Wiring the Corporate Brain

Wiring the Corporate Brain

Novartis ventures a new strategy for sharing ideas and innovation across a global enterprise.

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Ways to share useful concepts between dissimilar business units How to involve staff from many levels and locations in hands-on knowledge management The potential obstacles and benefits of knowledge sharing From the rooftop of his office overlooking the Rhine, Joerg Staeheli can make you see history and with it the blessings - and the bane - of an intellectual empire. Follow his gaze into the foreground: Laboratories that have created some of the world's best-selling drugs and chemicals dot the banks of the Rhine. At this bend in the great river, where Basel grew from a medieval Swiss university town to a world-renowned centre of science-based business, three countries meet. A few hundred yards to the north stands Germany, where science and business joined to create the chemical industry. To the east, so close you can see the French customs post, lies Alsace, a region conquered and reconquered by Germans and French. In today's global economy, employees of Staeheli's company cross these borders each day without a thought to politics.

Panning the city itself, Staeheli points out the large, modern buildings that dominate Basel and that now belong to his company, Novartis AG.

Born of the merger in 1996 of two venerable Basel-based companies, Sandoz and Ciba-Geigy, Novartis is the newest and richest beneficiary of Basel's confluence of scientific learning, industry and culture. From two tiny makers of specialised dyestuffs 150 years ago, Novartis has become a $US 24 billion corporation that calls itself a "life sciences company," a conceptual catchall for an entity whose products include such diverse items as pharmaceuticals, genetically engineered seeds, baby food, contact lenses and animal health products.

Yet Novartis's breadth of products and its success in the global economy make for its greatest challenge: How can a company with extremely sophisticated and diverse knowledge - in basic technologies, scientific research, manufacturing and marketing - marshal its dispersed, compartmentalised intellectual resources? How can a company that depends on innovation to survive find ways not just to share but to increase its knowledge? This problem faces any knowledge-intensive, global industry. Novartis addresses it with a three-pronged strategy: using Web-based technology to foster collaboration within its worldwide workforce; creating a system of development grants (think of in-house Fulbrights) for projects that will make different business units work together; and hosting periodic knowledge fairs to spark ideas. Staeheli, who heads this effort, prefers to call it knowledge networking, because that sounds less hierarchical than knowledge management (the usual term for a strategy to make the whole of a workforce's contribution greater than the sum of its individuals' knowledge). Likewise, Staeheli's title is "officer of the science boards." Senior officer of corporate knowledge management, the role he acknowledges to outsiders and which he in fact performs, would sound too much like he controlled the process, he says. He prefers to see himself as a shepherd rather than a director. The wording is more than symbolic. Novartis's president, Dan Vasella, asserts that knowledge transfer and creation will determine the company's future competitiveness.

"Knowledge networking" shows that Novartis understands that making the most of an organisation's intellectual assets is more of a cultural than a technological challenge.

Howdy, Stranger

Until he walks into the hotel conference room in Zurich, Switzerland, one Friday morning, Colombian chemist Esteban Pombo-Villar has never met Xun Wang, an American geneticist who looks like he has flown in from Southern California.

Which he has. Thanks to Staeheli, the two Novartis colleagues are sitting across from each other - along with seven other company scientists - ready to engage in a totally new experiment in which they'll be the guinea pigs.

Staeheli, a soft-spoken but kinetic man, has selected a few dozen of Novartis's younger scientists and managers to become the company's first "technology scouts" in each of its business units worldwide. Their mission is to lead the charge at their home offices in search of promising, cutting-edge technologies and bring colleagues into worldwide, online brainstorming groups that will, hopefully, lead to the development and sharing of those technologies across business units.

The scientists begin haltingly. Like any group of strangers who must feel their way into becoming a unit, there are short comments to test the waters, until two or three daring individuals hold forth to set an early agenda. Bernhard Fischer from the generic drugs unit in Vienna brings up the idea of protein engineering, describing it as a technology that might enable a molecule to taste sweeter. So why can't this be used to make contact lenses biocompatible? asks Peter Hagmann, from the Ciba Vision contact lens company in Aschaffenburg, Germany, mulling over this new thought.

Rudolf Waditschatka, a process development chemist from the crop-protection unit in Muenchwilen, Switzerland, mentions a microtechnology that would "make chemical production a white-collar job" instead of the "dirty, smelly job" it is now. Hagmann and Wang say they have both read about it and wonder whether it might apply to their businesses.

In an hour, a mix of reserve and scepticism has turned into a mix of exuberance and scepticism (these are scientists, after all). The problem, they all agree, will quickly become how to keep the collaborative ball rolling once the face-to-face meetings end. "You could start off the online dialogues with a provocative statement," suggests Waditschatka. "We'll have to market the ideas - make them popular science," chimes in John Stokes, an Australian chemist now in management as a strategic planner.

Even among technology lovers in a technology-driven business, nobody doubts the next step - moving into what Staeheli calls "the virtual space" - will be the toughest. Collectively called The Knowledge MarketPlace, the applications include a corporate YellowPages of staff expertise, a BluePages of outside experts vetted by Novartis employees and The VirtualForum, which the scouts are being shown that morning, a virtual bulletin board and meeting room that will include the technology scouts' forum. But the problem is that only a couple hundred or so of Novartis's 86,000 employees have entered themselves into the YellowPages in its first few months. (That grew to over 700 by January 1999.) "I now have 35 names from the scouts' meeting, but that still doesn't tell me what technology you all cover," laments Peter Kondor, attending the meeting from the consumer health unit in Basel. In a day or two, the scouts will be back in their offices. After much debate, they each agree to recruit at least one person from their own unit to join in the online technology discussions.

But how many will really log on?

In-House Marketing

Staeheli is working hard to make sure scouts and recruits will participate. The afternoon before the formal meeting of the technology scouts, he seems a bit like the father of the groom before the wedding. He puts finishing touches on his presentation about the technology-scouting initiative, which he has dubbed FutureWatch with a marketer's ear for a catchy product name. He confers with an assistant who has put together shiny silver souvenir bags that participants will receive when they register. He asks for a critical eye on his welcome speech, concerned about his not-quite-perfect English, the lingua franca in this very Swiss and German company.

Though there is no mistaking Staeheli's training as a scientist - his speech is peppered with phrases like "proving the model" - it is equally obvious that he is a skilled salesman. "We consider [knowledge management] now as a product that can be used internally, and you have to advertise, you have to promote like you would to sell a product on the market," he explains.

In any month he can be found jetting around Europe or the United States to Novartis offices to promote his programs. At a 1998 meeting of some 250 of Novartis's top managers at Harvard Business School in Boston, Staeheli made a pitch for the Knowledge MarketPlace. Within a few months, he is readying a new VirtualForum based on a management tool called the balanced scorecard (see "Score It a Hit," CIO Section 2, Nov. 15, 1998). By spring 1999 the scorecard forum will join FutureWatch and a half-dozen or so other online topics including IT and business administration. Staeheli has even hired a Swiss public relations firm to help him get an article in a business paper that Novartis employees are likely to read.

Budgeting for Knowledge Transfer

This campaigning may sound superficial, but its objective - ensuring the success of knowledge sharing - is critical to the future of Novartis. The company and its competitors are scrambling to put together portfolios of intellectual assets as a new life sciences industry evolves from a wave of mergers and acquisitions among drug, nutrition, seed and biotech companies. A handful of giants, including Novartis, are on the prowl to buy or ally with startups, and they compete for partnerships with individual outside scientists and academic institutions.

As multinational corporations accentuate the commercial side of the traditional exchange of knowledge among scientists, Staeheli must create channels for this knowledge to bubble up into Novartis products. Staeheli's senior partner in knowledge management, Hanspeter Schelling, is head of corporate knowledge management. Besides sitting on the Research Council of the Swiss National Science Foundation and serving as a link to the outside scientific community, Schelling is responsible for the company's Research Advisory Board that funds several million dollars a year in high-risk research projects. The heads of research of all business sectors sit on the board, which approve about half of all proposals. Results of proposed projects must be applicable to more than one business unit.

Staeheli and Schelling hope that some of the ideas the technology scouts develop in virtual forums will inspire research proposals, which in turn can develop into new technologies for use inside Novartis or into new products or components. In fact, a group of scouts presented its first idea to the board, for a cooperative project on drug delivery techniques, within two months of FutureWatch's launch. Staeheli was headed to MIT this month to seek possible collaborators for the project.

But the scouts are only one source of research ideas, which all business units are encouraged to produce. Among the board's current research projects that may lead to commercial products is research in nutritional products to delay the onset of osteoporosis. The nutrition and pharmaceutical businesses are working together to explore ways of adapting the composition of normal foods to prevent the age-related weakening of bones. "I'm convinced there will be products on the market eventually that are based on this cross-sectorial project," Schelling says.

The board has already had successes. Novartis's treasurer, John Martin Manser, brought a suggestion to the Research Advisory Board on using artificial neural networks - computer programs that learn by recognising patterns of data - for financial forecasting. The board is funding development of the application for Manser's finance department, but the chemical processes department is also expected to benefit.

To the Knowledge Fair

Manser got the idea for the neural networks project by attending one of the knowledge fairs that Staeheli and Schelling host about four times a year. The fairs, of which the scouts' FutureWatch was the most recent, are a rare opportunity for face-to-face, open-ended meetings of scientists and businesspeople from throughout Novartis. One scientist who works in veterinary research in a small Swiss town said the one-day events keep him from feeling isolated from the rest of the Novartis scientific community. Recent topics have included product delivery systems, high-throughput screening and functional genomics.

"To me it was amazing to find that people in such different disciplines have exactly the same structural needs, the same key success factors, and the means to be good are pretty similar," Manser says. Just as a Novartis scientist would, he listened carefully to discussions about neural networks, then made a pitch for research to the Science Board. "It's the kind of high-risk, high-return project that, normally, businessmen would be hesitant to do because of the risk of failure," he explains. But if it works, he says, it could improve financial forecasting for the management of Novartis's $US 14 billion investment portfolio.

Leaders of knowledge programs know that unless employees believe that such apparently fuzzy programs have the endorsement of top management, they won't participate. To convince the scouts to devote time to the new knowledge-sharing project despite pressures the merger has brought, Staeheli brings his boss, Hans Kindler, head of group technology and a member of the Novartis eight-member executive committee, to rub elbows with the scientists the night before their first meeting and emphasise his sponsorship of the project.

Stumbling in Virtual Space

The real work for the scouts begins once the forums go live about 10 days later. Back in her office in Basel, technology scout Karen Ann Bergmann wonders whether the pressures of the daily routine will leave room for the forums.

Bergmann, who heads strategic planning for technical research and development, was impressed by the proposals she heard that had overlap across business units. "This was a big eye-opener. But I think it will be really difficult.

Today we got the information to start the database, but I was struggling to find the energy and focus to enter and see what others had posted. I'm back in the office and doing what I have to do [for my daily job]. It's easy when we're isolated in a room together." Three months after the FutureWatch launch, the experiment has moved into a new phase, and Novartis is absorbing the lessons. As Bergmann feared, the online participation did in fact die down twice. Each time, Staeheli and other moderators prodded more postings with a round of e-mails and online responses to keep debate flowing. "We learned you have to continuously feed oil into the furnace, challenging people to come back," or the energy disappears, Staeheli acknowledges.

But all told, the knowledge shepherd sounds encouraged. The scouts and their colleagues created about 60 topics for discussion, while the VirtualForum as a whole has drawn some 350 comments. This spring the scouts will be welcomed back to the virtual space with new topics, which Staeheli says this time will be more narrowly focused. But the inherent fuzziness of knowledge sharing is not something to avoid. At a company like Novartis, it's essential. "I got a typical comment this morning from a person who made a good contribution," Staeheli recounts a few days after the scouts' launch. "[The scout] told me 'I'm not completely informed about the technical details I'm talking about.' I said, 'That qualifies for the platform because if everyone knew the technology then this wouldn't be interesting; there should be an uncertainty as to whether it will work.'" Staeheli's voice cannot conceal his excitement: "That is the attitude I like, because we are reaching far out." Science and the Art of KnowledgePioneers on the knowledge frontierMany companies talk about knowledge as a key asset, but the number that have actually jumped into practicing knowledge management - a field less than 6 years old - is not more than a few hundred out of thousands of corporations around the world. Global companies understand the logic, but until recently few were willing to risk time and resources on an unproven strategy. But science-based companies are leading a new wave.

"Senior management has now read enough about KM to say, 'How do we get this started?' We get calls from people who say, 'My competition is doing this,'" says Mark Mazzie, chief knowledge officer of Barnett International, a pharmaceutical industry consulting firm in Media, Pa. Companies such as Eli Lily and Co. of Indianapolis and Pfizer Inc. of New York City have begun to share their experiences at industry conferences.

However, even in an industry such as pharmaceuticals, management "doesn't know where to put new KM programs: in HR, strategy, IT, or even who in the organisation should get it started," says Mazzie. "I've had CIOs say they understand KM, but it doesn't belong under IT. We normally recommend it be a standalone department reporting to a high-level [executive]." Senior Writer Gary Abramson can be reached via e-mail at

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