Innovation By Design

Pharmaceutical executives understand that they must confront multi-layered demands. They have to explore new business models while attending to their existing, highly profitable commercial model. The important question is: How can they actively pursue both paths to create their own future?

Bansi Nagji

Designers, who are trained in creative problem solving, excel at solving these kinds of complex, multi-dimensional challenges. While designers are respected for their vision and creativity, their disciplined approach to problem solving often yields solutions not discoverable through traditional business methods.

Though design has historically been applied to the development of new products, in recent years leading companies such as Intel, Toyota, GE, and P&G have implemented design in conjunction with traditional business thinking to create new offerings, customer experiences, and business models.

The Discipline of Design

With a sharp focus on how things work, designers approach problem solving with distinctive faculties of openness and curiosity, analytic rigor and integrative thinking, and flexibility and responsiveness. Those qualities, combined with the rigorous discipline and protocols of design, reliably yield new products, services, and business models.

The discipline of design provides valuable insights and lessons for the pharmaceutical industry as it rethinks its approach to the commercial model:

Frame complex problems holistically Solutions to complex problems are seldom found by study of the individual components of the problem. Design thinking embraces this complexity when defining the challenges at hand, dissecting issues and causes until the system as a whole has been framed in the broadest context.

Companies that frame healthcare challenges holistically, taking into account the needs of all stakeholders, will be more likely to create solutions that are effective and robust. On-site health clinics such as Whole Health Management (now owned by Walgreens) have been able to reduce employers' healthcare costs by creating a value proposition that works for the needs of employers, employees, and caregivers, leading to wholly new models of healthcare delivery.

Matt Locsin

Fundamentally understand the end user Take a look at the experience of customers and non-customers, and the contexts in which they live and act. Techniques derived from (among others) cultural anthropologists, social scientists, and ethnographers all serve to generate important insights about opportunities to engage more meaningfully with customers. Such insights add significantly to the information provided by more traditional market research techniques, which tend to focus on how to evaluate the current behaviors of known customers. Designers' research techniques generate insight into patients' needs and uncover ways to serve those needs beyond product features and messages about clinical efficacy. Companies that understand these needs and deliver compelling experiences to meet them—through new payment models and product systems—will thrive in the new market.

For example, as Wellpoint (now Anthem Blue Cross) created Tonik, a straightforward health insurance offering for uninsured consumers less than 30 years old, they understood they would be targeting customers outside their traditional demographic. By using ethnographic techniques, they formed a deep understanding of the environment, perceptions, expectations, and values of this group that made it clear they would need a different model to engage this population. Armed with this new insight, Wellpoint created a simple, clear suite of offerings, supported by a culturally relevant brand and a compelling style that has contributed to success that exceeded all expectations.

Perform divergent and integrative thinking to find novel solutions While designers are extremely skilled at drawing out holistic insights about a particular challenge or problem, they never lose sight of the forest for the trees. This ability to create deeply informed, but thematic, insights allow them to constantly draw connections to other fields of study and industries. That, combined with their unwillingness to be tied to industry orthodoxies, means they are able to integrate insights, analogies, and precursors from multiple sources. For example, the rise of health tourism and the global attraction of hospitals like Bumrungrad in Thailand and Apollo in India were driven by lessons from the high-end hospitality industry. These were applied to create world-renowned healthcare services at a fraction of Western costs. Pharma will need to deploy such divergent and integrative thinking to consistently discover opportunities for disruptive innovation.

Learn through rapid prototyping One predictable challenge that goes with the reinvention of a commercial model is that many elements of the solution, by nature new and uncertain, draw out the "antibodies" of legacy infrastructure. Innovations can easily be killed before they reach the market by objections that infer the infeasibility of ideas or exaggerate the market's reactions to them. By contrast, design draws its main insights from the market itself through rapid prototyping of new models with lead users and non-users in their natural environments. This approach generates real feedback so that new ideas can be improved upon more quickly.

The rapid cycle of market-driven improvement also brings a new innovation concept that quickly neutralizes the objections of the traditional legacy systems. Companies that adopt prototyping and adaptation dramatically accelerate their time to market with viable offerings—both because they learn faster and because this approach allows them to fail early and inexpensively. For example, the Mayo Clinic's "See, Plan, Act, Refine and Communicate" (SPARC) and Kaiser Permanente's Garfield Center provide those organizations with "living laboratories," where new protocols and technologies can be tested, adapted, and implemented quickly and successfully.

Listen, Learn, and Replicate

A number of companies outside of healthcare have applied design thinking to their business with staggering results. Apple has redefined how people experience media. P&G has revolutionized home cleaning. And in healthcare, a number of companies—particularly in the device and delivery arenas—have used design thinking to redefine their business. J&J has used designers in its endosurgery business, coupling an understanding of user needs with its capabilities in science and bioengineering.

And there are numerous opportunities to apply design thinking to transform pharma's commercial model.

• As access becomes more difficult, design thinking can aid in the creation of new ways of communicating and engaging professionals. This could include working with physicians and physician groups to deliver integrated, customizable solutions that cut across therapeutic areas, and engaging in new business partnerships that help physicians run more successful practices.

• As payers strive to contain spiraling costs, they pare back drug coverage and exert downward pressure on pricing. Design thinking can help explore dramatically different models of cooperation and risk management with payers. These could be driven by reimbursements for managing specific conditions through more integrated therapies and new protocols for healthcare delivery.

• As consumers take on more responsibility for their healthcare, pharmaceutical companies must adjust how they interact with their audience. Design thinking can help re-imagine the frontiers of service, such as providing intuitive, clear information and convenient solutions that help people participate in their own care.

Design thinking can provide a capability for creating compelling solutions for the new challenges facing the healthcare industry. Designers bring a sense of empathy along with an open-minded attitude that is unencumbered by traditional industry approaches and solutions. Add to this their passion and optimism—an innate energy for seeking out what's possible, in addition to what's desirable and feasible—and we see a powerful set of skills the pharmaceutical industry would do well to embrace.

Of course, design capabilities are complements to, not substitutes for, the existing innovation capabilities of the industry. This is a leadership opportunity. Those leaders who make the strategic commitment to think and act differently—creating the capabilities, permissions, and independence necessary to re-frame the challenges ahead—will find themselves moving and learning faster than their competitors. In turn, those who move quickly to embrace design thinking will not only inject more imagination into solving the challenges they confront, but also will be at the forefront of the next several decades of success.

Matt Locsin is a designer and manager at Doblin, a member of Monitor Group. He can be reached at mlocsin@monitor.com

Bansi Nagji is senior partner of Monitor Group. He can be reached at bnagji@monitor.com