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(originally published by Booz & Company)


The Missing Link in Innovative Research

The role of scientific leaders, therefore, is not only to encourage scientists to strengthen their core areas of expertise, but also to identify the scientists who have the greatest potential for breakthrough insights and help them interact with one another and explore adjacent fields. In pharmaceuticals, this can help create opportunities for major advances in the treatment of human disease.

But the leadership challenge is stark. Industry-wide consolidation has led to larger research organizations, where senior leaders are now managing many more projects. This limits the leaders’ ability to generate deep insight, explore multiple avenues, or make informed decisions. Senior leaders cannot know all the scientists, encourage them, or easily identify exceptional scientific insights. As a result, middle managers have become a linchpin in research productivity.

Meeting the Productivity Challenge

Our team at Booz & Company recently interviewed 20 senior executives at 15 leading research-based pharmaceutical companies and academic institutions. We asked them, “How can better management of R&D solve the productivity challenge?” and then we convened a roundtable with four recent leaders of global R&D organizations. We concluded that because of a gap in scientific leadership, few structural or process solutions have delivered their promised results. We drew on these conversations to identify specific ways to expand scientific leadership capacity.

Our research reaffirms the widely perceived decline in pharmaceutical R&D productivity, but it reveals that although no one company has a sustained record of success, distinct pockets of excellence do exist. This research also confirms the value of improving leadership across the middle of the organization. Middle managers in the research division of pharmaceutical companies are frequently responsible for multiple programs; they report to a therapeutic area head or lead functions. Most importantly, they make thousands of day-to-day decisions about what to support and what not to support, and this collectively gives them a great deal of leverage. Not just pharmaceutical companies, but technology-oriented companies in all industries, could raise their productivity significantly by selecting, developing, and enabling strong scientific leaders at that level.

Regardless of other management approaches — such as an open innovation sourcing strategy, a particular organizational structure and alignment, or other systems and tools — internal discovery output per dollar can be vastly improved and downstream attrition reduced by addressing the scientific leadership across the middle of the organization. Indeed, one reason that all the investments in organization, tools, technology, and techniques have not delivered additional insight is that the investment in the leaders using them has lagged. Furthermore, the recent wave of outsourcing, restructuring, and merging has caused companies to take capacity away from the middle of the organization. And even where middle managers do exist at some concentrated level in an organization, their roles are often not well defined.

We suggest that companies seeking more successful breakthrough innovation focus on the following three elements.

1. Clearly differentiated roles for senior, middle, and project managers. In many companies, the roles of scientific leaders at different levels overlap, blurring responsibilities and activities. Some leaders in middle management begin to mimic senior leaders, managing resource allocation through formal reviews and relying primarily on checklists and common criteria. Other midlevel leaders duplicate the role of the project managers, continuing to manage too many projects directly — either because their strategic responsibilities are squeezed by their own senior leaders or because they rely on their familiarity with prior roles and responsibilities. By formally defining the responsibilities of each level, companies can take full advantage of the different contributions that people at each of these three levels (senior, middle, and project managers) can offer.

2. A focus on the pivotal roles across the middle. Take advantage of the fact that managers in midlevel roles typically oversee 100 to 200 employees. This allows them to develop and foster good working relationships with most of the people in their organization, if consistently encouraged to do so. Groups of this size have sufficient scale to develop expertise, create connections and opportunities for serendipity, and marshal resources to support good ideas. Individual researchers or teams may generate new insights, and senior leaders may devise effective strategy, but groups of 100 to 200 researchers have the depth, critical mass, and diversity (via internal and external connections) to deliver results. Midlevel managers are well equipped to select and increase opportunities for these scientists. They can also guide promising ideas through the organization to make sure that they aren’t knocked out too easily in a process based on abstract criteria.

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