The strategic context for business has radically changed, with old patterns of power fracturing along new lines. Organisational culture is heading into a new phase, and the journey promises to be more transformative than the 20th century’s post-industrial revolution.
We face multiple shifting paradigms, and it’s easy to blame technology. Disruption has always been a force in the business world: waves of innovators have built upon those who came before, overturning industries through tsunamis of change. It’s now time to adapt to a new reality, one that has everyone calling for some form of innovative thinking – a new kind of strategy and action – to respond to their challenges.
Innovation is never easy for regulated industries – especially healthcare, where the risks and security concerns associated with technology come along with any mention of disruption. But it’s time to focus on the bigger picture – an entirely new orbit for innovation and design thinking at a system level. We can do this by organising around the outcomes we seek to achieve.
Jenny Comiskey, former director of both IDEO and McKinsey, put it best:
“The next frontier for health innovation will be focusing on the broader system, bringing disciplines together around the human side of health, and reconnecting with its bigger purpose – creating quality of life.”
The inherent risks of innovation
Of all the regulated industries, I’m focusing specifically on healthcare here – rather than, say, finance or energy – because it’s a historically conservative industry for a number of reasons. The healthcare industry faces major challenges: data security, practitioners’ personal and professional risks, health risks to patients, and liability risks, to name a few. Yet innovation is crucial in the face of this conservatism when patients’ outcomes are at stake.
Data is all around us. Everything from batteries to Bluetooth to sensors is used to gather actionable and quantifiable data that can help prevent, treat, and diagnose chronic conditions outside methods used by traditional healthcare. But if your doctor used your activity tracker’s data to diagnose you, do you realise how many companies in diverse sectors would risk prison sentences or lawsuits?
And yet, an organisation considered synonymous with “red tape” – the U.S. Food and Drug Administration (USDA) – is innovating by creating policies that could break down barriers currently preventing developers from creating helpful apps and third-party tools for patients and providers.
While regulations pose barriers to innovation, they don’t preclude it. Waymo self-driving cars drive us to our Airbnbs, where we use Teladoc to videoconference with our doctors in order to stay healthy. Amazon will soon use drones to deliver our drugs. And even in the operating room, surgeons use robotics like those already performing 2,000 surgeries a year at New York University’s Langone Medical Center. If these organisations can innovate in such a tightly-regulated industry, there’s no reason that others can’t create change.
Four strategies to start organising around outcomes
1. Create an innovation framework.
Rules-based innovation creates a space for disruption within a more controlled environment. For instance, healthcare company Novartis partnered with heart-failure medication Entresto to create a framework for value-based pricing. Patients on the drug would pre-set a threshold for heart failure-related hospital visits, and if their visits exceeded that threshold, they’d receive Entresto at a lower price. While value-based pricing is a relatively new step for this industry, this groundbreaking approach creates benchmark guidelines for innovation to succeed without running wild.
2. Enable revenue through innovation.
Cost is always a major hurdle to innovation, and an American Hospital Association/AVIA survey of 317 CEOs and innovation leaders found this to be true in healthcare as well. However, innovation leaders scored 25% higher across the board at risk management than their non-innovative counterparts. The trick to overcoming this obstacle is to apply growth to outcomes. When the technology is a tool used to accomplish a strategy, you’re doing it right. If your strategy is to simply acquire the tools, you’ll constantly lag behind competitors better leveraging those tools (and probably selling their lower-end models to you).
3. Know your role.
There are, of course, limits to innovation. Regardless of how you feel about how the government regulates you, for example, you won’t get away with disrupting the industry by violating the rules. Executives who win in any business are those with solid stories and all systems focused on that goal.
4. Execute and quantif.
Research shows how much you spend on innovation isn’t as important as where you spend it. Work together with employees to establish a culture of innovation from the top down – don’t isolate inventiveness to your R&D department. When business and technology work together, your entire organisation will be fuelled by the buzz of innovation. There’s no shortage of technologies to invest in, regardless of the industry. The Internet of Things has seemingly endless layers of profitability, and those organisations that execute and quantify ideas will be successful.
As both enterprises and consumers become more connected, it’s easy to focus on the technology – there’s so much of it evolving so fast and coming from so many directions. But never forget that your end users are human too. And improving outcomes for people is worth all the risk in the world.