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04 MAY 2019
How a 100000-strong company is relearning how to innovate
by Julian Birkinshaw, Enrique de Diego, Monika Lessl, Henning Trill and Julia Hitzbleck

Innovation in painkillers, polyurethanes, selective herbicides, antibiotics and anticoagulants are among a long list credited to pharma giant Bayer over its 150-year history. It still employs 14,000 people in research and development alone.

However, management has recognised that while this commitment to scientific progress remains essential, it is not enough. The world of life sciences is changing even more rapidly today than in previous generations. Innovation isn’t just about new technologies and new products – it also means developing new services, new business models and entirely new ways of working. Bayer used to see the other big pharma and crop science companies as competitors; now it is Silicon Valley start-ups like Verily and 23&me that are threatening market disruption.

Bayer’s reinvention began five-years-ago, it looked at how to problem solve, how to come up with new ideas and how to drive them forward into services and products. It has rethought and expanded innovation – so that people across the company, in whatever function, can identify and act on opportunities to do things differently. Bayer needed to operate in a more agile way. The pace of change inside the company needs to match the pace of change outside.

Choosing the right innovation model

Delivering an innovation agenda is challenging, more so in a company of 100,000 individuals, and the closer executives looked at models, which had worked elsewhere, the more challenging it looked.

From the start Kemal Malik, Member of the Board of Management with responsibility for innovation, knew the company could not simply replicate a proven solution: “We cannot be like Google, but neither do we want to be. We need to plot our own path.”

Inspired by John Kotter’s dual-operating structure model, an agile network was developed, a volunteer group of many hundred people, still working primarily in their day jobs within the established hierarchy, but with between 5% and 10% of their time devoted to innovation.

A network working on fast-cycle, informal project cutting across the silo-based structure. The agile network has become a spine of innovation ambassadors and coaches running through the entire company, taking on collective responsibility for innovation and transmitting new innovation culture.

To be successful two questions needed to be answered: How to build the network? And what should these innovation roles jobs look like?

A point of view on culture change

One of the first mass-participation initiatives was an online idea forum. Most large companies have tried some version of this, but with mixed outcomes. Bayer’s first effort, Triple-I (Inspiration, Ideas, Innovation) was launched in 2010 but it never really took off – it lacked focus, and no-one seemed to feel any responsibility for following up on ideas.

Learning from those mistakes, WeSolve was launched in 2014, which asked employees to contribute solutions to specific technical or commercial problems, rather than come up with unsolicited ideas. It focused on existing challenges and built a network of 40 WeSolve coaches, people across the company who were excited by the initiative and prepared to devote some discretionary time to the project.

These people helped identify and simplify challenges, so they could be posted on WeSolve and encourage others to contribute. Meetings were held once a year for these coaches, to inspire and involve them further. In year one, WeSolve attracted 1650 contributors, and 23,000 Bayer employees visited the site.

The success of WeSolve was confirmation of the power of an informal network for shifting behaviours in a large company. But it was felt to be just scratching the surface of a bigger change.

An Innovation Committee of 14 top executives was added into the mix, to ensure there was real ownership at the top of the company, with a full-time Innovation Strategy team of five people, orchestrating the portfolio of specific initiatives, or Innovation Enablers, as they came to be called. It was part of a strategy to pick to drive ‘personal activism’.

To incentivise the project, innovation bonuses were considered but it proved impossible to design in a fair way, and, most importantly, it didn’t develop people’s intrinsic interest in making a difference. Instead, a qualitative measure was added to people’s annual performance review (what have you done to support innovation this last year?) and - it provided visibility to senior management.

It was an approach designed to excite and engage people rather than steering them in an overt way. Most employees want to do a good job and want to fit in; therefore, the way they behave on a day-to-day basis is driven largely by the informal stimuli and cues they receive from the people around them.

Therefore, one key priority was to inspire people, using informative and exciting stories of people across the company who had been successful in their innovation endeavours. Based on their experience, many were interested to learn more, so Bayer offered new innovation methodologies like Systematic Inventive Thinking, which fosters creativity and customer-centricity.

Building an agile network

Getting the right body of people to champion innovation across a company the size of Bayer is no easy task. Senior executives may not have time to do the job well, while lower-level employees may lack influence or gravitas. Moreover, you need people with motivation and capability to send the right message, and to devote the necessary amount of time to this discretionary activity.

In early 2016, country and function heads were asked to identify Innovation Ambassadors who would be the central contact for innovation in that country. Initially 80 were appointed, typically functional heads within a country or business unit, people who were enthusiastic about innovation and senior enough to make things happen.

During 2016 and 2017, the Innovation Ambassadors appointed more than 600 innovation coaches (these people stayed in their existing roles, and worked between 5% and 10% on innovation).

So what do the innovation coaches actually do? One popular activity is the fast session – a short, structured workshop to address a specific problem. A manager might be struggling with a poorly-selling product, an overly complex process, or a new digital competitor. The innovation coach would quickly assemble a team of four to six people to address the problem.

After a while, Bayer started counting these activities. More than 1000 fast sessions took place across the company in the last three months of 2017, a level of effort, which has continued through 2018. The fast sessions quickly became the focal activity of the innovation coaches, and doing them helped spread the word about all the other parts of the innovation agenda.

To reinforce the efforts of the innovation coaches –and to deepen their expertise – an advanced course for those who had run at least ten fast sessions was launched. By late 2017, 49 people had completed this additional course.

Extending the agile network

This volunteer army of innovation ambassadors and coaches, were able to make dramatic progress in developing other aspects of Bayer’s innovation agenda.

In 2017 the CATALYST fund was created, it deployed a combination of professional support (using Lean Startup principles) and money to explore larger business opportunities across the company. It sought to further activate the network and foster Innovation projects that would make a real impact.

Within two weeks, 120 specific challenges and opportunities were put forward for consideration. The central team did an initial prioritisation, then the ambassadors voted on the short list. €50,000 was put behind 28 of these challenges, 11 received a further €100,000, and by early 2018 Bayer had three pilots: a new business model in animal healthcare, a digital solution for clinical operations, and a gamified education app.

Knowing that innovation cannot be prescribed, nor delegated, Bayer’s agile network recognises that innovation is everyone’s job, and that it takes resilience and patience to flourish.

Key takeaways

  • Build your own solution, and experiment as you go. Best practices are usually context-specific - there aren’t any ‘hidden secrets’ to innovation.
  • Innovation is a social activity, and connectivity is an asset. Innovation happens in teams, in cross-functional workshops and through many people’s involvement.
  • The dual-speed model needs a new mindset. Fast-cycle work is about experimentation, tolerance of ambiguity, and openness to failure, and these qualities do not come naturally to those who have spent their entire working lives at Bayer. This isn’t a challenge the company has completely resolved. It is still working on defining the right metrics, putting the right leaders in place, and building the necessary level of understanding across the company.
Useful resources:

Business Strategy Review
Business Strategy Review analyses and interprets contemporary research on strategic management and the wider business environment, publishing articles which combine disciplines and cross cultural boundaries. Leading business thinkers from around the world, both academic and managerial, come together in Business Strategy Review to debate current issues and present cutting-edge research and ideas. Visit our InfoCentre or website.

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