The Secret To True Strategic Partnerships
By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL
In the May 2013 issue of Life Science Leader magazine, Wayne Koberstein wrote an article asking the question, When Does a Supplier Become A Partner? I shared Koberstein’s skepticism when he said, “Just doing business with a developer doesn’t make you a partner.” He goes on to define what makes a true partner, but providing a real-world example of these kinds of companies is difficult because — frankly — they are rare and often lack the willingness to share their story. As I was preparing for attending the DCAT Sharp Sourcing event at the Hyatt Hotel at Grand Central on Thursday, July 11th , I saw a planned presentation which I thought might qualify as defining a true partnership — Value Creation and Delivery: The Goals of Roche’s New Supplier Relationship Center and its External Partnerships. One of the speakers, Clive Heal, team leader and value creation agent at the Supplier Relationship Center (SRC) for Roche/Genentech Pharmaceuticals, took the time to provide me with a prequel of his upcoming presentation. He shared the nexus behind the creation of SRC and what Roche/Genentech and its five strategic partners (Catalent, EMD Millipore, Sartorius, Schott, and West Pharmaceuticals) are doing to redefine strategic partnering. Heal’s narrative should serve as a premier example of the necessary disruptive and innovative thinking that life science leaders need to undertake in order to revolutionize our industry.
Life Science Leader (LSL): Where did you get the idea for creating the SRC?
Heal: The idea came from a number of different things that happened to me over the years in a variety of roles throughout my career. When I worked in sales and marketing at a different company, I noticed that neither our biggest, nor our most profitable customers were the ones we usually went to with most of our projects. It tended to be a select group of smaller companies. This made me wonder why. Why is it these smaller companies got first level of support? Why did we take all the R&D ideas to them? The reason I discerned was that we helped them, and they helped us. They helped us with improving our quality and ideas about what we should be working on from an R&D perspective. In turn, we helped them with some of their business processes. As a result, my company (at the time) got better quality products to sell in the marketplace and had a better R&D pipeline. I learned if you collaborate together, you get value beyond the exchange of goods, services, and money.
At another organization, I worked in procurement. Every month we had to write down what money we saved, and what value we brought to the business. Beyond that, we had to write down how we actually did it. This was put into a global procurement database. After a couple of years, I was given the job of analyzing the data. What the data showed is, in the short term up to a year, the biggest driver of value creation was derived from creating competition in the marketplace (i.e. getting suppliers to compete for business and then moving the business around from time to time from one supplier to another). However, the data also showed that in the long-term (i.e. over a year) more value came from picking a partner, collaborating very closely with them, and working with the partner to create a win/win scenario. The lesson learned was that suppliers are more willing to do business with you and give you more if they feel there is something in it for them. You will open more doors and get more value from collaboration as opposed to creating competition.
LSL: What is the secret to making a true strategic partnership work?
Heal: I learned the secret to making a strategic partnership work when I was working at SmithKline. I tasked four people (two procurement managers, an analyst, and an admin) with clearing their calendars for two weeks, not telling them why. Assume you are on vacation and show up at my office at 9 o’clock on a Monday morning. When they showed up, I told them they had two weeks to go out and come up with a strategy on how we could reduce the costs involved in making toothpaste dispensing pumps? There were no constraints and no budget. They could go wherever they wanted, talk to marketing, talk to suppliers, and talk to manufacturing. The procurement managers took to the road. The analyst captured all of the data being sent back from their efforts. The admin coordinated everything and helped them prepare the strategy. After two weeks, they presented a plan on how to reduce costs. It promised significant savings, and it was adopted by the company. One part of their plan involved replacing the aluminum ring in the top of the spring mechanism with a plastic version. They also came up with a different idea for how to label the product more cost effectively. The lesson learned wasn’t about how to save money. Instead, we learned that if you want to really figure out how to deliver more value, you have to dedicate your staff full time to the task, which means taking them out of their day-to-day job and problems. You can’t have people focused on it part-time. It must be a full-time focus on creating value. This is what we are doing at Roche/Genentech.
LSL: Explain the process of creating the Roche/Genentech SRC.
Heal: We did some benchmarking first, visiting other companies’ innovation centers. We elected to go with the Walt Disney Creativity Strategy. It is a proven technique for coming up with creative ideas. We built on the Disney creativity process to create something we thought would work in the pharmaceutical industry in order to create and deliver value. The three main elements to create the SRC were: get the people with the right skill sets and confidences; create the process to drive creativity and innovation, and bring it to the business; and create the environment where it can take place.
The process began in October 2010 when I discussed the idea with executives within Roche/Genentech. From January 2011 through July of that same year, I worked with the head of procurement to get approval. In October of 2011 I was placed as a full-time employee to work up the business case for SRC. The plan was approved across Roche in January 2012. We began creating and building a 3,400-sq.-ft. center in San Francisco , which opened on June 11, 2012.
LSL: Explain how SRC works.
Heal: We have 11 people — five full-time Roche employees, including myself, five full-time strategic partner employees who work at the SRC, and a program manager. In addition to functioning as a value creation agent, I also serve as the SRC team leader. Everyone’s full-time job is to create and deliver value together. The strategic partner employees are physically based here and can’t work with any other organization. They are dedicated to just working with Roche/Genentech, which is rather unique. Each Roche employee is paired with a member of a strategic partner, working together in a pod. I sit about three feet away from my strategic business partner on a daily basis.
The team does not have anything to do with pricing. That is done by the procurement people. We talk about how can we bring value to Roche/Genentech, and bring value to our partner organizations as well. We look for ideas which bring value to both companies, not focusing on price. I know it’s called the Supplier Relationship Center, but the funny thing is we actually banned the word “supplier” from being used at the center. We are partners, working together, trying to bring success to both or organizations.
Though I am a director-level person, we don’t usually use titles. We even created new job roles for people who work in the center — value creation agents.
LSL: Describe the facility itself.
Heal: The five pairs of value creation agents are based in pods, which are pretty much paperless equipped with computers and electronic whiteboards. We have a program office where the program manager sits, tracking where we are and what we are doing. We have a regenerative space, which is a room where you can meditate, sleep on a couch if you want, or listen to music. The SRC also has a social space where everyone can interact. However, we don’t talk there about any of the confidential ideas that any of the pairs are working on. Finally, we have the creative room that is equipped with a lot of technology. For example, it has two 88 inch starboards (electronic whiteboards), two 55-inch plasma screen TVs equipped with camera and audio equipment to facilitate meetings with people remotely. What makes this room very interesting, though, is it is fully customizable. The room has over 3,000 computer controlled lights which are built into the walls and ceilings. At the touch of a button we can change the color of the room completely. Depending upon the desired emotional configuration appropriate for the phase of the process we are involved, the room can be changed so as to trigger the right emotional feel and output from the people physically participating in those sessions. The furniture will even get switched out. We will even change the temperature and smell in the room. This is the room we use to run the collaborative sessions.
The combination of dedicated employees, in a dedicated space, configured to spur innovation, provides Roche/Genentech and our strategic partners with a unique opportunity to truly work collaboratively with a single focus — creating value for each other’s organization.