Innovation scouting at Johnson & Johnson

By David Rae

By David Rae

One of the most important aspects of a fully-fledged Supplier-Enabled Innovation approach is tapping into new technologies and capabilities wherever they happen to be, whether within the existing supply base or elsewhere.

While working on strategic objectives and understanding internal stakeholder need are the top priorities, putting a framework in place to find solutions to those needs isn’t far behind, and scouting can form a key part of it.

For Johnson & Johnson, innovation scouting essentially involves locating and utilizing new types of tech, assets, or capabilities that will add value to consumers. The process can be long, arduous, and often unfruitful.  As Brian McClure, Director of Global Innovation Sourcing at J&J puts it, it’s like “mining a thousand mines to find a single piece of gold.”

Knowing which supplier eco-systems house what types of technologies and capabilities, as well as understanding how “innovative” the solution needs to be, helps guide the effort. However, the form that a scouting strategy takes is a subject of debate, with no definitive, one-size-fits-all model. Having internal or external teams are both viable options; the types of innovation that the team searches for will inevitably vary according to end goals; and the KPIs assigned to scouting teams can range from being relaxed to highly stringent.

In many respects, Johnson & Johnson’s approach to innovation scouting has been organic. It started by outsourcing the process to scouting agents, but as the importance of innovation to its company objectives increased, it decided to gradually embed the function more centrally into its organization.

Brian McClure is at the heart of Johnson & Johnson’s innovation scouting efforts. Over the past year especially, McClure has been spending a lot of time on formalizing the company’s innovation scouting toolkit, ensuring that it contains clear deliverables and processes that are understood not only by those tasked with scouting, but by other departments across the company as well.

Getting the metrics right

As with measuring the success of any SEI program in general, defining success in innovation scouting is problematic. Metrics can be put in place, but tracking the innovation that has been scouted from its initial discovery through to its overall impact on a company’s bottom line can prove elusive.

Defining success was therefore an important first step in Johnson & Johnson’s scouting toolkit, but McClure is quick to point out that it hasn’t been an organized success story, and is still very much an ongoing process. The company looks first to categorize an innovation that they’ve scouted as being either incremental (providing continuous improvement), platform-based (used across multiple brands), or breakthrough (an innovation that is disruptive). They then decide if its success will be measured across the short, medium, or long-term.

McClure provides some examples. If technology is already available and can add improvements across Johnson & Johnson’s products, it would likely be a short- to medium-term innovation at the platform-based level. If the technology has not yet been developed but has potential to be disruptive in the market, this would likely become a long-term, collaborative innovation at the breakthrough level.

By correctly identifying and categorizing the innovation at the scouting stage, Johnson & Johnson is able to designate it as a success. However, if the categorization proves to be incorrect – say, if an innovation is scouted as being medium-term and breakthrough, but turns out to be long-term and incremental – it would be defined as unsuccessful.

“Inspired Innovation”

Johnson & Johnson also sees the benefit of scouting innovation that already widely exists in the market. McClure terms this as “inspired innovation” – innovation being used by others that inspires the company to move in a different direction, or use the innovation in a new and fresh way. The desired outcome here, he says, would be to deploy a customized or unique version of the existing technology to appeal to their broad consumer base, perhaps augmented with a more minor innovation if required.

This widening of the net is important. By not restricting themselves to breakthrough types of innovation, Johnson and Johnson’s scouting team are able to find value across the market and integrate that value into the organization accordingly.

Balancing the team structure

While a dedicated innovation scouting team doesn’t currently exist, scouting is now an important part of the day-to-day duties of Johnson & Johnson’s global innovation team, which McClure heads up. This team looks for innovations not only in China, but across the Asia Pacific, including in Korea, Japan, and India.

Supporting this team are “new ventures” teams based out of Johnson & Johnson’s R&D innovation centers. While not dedicated to innovation scouting per se, new ventures are Johnson & Johnson’s only fully outward looking team, focusing on collaborations with universities, entrepreneurs, SMEs and start-ups that can add extra value to the innovation scouting function. In this way, awareness of the importance of innovation scouting is spread across various parts of the company, and different capabilities can be harnessed to locate innovation leads.

Looking ahead

McClure is aware of the challenges that exist. His analogy of continually searching mines for gold is one that likely resonates with other professionals in the field, but he’s optimistic about Johnson & Johnson’s efforts. “There’s a great deal of opportunity out there,” he says. “The hard part is finding the right type of innovation, and then bringing it in and embracing it in a productive way, but the potential rewards are huge.

“As we improve and find better ways to look and assess innovations, our success rate will continue to increase. There’s a great deal of innovation in the market that’s either untapped or unutilized, so there’s still a lot of scouting work for us to do – we just need to ensure that what we scout translates into net benefits for Johnson & Johnson.”

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