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Health Orgs Dooming Their “Innovation” To Failure

This article was first published on 24 June 2013.

Dave Chase, the author of both this article from Forbes Magazine and the article spotlighted in my previous post, makes a couple of very interesting points about the innovation imperative in a world of disruptive technology.  As with his earlier article the lessons go way beyond healthcare and apply to every industry.

He’s had exposure to virtually every health system in the U.S. and his primary argument is that:

  • Attempts to promote innovation in the healthcare industry are overwhelmingly being mismanaged.
  • His primary proposition is that the way they are being setup right at the beginning virtually guarantees they will fail.
  • He states that “the way to guarantee innovation failure is to pass them [i.e. initiatives] through existing operations.
  • He argues that it’s hard for a big company to take seriously a new market segment when its initial revenue impact is a tiny fraction of their existing business.
  • He makes the point that “most health systems look at their crosstown rival as their main competition when it is asymmetric competition that is their biggest threat.”
  • He also specifically notes that the metrics for success with new innovation will in most instances look very different to those for the existing business.  This is a point that the leaders of existing operations continually struggle with.
  • In short, his position is that sprinkling a little innovation fairy dust over a traditional organization won’t magically transform it.
  • He concludes by arguing that, to be successful, innovation needs to follow Microsoft’s Xbox model.  That means complete cultural and physical separation of the new innovation from the existing business.

His case is well argued and, in my view, these lessons apply to a range of industries.  One thing we can be sure of is that simply injecting the word “innovation” into the CEO’s slide pack or newsletter and exhorting people to “be more innovative” won’t cut it.

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