I attended Procurement Leaders Americas Conference in Miami, Florida this week.  The latter part of March 9th was extremely enlightening. Head of Strategy Research at Procurement Leaders, Jonathan Webb, shared a study on supplier-enabled innovation, followed by a case study by Clive Heal, Head of Innovation Center of Excellence with Roche. After which, there was a panel discussion about how supplier innovation can improve with better collaboration.  My blog will share some conference insights

The Key to Innovation

Jonathan’s presentation focused on connectivity as the key to innovation.  Not just the connection of the stakeholders and company – but the connection to the customers, the suppliers and the culture.  A dedicated procurement-connected program is the key to both innovation and a solid supplier-enabled innovation (SEI) program.  But procurement connectivity cannot act alone; it also requires talent that dedicated solely to SEI, incentives, plus training to listen, collaborate and move beyond the current state.   And, like any procurement program worth its weight, it also requires processes and tools.  SEI processes include directives to manage innovation, idea generation, idea screening, implementation and metrics.   Tools required for SEI to be extremely successful include contract lifecycle management, sourcing, and supplier relationship management.  In addition crowdsourcing mechanisms, knowledge management and monitoring tools are needed.  According to Jonathan Webb, for supplier innovation to occur the levers you need to create it are Procurement connectivity, talent, processes and tools.

Johnson & Johnson

Jonathan cited Johnson & Johnson as a case study in supplier-enabled innovation. .  Johnson & Johnson has a team of 12 people focused on cross-functional innovation sourcing.  All roles in the SEI team are senior, VP level and above, creating a culture focused on innovation and tied directly to the outcome.    The Johnson & Johnson team worked with a small number of key suppliers on large scale, multi-year initiatives.  Key areas of importance in the SEI program include:

– Trusted and open buyer and supplier relationship

– Joint strategic planning, shared objectives and roadmaps

– Financial commitments and partner enabled development

– Quarterly reviews

– Regular top-to-top discussions


Clive Heal, Head of Innovation Center of Excellence, discussed the journey at Roche.  Much of what the Roche team built was based on Disney creativity strategy.  Roche recognized they needed an Innovation Center of Excellence (COE).  Like Johnson & Johnson, Roche needed a separate focus on value innovation from the day-today activities.  Roche started an Innovation COE with three attributes – people, process and environment.  The people drive the process and the environment brought more ideas.  In 2012 -2013 five suppliers were brought together with Roche personnel in San Francisco to collaborate and bring more innovation to the organization.  The focus on the first meeting was on long-term relationships with key manufacturing suppliers.

The program was successful because Roche created value creation agents (VCA) and a COE called ICE – Innovation Center of Excellence.   The VCAs were chosen based on their breadth and depth of their experience.  Both the supplying and buying organizations had VCAs.  ICE innovation process is made up of six  steps that are closely aligned to the Disney creativity strategy:

  1. Research – define the business needs and opportunities
  2. Create – early collaborative development of innovative ideas
  3. Plan – develop actions for implementing ideas and quantify potential value
  4. Challenge– probe on the strengths and weaknesses of ideas and quantify risks
  5. Evaluate – identify ideas that meet business needs and delivery high net value
  6. Implement – approved ideas jointly implemented and communicate using standard business processes

Four of the steps were environmentally configured to help manage emotions during discussions.  Roche utilized the Disney changeable environment to optimize the innovation process.  Creating is a blue environment for open discussions and includes challenge questions to address the business needs.  The planning stage is in a green environment and only done after a few weeks of creating. Disney found radical idea approval has a higher increased approval after a few days/week in your subconscious.  The challenge environment looks at how to do something and is red to feed the mind to think.  And the evaluate environment is yellow to sift through the ideas and enable the right ones.

Once the final list is complete the hardest part is to sell the innovation business case and secure business case approval.  Roche found six imperatives that gave them 98% success:

  1. Secure executive agreement on key business needs (externally) or business challenges (internally). Define the decision makers.
  2. Involve the staff of the executives to generate and evaluate the ideas that will be moved forward.
  3. Select creative ideas that meet the business needs and have the potential to deliver high net value.
  4. Ensure the executive governance group have 2-3 heads up on the potential business cases coming their way to review (long shot, short list).
  5. Ensure the business case highlights the value delivered and how it meets key business needs.
  6. Extensively socialize the developing business case with lower level stakeholders before presenting to the Governance committee.

Roches success to date includes:

  • Eight innovation projects completed with external partners. Three on currently in progress
  • More than 100 workshops with suppliers to date generating greater than 5500 ideas.
  • 52 approved supplier business cases, 49 launched. 24 are core or continuous improvement opportunities, 12 are adjacent or new to Roche and 16 are disruptive or new to the world.
  • Greater than 30 internal business teams focused on innovation.

Roche is now developing a balanced portfolio of innovation business cases.  In addition they are starting to manage the ratio of internal to external work.

Bottom Line

Innovation and supplier-enabled innovation is not easy, nor is it something you can institute immediately.  It requires a completely different culture, an open and trusted environment between trading partners, connecting to make a shared difference and tools that move the team beyond the day to day.   Do you have the right attributes?