How an Innovation Mindset Fuels Revenue Expansion for a Top 10 Fortune 500 Company

In this installment of the Harvard Business School Healthcare Alumni Association (HBSHAA) Q&A series, Leslie Donato, EVP and Chief Strategy Officer at AmerisourceBergen, talks to Michael Wong about converting innovative ideas into revenue-generating platforms.

Michael Wong: When most people think about the “Main Line” neighborhoods that are west of Philadelphia, images that pop up are likely of premier colleges nestled in leafy neighborhoods,¹ versus a company that was ranked 8th on the most recent Fortune 500 company list.² As several Fortune 500 investor presentations have the inevitable reference to “innovation”, what is the password for success behind your firm’s ability to convert innovative ideas into revenue-generating platforms?

Leslie Donato

Leslie Donato: At our core, AmerisourceBergen is a purpose-driven organization where we are united in our responsibility to create healthier futures. This guides us from a strategy and innovation perspective.

To fulfill our purpose we routinely work to understand the needs of our customers and the “jobs to be done”. Given our integral position in the pharmaceutical value chain, we have significant scope and the opportunity to understand the needs of all players in healthcare, from our manufacturer partners to our provider customers, to payors, and patients or consumers. The insights gained from these ongoing connections help spark new ideas to improve the customer experience and contribute to effective and efficient health care delivery and ultimately healthier futures.

AmerisourceBergen has four growth strategies³ and I believe the company’s commitment to our purpose, customer focus, innovation culture and growth mindset enable our team members to take daily actions to execute on them. And executing daily actions to exceed customer expectations and deliver on our strategy, while it might sound mundane, is what separates high-performing companies from their competitors.

During my time at McKinsey, I had the opportunity to consult with several pharma companies where we analyzed perceptions within their marketing departments of their internal capabilities. Research uncovered that only 35% of survey respondents thought they were doing a good job at synthesizing insights and translating them into actionable recommendations⁴ for the business. Customer insights are foundational in meeting the customers’ needs and in driving innovation.

At AmerisourceBergen, we have an internal Customer Experience & Insights (CXI) group that uncovers essential information to help us elevate our customer interactions, enhance our solutions, and innovate new offerings. We envision what our customers will need by synthesizing insights about their experience today, with market trends, and patient/consumer expectations. This group’s qualitative and quantitative insights enable us to make ongoing data-driven decisions on where, when, and how to invest our limited resources, which includes dollars and our employees’ time.

A great example of customer-focused innovation is our Cocoon packaging solution which is available through our World Courier business that supports global clinical trial logistics. As medical products became more specialized and complex, they were also becoming more difficult to transport. We began seeing products that required very specific temperature ranges that needed to be maintained to keep the products from deteriorating. That’s hard enough when moving products across a major metropolitan area. It’s exponentially more problematic when traversing across continents, managing through airport customs delays, and factoring in external climate variations that might include winter in Moscow or summer in Dubai. After talking with our customers and manufacturer partners, we felt like we could create something better, so we developed Cocoon. Our Cocoon packaging solution uses a proprietary combination of honeycomb, vacuum-insulated panels, and advanced-phase change materials to provide stable thermal protection across multiple temperature ranges. The validated statistics we have leapfrog the market.

As some readers might assume that AmerisourceBergen’s size enables it to achieve the growth strategy that you just mentioned, what three revenue-generating ideas would you recommend that transcend the size of the entity, be it a start-up or another Fortune 500 firm?

First, even though AmerisourceBergen is ranked within the top ten of the Fortune 500, we recognize the importance of continually strengthening our approach to drive innovation into our business, the supply chain, our customer’s lives and our employees’ daily lives. So about 14 months ago, we introduced an Innovation Board that ring-fences funding for potential investments, clears processes for ingestion of new ideas and stage gate reviews, and provides executive sponsorship. For sponsorship, EVP and AmerisourceBergen Group President Bob Mauch, who leads our commercial business segments, and I co-chair the cross-functional Innovation Board with the mandate to source and nurture innovation projects from across our businesses.The approach provides funding and Innovation experts to the most promising projects which are de-risked as they move through a stage-gate, metered-funding process where agile teams iterate with customers in rapid sprints allowing us to co-create and iterate together in order to ensure product-market fit.

Second, analyze and plan for where your clients’ growth opportunities are and build creative solutions accordingly. For instance, we have a deep appreciation and affinity for community-based care. We work with thousands of independently owned and operated oncology and specialty physician practices across the country. We’re constantly watching the treatment pipeline that these independent physicians will need access to and thinking about services and solutions that can make those treatments — like cell and gene therapies — tangible for them.

Finally, embrace digital transformation to build stronger ties with your existing clients and create new ones with prospects. I recall a World Economic Forum article that pointed to many executives who reported that, per the recent pandemic; they moved 20 to 25 times faster than they thought possible on strategies like building supply-chain redundancies and elevating the use of advanced technologies in operations.⁵

Leslie Donato is Executive Vice President and Chief Strategy Officer of AmerisourceBergen. Prior to her current role, she was the Vice President of Strategy at Bayer Pharmaceuticals. Ms. Donato was also a principal and founding partner of McKinsey & Company’s Philadelphia office. She received her MBA from The Wharton School at the University of Pennsylvania and her BA from Swarthmore College.

Michael Wong is an Emeritus Board Member of the Harvard Business School Healthcare Alumni Association.

Notes

1. https://www.mainlinemedianews.com/mainlinetimes/news/main-line-colleges-universities-recognized-ine -u-s-news-world-reports-annual-americas-best-colleges/article_ee0e9a30-44a7-5a22-ba2a-b62b8da44dc8.html

2. https://fortune.com/fortune500/2021/search/

3. https://s27.q4cdn.com/189772748/files/doc_financials/2021/q2/AmerisourceBergen-Q2-FY2021-Earnings-Presentation-Final.pdf

4. Agarwal, Sanjeev; Donato, Leslie; Haas, Bernd; Heerwagen, Valerie; Rodgers, Liz; Westhues, Kirsten,The Eye of The Storm, 2006, https://www.mckinsey.com/client-service/pharmaceuticals-and-medical-products/~/media/E4BF75C269CA4663855DCA6C833C54CE.a

5. Sneader, Kevin; Singhal, Shubham, The next normal is upon us: Here's what to look out for in 2021 and beyond, World Economic Forum, January 21, 2021.