The Story of Eli Lilly Essay Example

and more  firmly established, a variety of models have started to evolve for  describing the levels of maturity that companies move through  as  they  adopt  practices.

In  this  article,  we’ll  use  the  model  shown in Exhibit 1, which presents three main levels of open  innovation maturity:

• Level 1: Externally Aware
• Level 2: Fully Integrated
• Level 3: Ecosystem Orchestration

In Part 2 of this series, we’ll discuss in detail how this model for  open innovation maturity can be applied to different companies as  a guide for moving forward, what hurdles must be overcome along  the way, and even where leading companies are starting to push  the envelope beyond Level 3 maturity.

But in this article, we will  focus on using the example of Eli Lilly and Company to bring this  maturity model to life—exploring why Eli Lilly embraced open  innovation, how it built its open innovation model, the stages it  moved through, and the successes it has gained from it. PDMa Visions Magazine O The growth of Eli Lilly and company Eli Lilly and Company was founded in 1876. Since then, the  company has grown to be the 10th largest pharmaceutical in the  world. Today, it has approximately 40,000 employees around the  globe and its medicines are marketed in 143 countries.

Lilly has  major Research & Development facilities (R&D) in eight countries  and conducts clinical trials in more than 50 countries For over 130  years, the company has created medicines that improve the health  of people around the world. Lilly was the first company to mass  produce penicillin and offer a number of other important medicines,  such as Prozac and Zyprexa. Like most other companies in the early  and  mid-1900s,  internal  R&D  was  the  primary  driver  of  Lilly’s production of new

medicines.

The company turns to collaborative product development However, in the early 1990s, the company’s thinking changed. In order to provide a reliable, ongoing stream of external ideas  to supplement its new product pipeline, the senior management  team realized it had to do more than approach partnering opportunistically. The company made a conscious decision to develop  a strategy that would create a sustainable alliance management  capability. This strategy included specific actions the organization  needed  to  take  in  order  to  achieve  excellence  in  this  new  endeavor.

An Office of Alliance Management headed by a new  Vice President position was created with the explicit mandate to  create and drive execution of this strategy. The company turns toward collaborative PD Fortunately, Lilly already had a history of successful collaboration—the development of mass-produced insulin for diabetics.

This success was a strong piece of the company’s cultural history  and demonstrated the power of successful external collaborations. It originated in 1921 when Dr. Frederick Banting and Charles Best,  of the University of Toronto, discovered insulin as a treatment for  diabetes. Unable to mass produce insulin, the University of Toronto  entered into a partnership with Eli Lilly and Company to develop a  manufacturing process.

This collaboration was ultimately successful and led to one of the greatest products in Eli Lilly’s history, one  that not only contributed to the company’s commercial success but learly served the corporate mission of improving people’s lives. More than 70 years later, the Eli Lilly management team again started  looking outward. The idea was to create a reliable, ongoing stream of  external ideas to supplement its new product development. But the team  realized it had to do more than approach partnering opportunistically. It needed an explicit strategy that would enable the company to have  a sustainable alliance management capability and define the specific  actions needed to be taken to achieve excellence in this new endeavor.

Management appointed a Corporate Vice President whose mandate was  to create an Office of Alliance Management to drive  execution  against  this  We believe Lilly

was the strategy. This  office  was  first organization of its kind to be staffed with experienced program managers  that developed a holistic set of and  leaders  from  across  alliance management processes the global Lilly organization. We believe Lilly was  and metrics the  first  organization  of  its kind that developed a  holistic set of alliance management processes and metrics and assigned  individual Alliance Managers with responsibility for overseeing key  partner relationships and ensuring that the goals of each alliance was  met—from both Eli Lilly’s perspective and that of its partner. creation of the Office of alliance Management The  investment  the  company  made  was  substantial,  but  the  commitment to cultural change was even more important than the  specific resources committed.

The new Office of Alliance Management was empowered directly by the CEO and given abundant exposure throughout the company, and externally as well. As the  organization started to operate, Eli Lilly publicized what they were  doing, presenting at conferences and publishing various articles on  their alliance management tools and methodologies. The goal of  Eli Lilly was to become the “Partner of Choice”—a company that  others would choose to approach first and foremost with any new  drug candidates because they had a reputation for being the best  firm in the industry to work with.

By widely advertising both the  details of their alliance management practices and its successes,  Eli Lilly helped to create its image as a Partner of Choice. Though the company did not think of it in exactly these terms,  they had effectively chosen to move from an Externally Aware  organization (Level 1 in the open innovation maturity model) in  the mid-1990s to a Fully Integrated open innovation

organization  (Level 2 maturity) by the early 2000s.

Three External Orientation lliance management successes The Office of Alliance Management and related corporate initiative resulted in a stream of successful product launches starting in  the mid-1990’s that continues today. Lilly has demonstrated the  value and strength of these partnerships through the launch of new  medicines such as Byetta (with Amylin), Cialis (with ICOS), and  Effient (with Daiichi Sankyo). In each of these cases, Lilly and the  partner aligned their strengths, whether it was the discovery of the  molecule, therapeutic area knowledge, development capabilities,  or regulatory expertise to develop and launch these new medicines.

Since 1995, Lilly has launched a total of 16 new medicines, 6 of  which were developed or marketed in collaboration through partnerships. Almost 10 new medicines are currently in development  with partners. In  addition  to  partnerships  that  directly  led  to  the  launch  of  new  medicines,  Lilly  Levels The Evolution of Open Innovation—Three Levels of Maturity Exhibit 1: of Maturity Evolution also formed other types  of  partnerships,  involving both in-licensing and  out-licensing of technolLevel 3 ogies  (see  Exhibit  2  on  Ecosystem page 21).

Internal and external R&D Business model is interconnected ideas and technologies Explicit role for suppliers and customers in innovation process Business model can be extended to adjacent markets for new growth activities are integrated with the business model Innovation roadmaps are widely shared and access is reciprocated Business model is focused on new markets and new businesses with business models of others External partners share technical and financial risks / rewards in innovation process Innovating the company’s business model is a part of the innovation task Role of Suppliers and Customers Business Model.

The scorecards 

are developed via annual surveys involving the various internal  and external stakeholders in each alliance and then communicated  back to everyone involved. These scorecards and the transparency  they drive has helped Eli Lilly to minimize the risks of partnerships  that fail or dissolve before achieving their goals—and to establish  its Partner of Choice reputation. “

Moving beyond alliance management — Taking advantage of “Technology Scouting Networks”. In parallel with its Alliance Management initiative, Eli Lilly  was  also  an  early  leader  in  another  major  element  of  open  innovation – the Technology Scouting Network. In the late 1990s,  a group within Eli Lilly  It’s not just for pharmaceutical companies… developed an online tool  Whenever business practices are discussed in the context of one  to  allow  its  researchexample company, people often ask if the practices are specific to  Last year Lilly posted more ers  to  look  outside  the  that industry or if they apply more broadly.

As of today, the robust  company  for  assistance  open innovation practices we’ve been discussing have been widely  than 100 internal problems on  specific  technical  (and successfully) adopted at leading companies across a wide range  through the @Lilly program; more problems they were ad- of industries, geographies, and situations. In consumer products,  than 80 percent of those problems dressing.

So if a Lilly re- Procter & Gamble, Unilever, GlaxoSmithKline Consumer Products,  searcher was looking for  and The Clorox Company have well-established open innovation  were solved or significantly a molecule with specific  initiatives, to name a few of the most well-publicized examples. properties, by using this  Cisco Systems, IBM, and Nokia are leading examples in the highadvanced by internal experts. ” tool, he or she could post  tech  arena.

All  of  these  companies  have  broad  open  innovation  a  “challenge”  on  this  initiatives  (though  using  a  variety  of  names  and  terminology),  online system for review by a network of

individual scientists and involving various elements of Level 2 open innovation maturity,  academics around the world. If anyone in the online network had  generally including both active R&D partnership management and  an idea for how to solve the challenge, he or she could respond  technology scouting networks. and receive a cash award if the solution were accepted.