An Organizational Appraisal of Innovation: Drivers of Risk Based Innovation
Innovation requires the ability to take higher order risks. In drug development, there is often a defensive mindset at play and such a risk posture can hamper innovation and reduce productivity [2]. Using the validated scale of Hansen and Birkinshaw [3], a survey based analysis in which a myriad of pharmaceutical companies participated, the survey revealed high scores on two dimensions, namely, difficulty with which ideas got funded, and that there was a risk averse attitude towards investing in novel ideas [2]. The survey revealed that in general there was a good degree of collaboration across units and businesses. Idea sources appear to transcend specific organizational boundaries – originating from within and beyond firm’s immediate environment. There was a good degree of idea sourcing within the organization and there is sufficient agility in the organization to leverage fast to patients. These observations suggest that ideation and diffusion are not problem areas in an innovation enterprise.
Because the analysis revealed two potential weak links, difficulty in getting ideas funded and a risk-averse attitude, firms are conversion-poor [3], which is validated in the industry analysis by others [1,4]. It is poor in selection of concepts for further advancement. This aspect warrants an understanding of how innovation occurs within an enterprise, and more importantly, what change situations do to the organizations. A change situation is one where an organization reacts to a certain situation that could affect the ways of the firm in unprecedented ways, e.g., the coronavirus pandemic. This aspect is further analyzed as follows.