right?

Surely.

Did you find that you had support, good support, Sergey, when you were running this?

Yeah, I mean, 100%. Right. So, and this is where I started about having supportive leadership that really. And in our case, I mean, we were really driven by failures. It was like a big, big motto like go and fail, fail, fail. Because you saw the quality you need to fail like thousands of times to get one really transformative business model. So we would like it to have that supportive leadership.

I just want to say as well that, I mean, this is obvious, we don't even talk about it. But in the case of Sergey, what you said at the beginning, I mean, you had this role to set up the studio and then you moved on, you had this promotion internally. And that's also something that sends a very strong signal that in msd, taking risk and being part of innovation is not risky. That also can lead to some success stories and career promotions, et cetera. That also sends a very strong signal.

We've got the virtual Boot Camp which is coming up next year. If you'd like to learn more about how you can become an innovation coach, really learn, strategize the secrets. This is a great way. This is a great thing to do. So you can sign up for that or register to apply for it@stragizer.com Bootcamp and there is a Strategizer Coffee Chat Coaches Bootcamp 2022 talking about that that you can register for as well on the website. So if you go to there and then you click in the bottom on webinars strategizer.com webinars you'll be able to register that. Register for that. If you want more info on the boot Camp, that's pretty much it for me and from the team. So I don't know. Frederick, Sergei, is there anything you'd like to say to kind of round off the session?

No, just from my end, really. Thank you. Thank you, Fred. Thank you, Nico, for very interesting conversation. It's a privilege to be here. Thanks thanks once again for inviting. It's a bit pity that we are doing this virtually. I really hope that at some point we will do this in person as well. Maybe next year. But again, thanks for inviting and just we'll be in touch.

Thanks Sergey for sharing your lessons learned and your adventure. I always had this dream of bringing together this community of people who are pushing the agenda further on corporate innovation and using innovation to transform organizations. So yeah, that's great that we can connect to people like you who are doing this work. So thanks for sharing your story and.

Thanks to all participants for their questions and interest to that innovation topic.

Absolutely. Thank you everyone. If you've joined from Europe, I hope you have a wonderful afternoon. If you haven't had lunch, I hope you enjoy. If you're joining from the Americas, I can see that we've got a few from Colombia and Brazil. I hope you have a wonderful breakfast and rest of your day. And if you're joining from the rest of the world, well have a great evening and night. So take care everybody and we look forward to seeing you in December. On the eigth we'll have another webinar. So we look forward to seeing you there. So take care everybody and see you later. Goodbye.