Magazine Article | August 1, 2015

How Bayer Relieved My Innovation Neurosis

Source: Life Science Leader

By Louis Garguilo, Chief Editor, Outsourced Pharma
Follow Me On Twitter @Louis_Garguilo

Among her many positive attributes, Dr. Monika Lessl is a good sport. I know because she graciously accepted to enter – at least for the duration of our interview – my neurosis regarding the word “innovation.”

This ailment intensified at BIO 2015 in Philadelphia, where Lessl and I sat down to talk. Others devoting a career to innovation — and holding a title like VP, Head of Innovation Strategy at a renowned company like Bayer AG — would walk away from a conversation that starts with: “Innovation is meaningless in the bio and pharma industries. The word itself drives me crazy.” Lessl didn’t leave, though. Instead, by meticulously imbuing the word with context and revealing the meaningful way Bayer has woven innovation into the entire company, she walked me through my difficulties with the word. Here’s how our session unfolded.

We Breathe … Air!
This issue with innovation started a few years ago, rising to a jarring crescendo at the BIO International Convention, where at virtually every other step, every presentation, booth, and marketing material, and in each conversation, someone or some company was better or more worthwhile for having appended innovation to their activities. Nary a soul performs boring R&D; all innovate technology, platforms, and programs. Passé corporate culture is replaced by an innovative environment. Worn-out relationships must become innovative partnerships. There is no more naked planning; it is all about innovative strategies. Please … make them stop.

"Innovative leadership is different than leadership. The first is both a product of a purposely created environment and the cause to make ideas happen."

In my despair, I ask Lessl if this incessant invocation of innovation doesn’t start to wither on the vine of meaning. Hasn’t it become as innocuous as saying, “We don’t just breathe … we breathe air!”?

“Yes, there is this added challenge to be meaningful because everybody is now talking about innovation,” she replies. “The key is in the actual doing. Innovation is defined by the actions we take.” Lessl says Bayer has constructed a model for action that both enables and defines innovation for its employees and external collaborators. But before we go there, I lament how years ago there was “creation,” a term of biblical — and great scientific — proportion: From nothing comes something. Now that’s exciting. Today, though, we want “innovation” to mean more than just some alteration of that which already exists. “On the first day, he or she … innovated?” When did innovation crush creation and relegate it to second fiddle in the biotechnology and pharmaceutical industries? Why isn’t Lessl titled Head of Creation?

We laugh at my insanity. Then Lessl says more seriously, “Creation — creativity — is of course still absolutely crucial. But there is a real point here. We’ve learned creation is not enough. Create, and then turn that into a product that serves patients, customers, and farmers for agriculture. People do mix the two up and say that innovation is simply an ideation process. It is not true. The idea is critical, but the translation to bring it forward is where we can often fail. And it requires passion, and persistently great leadership, to get the initial idea to a product of value and out to the market. So, for example, innovative leadership is different than leadership. The first is both a product of a purposely created environment and the cause to make ideas happen.”

There’s A Creation For That
Is creation, then, a done deal? Has the industry mastered the art of coming up with original ideas and novel approaches, and so now the focus must be on the culture to move them forward? People used to care more for the epiphanies; now it’s all about the environment within which they are born.

Lessl, who joined Bayer HealthCare in 2007 and has had the word innovation in her title from that start and in each successive promotion — the first role was Director, Alliance Management Global Innovation Sourcing — is not new to this type of discourse. Much of what has developed around the idea of innovation at Bayer stems from her earlier experiences there and even before she joined the company, including when she served as CEO of the Ernst Schering Foundation. She originally joined Schering AG in 1994 and moved to Bayer when Schering was acquired in 2007. She has published articles with titles such as: Interactive Added Value: New Innovation Models Between Industry and Science and Collaborative Innovation — Regaining the Edge in Drug Discovery.

Regarding the question leading this section (i.e., Have we mastered the art of coming up with new ideas?) and the current focus on innovation, Lessl sees the process of collaborative thinking as the connecting thread. “If you want to be successful, you have to do both the creation and the translation, right?” she asks. “Fundamental to the creation part is thinking. Creativity is a form of thinking that is then enhanced and actually continued within an innovative culture. At Bayer, we focus on integration as a cross-functional approach to collaborative thinking. Different perspectives, opinions, and expertise help us come up with new ideas, new ways to move those ideas to development, and ultimately a commercial product.”

Lessl interjects that Bayer has been a successful company for more than 150 years, but “we have to constantly work on developing new processes and capabilities to stay successful. This is what we are doing and what we continue to explore throughout the organization, including our 4 Cs Model of Innovation.”

The 4 Cs Of Innovation
Lessl explains this as a holistic model for people and their ideas. The model assists with the creation, nurturing, and enhancing of people and ideas. Its goal is to create superior employees, products, and services. Here’s a summary.

  1. Cultivate
    This refers to finding and establishing the right environment so people can “think out of the box,” and the right ideas can grow. It also refers to supporting people with the right skills, tools, and leadership mindset.
  2. Connect
    People need to reach out to various partners to obtain additional expertise and inspiration to further develop ideas. To support this, Bayer “continuously works to develop novel and innovative ways of partnering.”
  3. Collaborate
    To “make ideas happen,” you need to then join forces both internally and externally. For example, Bayer has established an internal platform called WeSolve for collaborative problem-solving.
  4. Communicate
    Companies need to effectively communicate to attract talent, partners, and customers to assist in creating and progressing novel business offerings.

If Lessl had to pick one of the four as the lynchpin of innovation, it would be the fourth, communication. She makes it clear, though, that all are crucial and must be applied equally internally and to all external partners. “We’ve put a lot of thought into how we can promote innovation in our organization. On the one hand, as we’ve discussed, a lot of it does clearly refer to and inform R&D strategies, which define in what areas we want to innovate. But innovation up to and through the marketing and sales of commercial products leads to the correct mindset and spirit for the whole organization and all partners.”

Based on these guideposts, Lessl says Bayer has “developed a whole range of collaboration models and experimentation.” She mentions very close research relationships with the Broad Institute here in the U.S. and the German Cancer Research Center — which, she points out, has nearly 3,000 people working on cancer, the most in Europe — to broader open-innovation platforms, crowd-sourcing (see more on this in the accompanying article), and venture funding.

Is Bayer Known For Innovation?
Innovation has been of top importance at Bayer for a long time, says Lessl, and much of the recent activity is based on acquired learning and experimentation. “You can see this in the fact that we have a board member, Kemal Malik, directly responsible for innovation at Bayer,” she says. Life Science Leader featured Malik in our April issue, where he simplified innovation as “turning a new idea into something meaningful for customers.” (He also said, “When you ask people what innovation means to them or even just what innovation is, they get a confused look on their faces. They have a tough time explaining it.” Thank goodness it isn’t just me with the problem.)

Ultimately in business, though, dollars denote commitment. Lessl says a demonstration of Bayer’s commitment to innovation is an increase of 10 percent in the R&D budget this fiscal year. She also points to last year’s $14 billion acquisition of the consumer-care business of Merck & Co., Inc., which included $7 billion of notes in Bayer’s largest dollar-denominated bond issue that helped fund the purchase. According to Bloomberg, it was the seventh-biggest dollar-denominated corporate bond sale of 2014, and Lessl says Bayer won a corporate finance award in Germany for this innovative transaction.

However, even with these growing, widespread, and impressive activities of innovation, I wonder if Bayer still isn’t more known for other attributes. “Maybe Bayer has been seen more as being efficient, stable, reliable, professional, and not for being agile,” says Lessl. “But that perception of reliability and stability is a clear strength, and we’d like to keep it. We also want to be recognized for the actions we have taken on the front of innovation.” After a pause: “Do I have to explain what innovation means again?”

No, Dr. Lessl, you don’t. I’ve got it, and so does Bayer. In the end, innovation is itself a form of creation. It is the creation of an environment for people and ideas to flourish. Perhaps in some regards it is nothing more than the cold calculation of simple addition and subtraction. Add the components, people, and even companies that assist in translating better ideas into better services and products for patients and customers, and provide better returns on investments and to investors. Subtract any items wherever they are in the company if they hinder the process of collaborative thinking to make it happen. And so, innovation itself becomes the business strategy today in the biotechnology, pharmaceutical, and for Bayer, agricultural markets. Will it work? We’ll continue to see. And if you have the time, please check out my recent article on Outsourced Pharma titled, Can Bayer Innovate the Incubator for Japan? Looks like I’ve made a full recovery.


Bayer’s Trust In Crowdsourcing

Be honest: When was the first time you heard of and/or started to think about crowdsourcing (if ever)? Or more specifically, crowdsourcing applied to the biotechnology or pharmaceutical industries? If you’re like me (and there is a measure of pity if so), it wasn’t that long ago … and any thoughts on the subject were more about crowdfunding (gaining investments or donations from strangers) than anything else.

That’s not the case for Monika Lessl, Ph.D., VP, head of innovation strategy at Bayer AG. She jumped into the “crowd” in the early 2000s, while CEO at the Ernst Schering Foundation in Berlin, and started utilizing crowdsourcing in 2009 at Bayer HealthCare. In her article, “Crowdsourcing in Drug Discovery,” published in Nature Reviews in April 2011, she penned, “Crowdsourcing is emerging as an open-innovation approach to promote collaboration and harness the complementary expertise of academic and industrial partners in the early stages of drug discovery.” Prescient, you might say.

How did Dr. Lessl latch on to crowdsourcing so quickly?

“It seemed so compelling to me,” she says. “You simply cannot meet all the challenges of being a pharmaceutical company alone. Every company should understand that more than 99 percent of research done is outside your own walls. Why not ask people for their ideas?”

On The Cusp Of The Crowd
Under the tutelage of Dr. Lessl, Bayer HealthCare started its crowdsourcing activities with the Grants4Targets program, which provides grants for the exploration of attractive, novel drug targets and biomarkers in the fields of oncology, gynecology, cardiology, hematology, and ophthalmology. “We had some contentious discussions on should we try this or not,” she says. “I mean, in the beginning, the discussion wasn’t even about will we get good ideas; it was, ‘Will we set this all up and get nothing at all?’ Others said we would just get a lot of crap!”

Lessl, though, saw the program as a legitimate business experiment to understand if crowdsourcing was an avenue to more and improved early-stage ideas. It didn’t take long for Bayer to decide it was a road well taken. “It was successful,” explains Dr. Lessl, “and I think that’s because of the way we set up the whole scheme.”

Dr. Lessl says the first key component was easy access; anybody with Internet access could participate. Next it had to be an unbureaucratic process, with bureaucracy the antithesis of the crowdsourcing movement. The final point, though, required the most internal debate: Bayer would not own any of the IP at this stage.

Both parties would have to subsequently and mutually decide they wanted to move forward into a collaboration agreement. This debate was won, and she says this is indeed the most significant point to understand about crowdsourcing: Where there is no trust, the crowd disperses.

Trust In The Crowd
Dr. Lessl learned during her five years at the Ernst Schering Foundation that trust is the glue that keeps the crowd together. “You don’t get far without trust,” she says. “If the people trust you, they are happy to work with you. For example, if you support fellows in a foundation, it’s considered a donation; you don’t have a right to get anything back. However, have you ever noticed how people are bound to foundations because they feel trust in the relationship? It was my job to translate this understanding to Bayer.”

Today, applicants receiving grants from Grants4Targets are only obligated to provide a research report. “Thereafter,” says Dr. Lessl, “in principle they can take their money and their results to another company. It is important they feel that freedom.” However, she adds, few if any take up that option. “We build a relationship that keeps them. For example, we nominate a coach for each grant — an internal champion — to support the development on all fronts. So, via that trust and the relationship, new creativity and ideas are reaching Bayer.” She concludes, “Many collaborations fail not because of business terms, but because of a poor relationship.”

Going Viral
Back at Bayer, Dr. Lessl says after the first crowdsourcing experience, “It really went viral.” Other R&D departments adapted the concept, and Grants4Leads was born to address the next step in the drug discovery process. Even Bayer’s IT departments wanted in on the concept. “They said, ‘Well, why don’t we make a grant for apps,’” recalls Dr. Lessl, and started to work with start-ups developing healthcare applications that complement Bayer products. One example from Bayer’s Grants4Apps program is an app linked to a small pillbox that sends a positive message to patients’ smartphones if they take the pill as prescribed, and a different message — “Take your medication” — if they don’t.

Bayer now has four distinct Web-based crowdsourcing initiatives, with the fourth called PartnerYourAntibodies. “We are just on our way to bringing it all together for both our healthcare and crop sciences fields,” she says. “Already, though, I think we are ahead of the curve in the pharmaceutical industry in establishing crowdsourcing as a part of our overall innovation theory.” Last year, as a result of a crowdsourcing activity, Bayer announced a collaboration with the University of Oxford in the U.K. “Crowdsourcing can bring many short-term relationships through a seed approach, but it also can result in long-term research alliances like with the University of Oxford,” she says. “The potential for both is great.”