practitioner’s section - business chemistry · 2014-02-27 · operational excellence (opex)...

10
1 Introduction A typical novel drug takes over 10 years and over $1Billion from discovery to market (PhRMA, 2013). The current pharmaceutical business model is being questioned due to declining R&D productivity as measured by approved drugs over R&D investments (Cockburn, 2007; Scannell et al., 2012). One key met- ric of productivity is cycle time of the R&D process. Reducing the time to market has numerous busi- ness benefits, such as longer exclusivity and reduced costs (Mestre-Ferrandiz et al., 2012). Operational Excellence (OpEx) methodologies have long been used for productivity improvement (Ber- tels, 2003). In the past few decades, a number of new approaches emerged. The Six Sigma method- ology, introduced by Motorola in 1980’s, empha- sizes the use of statistical tools to understand and reduce variation and improve quality. The Lean methodology, popularized by the success of the Toyota Production System, is widely used to elim- inate waste and reduce cycle time for manufactur- ing and product development processes. Many organizations have combined these new method- ologies with traditional quality improvement tools in their implementation of Operational Excellence. One common form of implementation is DMAIC, which is the acronym for Define, Measure, Analyze, Improve, and Control, a five-phase process improve- ment approach originated from General Electric. As illustrated in Figure 1, DMAIC is one form of the Plan-Do-Check-Act (PDCA) cycle advocated by W. Edwards Deming for scientific problem-solving and continuous improvement (Deming, 1986). Since the 1990’s, Operational Excellence method- ologies have also been implemented to a varying degree in pharmaceutical manufacturing to reduce cycle time, improve quality, and control costs. In the past few years, as improving R&D productivity became an imperative, Operational Excellence was introduced to many pharmaceutical R&D organi- zations, ranging from DMAIC training of a small group of individuals to divisional deployment of a suite of OpEx methodologies. Management and OpEx practitioners believed that the same disci- plined improvement approach applies to the phar- maceutical R&D process (from discovery of a drug target to application for regulatory approval) as well as manufacturing. While the OpEx methodologies worked well in a project within one or two functional areas, practi- tioners quickly realized they faced new challenges when applying them to improve the core process (Johnstone et al., 2011; Barnhart, 2013). For exam- ple, engaging a local team in a Kaizen event to improve their own process is effective. But when the outcome is less defined and the processes inter- twined among many organizations and geograph- ical locations, a myriad of issues, from defining the right metric to gaining the right sponsorship, Practitioner’s Section Improving R&D productivity requires a balan- ced approach Fang X Zhou* and Thomas Bertels** In recent years pharmaceutical companies have implemented Operational Excellen- ce (OpEx) in their R&D organizations to improve productivity but had only limited success. Practitioners and management start to question the effectiveness of pro- cess-focused improvement methodologies. In this article, we illustrate a number of challenges OpEx practitioners face and argue that our long-held assumptions and lack of understanding of pharmaceutical R&D can prevent us from seeing the real problems. We recommend a balanced approach by integrating process management with organization’s project management capability in order to better engage the stakeholders and deliver both short-term results and long-term improvement. * Valeocon Management Consulting, 127 W. 26th Street Suite 500, New York, NY 10001, United States, [email protected] ** Valeocon Management Consulting, 127 W. 26th Street Suite 500, New York, NY 10001, United States, [email protected] Journal of Business Chemistry 2014, 11 (1) © 2014 Institute of Business Administration Improving R&D productivity requires a balanced approach 33

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Page 1: Practitioner’s Section - Business Chemistry · 2014-02-27 · Operational Excellence (OpEx) methodologies have long been used for productivity improvement (Ber - tels, 2003). In

1 Introduction

A typical novel drug takes over 10 years and over$1Billion from discovery to market (PhRMA, 2013).The current pharmaceutical business model is beingquestioned due to declining R&D productivity asmeasured by approved drugs over R&D investments(Cockburn, 2007; Scannell et al., 2012). One key met-ric of productivity is cycle time of the R&D process.Reducing the time to market has numerous busi-ness benefits, such as longer exclusivity and reducedcosts (Mestre-Ferrandiz et al., 2012).Operational Excellence (OpEx) methodologies havelong been used for productivity improvement (Ber-tels, 2003). In the past few decades, a number ofnew approaches emerged. The Six Sigma method-ology, introduced by Motorola in 1980’s, empha-sizes the use of statistical tools to understand andreduce variation and improve quality. The Leanmethodology, popularized by the success of theToyota Production System, is widely used to elim-inate waste and reduce cycle time for manufactur-ing and product development processes. Manyorganizations have combined these new method-ologies with traditional quality improvement toolsin their implementation of Operational Excellence.One common form of implementation is DMAIC,which is the acronym for Define, Measure, Analyze,Improve, and Control, a five-phase process improve-ment approach originated from General Electric.

As illustrated in Figure 1, DMAIC is one form of thePlan-Do-Check-Act (PDCA) cycle advocated by W.Edwards Deming for scientific problem-solving andcontinuous improvement (Deming, 1986).Since the 1990’s, Operational Excellence method-ologies have also been implemented to a varyingdegree in pharmaceutical manufacturing to reducecycle time, improve quality, and control costs. In thepast few years, as improving R&D productivitybecame an imperative, Operational Excellence wasintroduced to many pharmaceutical R&D organi-zations, ranging from DMAIC training of a smallgroup of individuals to divisional deployment of asuite of OpEx methodologies. Management andOpEx practitioners believed that the same disci-plined improvement approach applies to the phar-maceutical R&D process (from discovery of a drugtarget to application for regulatory approval) aswell as manufacturing. While the OpEx methodologies worked well in aproject within one or two functional areas, practi-tioners quickly realized they faced new challengeswhen applying them to improve the core process(Johnstone et al., 2011; Barnhart, 2013). For exam-ple, engaging a local team in a Kaizen event toimprove their own process is effective. But whenthe outcome is less defined and the processes inter-twined among many organizations and geograph-ical locations, a myriad of issues, from defining theright metric to gaining the right sponsorship,

Practitioner’s SectionImproving R&D productivity requires a balan-ced approach

Fang X Zhou* and Thomas Bertels**

In recent years pharmaceutical companies have implemented Operational Excellen-ce (OpEx) in their R&D organizations to improve productivity but had only limitedsuccess. Practitioners and management start to question the effectiveness of pro-cess-focused improvement methodologies. In this article, we illustrate a number ofchallenges OpEx practitioners face and argue that our long-held assumptions andlack of understanding of pharmaceutical R&D can prevent us from seeing the realproblems. We recommend a balanced approach by integrating process managementwith organization’s project management capability in order to better engage thestakeholders and deliver both short-term results and long-term improvement.

* Valeocon Management Consulting, 127 W. 26th Street Suite 500, New York, NY 10001, United States, [email protected]

** Valeocon Management Consulting, 127 W. 26th Street Suite 500, New York, NY 10001, United States, [email protected]

Journal of Business Chemistry 2014, 11 (1) © 2014 Institute of Business Administration

Improving R&D productivity requires a balanced approach

33

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emerge. As a result, many OpEx efforts have madelimited impact in R&D. Some practitioners werequick to blame OpEx maturity and organizationalculture as the causes. But they are not unique topharmaceutical R&D and cannot explain all thechallenges. To understand these challenges, wemust first examine long-held beliefs and practicestaken for granted in manufacturing and serviceenvironments, and ask:

What is fundamentally different when strivingfor productivity improvement in R&D as com-pared to manufacturing or services?What aspects of Operational Excellence are validand relevant for pharmaceutical R&D? What ismissing in the traditional approach?

The intent of this article is not to cover the full spec-trum of the challenges facing OpEx practitionersand R&D business leaders. Instead, it focuses onone key question:What is the role of processimprovement in transforming pharmaceutical R&D? In this article, to help readers appreciate the spe-cific challenges, we first present a hypothetical casethat is based on our real-life observations of imple-menting OpEx in many pharmaceutical R&D organ-izations. It is used to illustrate one aspect of R&Dproductivity improvement: cycle time reduction.We then link the challenges to the critical differ-ences between pharmaceutical R&D and manu-facturing or services. We believe that the under-standing of these differences is fundamental todeveloping new perspectives and applying the rightmethodologies in pharmaceutical R&D. Finally, by

considering the organizational reality in pharma-ceutical R&D and applying the above understand-ing, we propose a practical approach to reduce cycletime and develop organization’s capability of con-tinuous improvement.

2 The Challenge: A Cycle Time ReductionExample

To illustrate the challenge in applying the tra-ditional process improvement methodologies inpharmaceutical R&D, consider the following sce-nario.

In a global pharmaceutical company, a numberof R&D programs were facing competition frommultiple industry leaders, in some cases severalmonths to a year behind the leading competitor.Based on external benchmarking, the executivesestimated that their company’s overall R&D cycletime was about the same as or slightly longer thanthe competitors. Therefore, it was imperative toreduce the cycle times in the process wherever pos-sible. A cycle time reduction project was charteredto identify opportunities to streamline a sub-processthat had the worst performance. The team wasled by a respected functional leader and coachedby an Operational Excellence veteran experiencedin improving both manufacturing and transaction-al processes in other industries, and followed thepopular DMAIC framework.

As a high-priority project, the team receivedstrong sponsorship from top management anddedicated resources, both of which were uncom-mon in the early stage of OpEx deployment. As a

Fang X Zhou and Thomas Bertels

Journal of Business Chemistry 2014, 11 (1)© 2014 Institute of Business Administration 34

Figure 1 DMAIC and PDCA cycle.

Plan

DoCheck

ActDefine

Measure

Analyze

Improve

ControlControl Define

Measure

Analyze

Improve

Act Plan

DoCheck

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result, the Define phase went smoothly, and thesponsors approved the project with a goal of reduc-ing the average cycle time of a sub-process in PhaseII clinical development by 3 months.

As soon as the team entered the Measure phase,however, they encountered major obstacles:

The process was poorly defined and document-ed in various formats. The process flow variedfor each program because teams developedtheir own way of performing common tasks.No standardization was attempted.Each program required some unique decisionpoints, branches, loops, and steps in the process.No single process map could adequately describethe current state.With regards to cycle time, there was no oper-ational definition or systematic measurement.The data available was incomplete and incon-sistent.

The process was obviously not consistent, out-liers common, and the measurement system notreliable. If the baseline was undefined, what shouldbe the SMART (Specific, Measureable, Achievable,Relevant, and Time-bound) goal statement at theend of Measure? Should the project goal be 1) reduc-ing the variation to have a better defined baselineor 2) reducing the average cycle time as originallychartered? Could the team achieve both objectives?

In Analyze, the cross-functional team workedto identify the root causes of the long cycle timeand variation. Some common potential causes wereidentified based on limited information of previ-ous programs, including

Resource constraints (both internal and exter-nal)Technology/IT limitations (multiple conflictinglegacy systems)Regulatory requirements (unclear or changing)Product-specific requirements (translated intounique tasks and deliverables)Program priority (due to commercial/businessreasons)Unexpected internal/external events (leadingto change in resources and course of action)

Most of such factors were categorical and attrib-ute variables that were rarely operationally definedand hard to quantify. Given the poor data availablefor the few dozen programs, statistical analysestypically required in Analyze were not possible. Foreach program, a different set of factors seemed tocontribute to cycle time. There was hardly any Pare-to effect or consensus on the critical few drivers.What could the team do to verify the relative impact

of the factors and prioritize them for improvement?Entering the Improve phase without a clear

focus on a few critical factors, the team brain-stormed and developed an assortment of solutionsto address various causes. Eliminating various typesof waste led to a number of proposed changes.Implementing automation to replace manual workwas a popular high-impact solution but requiredcapital investment and long-term planning. A finalrecommendation was to identify best practices andincorporate them into a global process as the futurestate. Process maps, responsibility matrices, guid-ance documents and templates were proposed toguide the functions involved. During the imple-mentation, a practical question then arose: to whatextent should we standardize or prescribe the solu-tion without being seen as over-controlling orbureaucratic? In an organization where the term“process” was often viewed as a rigid structure thatstifled innovation and individual creativity, howcan the process be efficient, consistent, but alsoflexible and enabling? The team knew that own-ership and change management would be a bigissue in the Control phase.

The improvement project did not end withimplementation, even with sustained ownershipof the solutions. Despite visible process changes,new roles and responsibilities, training of staff, anda wide array of tools and templates, senior man-agement’s question remained: “How can we besure that the new process is better, and by howmuch? Can you assure us we will beat the compe-tition?” Given the numerous changes happeningoutside the project and many factors (from knownand controllable to unknown and uncontrollable)that could influence the cycle time, the team sawno single factor that could be a useful leading indi-cator. Since it would take at least two years to haveone project go through the new process and manymore years to establish a new baseline, the teamwas struggling to provide a convincing answer. Inthe meantime, R&D program managers asked:“How much could the new process improve MYprogram’s cycle time?” Improvement in the aver-age did not matter to them because each programwas so unique. Without a clear path forward, sen-ior leadership reluctantly declared project successso they could dissolve the team to free up resources,but promised to “study the issue further.”

As the example shows, even a well preparedOpEx team with strong leadership support facesserious challenges when it comes to tackling processimprovements in an R&D environment. In reality,the situation is often worse because most R&Dorganizations exhibit a low level of OpEx maturi-ty: poorly defined problems, lack of sponsorship,project variability, and inexperienced teams. But

Journal of Business Chemistry 2014, 11 (1) © 2014 Institute of Business Administration 35

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what is really unique about improving pharmaceu-tical R&D processes? How should OpEx profession-als approach it?

3 Challenging assumptions: Pharmaceu-tical R&D is different

To create a right mindset when approachingthe R&D process improvement challenge, it is help-ful to revisit two unquestioned assumptions wecarry over from improving manufacturing or serv-ices.

Assumption 1: Variation is always undesirable.This is not the case in R&D. The output of the phar-maceutical R&D process is a new medicine, whoseideal characteristics are often defined by the Tar-get Product Profile. The path to achieve that goalis much less defined at the beginning. The processinvolves numerous decisions along the way, e.g.choices among multiple biological pathways, mech-anisms, or formulations. The decision to investi-gate or pursue one way or the other depends onthe experience and human judgment of the knowl-edge workers. Some observed variability simplyreflects the freedom given to the teams to designtheir own work and to innovate. Additional varia-tion among projects is due to scientific or businessreasons. For example, the therapeutic area influ-ences the design and duration of a clinical investi-gation, and portfolio priority leads to varying lev-els of resource allocation among projects. The chal-lenge is to identify and separate sources of inten-tional variation from those undesirable, such asirreproducible results and inconsistent project plan-ning.

Assumption 2: The process, not the people, con-tributes predominately to the quality and perform-ance. Because the work is defined and executed bya team of experts in R&D, “people are the process.”While a large amount of work in R&D is routineand can be organized and managed as a process,significant progress and innovation come from peo-ple working together as a self-organizing team.People familiar with team dynamics understandthe challenge of working with cross-functional,multi-cultural, and multi-regional teams. Teamleaders and senior management need to under-stand the factors that build an effective team, e.g.commitment to goals, clear roles and responsibil-ities, established trust and agreed collaborativeprocesses. In addition, multiple teams are involvedalong the process from early discovery to commer-cialization, and ownership continuity and knowl-edge transfer are largely facilitated by people. Select-ing the right teams and enabling them to effec-

tively bring out innovation is not a process issue –it requires proper organization design, effectivegovernance, a supportive culture, individual andteam accountability, and continued developmentof people. An overemphasis on process can limitour ability to see broader issues and opportunitiesthat related to the organization, people and cul-ture, and therefore not engaging the right stake-holders, e.g. senior leadership.

In the hypothetical example above, the teamfailed to understand the sources of the variabilityin R&D, and approached the problem as if allobserved variation was the characteristics of theprocess, i.e. “common cause” variation. In reality,the largest contributor is “special cause” variation,e.g. decisions and circumstances that are uniqueto individual programs and teams. Furthermore,the team treated the process as a manufacturingor transactional process and failed to recognizethere was a large governance component in thelong cycle time.

If a traditional process-focused improvementeffort was not enough, how could they have doneit differently?

First, there are a few concepts that are funda-mental to our understanding of pharmaceuticalR&D productivity.

1. R&D is largely knowledge work in which a con-siderable number of tasks cannot be welldefined. Peter Drucker raised “knowledge-work-er productivity” as a management challenge inthe 21st century and laid out the six major fac-tors that differentiate knowledge-worker frommanual-worker productivity (Drucker, 1999).Traditional process-focused improvement meth-ods were developed primarily for manual workand have a basic assumption: most if not alltasks can be pre-defined in a process in orderto produce the desired outcome. Consequent-ly, we expect the process to vary within a defin-able range. In other words, it should be stable.To improve manual-worker productivity, thequestion is about “how.” This is true in manu-facturing or services. However, in knowledgework, such as in R&D, the crucial question isabout “what” because all tasks are not knownin advance. A substantial amount of tasks areprogressively planned, defined and executed bythe knowledge workers themselves (individu-ally or in collaboration). It is important to appre-ciate the emergent nature of R&D, in which newscientific and market information continues toemerge and modify the subsequent activities.

2. A process has to be purposely designed - “fitfor use.” A process in R&D should enable knowl-

Fang X Zhou and Thomas Bertels

Journal of Business Chemistry 2014, 11 (1)© 2014 Institute of Business Administration 36

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Journal of Business Chemistry 2014, 11 (1) © 2014 Institute of Business Administration 37

edge work productivity, e.g. enabling close col-laboration and effective communication. Theresistance against “processes” in R&D oftencomes from the perception that a process lim-its intellectual freedom. When designing orchanging a process in R&D, we have to strike acareful balance between implementing bestpractices and encouraging creativity. Choosingthe right processes to improve and designingto the right level of details become critical.

3. Governance and work processes jointly con-tribute to R&D productivity. Governance process-es determine what is done, and work process-es describe how things are done. A governanceprocess helps management establish prioritiesand make critical decisions regarding projectportfolio and resources allocation in order toachieve optimal results. A work process repre-sents how resources (human and non-human)are organized, based on the current knowledgeand practices, to produce a pre-specified out-come. While the work processes are typical tar-gets for improvement by OpEx practitioners,the governance processes are often the bottle-necks in R&D productivity. A different approachis required to address governance processes.

Back to our example, the team could separatethe governance layer of the overall process fromthe operational layer, and analyze them different-ly. Much of observed cycle time variation was like-ly due to portfolio and resource decisions, i.e. howmany projects in the portfolio and how manyresources allocated to each project, made by theexecutives or governance body (see Figure 2). Itwould be a waste of time trying to understand whylow priority projects with fewer resources tooklonger to complete – the time-resources relation-ship was known when the resource decision wasmade. These decisions do not change the opera-tional level detail of the work, i.e. the work process.To reduce the overall cycle time, the management

could follow Little’s law, which states that the aver-age cycle time is proportional to the number ofitems in the process (“work-in-progress” or WIP)and inversely proportional to the throughput. Inthe case of pharmaceutical product developmentprocess, any project, whether it is active, pending,on-hold or even discontinued, is a WIP item as longas it consumes organizational resources. It is com-mon that projects in the portfolio stop movingwhile the teams wait for management decisionson resources or directions. Therefore, the obviousimprovement opportunities at the governance levelinclude 1) reduce the number of projects in the port-folio and 2) simplify decision making along the crit-ical path to allow continuous flow. The formerrequires disciplined portfolio management, andthe latter requires the management to see them-selves as servant leaders, not as authorities.

Second, the team could use the approach formanaging special cause variation, i.e. identify andunderstand outliers. At the core of OperationalExcellence is identification and separation of sourcesof variation. This is true and applicable in pharma-ceutical R&D. But the sources in pharmaceuticalR&D are much less obvious than in manufactur-ing or services. Instead of looking for a “process”baseline (i.e. average cycle time of the process), itwould be more productive to investigate if a “pro-ject” baseline (i.e. the initial project plan) was cre-ated for each project. They could estimate theamount of variation among project baselines thatreflected intentional or assignable variation, i.e.their portfolio priority and scientific rationale. Theremaining variation could be attributed to twosources: 1) process inconsistency and 2) deviationsin project execution. If of a significant size, eachsource would be opportunities for focused improve-ment with traditional OpEx tools and methods. Bydeveloping greater appreciation of the nature ofknowledge-based work and the roles of governanceand work processes in pharmaceutical R&D, we canstart to see new opportunities beyond the process.

Figure 2 Governance and work processes contribute to cycle time.

Improving R&D productivity requires a balanced approach

ProcessManagement

ProjectManagement

ResourceDecisions

PortfolioDecisions

Overall Cycle Time

Governance Process Contribution

Work ProcessContribution

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4 An Opportunity: Process and ProjectManagement

Operational Excellence is more than a set oftools. It is a culture of continuous improvementthat requires commitment and engagement at alllevels across the organization. In manufacturingand services where processes are more defined,process management (with its roots in the PDCAcycle) has proven to be an effective mechanism toengage the right stakeholders in continuousimprovement. Given the unique nature of pharma-ceutical R&D, how can OpEx practitioners useprocess management effectively?

In pharmaceutical R&D, many activities changedue to unique requirements of the projects or rapidadvancement of knowledge and technology. There-fore, activities are more project- than process-driv-en. By Project Management Institute definition, aproject is “a temporary endeavor undertaken tocreate a unique product, service, or result.” (PMI,2013) Most of the pharmaceutical R&D activitiesfit this definition. Process management is usefulonly to the extent the activities are repeated, where-as project management capabilities are specifical-ly developed to address the unique nature of a proj-ect.

Project management has evolved as a disciplinein the past decade. As it becomes an essential partof product development and technology imple-mentation in many industries, it has incorporateda wide range of management best practices, includ-ing Operational Excellence concepts and tools.Unfortunately, in most organizations inexperiencedstaff performs project management work. Too often,management and staff equate project manage-ment to “Gantt chart” management, i.e. creatingand updating project schedules on a Gantt chart.Instead of proactively and methodically managingvarious aspects of a project, these project managerstake orders from management, record meetingminutes, update the Gantt charts, and track downlate tasks. In our view, project management goesbeyond the standard scope, time, and cost man-agement. It systematically integrates these aspectswith quality, risk, communications, procurement,and stakeholder management required in a proj-ect lifecycle (PMI, 2013). The principle of progres-sive elaboration is particularly applicable to theemergent nature of R&D, and its emphasis on iter-ative planning and lessons learned is consistentwith the PDCA cycle in Operational Excellence.

One advantage of strengthening project man-agement is that its implementation immediately

Fang X Zhou and Thomas Bertels

Journal of Business Chemistry 2014, 11 (1)© 2014 Institute of Business Administration 38

Figure 3 Combining process and project management for continuous improvement.

Low Process Variability High

High Process Management Maturity Low

Degree ofApplication

Drug discovery ina small start-upcompany

High-volumemanufacturing ina large company

Project Management

Process Management

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Journal of Business Chemistry 2014, 11 (1) © 2014 Institute of Business Administration 39

benefits the current business. Another advantageis its real-time monitoring of project metrics, suchas deviations from the plan using earned value,which can be leading indicators of process perform-ance. In addition, there is a growing acceptance ofproject management in the pharmaceutical R&Dorganizations as scientists as well as managementrecognize its benefits. Therefore, there exists a greatopportunity for OpEx practitioners working in thisindustry to leverage this body of knowledge andorganizational capability for improvement.

As a first step, OpEx practitioners have to seethe problems from both project and process per-spectives. Process management and project man-agement can be combined to different degreesdepending on the variability of the process andorganization’s process management maturity (seeFigure 3). For example, in a typical high-volumemanufacturer where low process variability isdesired, process management is most critical in thepursuit of continuous improvement. As processmanagement is developed and matured, processvariability goes down and quality and productivi-ty go up. In the case of pharmaceutical R&D, thediscovery phases have less defined processes than

early and late development phases. Therefore,process management has been limited to routineactivities or at a high level in discovery, but adapt-ed more broadly in late development processes.Research and development activities in all phasesheavily depend on project management. Soimprovement in project management capabilitieswill have the biggest impact on R&D productivity.

To determine the best improvement approach,it is helpful to assess the organizational maturityin two dimensions: process management and proj-ect management, as illustrated at high level in Fig-ure 4. For example, a R&D organization with highproject management maturity but low processmanagement maturity may be able to execute proj-ects successfully but only with highly experiencedproject managers and teams. The capability is notreadily scalable if the demand rises because thebest practices have not been institutionalized inthe form of processes. In contrast, an organizationwith high process maturity and low project man-agement maturity may be efficient delivering stan-dard or routine results. But if the external circum-stances demand different outcomes, the organi-zation may not have the right leaders and culture

Improving R&D productivity requires a balanced approach

Figure 4 Process and project management maturity assessment.

High variability in project executionand outcomesWaste in “reinvent-ing the wheel“

Consistent processesacross organizationbut lack flexibilityProject teams “followthe rules“ but lackleadership and cre-ativity

Projects executed asplanned but requirehighly experiencedproject managersBest practices notinstitutionalized inprocesses

Projects are man-aged according to anestablished enter-prise frameworkLessons learned con-tinue to improveenterprise processes

State of Maturity

Proj

ect M

anag

emen

t Mat

urity

Low

Hig

h

Low HighProcess Management Maturity

Efficient but noteffective

Effective but notefficient

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to respond quickly. OpEx practitioners and seniormanagement should use this maturity assessmentwith their business strategy to determine the desiredfuture state for the organization, and then identi-fy the optimal path (see Figure 5).

Based on our experience, there is a greater organ-ization capability in project management thanprocess management in pharmaceutical R&D. Insuch a case, the organization’s project manage-ment capability should be leveraged by OpEx prac-titioners, i.e. project management can be a tempo-rary substitute for process management, provid-ing an alternative path to improved business resultsuntil the organization becomes ready to embracefull process management. The same maturityassessment can also help other R&D organizations,such as those in the medical device industry, whereboth process and project management have a medi-um level of maturity. OpEx practitioners improv-ing R&D processes should consider the followingsteps.

1. Assess organizational maturity in process man-agement and project management

2. Understand what is common among R&Dprojects and what is unique

3. According to the organizational maturity, ap-ply process management to standardize thecommon tasks as processes, and apply projectmanagement to manage unique tasks in proj-ects, respectively

4. Build project plans based on governance deci-sions, standardized work processes, and expert-ise of the teams

5. In real time, use lessons learned during proj-ect execution as feedback to continuouslyimprove existing processes

6. Continue to improve process and projectmanagement capabilities in the organization

Figure 6 shows how governance, project man-agement, and process management work togeth-er to ensure project success and continuousimprovement.

Figure 5 Tailored approach based on process and project maturity.

Identify & managespecial cause variation

Establish professionalproject management

Leverage processcapability to reduceproject riskRedesign processes to„fit for use“

Select best practicesin projects to estab-lish common process-esImprove process capa-bility by reducing vari-ation

Integrate process andproject managementto enable continuousimprovement & inno-vationDevelop organization-al capability to learnand adapt

Tailored Approach

Proj

ect M

anag

emen

t Mat

urity

Low

Hig

h

Low HighProcess Management Maturity

Journal of Business Chemistry 2014, 11 (1)© 2014 Institute of Business Administration 40

Fang X Zhou and Thomas Bertels

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5 Conclusion

In summary, improving pharmaceutical R&Dusing classical process-focused approaches areunlikely to succeed without adaptation to its uniqueenvironment. The emergent nature of R&D andknowledge-based work mean that R&D processesare less defined and highly variable. Governance,organizational structure and capability have sig-nificant impact on R&D productivity. OperationalExcellence practitioners using the traditionalapproach need to look beyond the process andquestion long-held assumptions. One opportuni-ty to overcome some of these challenges is to inte-grate project management with the OperationalExcellence methods that do apply. By carefully bal-ancing project management and process manage-ment in our approach to R&D productivity, we cancontinually reduce variation over the long termwhile improving business results from on-goingR&D projects. The effectiveness of this approachwill impact not only R&D productivity but also cul-ture change required for continuous improvementby embedding the PDCA mindset in everyday activ-ities at all levels of the organization.

Acknowledgements

We thank Fredrik S Bendiksen (former Vice-Headof R&D, Nycomed), Linda Bryant (VP, Global Strat-egy & Business Excellence, Janssen), VenkyGopalaswamy (Vice President and head of Busi-ness Process Management, Philips), Paul W. Knight(Director, R&D Productivity & Continuous Improve-ment, Bristol-Myers Squibb), Dr. Ralph N. Landau(Vice President, Development & Regulatory Affairs,Sandoz), and Joseph A. Ritter (Director, Sigma, Strat-egy and Operations, Merck) for their thoughtfulcomments and suggestions on the earlier versionsof the manuscript. We also thank our colleague,Steve Crom, for critical review, feedback, and edit-ing of the initial draft.

References

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Figure 6 Integrated process and project management ensures execution and continuous improvement.

PlanBuild/modify projectplan with governanceand process inputs

DoExecute projectaccording to its uniqueplan

ActTake actions to ensureproject success

CheckMeasure and analyzedeviations from itsplan

GovernancePortfolio decisionsResource decisions

ProcessManagement

Standard processesMetrics

Project Management

Best practices

Lessons learned

Journal of Business Chemistry 2014, 11 (1) © 2014 Institute of Business Administration 41

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Journal of Business Chemistry 2014, 11 (1)© 2014 Institute of Business Administration 42

Fang X Zhou and Thomas Bertels