A white paper from the IT company Vertical*i (Lausanne, Switzerland; US HQ: New York) proposes the concept of “open (networked) innovation” as a method to better analyze all the implications of life sciences partnerships ranging from licensing deals to mergers and acquisitions, as well as managing internal development projects that cross multiple operational lines.
In effect, the company says that the concept of “due diligence” is not very well tested: It is seldom clear what the most critical issues are when a project is undertaken, and key findings are lost when they are not appropriately communicated. The result: many partnerships fail, and a troubling number of acquisitions become millstones around the necks of corporate management as the difficulties of merging operations and obtaining value grow.
Vertical*i suggests that networked innovation has the best chance of succeeding when seven core competencies are in place:
- strategic planning
- asset management
- tech scouting and market intelligence
- deal flow management
- valuation and risk management
- alliance and relationship management
All of these, except perhaps for “crowdsourcing,” are well-known attributes of successful relationships. By crowdsourcing, Vertical*i is alluding to the social-networking capabilties of the Internet; in this case, it implies that deal management processes should have a communication pathway or forum in place that offer “open or by-invitation-only opportunities to consider advertised problems for which the host company is seeking solutions.” The Connect + Develop program of Procter & Gamble (a Vertical*i client), wherein new products are proposed by registered users (which include P&G employees and others) and where requests for new ideas are posted.
To address these objectives, Vertical*i has developed a suite of software tools and services (see figure), most based on Web-enabled access to databases of information, actions and ideas. The heart is a configurable Interaction Manager that provides community profiling and communications pathways for partners, advisers and managers.
Other “deal flow” tools provide specific structures for reviewing ideas, evaluating deals, manage the contractural terms of deals (alliance management). Market intelligence is provided by, among other things, a relationship with ThomsonReuters, which allows portfolio managers to scout for news on product innovations and competitive situations. Vertical*i struck a deal with ThomsonReutes last year to access the drug pipeline information in Thomson Pharma (one of the company’s news services).
Overall business functions that the Vertical*i suite is designed to manage include:
innovation sourcing and open innovation
network insights and interaction management
in- and out-licensing management
M&A and divestiture management
partner commitment and relationship management
project/portfolio valuation and risk management
Vertical*i started several years ago with a focus on dealmaking activity in life sciences, and continues that focus today, although it has branched out into consumer goods, chemical and other industries. PC