I have my own theory of innovation. Almost everyone agrees that innovation is a key ingredient in growth and prosperity but in our current times, few companies are able to cause it to happen. I think that’s because people misunderstand innovation, and particularly how to get it going. With all the belt-tightening going on as the result of lean times, innovation could not be more essential, but at the same time, seemingly more out of reach.
In my view, there are three main stages to innovation: experimentation, enlightenment and transformation. Experimentation is the most assured pathway to innovation but it is also one of the first things to get cut when belt-tightening occurs. It requires an organization to spend time on lots of things that eventually get discarded because they end up never taking root. To an accountant, experimentation looks a lot like “play-time” activity that isn’t needed. Innovation can occur without an experimentation stage, but reliance on “bolts-out-of-the-blue” to kick-start innovation will ensure that you will almost never actually get there.
Enlightenment is nothing more than an improved understanding of reality. It occurs when a series of experiments from the experimentation stage are accepted by a group as having special significance because they reveal a part of reality that was previously hidden from view. Enlightenment is the removal of blind-spots. Once the blind-spots are removed, easier or more profitable paths become more obvious—or at least one of them becomes less foggy.
To actually benefit from enlightenment, and thus achieve the final stage of innovation, transformation, you need the courage to take a path that has been revealed by the enlightenment stage. Without courage, innovation won’t occur and stagnation will result. What a shame, after the experimentation and enlightenment stages and being able to see a better path but fail to innovate due to lack of courage to transform. I suspect it happens a lot.
HOW TO PRODUCE “INNOVATION” THROUGH IDEAS
In hard sciences, the experimentation stage of innovation is literally that: running a bunch of laboratory experiments. But in a lot of other areas, experimentation is simply the raising of a lot of ideas and debating their merits and drawbacks. Good ideas, bad ideas, stupid ideas, new ideas, old ideas—it doesn’t matter. You just need a lot of them. I think “supply chain architecture” is one of those kind of areas and essays in blogs like this one are an excellent way of raising and debating those kinds of ideas.
When it works right, an idea is exposed to a larger audience who’s role is to respond through comments with improvements, alternate perspectives and corrections. In the rare instance when it results in “improved understanding of reality”, it is on its way to becoming “innovation”. The only question is whether someone will have the courage to act on it.
Generally, what I write about in this blog are my own ideas that I think should be considered and debated. Some of them just might end up getting someone to the enlightenment stage and then perhaps, with some courage, to true innovation.
THE “AUTHENTICATING WHOLESALER” IDEA
But today I have a potentially innovative idea to expose that is not mine. The first time I heard the idea of the “authenticating wholesaler” I didn’t like it. At that time, I was purely focused on industry adoption of an interoperable approach for complying with existing pedigree laws, including the federal PDMA, Florida and California laws. The idea of an “authenticating wholesaler” would clearly not comply with those existing laws, so I wasn’t interested in the idea at the time.
An “authenticating wholesaler” is a pharmaceutical wholesaler who pledges (probably through a contract) to validate all of the prior sales and shipment transactions on the pedigrees of all drugs sold to their customers, and who is willing to absorb their customer’s liability for doing so. Unlike an Authorized Distributor of Record (ADR) designation (for the definition of ADR, see § 203.3 Definitions of the Prescription Drug Marketing section of 21 CFR Part 203), any wholesaler could become an authenticating wholesaler (let’s now call it an “AW” for short), even a wholesaler who buys from another wholesaler. In this way, the concept solves the big clash between the big and small wholesalers.
The AW concept would provide the pharmacy segment with the ability to forego all serialization and pedigree activities. Instead, they would pledge to only buy pharmaceuticals from an AW. This would nearly eliminate the estimated high costs associated with deploying the hardware, software and high-speed internet access (and perhaps GS1 fees for GLN’s too) to every pharmacy in the U.S.. Although, wholesalers who offer the service will need to be compensated somehow for taking on greater risk. How that might be done is not yet part of the idea as documented here.
An AW would take on additional risk because if they fail to fulfill their pledged duty, and an illegitimate drug makes it through to a pharmacy or a patient, they would be the party responsible for the results. The risk would pass from the pharmacy to the AW so it would be in the best interest of the AW to take their pledge very seriously. In fact, this would require the regulatory body to acknowledge and enforce the liability arrangement that underlies the AW concept.
Some characteristics of the AW idea are:
- Provide the option to pharmacies to not have to deal with the complexities of reading standardized numeric identifiers (SNI’s), and validating and updating pedigrees. If they wouldn’t want to be limited to buying only from an AW they could choose to deploy the necessary technology and take on the responsibility to do those things for themselves.
- Provide the option to wholesalers to offer the AW service to their customers. If they don’t want to take on the extra liability then they would simply not offer the AW service. They would still be responsible for validating all incoming SNI’s and pedigrees, but they would only be liable to themselves for those steps. The optional AW service offering would simply be to take over the liability of their customers.
- It is possible that the AW service would be offered by a given wholesaler—or accepted by a given customer—on certain drugs but not others, although that may defeat the purpose of the pharmacy not having to invest in new systems. The AW concept would have to be contract-based since liability is transferred.
The second time I heard someone pitch the AW idea my mind was more open to ideas that might be offered as a better industry adoption model than the existing pedigree laws. That is, ideas that the U.S. Congress or FDA might consider as they develop their regulations in the future. Even though it’s not my idea, I decided to write it up and put it out there because both of the individuals who told it to me are not likely to ever carry it any further. The first person is no longer in this industry and the second person is an executive in a large organization in the supply chain. This executive is too busy dealing with other things to submit an idea like this for consideration by a wider audience.
I’m still not sure the concept could actually work in a regulated supply chain, but as an initial idea for consideration, I think it is definitely worthy. What do you think? Could the AW concept help lower the cost of starting up a nationwide drug pedigree system?