Degrees of innovation
Innovations can be categorized in many ways. One of the most familiar frameworks is the “3 Horizons” from McKinsey.
- Horizon 1 innovations are about the “now”: existing business models and core capabilities
- Horizon 2 innovations extend the core capabilities or reach new customers or markets
- Horizon 3 innovations typically have a longer term view: create new capabilities to build on (or defend against) disruptive opportunities
Corporations likely focus on all 3 in a balanced way. In Merck (MSD outside the US/Canada), different teams, sometimes referred to as “innovation engines”, addressed each of these Horizons for commercial innovations. Note: this is separate from the R&D organization’s inventions: innovative medicines and vaccines – Merck’s mission covers both: “To discover, develop and provide innovative products and services that save and improve lives around the world.”
Horizon 1 initiatives typically resided in the global brand teams, especially driving efficiencies.
Horizon 2 innovations were driven by the global, regional and local “Commercial Innovation” teams. Their goal was to solve core business and customer challenges in innovative ways. This included extending core capabilities, like experimenting with social media to identify patients that might need our medicines (traditional approach was advertising in magazines). This also included reaching new customers, e.g. providing micro loans to patients who otherwise wouldn’t have been able to afford our medicines.
Horizon 3 innovations are still managed by 2 organizations which are part of the corporation, but operate separately from the pharmaceutical business as independent entities. This enables them to explore new opportunities in human healthcare while leveraging the company’s corporate capabilities in the healthcare industry, science, regulatory affairs and outcomes research.
- The Global Health Innovation Fund (GHI) is a $500M evergreen fund with 40+ digital health investments. GHI invests globally in platform companies with proven technologies or business models where the corporation’s expertise can accelerate revenue growth and enhance value creation. One of the companies GHI is investing in is koneksa health, which develops technologies to improve compliance, patient experience and effect detection in clinical studies.
- Healthcare Services & Solutions (HSS) markets services that help solve the problems faced by patients, providers and payors as they navigate the healthcare maze, more efficiently and at a lower cost. An interesting service provided by HSS is Aptus Health. This organization is commercializing an innovation that was created more than a decade ago by the core business: to engage digitally with doctors (traditionally, communication with doctors went through medical representatives). It is now the world’s largest healthcare professional community with over 3 million members across 63 specialties in 90 countries. Aptus Health was recently acquired by WebMD.
There is some overlap amongst these “innovation engines”, like the above mentioned service from HSS, Aptus Health, which originated in the core business. The core business also sometimes initiates Horizon 2 innovations. An informal committee of representatives of each group regularly met to increase awareness about each other’s initiatives and to provide each other “innovation” support.
As Mehmet Murat ildan said:
“Some people close their eyes to the horizons; some people sit and watch the horizons; some visit the horizons and some incredible people go beyond the horizons!”
So, as Innovation Leader, focused on Horizon 2 level initiatives, I made sure to clearly communicate this area of focus to my internal target audience, while keeping an open mind for emerging Horizon 1 and potential Horizon 3 innovations and passing them on to those colleagues.
More about this topic: McKinsey’s Three Horizons Model Defined Innovation for Years. Here’s Why It No Longer Applies. by Steve Blank, HBR
What do you think? Please share below!
More of my blogs on innovation: Wim Vandenhouweele