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TUM, Class 3 Thursday Reinventing Ourselves (Eli Lilly) Internal Ventures and Ambidexterity (3 M, TUM, Class 3 Thursday Reinventing Ourselves (Eli Lilly) Internal Ventures and Ambidexterity (3 M, Nokia, Hermes) JMPennings TUM 2004 1

Strategy and Innovation: Monday 15. 30 -1830 • Part I, Day 3 – Reinventing Strategy and Innovation: Monday 15. 30 -1830 • Part I, Day 3 – Reinventing (Ely Lilly) – Start New Page • 3 M, • Hermes • Part II, Day 3 – Tipping Point – Networking: Combining Old or New JMPennings TUM 2004 2

From Inertia Into Future with new Paradigm • Today: – Use current skills, structure From Inertia Into Future with new Paradigm • Today: – Use current skills, structure to add new product lines (Ely Lilly) – Internal venturing (3 M, Hermes) – Networking: Combining Old or New, or Rebundling Old into New Paradigm JMPennings TUM 2004 3

Reinventing ourselves: Ely Lilly • How do we organize, make people work together on Reinventing ourselves: Ely Lilly • How do we organize, make people work together on an routine vs novel basis? • How do we know customers? Are are current customers the ones we should listen to? JMPennings TUM 2004 4

Pharma and Biotech(1) • Key Players: Merck, Glaxo-Welcome, Roche, Pfizer, Novartis, BMS • Search Pharma and Biotech(1) • Key Players: Merck, Glaxo-Welcome, Roche, Pfizer, Novartis, BMS • Search for New Chemical Entities (NCE), large R&D budgets in search of a “blockbuster” drug • Hit rate very, very low (lower than roulette!) • First (before WWII) major NCE: Penicillin • From “discovery” to “development” (three phases), to “approval” to “market launch “ JMPennings TUM 2004 5

Major Thrust of Pharma Strategy • R&D driven: what enters the pipe line from Major Thrust of Pharma Strategy • R&D driven: what enters the pipe line from “discovery” , Phase 1 -3 research and testing to FDA approval and market launch? • Marketing injected: how do we penetrate therapeutic area where we position ourselves? JMPennings TUM 2004 6

Pharma and Biotech(2) • Strategy of firms: – R&D (Merck: beta blockers) or Market Pharma and Biotech(2) • Strategy of firms: – R&D (Merck: beta blockers) or Market (Pfizer: Viagra)) Driven – Joint ventures with biotech firms to latch onto new paradigms – Big consumers of R&D funds to fill the “pipeline” – Regulatory Approval (eg FDA) a key hurdle to get to market • Is drug safe, and does it produce health benefits? – Top Management, also “go-no. go committee” tends to be science oriented, but Pfizer, Novo Nordisk etc. are a little more market oriented – Competencies in certain “therapeutic areas”: • Cardiovascular, endocrine, pulmonary, bones, digestive JMPennings TUM 2004 system, brain, etc. 7

Pharma and Biotech(3) • Examples of blockbusters drugs: – – – Prozac (Ely Lilly: Pharma and Biotech(3) • Examples of blockbusters drugs: – – – Prozac (Ely Lilly: depression) Tagamet ( Glaxo: ulcers) Zantac (Glaxo: ulcers) Viagra (Pfizer: impotence) Cozaar (Merck: hypertension) • Examples that firm destroying Drugs: – Vioxx (Merck, MSD) • Patents expire after 17 years: – Generics (Israel, India, China) JMPennings TUM 2004 8

Pharma and Biotech(4) • Paradigm Shifts: – Move from chemical to biological competencies – Pharma and Biotech(4) • Paradigm Shifts: – Move from chemical to biological competencies – Doctors as “customers” become less critical in buying decisions as insurance and other factors become more powerful – IT is now a major part of drug discovery process (Bioinformatics: programmers become molecular biologists!) JMPennings TUM 2004 9

Strategy • Corporate • Business • Function JMPennings TUM 2004 10 Strategy • Corporate • Business • Function JMPennings TUM 2004 10

Ely Lilly • General Strategy: market-product positioning? • Insulin Strategy? • Organization Design? • Ely Lilly • General Strategy: market-product positioning? • Insulin Strategy? • Organization Design? • Fit Insulin Strategy and Design? ? JMPennings TUM 2004 11

Ely Lilly • What is Ely’s General (or Corporate) Strategy: market-product positioning – Therapeutic Ely Lilly • What is Ely’s General (or Corporate) Strategy: market-product positioning – Therapeutic areas? – R&D emphasis? – Pipeline? • What is Ely’s Insulin (or Business) Strategy – NE Strategy? • What is Ely’s Organization design? – Spaghetti or matrix, or functional? • Fit? JMPennings TUM 2004 12

Ely Lilly’s Corporate Strategy • Portfolio of projects: – Like Du. Pont: LT investments Ely Lilly’s Corporate Strategy • Portfolio of projects: – Like Du. Pont: LT investments – Filling drug pipeline before current patents expire – Competencies in R&D, FDA – Competencies in Therapeutic Areas such as Psychopharmacology and Endocrinology JMPennings TUM 2004 13

Lilly’s Insulin Lo. B Strategy • S-curve Pursuit – – – Cleaner insulin (“NE”- Lilly’s Insulin Lo. B Strategy • S-curve Pursuit – – – Cleaner insulin (“NE”- bias) Humulin and Match Pricier “Detailing” (Internists, Endocrinoligists, HMOs, etc. ) Prozac minset! • Emergent landscape response – > 1994 IT investments, Internet based education, CDS centers – Diversification (Glucose meters) – Half-baked efforts to get locked into novel insulin market JMPennings TUM 2004 14

Business of Insulin Two companies dominate the worldwide insulin market. In 1999 Eli Lilly Business of Insulin Two companies dominate the worldwide insulin market. In 1999 Eli Lilly had 48 percent of the worldwide market in volume terms and Novo Nordisk had 44 percent, according to IMS Health, the leading market research firm tracking the global pharmaceutical industry. A distant third was Hoechst, which has since merged with Rhône-Poulenc to form Aventis, with 5. 5 percent. In the U. S. Lilly has an 86 percent share of the retail pharmacy market compared to Novo's 14 percent. But Lilly's share drops to 78 percent when you factor in insulin use in hospitals and elsewhere prescriptions aren't required. Only these two companies manufactured insulin sold in the United States in 1999, although Aventis is poised to enter this market. JMPennings TUM 2004 15

And in…. 2003 Danish Novo Challenges American Rival Eli Lilly Apparently, more and more And in…. 2003 Danish Novo Challenges American Rival Eli Lilly Apparently, more and more Americans prefer Danish insulin products to local products and as a result Novo has now a 27 percent share of the world’s largest market. Last year, the American insulin market increased by 7. 6 percent. In the same year, Novo’s sale increased by 12 percent and the Danish company is now gaining in on its closest American – and world wide – competitor Eli Lilly. The reason for the increase is that patients are changing from the traditional types of insulin to the more efficient analog insulin that is sold at a higher profit. Novo’s CEO, Lars Rebien Sørensen, informed analysts that the American business of Novo is developing in a positive direction. However, Novo is now left with one problem and that is the depreciation of the American dollar which has caused a lower income for the company in America than expected. In Europe, where the Danish medical company has a 60 percent share of the market the development is likewise positive. Novo is gaining compared to Eli Lilly though the increase is a little less. In Japan, however, Novo has experienced a decrease, though they still hold a 76 percent share of the market. JMPennings TUM 2004 16

Same technology, new dominant design, meeting different needs is “disruptive technology” See, again, . Same technology, new dominant design, meeting different needs is “disruptive technology” See, again, . . . Bulk pack's Rosenbloom & Christensen (Class 2) NE Strategy Purity of Insulin Novo. N Performance demands for old diabetic patients Pure, syringe based Less than pure pen based Performance demands for new diabetic patients Year JMPennings TUM 2004 17

Lilly’s Organization Structure (note what about Information & Incentive Systems? ? ) • Corporate: Lilly’s Organization Structure (note what about Information & Incentive Systems? ? ) • Corporate: – <1994 R&D-Medical Division-Marketing Research – >1995 Marketing ->Endocrine (with Diabetes Care) -Central Nervous System-Internal Medicine • “Affiliates”: – National Markets Marketing-Distribution-Sales • Strategic: – Planning Committees JMPennings TUM 2004 18

Ely Lilly in Indianapolis Sales “ Affiliates” HQ Mfct R&D Discovery Pre-Clinical Psycho. Pharma Ely Lilly in Indianapolis Sales “ Affiliates” HQ Mfct R&D Discovery Pre-Clinical Psycho. Pharma Endocrine Marketing IM Psycho -Pharma, Endocrine Regional Sales Local sales JMPennings TUM 2004 19

“NE” Period 1940 s-2003: §Fewer side effects §Efficacious §Profitable §…but some orphan drugs ok “NE” Period 1940 s-2003: §Fewer side effects §Efficacious §Profitable §…but some orphan drugs ok JMPennings TUM 2004 20

From Overcoming Inertia to Joining the New Paradigm JMPennings TUM 2004 21 From Overcoming Inertia to Joining the New Paradigm JMPennings TUM 2004 21

(e. g. , Lilly’s Prozac) Convenience Who is the ”customer” and does Ely Lilly (e. g. , Lilly’s Prozac) Convenience Who is the ”customer” and does Ely Lilly listen to her? Insulin JMPennings TUM 2004 22

From Overcoming Inertia to Joining the New Paradigm • German Setting – Advertising not From Overcoming Inertia to Joining the New Paradigm • German Setting – Advertising not permitted – EU – Other issues? JMPennings TUM 2004 23

Ely Lilly Lesson? • Internal Linking: Organizational design impedes or enhances innovation – insulin Ely Lilly Lesson? • Internal Linking: Organizational design impedes or enhances innovation – insulin product (development, marketing, testing, etc. ) located in wrong departments, wrong levels • External Linking: Market driven stratgey precludes access to customers-that-matter and their needs – obsessed with endocrine specialists, pharmacists, HMOs, etc • Similar lessons elsewhere – e. g. , Xerox focus on Procurement rather than IT JMPennings TUM 2004 people, bleak prospects 24

Take-aways on Locking into New Dominant Design, day 3, Part 1 • Firms need Take-aways on Locking into New Dominant Design, day 3, Part 1 • Firms need to reinvent themselves: – internal linking: • establish tools for interdepartmental coordination • if necessary, create a new design fitting new product architecture, with information and reward systems – external linking • create tools for customer intelligence • beware of talking to the “right” customers • create mechanisms for detecting “wrong” customers, i. e. discovering new and eventual mainstream market segments JMPennings TUM 2004 25

“Parking Place” of Projects • Products take on the organizational environment in which they “Parking Place” of Projects • Products take on the organizational environment in which they are placed – Engineering approach – Customer demands – Business Process • Give a hammer and everything looks like a nail • Examples: Discount retail and Martha Stewart, Woolworth and Woolco, Endocrine and Insulin pens, IB and retail brokerage JMPennings TUM 2004 26

Occupational Bias (quotes from your professor) • If you think carpenter you see hammers Occupational Bias (quotes from your professor) • If you think carpenter you see hammers • If you give her a hammer, everything to her looks like a nail • If you meet endocrinologist, you talk or hear about hormones and endocrine imbalances JMPennings TUM 2004 27

Why firms are blocked from getting customer information? • because they do not care Why firms are blocked from getting customer information? • because they do not care • because they lack intelligence devices – Lead User Analysis (compare Dominik’s Forschung) – blocked channels – careers and incentives – locked in to wrong types of customers JMPennings TUM 2004 28

Design: link with each other and link with market Internal Linking: build bridges between Design: link with each other and link with market Internal Linking: build bridges between R&D, Marketing and CDCs, between “go-nogo committee” and ‘affiliates” External Linking: create firm-customer interfaces JMPennings TUM 2004 29

Issue of wrong customers, or: how firms get entrapped in vanishing market segments while Issue of wrong customers, or: how firms get entrapped in vanishing market segments while oblivious of new ones • Market contains current and emerging segments – price, functionality • Emerging segments are typically not on incumbents’ radar screen • Emergent (and thus small) markets cannot satisfy growth JMPennings TUM 2004 30

Ely Lilly Lessons • Firm had no parking space in Marketing for convenient insulin Ely Lilly Lessons • Firm had no parking space in Marketing for convenient insulin products • Misalignment – pay, metrics, accountability, external linking • Interventions – Re-matrix the structure – create insulin-based incentives for all silos – create a separate business JMPennings TUM 2004 31

Strategy and Innovation: Monday 15. 30 -1830 • Part I, Day 3 – Reinventing Strategy and Innovation: Monday 15. 30 -1830 • Part I, Day 3 – Reinventing (Ely Lilly) – Start New Page • 3 M, • Hermes • Part II, Day 3 – Tipping Point – Networking: Combining Old or New JMPennings TUM 2004 32

From a Two-Product Firm to. . a Three Product Firm JMPennings TUM 2004 33 From a Two-Product Firm to. . a Three Product Firm JMPennings TUM 2004 33

The Challenge of Ambidexterity New Businesses Old (“Rustbelt”) Businesses JMPennings TUM 2004 34 The Challenge of Ambidexterity New Businesses Old (“Rustbelt”) Businesses JMPennings TUM 2004 34

How Do Innovators Develop New Organizations? JMPennings TUM 2004 35 How Do Innovators Develop New Organizations? JMPennings TUM 2004 35

From Paper to Electronic (Virtual) Medium JMPennings TUM 2004 36 From Paper to Electronic (Virtual) Medium JMPennings TUM 2004 36

Ambidexterity: writing with Left (old) and Right (new) Hand Exploration The Incubator PARC The Ambidexterity: writing with Left (old) and Right (new) Hand Exploration The Incubator PARC The Ambidextrous Organization (Adobe, Apple, Palm) Bureaucracy The Document Company Exploitation JMPennings TUM 2004 37

 • Cannot create new companies • Warning for all Fortune 500, DAX 50 • Cannot create new companies • Warning for all Fortune 500, DAX 50 FTS 100 companies and beyond? • It is very hard to write with both hands, to be ambidextrous JMPennings TUM 2004 38

Paradigm Shifts from Day 1 • Examples: – From Wooden Tennis to Wide body Paradigm Shifts from Day 1 • Examples: – From Wooden Tennis to Wide body Rackets – From 35 MM Film Cameras to Digital Imaging – From Handy to Skype Phones – From Steel to Aluminum Engines JMPennings TUM 2004 39

Ambidextrous Firm • Firm with employees who are “Janusian” • Firms who are “Janusian Ambidextrous Firm • Firm with employees who are “Janusian” • Firms who are “Janusian – (like the locomotive which can go forward and backward) – Both exploitation and exploration. – Tolerance for differences JMPennings TUM 2004 40

3 M as Example • 15% Rule: internal ventures • Ambidextrous Firm • Build 3 M as Example • 15% Rule: internal ventures • Ambidextrous Firm • Build the ramp up of your new slopes while old dominant designs fall off the slope JMPennings TUM 2004 41

3 M, innovation and strategy: take-aways • Strategy dictates portfolio of business, anchored in 3 M, innovation and strategy: take-aways • Strategy dictates portfolio of business, anchored in core competencies • Dilemma of sticking to the knitting, yet buying options to get out of competency traps, latch on to new customers & technology JMPennings TUM 2004 42

Hermes • Innovation – Autonomous – Induced • Implementation – Five levers • • Hermes • Innovation – Autonomous – Induced • Implementation – Five levers • • • structure scorecards incentives, culture people JMPennings TUM 2004 43

Hermes (1) • http: //www. memorexlive. com/index_flash. h tml JMPennings TUM 2004 44 Hermes (1) • http: //www. memorexlive. com/index_flash. h tml JMPennings TUM 2004 44

Hermes (2) • Over the past 40 years, much has changed. Memorex (i. e. Hermes (2) • Over the past 40 years, much has changed. Memorex (i. e. Hermes Systems) hs moved from Audio Cassettes (1971) to VHS cassettes (1979). From Floppy Disks (1993) to Recordable CDs (1996). And from Rewritable CDs (1997) to Recordable DVDs with enough capacity to hold an entire set of encyclopedias. Yet while our media continues to evolve, some things remain unchanged. Like our commitment to provide customers with the highest quality products at the best value. By offering quality, value and performance, Memorex has become the digital recording company of the last century. And it's why we'll continue to be the digital company of the 21 st century. JMPennings TUM 2004 45

Hermes (2 a) • • Magnetic Tapes (1962) Audio Cassettes (1971) VHS cassettes (1979) Hermes (2 a) • • Magnetic Tapes (1962) Audio Cassettes (1971) VHS cassettes (1979) Floppy Disks (1993) Recordable CDs (1996) Rewritable CDs (1997) Recordable DVDs with enough capacity to hold an entire set of encyclopedias – ……. memory stick, flesh card, www? JMPennings TUM 2004 46

Hermes (3) JMPennings TUM 2004 47 Hermes (3) JMPennings TUM 2004 47

Hermes (4) • Computer Storage • Memorex, Hanny, HK (HNNYF) JMPennings TUM 2004 48 Hermes (4) • Computer Storage • Memorex, Hanny, HK (HNNYF) JMPennings TUM 2004 48

…. so Memorex • Still Going Strongly • Successive Paradigms and Their S curves! …. so Memorex • Still Going Strongly • Successive Paradigms and Their S curves! JMPennings TUM 2004 49

Hermes: Take aways on Internal Hybrids • Internal ventures to be part of tomorrow’s Hermes: Take aways on Internal Hybrids • Internal ventures to be part of tomorrow’s dominant design • Spillover (knowledge transfer) from new ventures to rest of firm • Challenge of post-IV integration • Re-establish organizational integrity – people, operations, synergy (scope), culture • Liquidation of dog division when they cease to produce cash – (i. e. , Iomega predecessor) JMPennings TUM 2004 50

Strategy and Innovation: Monday 15. 30 -1830 • Part I, Day 3 – Reinventing Strategy and Innovation: Monday 15. 30 -1830 • Part I, Day 3 – Reinventing (Ely Lilly) – Start New Page • 3 M, • Hermes • Part II, Day 3 – Tipping Point – Networking: Combining Old or New JMPennings TUM 2004 51

Networking: Internal and External The Tipping the Market JMPennings TUM 2004 52 Networking: Internal and External The Tipping the Market JMPennings TUM 2004 52

Networking • The bonding of people to bundle the pieces of an innovation • Networking • The bonding of people to bundle the pieces of an innovation • WHO you know take precedence of WHAT you know JMPennings TUM 2004 53

Network Effects • Direct (benefit is greater if more users) – Wi. Fi, webcafe, Network Effects • Direct (benefit is greater if more users) – Wi. Fi, webcafe, Kazaa, fuel cells, • Indirect (benefit hinges on complements) – Voice IP, Digital Camera, Internet Trading – Enhance the arrival of Tipping Points JMPennings TUM 2004 54

Networking organizations • Construction, entertainment and publishing • Broadway and its tipping point… • Networking organizations • Construction, entertainment and publishing • Broadway and its tipping point… • Hypertext Firms like Berteslmann, Alcoa and Booz • Do you know a networking organization? JMPennings TUM 2004 55

Networks in Broadway Musicals Network Emergence The Business and Artist Network Lyricist Librettist Composer Networks in Broadway Musicals Network Emergence The Business and Artist Network Lyricist Librettist Composer Producers Choreographer Director Costume Designer JMPennings TUM 2004 56

1892 Year 15 Artists Continuing: 35 New: 05 Total: 40 JMPennings TUM 2004 Small 1892 Year 15 Artists Continuing: 35 New: 05 Total: 40 JMPennings TUM 2004 Small World: No 57

1893 Year 16 Artists Continuing: 40 New: 10 Total: 50 JMPennings TUM 2004 Small 1893 Year 16 Artists Continuing: 40 New: 10 Total: 50 JMPennings TUM 2004 Small World: No 58

1894 Year 17 Artists Continuing: 50 New: 38 Total: 88 JMPennings TUM 2004 Small 1894 Year 17 Artists Continuing: 50 New: 38 Total: 88 JMPennings TUM 2004 Small World: Yes 59

1895 Small World: Yes Year 18 JMPennings TUM 2004 Artists Continuing: 88 New: 75 1895 Small World: Yes Year 18 JMPennings TUM 2004 Artists Continuing: 88 New: 75 Total: 163 60

1896 Small World: Yes Year 19 JMPennings TUM 2004 Artists Continuing: 163 New: 56 1896 Small World: Yes Year 19 JMPennings TUM 2004 Artists Continuing: 163 New: 56 Total: 199 61

1898 Year 21 Artists Continuing: 199 New: 99 Total: 298 Small World: Yes JMPennings 1898 Year 21 Artists Continuing: 199 New: 99 Total: 298 Small World: Yes JMPennings TUM 2004 62

1892 1893 Year 15 Year 16 Artists Cont: 35 New: 05 Total: 40 Artists 1892 1893 Year 15 Year 16 Artists Cont: 35 New: 05 Total: 40 Artists Cont: 40 New: 10 Total: 50 SW: No 1894 1895 Year 17 Year 18 Artists Cont: 50 New: 38 Total: 88 Artists Cont: 088 New: 075 Total: 163 SW: Yes 1896 1898 Year 19 Year 21 Artists Cont: 163 New: 056 Total: 199 SW: Yes JMPennings TUM 2004 Artists Cont: 199 New: 099 Total: 298 63 SW: Yes

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What’s Next • Tipping not only in market or sector, but also within firms What’s Next • Tipping not only in market or sector, but also within firms • Change agents, innovators and palace revolutions as creators of internal tipping JMPennings TUM 2004 67

Could a new, incompatible innovation or paradigm gain a footing within Booz: • A Could a new, incompatible innovation or paradigm gain a footing within Booz: • A (superior) new paradigm may not gain a footing • Many new, incompatible paradigms have been introduced to firms successfully JMPennings TUM 2004 68

Strategy and Innovation: Monday 15. 30 -1830 • Part I, Day 3 – Reinventing Strategy and Innovation: Monday 15. 30 -1830 • Part I, Day 3 – Reinventing (Ely Lilly) – Start New Page • 3 M, • Hermes • Part II, Day 3 – Tipping Point – Networking: Combining Old or New JMPennings TUM 2004 69

Networking and Architecture Social Capital as Core Rigidity • Organization Structure and Two-key car Networking and Architecture Social Capital as Core Rigidity • Organization Structure and Two-key car “architecture” (GM) • Social capital as key asset (Seafax) • Strategic Alliances, MP and who shall I ask for a dance to produce a Tipping Point? • Dismantling Booz’ networks to create new template for consulting JMPennings TUM 2004 70

Core Competencies • Knowledge that provides a competitive advantage • Core capabilities are embedded Core Competencies • Knowledge that provides a competitive advantage • Core capabilities are embedded in: – human capital – social capital – technical systems – managerial systems • While core skills enhance development, they might also inhibit development JMPennings TUM 2004 71

Core Rigidities (as distinct from core competencies) • Competency Traps – NE Strategy • Core Rigidities (as distinct from core competencies) • Competency Traps – NE Strategy • Forgetting Difficulties – Old skills get in the way (Cobol vs C++; driving on the wrong side of the road in Ireland vs BRD) • BA&H’s? ? JMPennings TUM 2004 72

BA&H: competencies and rigidities • Old Assets • New Assets – Fiefdoms – Customized BA&H: competencies and rigidities • Old Assets • New Assets – Fiefdoms – Customized Consulting – Free market • Lots of structural holes, and weak ties • Each network engenders its own unique consulting service architecture – Formal networks (Matrix!) – SIGs and KOL – One-size-fits-all • Dense network, formal and informal, social and virtual • Pre-imposed network assumes well established consulting service template JMPennings TUM 2004 73

BA&H Core Rigidities • Integrated Solutions rather than “Products” (e. g. BCG) • Partners’ BA&H Core Rigidities • Integrated Solutions rather than “Products” (e. g. BCG) • Partners’ fiefdoms with shared brand equity • Internal free market “as a disability” JMPennings TUM 2004 74

Booz Allen 1994 efforts to move away from old skills • V 2 K Booz Allen 1994 efforts to move away from old skills • V 2 K (Build Internal Social Capital): – Target Clients – Triple Crown Teams – Knowledge Engine (Matrix, SIGs, KOL) • One-size-fits-all: replication templates – Standardized Solutions – Sourcing, BPR thru “campaign selling” JMPennings TUM 2004 75

High Custom Solutions Richness: Level of Customization Standardized “Products” BPR, BSC, Sigma. Six, “Waterfalls” High Custom Solutions Richness: Level of Customization Standardized “Products” BPR, BSC, Sigma. Six, “Waterfalls” Management Gurus Low Few Many Reach: How Many Clients and what impact do we have? JMPennings TUM 2004 76

Possible Solutions BA&H • Rotate partners across clients • New Consulting Outfit, with different Possible Solutions BA&H • Rotate partners across clients • New Consulting Outfit, with different brand name • Re-engineer the sales process • Compare Oticon JMPennings TUM 2004 77

Booz Allen’s 2000 -4 Internal KM Innovations • • • “e-Audit” “Fast Track” KM Booz Allen’s 2000 -4 Internal KM Innovations • • • “e-Audit” “Fast Track” KM Capability “e-Education Webcast” (weekly) Career Development Passports Occasionalization (reports on current issues) JMPennings TUM 2004 78

Implications BA&H • Even in firm with prima donnas, there are distinct capabilities, processes Implications BA&H • Even in firm with prima donnas, there are distinct capabilities, processes • You got network internally, before launching a service externally • Many innovations exist already deep in the trenches; challenge is to locate and to transfer them JMPennings TUM 2004 79

Emerge with Emerging Paradigm • Internal Hybrids – Oticon, Booz • External Hybrids – Emerge with Emerging Paradigm • Internal Hybrids – Oticon, Booz • External Hybrids – mcc JMPennings TUM 2004 80