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Johnson & Johnson Innovation Strategy — Using Small Squads To Act Like a Startup

Johnson & Johnson is a well-known multinational company with over 134,000 employees worldwide engaged in the research, development, manufacture and sale of a broad range of products in the health care field. The business is organized into three segments: consumer, pharmaceutical, and medical devices. It had annual revenues of $76.5 billion in 2017—with earnings before taxes on income at $17.67 billion down from $19.80 billion the previous year and a high of $21.83 billion in 2013.  However, digital transformations are occurring across all large, medium and small industries and companies. New technologies are changing the way products are developed and the way companies operate and streamline the entire manufacturing process. Thus, it comes as no surprise that one of the largest and most well-known multinational companies is now amongst those facing stiff competition—not only from its large rivals but also from a growing list of startups that are taking aim to disrupt the behemoth. Such is the reason for the undeniable existence of the Johnson and Johnson innovation strategy.

Startups are Taking Aim

Johnson and Johnson competes with businesses of all sizes, both locally and globally, and across its product lines. There is a significant and growing competition in research, involving the development and improvement of new products or enhancements to legacy products. Recently, Johnson and Johnson has felt the growth of this competition coming not from only the large typical players but from an assortment of startups that are able to produce new innovations at a faster pace. Specifically, the company’s baby care, oral care, women’s health, and wound care franchises were all down significantly and facing new competition that is able to ideate more quickly.

Startups see the growth of these sectors and are expected to have a growth spurt which can raise awareness about their presence as investment opportunities. Additionally, these startups are operating in small agile teams with an attitude of building the next billion-dollar company. These startups are laser-focused on specific product areas with the ability to examine the problem from a completely different perspective. Also, they lack the bureaucracy that is common in most large multinational companies. Notably, Amazon is famous for operating in small teams, similar to a startup. And Johnson and Johnson is not only taking notice but also making drastic changes. Thus, the Johnson and Johnson innovation strategy—which involves the use of small squads—enters the scene.

Johnson and Johnson Innovation Strategy — Inspiration from Amazon’s “Two Pizza Rule”

The 10-person squad idea was borrowed from Amazon, where team size was limited to the number of people who can be fed with two boxes of pizza during a meeting. In actual terms, this was between 7 to 10 people. The group size also happens to be the optimal size for a small management group. In the development of the Johnson and Johnson innovation strategy, the idea for more smaller teams was to help create a small company mindset, which is to be agile as a startup. 

an image with three photos overlapping each other showing scenes from a small room meeting amid the development of the Johnson and Johnson innovation strategy
Ideal management group size is equal to the number of people you can feed with two boxes of pizza, according to Amazon

J&J has recently reorganized the consumer business operations for improved flexibility by organizing itself into teams or squads of 10. The competitive environment requires substantial investments in continuing research.

In addition, the development and maintenance of customer demand for the company’s consumer products.

Additionally, the company has launched Johnson & Johnson Innovation with the first centers in California, Boston, London and Asia Pacific. The goal is to develop regional innovation in the areas of medical technologies, consumer health care, and therapeutics. These centers bring together business development, venture investment, incubation and R&D from across the company.

According to Paul Soffels, M.D., the chief scientific officer at the company, “At Johnson & Johnson innovation, our goal is to bring forth highly differentiated health care solutions that extend and improve lives.”

The Consumer division has also extended this mindset, as a request, to its advertising partners. It instigated a review of its agency partnerships with the aim of streamlining the workload. According to Alison Lewis, Chief Marketing Officer of J&J Consumer, this does not change the actual workflow, like a request for proposal, as well as brand assignments for the creative agencies. However, it will streamline agency teams aligning them with the changes done to the J&J U.S. consumer business, which is now composed of 10 multidisciplinary teams revolving around pain relief, oral care, and others.

Another Note on the Johnson and Johnson Innovation Strategy 

This initiative is not meant to change the current line-up of agencies. However, it might impact the way the agencies work or the work distribution among the agencies. J&J, like most large multinationals, employs several specialty companies for its digital, social media, shopper and public relations. This case would also result in a restructuring to eliminate duplication, including the use of multiple account managers working with J&J.

Jeff Smith, J&J Consumer for North America group chairman says that “we may not end up with an agency that does it all end to end.” He was referring to the various tasks agencies now do for the company, which include more than 20 touch points such as social media updates and interaction, digital media, social media video ads, apart from TV and video ads. “If my squads are going to operate in a more agile, entrepreneurial way, they can’t really manage 20-plus touch points,” says Smith.

In the long run, J&J is also looking at developing smaller in-house teams to handle quick turnaround, real-time interaction. This bold move in relation to the Johnson and Johnson innovation strategy is increasingly becoming a necessity for big multinationals and cannot be left to agencies.

‘Johnson & Johnson’s Strategy: Use Small Squads Like a Startup’ Cartoon

cartoon of three men representing startups looming over J&J amid the development of the Johnson and Johnson innovation strategy
J&J is developing small squads to handle quick real-time, turnaround interaction. What does this strategy mean for J&J and other players in the industry?

Meat Substitutes: Disruption and Threats to $90B Industry

People enjoy food – what used to be just a source of nutrients is now an industry worth billions of dollars. The meat industry alone earns $90 billion, but with the rise of a health-conscious and cruelty-free population, they are about to experience one of the biggest disruptions around. With countless meat substitutes being created left and right, the bold idea of a meatless world may soon become a reality.

Is Meat Still King?

imagine a meatless world? what will be the impact of meat substitutes

meatless industry facts infographic

At the moment, meat eaters still make up majority of the population. Analysts say that in 2018, the United States will eat even more meat than ever – the US Department of Agriculture (USDA) estimates that an average person will consume about 222.2 pounds (100.8 kilos) of it this year. Additionally, about 30% of global consumption come from beef, chicken, pork, and other animal proteins.

David Portalatin, a food industry adviser for NPD Group, stated that protein is the number one priority of most consumers today. People are more into meat, eggs, and dairy than sources of carbohydrates, and the USDA says people will eat a daily average of 10 ounces of meat and poultry this year. The recommended amount is 5 to 6.5 ounces, so that’s nearly double the quantity.

The demand for meat is even higher than people realize, but factors like the health industry boom and the increasing number of people becoming more conscious about the effects of slaughtering animals does to the environment has opened the door for meat substitutes to creep in and change the game.

“Ten years from now, there will be higher plant consumption, but beef will always be king,” said David Friedman, founder of the Chicago-based meat substitute company Epic Burger Inc. “People are always looking to put more protein into their diets. But they want high quality and transparency in the food they’re eating.”

There Is More to It than Meat

It’s not common knowledge, but meat actually impacts the environment more than any other food for human consumption. This is mainly because turning livestock into food require a lot of energy, land, animal food, and water compared to raising and transporting plants or plant-based food and drink products.

To create a quarter-pound burger, there needs to be about 6.7 pounds of grains, 52.8 gallons of water for animal consumption and feeding the crops they eat, 74.5 square feet of land for them to graze and to grow the crops they eat, and enough fossil fuel energy that can power a microwave for nearly 20 minutes.

This all points to one thing: meat production needs to slow down and find a way to become more efficient. In lieu of this, especially for a mainly meat-eating species, people need to find other sources of nutrients. 

Today, seven of the largest meat companies have a combined $71 billion in market capitalization. Tyson is valued at $25.65 billion followed by Hormel at $15.96 billion, based on data from CB Insights. National Beef, Pilgrim’s, and JBS are behind at $9.17 billion, $7.72 billion, and $6.9 billion respectively. Not too far behind are Sanderson Farms and Bachoco at $3.41 billion and $2.95 billion each.

Even with such big names still leading the industry, “clean meat” startups are finding their way into becoming more mainstream. Impossible Foods is probably one of the first names people would think of, as their Impossible Burger has received praise for looking and tasting like the real thing. People end up consuming eco-friendly meat and getting more nutrition without sacrificing taste.

Impossible Foods’ chief executive officer (CEO) Pat Brown says the company is getting rid of prehistoric methods of creating food. “We think of it as meat made a better way,” he said, “using animals to turn plants into this very special category of food.”

Eco-friendly meat–what do we know about making better choices for ourselves and for the earth?

Los Angeles-based plant substitute company Beyond Meat has received support from Tyson through Tyson New Ventures, as well as Kleiner Perkins Caufield & Byers, and even (surprise!) actor Leonardo DiCaprio. Available at Whole Foods, Beyond Meat’s vegan products include substitutes for chicken, beef, burgers, and sausages. 

Memphis Meats, the Richard Branson and Bill Gates joint investment based in San Francisco, is also helping tackle the animal-friendly business by producing meats directly from animal cells – with their tech, there’s not need to raise and then slaughter animals to produce beef and poultry.

Other names are trying to get funding and support as well. Finless Foods are creating faux fish meat, New Wave Foods are creating “shrimp” from algae and pea protein, and Odonotella is creating algae-based salmon. Tokyo-based Shojinmeat Project is also joining the ranks, teaching high school students how to culture animal cells at home and converting them into meat substitutes. Companies like Perfect Day want to create milk even without cows, a bold idea that raised over $2 million from venture capitalists.

This food movement has created other possible solutions as well. Swedish company Plantagon has been designing “skyscraper farms” – the bold idea of farming within city limits. Phoenix, Arizona now has a similar company called Farmiculture, a company that converts commercial warehouses into vertical greenhouses. These hydroponic spaces maximize resources, virtually eliminating the need for tractors and wasteful irrigation systems.

In addition to city farming, companies are also looking into organic biofertilizer coming from algae, possibly providing a complete solution to the oil consumption and chemical fertilizer issues. A University of Texas at Austin study found how algae-based fertilizer yields more crops compared to their chemical counterparts as well – making food not only safer, but also allows farmers to more easily meet their bottom line.

Is The Steady Growth Of Craft Beer Industry Coming To An End?

a cartoon of a craft beer battling it lifespan
The craft beer movement has been on the rise, and big brands grab the opportunity of buying these breweries. Will consumers be affected by this incursion?