Merck Plans Radical Overhaul of Drug R&D Unit
PETER LOFTUS And  JONATHAN D. ROCKOFF
Updated Dec. 27, 2013 4:50 p.m. ET

http://online.wsj.com/news/articles/SB10001424052702304753504579284651836908502?mod=djemalertNEWS

This is an example of how companies who drove innovation primarily from internal sources are deploying whole new concepts of innovation outside their companies. Merck is joining such companies as IBM and Proctor and Gamble. From these examples, it is clear this approach is viable for any industry. Also, I believe it is a way for smaller companies to leverage the internal sources to better compete with the big guys in their industries.

Merck MRK +0.02% & Co. is working on a plan to radically reshape its once-storied research-and-development unit that would create international innovation hubs tapping into drug research outside of its labs. 

Merck would create these hubs in or near Boston, the San Francisco Bay area, London and Shanghai, according to people familiar with the matter—regions with a critical mass of academic and commercial R&D. The company would use the bases to scout for promising biotechnology and pharmaceutical research that Merck could license or acquire in deals, according to these people…. 

….A Merck spokesman confirmed the company plans to establish a "scientific presence" in the four regions, to identify both early- and late-stage opportunities. "This is consistent with our strategy of actively seeking external scientific innovation to bolster our pipeline with candidates that provide unambiguous promotable advantage," the spokesman said. He declined to comment on potential divestiture plans. 

Together, the moves would represent a significant shift for Merck, making it more receptive to external opportunities and less wedded to in-house handling of the entire life cycle of a drug's development, from discovery through clinical trials….. 

….Merck's labs were once the envy of industry, discovering products like the first measles vaccine and the first marketed statin drug to lower cholesterol. Merck researchers prided themselves on carrying drugs from discovery to the last stages of development in-house. But they haven't scored a major success since diabetes drug Januvia and cervical-cancer vaccine Gardasil were approved in 2006.(very typical of companies with a history of internal innovation).

How to Monetize Your Close
Thomas Friedman, NY Times

http://www.nytimes.com/2013/12/22/opinion/sunday/friedman-how-to-monetize-your-closet.html?_r=0

This title may sound a bit strange but it refers to an emerging concept called a sharing economy—one that focuses on benefiting from a utility without ownership. The example discussed in the article is one where women can exchange clothing in a way never before possible on the internet. Although not applicable to all situations, the concept of focusing on what you need and potentially gaining the utility in ways other than ownership is very powerful to many if not all business situations. The web site is www. Tradesy.com.

....Tradesy, which enables women to monetize the used or unused clothing and accessories in their closets by creating a peer-to-peer marketplace in which pricing, listing, buying, selling, shipping and returning goods is seamlessly easy — and with Tradesy taking a 9 percent commission. She is not alone in that space, but it’s working.... 

...“A sharing economy platform can aggregate massive amounts of inventory more quickly and cheaply than retailers because our supply is crowd-sourced from users,” DiNunzio said via email. “Having an abundance of product and content available allows our site to achieve larger and faster distribution across web channels such as search and social media, accessing masses of customers quickly and cheaply. Tradesy has accumulated $97.5 million in inventory, at virtually no cost to our business, in 13 months. If we had to do that with product that we produced or purchased, it would certainly take more time and resources, and expose us to significant inventory risk.”
The sharing economy is producing both new entrepreneurs and a new concept of ownership. “With improved peer-to-peer commerce platforms that remove the friction and risk from multiparty transactions, consumers are being empowered to value and sell their space, their belongings and their time in ways that weren't previously possible,”.... 

“For those at the cutting edge of this trend, durable goods are viewed as temporal objects to enjoy and pass on rather than ‘belongings.’ Personally, I no longer feel like I ‘own’ anything. I enjoy my consumer goods for a day, a week or a year, take good care of them because I assume they’ll go on to have another life with someone else, then share or sell whatever I’m tired of. I get access to goods and services that would typically be beyond my means, without accumulating a ton of stuff.” 

This “lightweight living,”“goes hand in hand with a re-imagined concept of ownership that’s focused on utility rather than possession, and can ultimately result in consumers enjoying more variety for their dollar.” Aren’t retailers hurt? “Tradesy’s early data suggests that our customers actually spend more at retail when they feel confident that there’s a viable resale opportunity on the secondary market.”

Ballmer on Ballmer: His Exit From Microsoft
By
MONICA LANGLEY

http://online.wsj.com/news/articles/SB10001424052702303460004579194150724298162

The bottom line of Microsoft’s problem and Ballmer’s specifically, was the culture of protecting the strong base of PC based software. Even when changed was demanded by the Board, it was hard for him not to put top proprietary on Windows. Once he realized that speed of implementation as critical, he felt, and I think correctly, he had little credibility with the organization

"Microsoft's culture included corporate silos where colleagues were often pitted against one another—a competitive milieu that spurred innovation during Microsoft's heyday but now sometimes leaves groups focused on their own legacies and bottom lines rather than on the big technology picture and Microsoft as a whole… 

He recalls thinking: "I'll remake my whole playbook. I'll remake my whole brand."The board liked his new plan. But as Mr. Ballmer prepared to implement it, his directors on the January conference call demanded he expedite it…. 

…"But, I didn't want to shift gears until I shipped Windows," Mr. Ballmer says he told the directors on the call (Your company watches what you do, NOT what you say), explaining that he hadn't moved faster in late 2012 because he was focused on releasing in October the next generation of Windows, Microsoft's longtime cash cow."

When Marketing Is Strategy
by Niraj Dawar

http://hbr.org/2013/12/when-marketing-is-strategy/ar/1

An incredible thought provoking article!!!

"It’s no secret that in many industries today, upstream activities—such as sourcing, production, and logistics—are being commoditized or outsourced, while downstream activities aimed at reducing customers’ costs and risks are emerging as the drivers of value creation and sources of competitive advantage….. 

…Downstream activities—such as delivering a product for specific consumption circumstances—are increasingly the reason customers choose one brand over another and provide the basis for customer loyalty. They also now account for a large share of companies’ costs. To put it simply, the center of gravity for most companies has tilted downstream…. 

….Yet business strategy continues to be driven by the ghost of the Industrial Revolution, long after the factories that used to be the primary sources of competitive advantage have been shuttered and off-shored. Companies are still organized around their production and their products, success is measured in terms of units moved, and organizational hopes are pinned on product pipelines. Production-related activities are honed to maximize throughput, and managers who worship efficiency are promoted. Businesses know what it takes to make and move stuff. The problem is, so does everybody else…. 

…The strategic question that drives business today is not “What else can we make?” but “What else can we do for our customers?” Customers and the market—not the factory or the product—now stand at the core of the business. This new center of gravity demands a rethink of some long-standing pillars of strategy: First, the sources and locus of competitive advantage now lie outside the firm, and advantage is accumulative—rather than eroding over time as competitors catch up, it grows with experience and knowledge. Second, the way you compete changes over time. Downstream, it’s no longer about having the better product: Your focus is on the needs of customers and your position relative to their purchase criteria. You have a say in how the market perceives your offering and whom you compete with. Third, the pace and evolution of markets are now driven by customers’ shifting purchase criteria rather than by improvements in products or technology."