Few companies can claim as long a tradition of innovation as Roche Diagnostics Corp.
For more than a century, the company has worked to provide medical laboratories and physicians with the most technologically advanced tools available.
Tiffany Olson, Roche Diagnostics’ president and CEO, says that innovation is the key to the company’s future growth.
“It allows us to not only stay competitive but, I would say, stay ahead of the market,” Olson says. “We are the leaders in diagnostics, and I believe we will stay the leaders because of our innovation. It is extremely important for us. We feel that we are in a position where we can help to shape the industry and to shape health care.”
Roche Diagnostics Corp. of Indianapolis is a unit of Basel, Switzerland-based Division Roche Diagnostics, which worldwide posted $6 billion in sales in 2004. Division Roche Diagnostics is an operating unit of Basel-based Roche Group.
At Roche Diagnostics Corp., innovation isn’t simply about new products. Innovation also comes in the way Roche manages, rewards and trains employees.
The medical field is extremely competitive, and innovation in all parts of the organization isn’t a luxury; it’s a necessity if you want to succeed and grow. And it all starts at the top.
Leadership of innovation
A culture of innovation begins in the executive offices.
“It’s starts with making sure the senior leadership team not just one person, and they all share the same type of passion for innovation and guiding principles,” Olson says. “It’s about expecting failures, taking risks, making sure that you have people that are committed to change and that are dedicated, this is their life’s work, and to reward that type of thinking.
“It starts with making sure the leadership team, the guiding principles of the organization, the rewards systems and the training systems are all tied together. Make sure they start to build their team (with people) who feel passionate about innovation in whatever area they’re innovating in — they (need to) build a team that is extremely dedicated in that area, and that they are comfortable with the risks that come with innovation.”
You also need to track innovation to gauge how successful your efforts are.
“One of the ways (we track innovation) is that we look at the percent of revenue that is generated by our new products against our other products,” she says. “How many new products have we released to the marketplace? What has been the revenue of those products, and what has been the percent of that to the rest of our sales?
“It provides us with a measurement on how well and how quickly the new innovation is being accepted in the marketplace. This allows us to understand if we’ve met the needs of our customers, if we need to provide more education and if we need to do more studies. The data helps us to refine and readjust our innovation process, so that in the future, we are looking at areas we might not have been aware of.”
Ultimately, Olson says, the market is going to tell her whether the company has found the right innovation. The adoption of products in the marketplace and how fast they are adopted is a measure of how well the company is doing.
Rewarding innovation
Cutting-edge facilities and technology are important, but those are useless unless the people employing them are innovative thinkers.
“We need to make sure that we have a culture that truly fosters innovation because having this particular culture helps us to attract and retain talent, which, in turn, helps us to be very competitive in the marketplace,” Olson says. “We have research and development facilities around the world. With this, we have a diverse group of individuals that can really help look at medical needs that are around the world and then use very innovative technologies [to solve the problems].”
Olson knows that having those tools is only part of the solution. Employees want recognition for their efforts and their accomplishments.
“We reward innovation through many different ways,” she says. “We have a couple of different employee recognition systems that we utilize. Some is providing recognition. All people are eligible for some type of variable pay. These programs range from formal incentive programs that reward managers for driving innovation in key strategic areas to individual or team cash awards that can be up to $5,000.
“What differentiates us from other companies, though, is not our formal reward systems, but how we engage and work with one another … how the individual has the opportunity to be creative and truly make their mark.”
Working with one another is key. In such a large organization, it’s possible the byproduct of one division’s work is the elusive and critical solution another division has been looking for. To make sure employees are aware of the work done throughout the company, Roche holds a research and development fair.
“It’s an internal fair where we have our different teams that are working on different areas do a poster session,” Olson says. “So everyone has an opportunity really understand and learn what others are working on, what some of their challenges may be and who are on those specific teams.”
For example, research teams at Roche Molecular Diagnostics developed improved methods for extracting DNA from standard clinical samples. This improved process proved helpful to research colleagues at both Roche Applied Sciences and Roche Pharmaceuticals.
Innovation as culture
There are more than 2,500 employees at Roche Diagnostic’s Indianapolis headquarters, and each one of them needs the latest medical research information to help the company stay ahead of the competition. To do that, Roche has employed a number of innovations in its training programs.
“We train very innovatively,” Olson says. “We have a very large e-training tool that we utilize that all employees are familiar with, which allows us to provide training quickly. We also do a lot with Webcasts and videoconferences. We’re able to do training very quickly, regardless of where people are located. This has, along with the tailored development plan for each of our employees, has helped us stay true to this culture of innovation and having people that are trained and creative.”
It’s not simply a matter of using the latest technology. Roche wants to know how effective its training tools are.
“We use [Donald] Kirkpatrick’s [training evaluation] scale to evaluate our training programs,” Olson says. “In one situation, after a Level 4 evaluation revealed that certain actions by contract specialists often resulted in billing errors, we created training to address these actions and errors. In the first month after training, the billing error rate dropped by 30 percent.”
Roche uses other metrics to measure training effectiveness, including turnover rates, new employee referrals, internal promotions, quality, production, customer service, customer loyalty, product development and safety.
For its efforts in work force development, Roche Diagnostics was ranked No. 21 last year in Training magazine’s Top 100 companies for the second consecutive year. Olson ties that kind of recognition directly back to innovation.
“Awards like Training magazine build pride in our people and encourage them to strive for new levels of excellence,” she says. “This, of course, creates a positive upward spiral in that people who strive for new levels of excellence achieve greater results, and in turn, are encouraged to be innovative in the search of new levels of excellence. These awards also help others to see how Roche is a leader in multiple areas, and they want to work with our organization.”
In addition to training, Roche employs a management-by-objectives (MBO) approach that provides employees with an opportunity to advance their skills.
“Everyone in our organization has an individual development program that they work on with his or her manager, a very detailed development [plan] where an individual can truly customize what they’re working on,” Olson says. “Our MBO system is done by many of our managers and directors, and it’s through these MBOs that we can also help to look at creating not only that environment of innovation but also rewarding it.
“They are objectives that individuals set at the beginning of the year with their manager, and they can range on anything that is within that individual’s area that they are working on that can help propel our company into the next level. These MBOs … describe how you will use your personal leadership and make a significant impact on the business, build new capabilities in your team or even across a broader organization.”
It’s this kind of innovative employee development that put Roche in Fortune magazine’s “Top 100 Companies to Work For” list.
“One of [the reasons for the ranking] is our commitment to developing people, to growing people as leaders,” says Olson. “To continue this commitment, it is critical for us to make leadership part of our overall performance expectations, assessment and rewards. This is why it is a requirement that all MBO participants have a leadership goal. The goal highlights the importance of leadership to achieving business performance and the priority that is placed upon it.”
The culture of innovation at the Indianapolis-based company has helped the parent Division Roche Diagnostics post positive results. In 2004, Division Roche Diagnostics reported a 6 percent increase in sales and a 19 percent increase in operating profit. Through the first three quarters of 2005, it posted a 4 percent increase in sales over the same period the previous year.
Acceptable risk
Innovation may lead to cutting-edge technology, but more often than not, new paths lead to failure. At Roche, that’s simply part of the process.
Olson works to make sure those looking for new solutions don’t worry because the efforts have led to a dead end.
“It is the willingness to take calculated risks and accept mistakes that are definitely part of the equation,” Olson says. “Innovation doesn’t come on a line. It comes very much in ups and downs and circles and other areas. It’s critical that we build and maintain this trusting, open environment that values and rewards new ideas and also diverse ways of thinking. It’s through these diverse ways of thinking and some of these other values that allow us to keep that innovation going.
“There are definitely the ups and downs that are absolutely inevitable and, I would say, even necessary. They are part of the process. They are part of the learning, and then going back and looking at it in a different way. For us, the key is to continually to reward employees on the ideas, on what they’ve looked at — not just the outcome — and help them stay focused on that ultimate goal because there are going to be things that fail. And that’s OK. We learn from those. We know different paths to take and we take the learnings and we apply them.”
HOW TO REACH: Roche Diagnostics Corporation North America, (317) 845-2000 or www.roche.us
