Tackling the issue of failing research productivity

Increasing productivity is one of the fundamental challenges of life sciences research. The work is highly complex and costly, timelines long, failure rates high. However, when research is successful, it leads to medicines that transform our ability to treat disease, and provides significant financial rewards to the originators. Research-driven companies have tackled this productivity issue through large, top down initiatives, such as reorganising research or large scale investments in new technology platforms. McKinsey has taken a different approach: we set out to understand what drives research productivity from the bottom up: from the lab itself.

Emulating world class research labs

To understand how the world's leading research labs organise and manage their research, we initially identified and interviewed world class serial academic innovators, including Nobel Prize winners, McArthur Genius Award winners and some of the world's most highly cited scientists.

We then tested our findings within industry, at a wide range of research labs in Pharmaceuticals, High Technology and Industrial Chemicals.

How do top labs innovate?

We identified a common set of activities and behaviours adopted by the leading academic and industry labs. This fingerprint has proved remarkably similar across academia, pharmaceutical industry labs, high-technology companies and industrial chemical manufacturing. There are some structural differences in how the labs try to achieve the same outcome, but the underlying principles are often consistent.

The core elements of the fingerprint include: the strategic choices a lab makes, the way talent is attracted and managed within the lab, the portfolio and project management practices, the lab's approach to problem solving, and the lab's ability to collaborate effectively.

How to interpret your fingerprint

1. Strategic choices

Top labs all had a clear, long-term strategy. This looks forward over a 3-5 year timescale, and defines a portfolio of consistent, aligned projects. This 'unifying' strategy for the lab is important to guide decisions on how to allocate resources, what new capabilities to build, and how to communicate effectively the role of the lab internally and externally. Top lab strategies are well communicated and understood within the lab, and more broadly throughout the organisation.

Improvement opportunities

Labs often have very short-term strategies, with plans in place for current projects only. As a result they struggle to identify where to build deep capabilities, and how to link projects to get benefits of shared learning. They also find it hard to articulate what the lab should be known for, in both internal and external communications.

Leadership within and above lab level should create and communicate a shared vision, and then ensure that all communications are integrated with this vision. Labs should also set objectives for each member that link directly with what the lab and the organization want to achieve, and invest in specific capabilities to deliver on these objectives.

2. Talent management

Top labs bring together teams from diverse backgrounds, with a range of experience and different approaches to problem solving. Labs do this to ensure that they are bringing multiple perspectives to solving the most difficult problems.

The selection process is designed to uncover the intrinsic problem solving skills of the candidate. Top labs review candidates over more than one day. They supplement the 'traditional' interviews and technical assessments with real problem solving sessions. They believe this is critical to assess the true capability of the individual.

One industry laboratory believes that "regular job interviews are totally useless" and instead relies on lab placements for a few weeks for potential new joiners - as well as recommendations from former close collaborators and colleagues.

All lab members commit a substantial amount of time to 1-on-1 apprenticeship of new joiners. They do this to pass on the high standards across all lab practices and to ensure that new joiners become effective as rapidly as possible. Ongoing mentoring is common in top labs, with more experienced lab members expected to continue to support and advise junior lab members, formally and informally.

Top labs use a range of financial and non-financial incentives to encourage performance. Financial compensation is directly linked to individual lab members meeting and exceeding targets each year, in a transparent way (e.g., an exceptional piece of research or a top publication is rewarded with a bonus). In addition they make full use of less formal mechanisms for reward and recognition.

Underperformance is actively managed, with poor performers leaving the lab. This implicit pressure on performance then drives overall productivity. Top labs also aim to have some turnover of their teams, to keep the environment fresh, with new perspectives and ideas.

Improvement opportunities

Labs tend to recruit from very small pools of talent, from the same local institutions and candidates with similar cultural backgrounds. In addition several of the labs we spoke with have very low attrition rates. By broadening the potential talent pool into new geographies and institutions, and actively managing the lab's visibility there, the lab can avoid becoming a 'stale' environment for addressing its major challenges

In several of the labs visited there was very limited mentoring and development of staff, and lack of clear career plans. By industrialising personal development processes, and linking the role of mentoring with the reward and recognition of lab leaders, researchers will be able to reach their full potential, and they will then be encouraged to support and mentor others.

Many researchers we talked to were unclear how financial incentives were linked to their performance, and some labs actively discouraged informal recognition of individual achievements with the whole lab. Labs have tackled this by creating a culture of recognition, with the intention of rewarding excellence in all its forms.

Finally, in order to avoid the common problem of tolerating researchers who underperform, the organization should ensure a robust performance management process is in place, and lab leaders are incentivised to adhere to it. This will necessitate partnering with the HR function to ensure best practices are followed.

3. Portfolio and project management

Top labs manage a broad portfolio of projects in an integrated way, to realise synergies and align resources, timing etc. The portfolio will typically include a number of high risk, high reward projects. Projects are defined by specific, well-scoped research questions, and plans are cascaded down throughout the project team. Projects are regularly reviewed against specific performance indicators, and those that are not progressing and with limited potential are terminated decisively.

Improvement opportunities

Many 'average' labs do not try to link the work between different projects, and the teams on different projects do not work together to solve problems. Labs can ensure project decisions are made in the context of the overall portfolio by holding portfolio review meetings with the team on a regular basis. This should realise the potential synergies and provide new avenues of ideas.

Projects that should be terminated due to poor results are typically continued for a considerable time, due to the high sense of ownership and the temptation that the research might have 'missed something'. Leadership should ruthlessly withdraw financial and human resources from failing projects, to ensure more promising projects receive a sufficient level of investment and resource early on.

4. Problem solving approach

Top labs are hypothesis led throughout, with the leader of the lab setting the overall scientific approach in collaboration with teams. Their role is to ensure that the projects continue to contribute to the overall goal of the lab and are synergistic, releasing the team's creativity and intellectual capacity to tackle individual problems.

"Having people choose which team and problem they work on ensures they work on compelling problems – that is problems that excite them as well as others"

Industry lab

Multiple tools and techniques are used to tackle a few major scientific problems, with researchers focused primarily on experimental design and data analysis. They are supported by staff running all repetitive activities. Top labs also encourage innovative side projects driven by the personal interests of researchers. This may be defined as a % of time, or as a specific time period during the week. For example, one lab sets aside Friday afternoon for working on these initiatives.

Improvement opportunities

Many leaders within labs will be quite directive about the specific scientific approaches teams should use, without giving much autonomy to their research scientists. By taking a more consultative leadership style, labs can motivate the team, and tap a broader potential pool of innovative ideas.

Due to budgetary and business pressures, many labs do not invest in side projects, instead focusing all available research time and resource on projects that are driven by the business needs. However, by making this initial investment, researchers can regain their passion for the work, and the lab can access a proven source of highly innovative ideas.

5. Collaboration

Top labs build a culture of sharing and collaboration. This is achieved in many ways, such as regular lab meetings and informal interactions to facilitate sharing of knowledge and challenge sessions. Individuals spend significant time in joint problem solving sessions, and actively share data and hypotheses. The lab ensures transparency between teams about the challenges they face.

They actively seek external collaborations, outside of the lab and the organisation, to bring to bear a wider community of scientists to solve their biggest research challenges. They see these types of collaborations as very different from transactional 'collaborations' that may be used to provide a specific, routine service.

The world's top labs ensure that the physical environment in which the teams work is designed to encourage sharing of ideas and information, and efficient working. There will be easy-to-access supplies near to the point of use. In addition stores of supplies are designed in the same way in different locations so it is easy for researchers to work at different points in the lab without having to re-learn the set up.

"Hospitals and labs are the opposite-at hospitals you want to minimize contact to prevent diseases spreading, in lab you want things to spread as much as possible like infectious diseases. You need crowdedness"

Academic lab

Improvement opportunities

External collaboration with other academic and industry labs is typically not widespread, only instigated for discrete projects answering a small part of the overall problem labs are tackling. This is driven by a perceived need to protect the lab's innovations. However, it is a highly viable alternative source of ideas given the correct agreement structures, and should be leveraged more.

Only a limited number of labs have taken the time to plan in detail their design, to ensure that the research teams are provided with an efficient and effective environment. In some cases research teams were located on different sites and rarely had the chance to meet to share learning and solve problems together.

Whilst accepting the limitations of budget and realities of available facilities labs should consider what they can do to improve the physical environment of their teams.

Differences between labs

It is important to recognise that one size does not fit all. In our research we did not identify any labs displaying all of the best practice activities of a top lab. However, the research did identify many similarities in the approaches of labs conducting quite different types of research. For example, the principles of being solution focused, and hypothesis led, with clear work plans were equally valid across academia, pharmaceuticals and high-technology.

We appreciate that there are intrinsic differences between certain types of labs. In particular academia and industry labs have fundamentally different requirements for the research they conduct how they build teams and how they organise themselves. These differences were consistently observed throughout our assessments. However, the underlying principles that our research has uncovered can be applied broadly across many sectors where innovation is driven by laboratory based research.

How to use these insights

This research has identified the common approaches the world's top labs take to make their research activities productive, from the lab level, up. Our findings can act as the basis for a comparative assessment of research labs in academia and industry, particularly those focused on biomedical research.

Contact

For more information please send an email to Successlab@mckinsey.com.

Mubasher Sheikh (left) is a Principal in McKinsey's Global Pharmaceuticals and Medical Products Practice. Colleagues Michael Edwards (right) and Mark Beards (London Office) lead McKinsey's global SuccessLab project.