Panther's Managing Innovation and Project Management - Case Study Example

PANTHER Introduction Panther is a pharmaceutical company that is in the process of developing a new therapeutic called Panther 123. It is a drug that is designed to the deal with an acute respiratory disease and that is considered to be a ‘blockbuster drug’ after its development. As Panther does not have any experience in the field of project management, a failure of clinical trials of another drug led the management to take a more professional approach for the development and deployment of Panther 123. The company does not want to make any mistakes in the clinical trial of this potential blockbuster drug. Therefore the company has planned the project over different phases followed by basic research. The company has also decided that it will out license that developmental drug that would get the drug through Phase II and Phase III as the company does not have any experience in the project management and does not want to take any chances that may lead to the failure. Panther’s approach to managing the innovation and the knowledge transfer throughout the Panther 123 development project has been evaluated in the next section. Managing Innovation and Project Management Before the beginning of any project or innovation, a project team is the most crucial part in the whole process. If the project team is not created the company can lose the focus on the development process of the product. As Panther had already faced difficulties in the previous product development process, a more professional approach to the process designing was taken place. In September 2005, the company management had introduced a project team to handle the decisions on the development. The previous structure of the project team was changed to coordinated matrix structure in which the recommendations and issues were discussed and reports were made. With the information gained from the teams and other members, a project go/no go decision was taken place. For the success of the Panther 123, formal management techniques were introduced along with time lines but the sad part is that it was not implemented as planned. Company founders are considered as the leaders for solving the problems that occur during the product development process. The probability of the product’s development success is perceived by the leaders to be higher as compared to the other perceivers. The major innovations gives the leaders persevere to fight with the ambiguities and setbacks while developing the product. In case of Panther, as aforementioned, the new drug development is considered as blockbuster – a drug capable of earning revenue of $1 million each day – which gives the leaders or the management to go forward despite the setbacks that the company has seen in the initial stages of development. Many innovative developments require excessive resources to ensure that the development of product can be a significant contribution to the company’s long term strategy. Panther had already conducted the successful animal testing for Panther-123 but invested more in the basic research of the drug and carried the tests further in order to understand biological mechanism in action. The company could have carried on with the first phase of clinical tests but because this was viewed as a short-term strategy, the management or the project team wanted to focus on the long term. The diagram shows that in order to develop and implement a new innovative product successfully, the following stages in the product development process must be followed. If the process is applied to Panther-123, it can be evaluated that the concept behind the drug consists of the market needs. The drug was developed to tackle a disease that affects 8% of the Western population and that is predicted to increase in frequency. The concept development step was therefore successfully implemented. [Source: Dolan 1991] The next step consisting of the feasibility testing was also successfully when the basic research on the animal testing was successfully administrated. The feasibility of the drug was further broken down into three Phases of clinical studies. The company had deployed the Phase I of clinical tests successfully but it was decided between the project that a second Phase I clinical test should be carried out with different target patients. Many situations had occurred for this decision which will be explained later. Managing innovation is similar to a poker game, in which the management can play many different hands. The best strategies are those that best suit the environment and the need of the organization. It is also widely accepted that the best innovations are better managed when strategies are based on incremental process, goal orientation and has interactive learning processes. In Panther’s case, the company lacked the needed experience in project management. The fact that appropriately fits here is that during the development of the new product a lot things can and in practice does goes wrong. The failure can be associated to the poor leadership or the lack of essential skills for the implementation of the process. The failure of the new product development of Panther was due to the lack of an appropriate approach for the development process and the company improvised as it deemed fit during the process. What the company needed was an aggregate plan to improve the management of the development function. It was decided that the developmental drug will be licensed out for the remaining phases such as Phase II and Phase III. The partnership approach to managing innovation and the development process was the first step that the company took in order to handle the project from a professional perspective. Partnership or alliances can be formed to follow R&D or any other steps to the development process. Panther therefore expected that the partnering company will lead the drug through commercialization. This strategic decision made by the management can help the project team to deal with many of the problems such as timing, coordination and motivation among the other staff and chemists involved in the project. The partnership approach to the development process can sometimes fail because the initiating companies fail to include them completely in the project from the beginning. The company usually using the partnership approach tends to separate the partnership management from the rest of the development team and process and do not provide them with enough resources. Panther made the same mistake, by taking the decision to involve the partnering company when it had already initiated the project and realized that the company does not have the necessary skills to go through the whole project. In addition to this, the company had also contracted an outside consultant to help it in the development of clinical trials during Phase I. If the partnering company is involved in the process, it has the full responsibility over the project. It has to devote in-house resources in order to monitor the project and acquire the new knowledge that was being created. When the decision for the partnering company was made, it was decided that the project team of Panther123 will go ahead with the study during the making of the agreement between the partnering firm. The company should have halted the project and taken the expertise of the management of Neptune (Partnering firm) before moving ahead as it had already faced failure in the second attempt of Phase I clinical test. Another failure of the partnering approach in Panther was that the project team of Panther 123 had no idea about the progress of the partnering and assumed that the process would be complete by September 2007 by which the Phase I would have been completed but it was done so. In addition to this, the project team was guessing the requirements of the partners when deciding to go head with the proposed future trials or not. To make the matters worse, lack of knowledge between the partner and the project team, the partners had no clue what studies should be done in the next phases. All these problems were occurring during the product design and the process development stages aforementioned in the diagram. The company did not have a proper planned project to carry out the innovation step wise and therefore the project team was jumping on all the stages of the new product development simultaneously. Another source of failure of the project in the Phase I was the factor of timeframe. All the timeframes on which the project team was working was based on guess work. If the company had developed an aggregate plan it would have provided the team with specific data to make the decisions. The steps comprising this process are work breakdown structure, schedule developing, analyzing the resources and developing a risk management plan like taking into account the regulatory conditions. In order to manage a successful product innovation through project management, the company besides following the product development process should take into account the following flowchart while designing the process. [Source: Project Management Manual, 2002] The company should account for the unknowable future and made the innovation process flexible to adapt to the unforeseen circumstances. For example, Panther faced different situations in which the project risk management was not taken into account. These are: The hospital selected for the trial did not have the necessary licensing to carry out the tests and as a result no other manufacturing company keen to be involved in a minor trial process The FDA had not given the approval for the change in the manufacturing process During the inspection certain particles were found in the suspension of which the chemists had no clue what they were. It is therefore wise to include more certainty in any plan. By doing so, the team and the product development effort will led by the plan rather than then being led by the knowledge along the implementation process. In order to successfully manage the innovation process three skills are necessary: Ability to demonstrate the capability of the new product to match the company competency and market reality Flexibility and adaptability to respond the unforeseen circumstances. Building support throughout the company to carry out the innovation process. Managing Knowledge and Project Management Knowledge management is not a new term. The transfer of knowledge has taken place for hundreds of year as family business owners have transferred their knowledge to their children, craftsmen taught their art to apprentices and employees exchanging ideas on the job. The method of knowledge transfer or knowledge management depends on the transfer purpose of the knowledge. It is the successful transfer of knowledge that influences the operational effectiveness of the project team and the product development process. This also influences the ability of the people in the organization to grow and innovate efficiently and effectively. Before the initiation of any project, a briefing is suggested to take place so that the first transfer of knowledge about the project can pass on to the upper management to the project team effectively. Another way the transfer of knowledge can take place before the project initiation is through workshops. Workshops can be structured or unstructured depending on the need of the knowledge. In both the techniques, knowledge is transferred or shared by highlighting the issues surrounding the project and discussing the solutions. The knowledge that is transferred is highly technical knowledge and can include the information such as time and cost of the project development process. In case of Panther, the management had developed certain teams that reported to their superiors. In addition, the teams had developed the development process of Panther 123 along the formal knowledge management lines such as preparing the cost and the schedule of the project. There are various methods to manage the knowledge transfer. The two methods that are widely used include: Codification Strategy: This method or strategy is based on the computers. Knowledge that is to be transferred or managed is codified and stored in knowledge databases. This knowledge can be accessed by anyone in the organization or outside partners depending on the access level. Personalization Strategy: Most companies prefer to use the personalization strategy in which knowledge is tied to the person from whom the knowledge was developed. The knowledge transfer takes place from direct person to person contact. The use of IT in such companies is to manage the knowledge so that it can be communicated. The choice of the above approaches depends upon the product and the information needed. If the company is trying to remodel the mature product then the development process of such product can be best understood if the knowledge is transferred through the codified strategy. But if the company is focusing on product innovation, the best approach would be personalization strategy. This is because the members involved in the product development process need to share information that could be lost in the document form. The choice between personalization and codification is difficult. If the company is unsure whether personalization strategy is appropriate for its team or not, it can assess itself using the following criteria: The business strategy of the company is based on product innovation The knowledge of one problem cannot be applied to other problems Employees rely on tacit knowledge such as scientific knowledge. The example of Memorial Sloan-Kettering Cancer Center (Hansen et al 1999) fits the above description of personalization strategy. The management chose the strategy to create 17 teams based on specific diseases. The teams used to meet weekly to discuss the initiatives, clinical findings and the on-going research. The result was customized treatment to the patients. In the same way Panther’s team were designed in such a way that each team (satellite teams) would report to the head of the team based on the clinical, preclinical information and business development information. This way the teams get a better understanding of the development process and therefore can work in coordination. During this process the findings and information were also reported and made available to other projects in Panther explaining the dos’ and don’ts’ of the project so that the future projects could progress without any hindrances. In addition to this, personalization strategy was also used by Panther to conduct face to face meetings with the equivalents in the partnering firm along with the business development manager. This technique would also ensure the consistency of the information that was being transferred. The next question that arises after the identification of the knowledge management strategy is the need for information technology in order to set up a knowledge management system. The level of IT that an organization needs is dependent of the type of strategy chosen by the company. The management strategies aforementioned require different IT structures including levels of support. Codification strategy requires project team to access all the information they can therefore they need to implement a system that is similar to a traditional library. On the other hand, personalization strategy requires a system that can allow team members to find other members. As we are focusing on the personalization strategy therefore Hansen et al (1999) has given the following strategy for implementation of information technology in personalization strategy. [Source: Hansen et al. 1999] In case of Panther, they had to transfer the knowledge of Panther 123 to Neptune, as further research and clinical trials would be conducted by the partnering firm and therefore they required the initial information related to the Panther 123. Panther although have a knowledge management system installed and the documentation related to the company’s own clinical doctors and chemists working on the project have been adopted on the system, the company still faced one problem. As the company was conducting clinical trials in collaboration with clinical research organizations, they did not provide the data that was compatible with Panther’s management system. Therefore Panther had to take measures to solve this problem as the deal with the partnering firm was completed. It is responsibility of the top management to choose a proper knowledge management strategy so that the company and the employees could benefit from it. If it fails to do so, the consequences are dire as can be seen from the Panther’s case study. CONCLUSION The project roadmap or the process can help the management in many ways. It can assist the project management team to capture and learn from its past development processes experiences and can therefore the lessons with modification can be applied to future projects. The real advantage of the product development process is a narrow one: it is through the choice of development project strategy that the company can determine future progression of the product development rather than responding to the individual’s project proposals as Panther was doing. If the project team has a clear understanding of the business strategy and how to translate it in project development map, only then can they identify and propose project processes that can be used. A successful project management can only be carried out if the company has the proper expertise. As it can be evident from the case study of Panther, the company and the management did not have the necessary expertise but still tried to carry out the Phase I again which was the turning point in the company’s project development process. In addition the company decided in the middle of the product process that it should be licensed out. The problems then just started building one by building causing the project team to get confused and lose the proper focus of the product development process. To make the matters worse, after the management had completed its second implementation of Phase I, the company was taken over by another European pharmaceutical company. Due to this, the new management ceased all the negotiations with Neptune that had been finalized after certain difficulties. The decision of the production and development of Panther 123 internally was now entirely on the new management. If the company had planned the entire project instead of just planning along as the project went further, the Panther 123 product would have been already on the commercialization stage. REFERENCES Adler, P., Mandelbaum, A., Nguyen, V. & Schwere, E., 1996, Getting the Most out of Your Product Development Process, Harvard Business Review. Biolos, J., 1996, Managing the Process of Innovation. Harvard Management Update Dolan, J., 1991, Managing the New Product Development Process, Harvard Business School. Elton, J. & Roe, J., 1998, Bringing Discipline to Project Management, Harvard Business Review Hansen, M., Nohria, N. & Tierney, T, 1999, What’s Your Strategy for Managing Knowledge. Harvard Business Review Hoegl, M. & Schulze, A., 2005, How to Support Knowledge Creation in New Product Development: An Investigation of Knowledge Management Methods, European Management Journal. 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