JEAN-PIERRE GARNIER is a big believer in innovation. He has to be. As chief executive of Glaxo Smith Kline, his company lives or dies by its ability to develop new medicines.

Drug companies must work constantly to refresh their product portfolios. Even the most successful drugs eventually lose patent protection, triggering a collapse in sales. Unless a company has promising new medicines to fill the gap, it will soon succumb to a takeover — as many have in the past.

Driven by this logic, Glaxo routinely tops the research-and-development “scoreboard” produced by the Department of Trade and Industry. Last year it spent £2.8 billion on R&D — 10 times as much as eighth-placed Shell.

This commitment explains why Garnier has been asked to address the CBI’s annual conference in London this week on the subject of innovation.

Speaking to The Sunday Times this weekend, Garnier said companies could not treat innovation as an optional extra. “Either it’s at the centre of your enterprise or it’s not there,” he said. “You can’t do innovation on the side. You have to commit yourself entirely.”

In the popular imagination, innovation is best understood as the creation of an entirely new product — whether a novel pharmaceutical, revolutionary car or ground-breaking gadget.

Garnier said such big leaps forward were atypical. “It’s not about some guy who shouts ‘Eureka’ and finds an iPod. Innovation is a lot about unexpected occurrences and solving problems.”

It is also about a willingness to learn from failure, and an acceptance that some failure is inevitable. This is another hard lesson from the pharmaceutical industry, where nine out of ten drugs that enter clinical trials never make it to patients.

Garnier cited an example from the motor industry. When Ford introduced the Edsel in September 1957, the mid-priced car was one of the most carefully researched products in commercial history. Yet it flopped with consumers.

Ford had made the mistake of segmenting the car market by income level, said Garnier. “During their experiment and the failure that followed it, they realised that the market was a lifestyle market. It had nothing to do with income. Some people want to spend a lot on their cars even though they don’t have a lot of money.”

Garnier said Ford turned the Edsel experience to its advantage with the development of the Mustang, the four-seater sports car that enjoyed a wildly successful launch in 1964. Promoted as “the car designed by you”, Ford sold 22,000 on the first day it was available, and by 1966 had shifted 1m.

“If you want this kind of failed experiment to become a nurturing ground for innovation, you have to allow for failure inside your organisation.”

This is not something that comes easily to big companies, where organisational politics often means that avoiding failure is the secure route to career progress.

Explore Health

• Expert Advice

• Health Features

• Mental Health

• Alternative Medicine

• Child Health

• Health Club