Disruptive Innovation: Do Healthcare Administrators Have What it Takes?

Tuesday VC Brad Feld described his experience with the Clear airline security expedition system on his blog, Feld Thoughts.

The post is interesting for several reasons. First, Brad's the only person (out of an estimated 100,000 customers) I know of using the $128 system, and the only blogger I've heard detail the actual process so transparently.

Second, Brad points out Clear is a disruptive innovation that allows him to get through airport security faster not because of its tech (or material-based innovation), but because it allows him to CUT STRAIGHT TO THE FRONT of the TWA security lines (a method-based innovation).

Now, is Clear's disruptive innovation good or bad?

The answer is both of course - there's not usually a black/white in innovation (subliminal message - Google debate, Google debate).

Like most other advances in process and systems, Clear's brand of innovation is good for some (Brad, who scoots right through after his retina scan) and bad for others (passengers already less than pleased with security measures who see this guy escorted to the front of the line).

There is, however, an alternate example of disruptive innovation in the airline industry that many consumers would classify as bad for most -US Airlines introduces the groundbreaking new $25 charge for a second checked bag.

According to the airline, 8 percent of passengers check a 2nd bag, and the policy will help offset rising fuel costs. Is it worth the customer service hassles that will ensue to execute this particular brand of disruptive innovation? Only time will tell - the policy goes into effect on flights May 5th.

It's easy to pick and choose examples of disruptive innovation from outside our industry, but let's take a closer look at who's leading the charge in healthcare.

Despite the aggravated, inflamed state of the US system, there are pretty decent examples of disruptive innovation within the industry (the retail clinic movement, specialty hospitals, social 'health' and medical networks).

The latest Forbes Magazine issue is all about healthcare, complete with a cover piece depicting a man in scrubs escaping from an ED accompanied by the headline "Stop That Patient!"

The magazine's approach in this issue represents a disruptive innovation in itself - all the articles are geared towards consumer issues (best hospitals, how to protect yourself, top 10 medical mistakes) rather than providers or star hospital players.

The issue includes a valuable piece "Bad Medicine," by David Whelan, advocating for specialty hospitals as consumer choice vehicles. Thanks to Bob Laszewski over at Health Care Policy and Marketplace Review for drawing attention to it.

First read the article, then answer the following questions.

Is your hospital's current innovation program more like Clear or like US Airways new policy?

Is it true that hospital administrators don't

Do physicians have the market cornered?

Do you agree that "Physicians innovate in health care. Hospital administrators do not?" (Dr. Blake Curd, quoted in "Bad Medicine," Forbes).

The complex answer, of course, is that disruptive innovation within an established hospital biosphere involves more than one subtype of innovation, and requires more than one professional designation to make it work.

Many can start a new entity by responding to what's 'broken' in our current system. Few can take what we've got and fix it at a site level.

Total market innovation requires repeated instances of BOTH fixing what's already broken (hospital by hospital - handwashing improvement campaigns, etc.) and also birthing organizations that seize competitive advantages with new Health 2.0 business models.

Industry innovation will succeed only with repeated instances of disruptive innovation that drive competition by departing from an established delivery framework, whether this happens inside an established hospital or via a startup sector.

For disruptive innovation from within, administrators have to first commit themselves to being disruptive innovators, accepting that there will be 'good' and 'bad' outcomes, ranked according to how different stakeholders classify outcomes in a very personal way.

Second, administrators must coordinate all types of innovation (and involved decision-makers) - the really tricky part.

Instead of classifying an administrator's job as 'innovation manager' or 'innovation leader,' efforts may be better defined as innovation optimization (hat tip to Kal).

Doblin's theory of innovation states there are 10 types, but places those subtypes into 4 (dry) major categories: Finance, Process, Offerings and Delivery. Tidd's theory also breaks down innovation into 4 subcategories: Product, Process, Positioning, and Paradigm. For further reading, Miguel Cornejo Castro has a great post on the topic here.

In the hospital setting, we might reframe the four major categories of innovation to reflect our mission. The quartet includes:

1. Material innovation
2. Method innovation
3. Management/leadership innovation
4. Medical/care innovation

There's a 5th type of innovation, too often hidden and underlying all the other types, that I'd argue may be most important for the success of internal disruptive innovation - motivational innovation (click the link for an amusing example), or "movement" innovation (click here for a more relevant industry example).

Motivational innovation provides the impetus to move out of an inert state - "business as usual."

In order to optimize creativity, harness innovation to plan and motivate the organizational hive to execute, administrators cannot design disruptive innovation strategies in a vacuum.

Administrators (and Boards) constantly undervalue how differently constituencies within the healthcare spectrum will prioritize innovation efforts. An awareness of how different sectors value the four different types of innovation above creates greater ability to enervate for change efforts.

There is no quicker way to ensure disruptive innovation's failure than to design a top-down strategy.

We pay lip service to physician relations, customer service units, nursing councils, etc., but tend to gather input from these groups only at low rungs of the innovation-design ladder.

Physicians will place medical/care innovation at the top of the ladder. Quality and safety depts. may put method innovation first. COOs, CIOs, and purchasing may put material innovation at the head. Administrators may place an emphasis on management innovation.

Although I don't agree with Dr. Curd that hospital administrators don't innovate, I do think the profession gets a bad rap for spouting off innovative goals that never ripen to full fruition. Too often benefits of an innovation initiative are not realized in the hospital setting.

The most important thing for hospital administrators to remember about innovation?

Disruptive innovation without execution is a crime against the organization.

Although innovation shouldn't be solitary practice, it's the hospital administrator's responsibility to facilitate execution.

So the question is, DO healthcare administrators have what it takes to coordinate and cultivate a culture of innovation, and optimize execution? Not by ourselves we don't...

Watch the progress of the SPIRIT campaign over at BIDMC for one organization's answer.

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