Five Ways Large, Mature Healthcare Organizations Can Change
Rick Newell, MD MPH is CEO of Inflect Health, Chief Transformation Officer at Vituity, and passionate about driving change in healthcare.
Healthcare is evolving at an unprecedented and ever-accelerating rate. In order to keep up, healthcare organizations must learn to evolve and transform their products, services and business practices. If not, like former giants in other industries, they face obsolescence. When facing these types of junctures, I've found that success can make it harder to innovate.
Bill Gates once wrote in his book The Road Ahead, “Success is a lousy teacher. It seduces smart people into thinking they can't lose.” When times are good, exploitation wins out over exploration. It’s a natural tendency to focus on what has made the company successful, milking the most successful products and services. But companies are then trapped by the paradox of plenty—a cognitive myopia that results in an inability to recognize that something better will come along and that customers’ future needs will be different than they are today.
Fostering Innovation In Large, Mature Organizations
While most healthcare organizations today have innovation as a key component of their strategy, innovation and transformation don’t just happen. It’s not just brainstorming new ideas or talking about changing how things are done.
Rather, innovation and transformation require that we avoid short-term thinking, resist the pursuit of the extraction of value over the creation of it and incentivize leaders to be entrepreneurs rather than financial engineers who generate bad profits that ultimately undermine your product, brand and customer loyalty. We must boldly invest the necessary resources, leadership and time in innovation. Here are five strategies to turn innovation from a goal into a reality.
1. Look forward rather than backward. Recognize that “What got us here will not get us there.” The marketplace is constantly changing, so we must maintain a sober self-assessment of our position and recognize that we cannot simply tread water. Rather, you should passionately pursue both incremental and transformational innovations.
2. Create a culture of innovation. Mature companies talk the talk of innovation but often don’t breed organizational cultures that identify, nurture, drive and reward creativity. To thrive in the new healthcare ecosystem will require creativity from all facets of the organization—from the board and executive team to the middle manager and front-line personnel. We need to lead by example from the top so a culture of innovation permeates throughout the entire organization.
3. Recognize that innovation is different from core business. Mature companies tend to treat innovation the same as their core product lines. They ask their innovators to “show me the money” or stop wasting their time. They’re accustomed to traditional product development strategies that can be easily modeled and projected, with easily trackable ROI. But innovation doesn’t fit into these established practices. The result is tension between innovation and bureaucracy, between those who create and those who control. It results in innovators spending too much time simply justifying their existence.
4. Create a startup environment for innovators. Smart and speedy startups often blindside mature companies with their inventiveness, then grow into mature companies and are themselves outsmarted by newer startups. A way to overcome this cycle is to insulate the innovators from the organization’s business processes (but not its people) so they can work in an ecosystem whose sole focus is innovation. This ecosystem typically includes a nucleus of five to twenty-five people whose role is to question assumptions and listen to the market’s transformative signals. They have a license to be fast, to iterate often and build robust channels for unorthodox thinking—hallmarks of a successful startup.
5. Take risks and recognize failures as successes. The fear of being stigmatized for a failure keeps people from suggesting and acting on ideas that might seem irrational at first. But executives and boards are rarely blamed for missing a major innovation, and no one has ever been fired for not failing. Companies fail not because they’re lazy but because they work hard and keep charging down a path whose end they don’t see coming. Failure in an attempt to innovate should be rewarded as a positive because even unsuccessful innovations build a foundation for further innovation.
We know that healthcare has already begun to change in ways we can’t yet predict. Faced with uncertainty, the urge to button down and keep doing what we’re doing is all too human. But to stay relevant, healthcare’s biggest, most successful companies would do well to take heed of Andy Grove’s advice: “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.”
Let’s be paranoid. Let’s look forward rather than backward. Let’s create a culture of innovation and recognize it as different from our core businesses. Let’s create a startup environment for our innovators. And then let’s take risks and recognize that failures are the first step to success. In my next article, I hope to detail specific tactics for driving innovation in healthcare.