Innovation

Bringing Creative Ideas to Life

Markus Fromherz, Chief Innovation Officer, Healthcare, Xerox June 2013

Outline

Defining innovation

Roles and processes

Innovation challenges

Examples in healthcare

Conclusions

Q&A

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Innovation is …

Innovation is invention brought to commercial use.

Invention means new ideas. Commercial use means impact.

Innovation creates differentiation.

Innovation saves cost and generates new revenue.

Innovation keeps us in business.

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Innovation in healthcare saves lives.

Types of innovation: strategic intent

Spectrum

Sustaining: do things better

Transformational: do things differently

Disruptive: do different things

Ex. customer service

Call center agent augmentation

Interactive voice response

Mobile self-service app

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Types of innovation: strategic intent

Spectrum

Sustaining: do things better

Transformational: do things differently

Disruptive: do different things

Ex. infant airways

Process improvements

Vent-less airway opening

Premature birth prevention

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Disruptive innovation

Why sustaining innovation is not enough

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Pe

rfo

rma

nce

Time

most demanding

customers

least demanding

customers

Sustaining innovation (continuous product/service improvement)

Disruptive innovation: low-end disruption (compete for overserved customers with

lower-cost offering)

Disruptive innovation: new-market disruption (compete against nonconsumption)

Diffe

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ea

su

re o

f P

erf

orm

an

ce

Time

nonconsumers

[Clayton Christensen:

Innovator’s Dilemma, Solution]

How about continuous improvement?

Continuous improvement is a form of sustaining innovation

Comparison teaches us what to look out for when pursuing both:

• distinct goals: optimizing the existing vs. creating the new

• risk tolerance: decreasing vs. increasing variation (and allowing failure)

• metric: driving for efficiency vs. looking for differentiation

• skills: process focus vs. entrepreneurial drive

Managing multiple types of innovation:

• requires different kinds of people

• should both report to the same executive team

• should be managed under a different set of rules

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(e.g., Six Sigma)

Improvement approaches

There are many methods to identify opportunities and get ideas

• Lean Six Sigma

• Root Cause Analysis

• Plan-Do-Study-Act

• Failure Modes and Effects Analysis

• Customer Led Innovation

• Customer-Inspired Quality

• …

Often a key requirement for success: making the case

• Business case analysis!

For examples, tools, and templates, see, for instance, Society of Hospital Medicine (http://www.hospitalmedicine.org/)

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Moving beyond sustaining innovation

From doing things better to doing things differently or doing different things.

Typical innovation focus: product/service improvements

• How can we make this better?

Expanded innovation focus: the job to be done by the offering

• What is the customer trying to achieve?

“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” [Theodore Levitt]

Implications for strategy, idea search, patient interviews, etc.

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Types of innovation: business focus

What: offering innovation (technology, platform, solution)

Who: customer innovation (experience, value capture)

How: process innovation (operation, organization)

Where: presence innovation (supply chain, channels)

Robert Wolcott’s 12 dimensions of innovation

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Strategy development

Technically not part of innovation, but an essential prerequisite

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Current State strengths &

weaknesses,

internal

Strategic Goal desired state,

short and long-term

Strategic Plan actions to reach the strategic goal from the current

state in light of the trends, build/buy/partner

Trends opportunities

& threats,

external

1 2 4

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Corporation

Business Group Business Group Business Group Xerox Innovation

Group

Organizing for innovation

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External Innovation

Customers

Strategy Council

Development

Business Dev.

Marketing

Innovation Steering Committee

Customer Engagement

Sales

Strategy

Open Innovation

Explore Incubate Develop Commercialize

Partnerships

Delivery

Innovation steering committee

Purpose:

• Manage the process

• Ensure ideas are realized

• Foster visibility

Membership:

• President, Chief Innovation Officer

• Department directors

• Directors of strategy, business development, marketing, development, IT, sales

Prototypical monthly agenda:

• Previous action items, highlights

• Innovation pipeline and project progress

• 1-2 focus projects

• New ideas

• Customer engagements and partnerships

• Feedback and action items

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Idea challenge

Purpose

An idea challenge* is a concerted effort to collect, develop, and review a large number of ideas for a given theme in a bounded amount of time.

Initially, plan to conduct one idea challenge per quarter. Ideas can still be submitted at any time throughout the year, but plan to concentrate your efforts on the idea challenges.

Process

Idea challenges use the regular ideation process and resources, except that many ideas will be reviewed together.

Schedule

• Week 1: announce challenge and theme

• Week 2: submit and comment on ideas, using the IMS

• Week 3: sort ideas into local, organizational, and shelve (Monday); fill out IRF for non-shelved ideas (Tuesday-Thursday); review and decide (Friday)

* or idea jam, idea campaign

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Innovation process

It’s not just about creativity and ideas …

“Genius is 1 percent inspiration and 99 percent perspiration.” [Thomas Edison]

“The best way to have a good idea is to have a lot of ideas, and throw away the bad ones.” [Linus Pauling]

Ideate Explore Incubate Develop Commercialize

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Strategic intent portfolio view

Innovation project portfolio reflects mix of ROI horizons

Market Newness

Te

ch

nic

al N

ew

ne

ss

Enhancements Scouting Options

Positioning Options Stepping Stone Options

Next-gen Platforms

Market Newness

1 Well-established market for Xerox

with significant share.

2 Established market for Xerox, but not

a market leader.

3 Existing market that Xerox has

recently entered.

4 Existing market, but new to Xerox.

5 Market new to the world; may be

defined but not yet established.

Technical Newness

1 Commoditized technology, widely

available, no competitive advantage.

2 Technology productized by Xerox,

also exists elsewhere, still

competitive advantage.

3 Technology exists within Xerox and a

few other labs, recently productized

but not by Xerox.

4 Technology is new to Xerox but not

elsewhere; not yet productized

anywhere.

5 Technology is new to the world; does

not exist elsewhere.

Continuous

Improvement

Central Innovation

Department Innovation

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Roadmap to innovation competency

Start

• Assemble an Innovation Steering Committee

• Define strategic priorities for your organization

• Manage existing innovation projects

Accelerate

• Develop new ideas

• Prioritize ideas

• Explore and incubate ideas

Transform

• Enroll everyone in innovation

• Train, support, make room for innovation

• Develop and explore transformational and disruptive ideas

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Mindsets to be aware of

Do • Be externally focused

• Recognize that your first idea is wrong

• Treat innovation as a marathon

• Fight the sucking sound of the core

Don’t • Force your view onto the market

• Plan too long before acting

• Throw too many resources at a problem

• Get seduced by too many opportunities

• Create a separation between innovation and operation

• Punish risk takers

• Be impatient for growth

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[Scott Anthony,

“The Little Black Book of Innovation”]

Examples of disruptive innovation

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futureofhospitals.org

Catholic Health Initiatives

Challenge

• Focus on hospital and medical needs, ignoring issues such as access (transportation, ability to pay)

Solution

• New infrastructure for the delivery of healthcare that shifts the central focus from the acute-care hospital to outpatient facilities and the home

• Expanded its relationships with physicians and has acquired other ambulatory organizations, including a home care services organization, to offer more outpatient care

Impact

• Shift to preventing sickness and maintaining people’s health in addition to treating sick patients

• View patient care as customer relationship management

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“We’re organizing our physicians, hospitals and ambulatory

healthcare delivery network providers into a more rational system.”

Juan Serrano, SVP, Payer Strategy and Operations, CHI

Hackensack University Health Network

Challenge

• Better serve the community and patients while maintaining a stable financial position

Solution

• Focus on other areas of business growth to compensate for reduced admissions

• Formed joint venture partnership with community physicians and United Surgical Partners International in the acquisition and operation of two ambulatory surgery centers, established a clinical affiliation with MinuteClinic

Impact

• Helped lead the way toward opening areas of opportunity for other aspects of care

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“Hospitals and health systems across the country are facing a

state of ‘controlled schizophrenia’.”

Robert C. Garrett, President and CEO, Hackensack (N.J.) UHN

Intermountain Healthcare

Challenge

• Population health management, identifying health trends in the community

Solution

• Process to identify such trends and implement improvements

• Use data as a driver for disruptive innovation, e.g., “hot spotting”, patient activation

Impact

• Potential to dramatically improve quality and reduce cost

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“It’s really thinking about healthcare differently. We’re not just

thinking about healthcare; we’re thinking about wellness. We’re

not just thinking about patients; we’re thinking about people.”

Lucy Savitz, Director of Research and Education, Institute for

Health Care Delivery Research, Intermountain Healthcare

Advocate Illinois Masonic Medical Center

Challenge

• Disruptive technologies and patient actions and demands such as home medical testing and “Google self-diagnosis” can’t be ignored

Solution

• High-tech development creates an echoed demand to re-infuse medicine with a high-touch, integrated and compassionate approach

Impact

• Each patient is best served by coordinated, patient-centered care

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“In my experience, disruptive innovation is a reminder of what we

can’t afford to leave behind. Listening to patients is critical – not

just to what they say, but to what their actions tell us.”

Susan Nordstrom Lopez, President, Advocate Illinois Masonic

Medical Center

Future of the hospital

“For over 100 years, the hospital has been the core of our healthcare system, and a pillar of every community – the central hub where people enter and leave this world, and where scientific discoveries become life saving procedures.

“But in the last couple decades, technological, social and economic forces have chipped away at this model. As these trends continue – making traditional clinical environ-ments punishingly expensive to run, and increasingly less necessary for many healthcare needs – the future of the community hospital is uncertain.”

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http://futureofhospitals.org/, 2013

Future of the hospital

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Conclusions

Support your innovation with structure and processes

Consider a portfolio of innovation pursuits

Inform your innovation with data, then ideate and prototype

Look for opportunities (and threats) from disruptive innovation

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