Philosophy

Where Should Innovation Be Conducted and by Whom?

There’s no one “correct” philosophy of innovation. Individuals, institutions, commercial entities, academic medical centers (AMCs), and research universities all have differing philosophies regarding commercialization of creative thought. One of our jobs as innovation leaders is to strive to understand these differences and unite and harness them in support of mission.

This chapter first touches on what philosophies motivate the individual innovator and dominate the thinking of the leaders charged with managing the innovation function at Cleveland Clinic. Next, it describes why the new locus of U.S. medical innovation is no longer industry, but our AMCs and research universities, and why it’s crucial to understand and embrace this paradigm shift. Finally, it explores why convergence of the innovation philosophies in healthcare and higher education, the two bastions of mission-driven innovation, can have broad, positive effects on innovation.

An Innovator’s Individual Philosophy

The concept of mission-driven innovation, as practiced by Cleveland Clinic and many of our sister institutions, is growing in understanding and gaining in popularity. What does it take to nurture it? The two main factors are presence of an innovation champion and buy-in at the top. If an organization identifies and empowers an innovation advocate, it positions itself to follow through and be successful in the practice. Furthermore, if the top executives prioritize innovation as a core value and competency, creativity will thrive.

For most physician-innovators, there’s always been inspiration beyond living the Hippocratic oath, wanting to help people, and seeking financial reward. It’s also the thrill of pursuing the unknown against considerable odds. I’ve long been inspired by the 140-word “man in the arena” excerpt from Theodore Roosevelt’s 1910 speech at the Sorbonne, Citizenship in a Republic.

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.¹

Some might judge this stance as contradictory to the disciplined, metrics-driven process of Cleveland Clinic Innovations (CCI). How can one disengage conduct from consequence? At its heart, innovation is about “daring greatly” and is performed by those “in the arena.” In a field where failure is so frequent, there must be recognition and reward for those who continue to reach and get back up when they stumble.

It’s always tough and risky to be on the field, and it’s easy to lob grenades from the sidelines. That’s why, when working with our innovators, I make a clear distinction between criticism and critical analysis. Pure criticism diminishes all parties, while critical analysis is a requirement of the innovator leader, because it identifies shortcomings and paves the way for improvement.

Cleveland Clinic’s 10 Commandments of Innovation

Over the years, a set of tenets has evolved to guide our innovation efforts. I have distilled them into these 10 commandments:

1. Innovation will occur when the most creative and qualified people are positioned for exposure to the most fertile material to inspire creative thought. This seems like a logical, almost basic concept, but it should not be taken for granted. Innovation requires the basic ingredients for the chemical reactions that produce creative outcomes. The basic substrates are need, opportunity, and ability. The catalyst may be the infrastructure that enables the development of ideas into meaningful inventions, but the pipeline is stocked by the environment that optimizes the interaction between material and makers.

2. Positioning individuals and the organization to innovate requires active strategic and structural actions. Idea generation may seem opportunistic, but there are forces at work that enhance creativity. Whether physical, virtual, philosophical, or otherwise, a certain level of engineering can take place that improves the chances for innovation to occur. Like building a fire in the wilderness, the appropriate elements can be assembled and the opportunity to “rub two sticks together” can be enhanced with forethought by organizational leadership. Whether fostering physical proximity that helps generate breakthrough ideas, establishing policies that reward creativity, or celebrating “fast fails,” the ways environments are structured influences innovation output.

3. The innovator’s time for and intimacy with the commercialization process differs by individual. Optimally managing innovator involvement is a key contributor to the ultimate success of the concept. Ideas are like children, all different, and inventors are like parents, all of whom have a vested interest in their progeny’s success. Some parents encourage free expression and exploration, while others hover. Similarly, some innovators choose to pass along the disclosure and return to their day jobs, while others desire a level of involvement that threatens to jeopardize execution. The innovation leader must be prepared to handle a wide spectrum of inventor involvement with education and empathy that parallels the doctor-patient relationship. Outcomes are just as rewarding when good results are achieved.

4. A commitment to best processes and best practices must be maintained by those charged with development of intellectual property (IP) for the process to thrive and become sustainable. Innovation is a practice that relies on processes and principles. What decades ago may have been a passive function that waited for ideas and then led them down individual paths to commercialization is now a well-tested process and a highly organized journey. Although there is a great deal of consistency, there is also flexibility for customization. Achieving a balance provides sustainable success.

5. Innovation is a discipline that can be practiced, learned, taught, and measured. It has rules and requires metrics and measurement. In a dynamic environment that consistently brings new challenges and perspectives, assisting a wide spectrum of innovators and their ideas relies upon adhering to a playbook of innovation practice.

6. The benefits of innovation are realized more robustly the more closely the commercialization system is positioned to the center of the medical universe. Innovation that is destined to improve and extend human life is contributed at a prolific pace by physicians who recognize unmet needs at the bedside and then solve them. Discovery science translates into better human health more effectively when researchers are in close proximity to clinical colleagues. Creative output has a much greater chance of finding its way into the marketplace and the hands of healers if the commercialization function is closely integrated and geographically proximate to the innovators’ work.

7. Innovation happens best at the intersection of knowledge domains, so seek and structure collaborations. Many disruptive discoveries follow exposure to domains that aren’t directly related. The innovation leader can catalyze interactions between creatives by orchestrating collaboration through arrangement of physical space or virtual interactions. Sometimes intellectual locks and keys reside in different places and need a little encouragement to find each other.

8. Innovation thrives best when individuals and institutions are aligned and guided by the enterprise mission. Innovation is nonlinear, fraught with failure, and long to succeed. When the innovators and their organization are aligned regarding its importance to fulfill the enterprise mission, there is intellectual freedom and there are resources to produce results, despite the risks.

9. Because of the inherent challenges associated with innovation, celebrate the pursuit and process, not just the outcome. Nothing kills innovation faster than the weight of expectation and reducing its measure of success to patents granted or dollars earned. If failure is not anticipated and even celebrated, the innovation culture will be stifled. This doesn’t mean that innovation should be sloppy, wasteful, or lacking a level of expectation. But even failure has a welcome by-product, experience. While solving some of the biggest healthcare problems, stumbling is to be expected and makes eventual success that much sweeter.

10. Innovation is not the antithesis of the academic mission. It is the enabler. To some, it remains fundamentally contradictory that a commercialization function could reside within the nonprofit sector. However, it’s both an opportunity and a responsibility for the minds in healthcare to bring forth tomorrow’s solutions. Success has the intended consequence of developing new revenue sources for pursuing core missions, such as patient care, further research, education, and community economic growth. With the challenges that have befallen our academic and healthcare sectors, pursuing revenue from monetizing IP is both logical and aligned with mission.

These tenets locate the ideal site for medical innovation at the center of the medical universe, where doctor and patient meet. This seems obvious to us now. But it was not always the case.

The New Locus of Medical Innovation

At Cleveland Clinic, we engage in truly “early stage” innovation—more like “earliest stage” or organic innovation. Our sweet spot is taking ideas scribbled on a napkin to first-in-man trials.

Can mission-driven innovators develop revenue-generating advances in technique and technology? Or, should innovation be isolated in large corporations with capabilities from research and development (R&D) through manufacturing, or are these too far removed from the patient’s bedside to be relevant?

Cleveland Clinic advocates research with development. With innovation in our DNA, there were no debates on whether we should develop a commercialization and corporate venturing arm, just how we were going to build it and ensure it was aligned with our identity and mission. This has not, however, insulated us from the process of examining scope and determining what capability should be built, partnered, or ceded to industry.

The Shift in Commercialization

Large corporations serving as the home of innovation was the dominant model until the 1980s. But since then, there’s been a steady decline in R&D investment by industry. For the most part, the corporate role in commercialization of innovation is to provide the production and marketing infrastructure. One reason for the contraction is that the risks associated with innovation can simply be too high for the appetite of corporate leaders and stockholders. True innovation has been supplanted by acquisition as a means of growth in many corners of industry; this strategy is much less precarious because revenue and customers are already established.

In addition, government’s involvement influenced the shift. Establishment of the National Science Foundation (NSF) in 1950 and the passage by Congress of the Bayh-Dole Act in 1980 brought about fundamental changes creating the climate for academic innovation as we know it today. The NSF provided a stream of research dollars to higher education, and advancing health is among the top priorities. The Bayh-Dole Act permitted investigators and their institutions to benefit financially from commercialization of such research.

As a result of these developments, healthcare systems and research universities have become the primary engines for creative thought and have had a profound impact on the American economy. To illustrate, in 2012 the Biotechnology Industry Organization released The Economic Contributions of University/Nonprofit Inventions in the United States: 1996–2010. Using a decade and a half of data from the Association of University Technology Managers (AUTM), the authors noted that invention licensing by universities and nonprofits during that time frame supported as many as three million person-years of employment, with a gross industry economic output as high as $836 billion.²

In 2011 alone, inventors at AMCs and universities earned more than $1.8 billion from commercializing their research, with royalties coming from a variety of drugs and devices. More than 12,000 new patents were filed, 5,300 licenses completed, and 617 startup companies launched, according to the annual AUTM survey.³

This isn’t just a pendulum swing, but a profound new trajectory in innovation. It simply makes sense that innovation should initially be managed by the entities creating the ideas in the first place. Additionally, Cleveland Clinic and others feel that the fiscal benefits should also accrue to the inventor and the institution gestating the concept.

Under the prior model, IP developed at AMCs and research universities was abdicated to industry before protection or development, and inventors and their institutions or communities didn’t reap the full benefits. In the new model, the institution is able to maintain control of the nascent idea and develop it. Furthermore, the ability to reward inventors with revenue from royalty-bearing licenses and spin-off companies has created novel ways to recruit and retain top talent.

The Bayh-Dole Act turned on a generous spigot that yielded breakthrough discoveries, incentivized inventors, and led to high-paying innovation-related jobs throughout the country. More than seven million U.S. jobs are directly or indirectly the result of the flourishing healthcare and bioscience sectors. In addition, governors and legislators across the country are recognizing the powerful impact that life sciences innovation can have on community economic development. This has resulted in visionary programs that provide competitive funding for creation of biotech incubators and accelerators or biotechnology clusters.

Why This Should Be Happening

Cleveland Clinic’s broad and extensive interactions with academic colleagues have allowed us to succinctly frame innovation’s role: Innovation, and its intended commercial outcomes, does not represent the antithesis of the academic mission—it is an enabler of the academic mission.

A tenured engineering professor at a Big 10 university and a surgery resident at Cleveland Clinic are both candidates to engage in innovation on a regular basis. Both should also be direct beneficiaries of any commercial outcomes resulting from their creative thought, and it should be shared with their institutions according to individual policies governing that activity. The benefits are compelling and do not exist at cross-purposes with the core academic mission.

What Healthcare Can Learn from Commercial Sector Innovators

The incentive to innovate is no longer simply aligned with industry’s commercial or competitive inducement, but now includes multiple reasons for mission-driven institutions to engage and invest in innovation. Cleveland Clinic is often asked by other organizations how they can “get out of their own way” and take advantage of the favorable climate toward commercialization.

Here are some basic guiding topics for those embarking on their own institutional analysis.

Consumption, as in consumer. In Cleveland Clinic’s world, customers are patients. They need something that physicians uniquely dispense, in various environments that healthcare institutions typically control. Providing efficient and effective solutions that give patients a better consumer experience is one of the most promising fields of innovation. For example, in 2014 Cleveland Clinic launched AppointmentPass™, a way for patients to check in for appointments quickly, easily, and privately using a self-service electronic kiosk, similar to self check-in for an airline flight. After scheduling an appointment, patients receive via e-mail a bar code that can be printed or downloaded to a smartphone for scanning at the kiosk. The kiosk also processes insurance identification and copays. Healthcare is a service industry. Innovating around the customer—perhaps its ultimate expression—will always be the right motivation.

Sharing. Because Cleveland Clinic is driven by the mission of providing better care of the sick, wherever they may be, we have taken the idea of sharing a leap forward by bringing traditional competitors together to collaborate on the supporting infrastructure required to advance innovation. For instance, Cleveland Clinic has created a Global Healthcare Innovations Alliance (GHIA), a network of healthcare systems, academic institutions, and corporate partners from around the world that collaborate to create opportunities to benefit patients through scalable technology development and commercialization.

Timing. We’re in the game to solve the biggest problems, regardless of how long the race. Chief among the challenges are funding gaps and the regulatory environment. Cleveland Clinic consistently endeavors to shave time from each step in our process. To help deal with allocation of scarce resources and margin pressures, we developed proprietary, multifactorial technology scoring instruments to evaluate all disclosures. While it’s vital to have a filter for clinical, technical, or scientific merit, the instruments also help us make better decisions faster. We sit down with the innovator directly after the ranking session to discuss in considerable depth where the strengths and weaknesses of the contribution reside. Instead of waiting for an answer for three to six months, the innovator can resume work on the technology immediately. Use of our scoring systems has slashed our time to decision. We allocate resources better, and promising technologies reach patients faster.

Resourcing. In general, most of our traditional R&D funding comes from grants or philanthropy, while commercial innovation resources come from the P&L statement or from investors expecting a return. We’re balancing mission delivery with the discipline of resource management, and we’re taking steps to “pay back” our funding sources, whether by turning grants into loans or tapping into the evolving venture-philanthropy ecosystem. This is a new class of philanthropists who seek high-impact investments, especially where they can measure outcome.

Process. Mission-driven institutions embrace process because it’s a basis for inclusion and idea sharing, while industry is more comfortable focusing on the product, its attributes, and the transactions around its dispensation. At CCI, we’ve made great strides by introducing technologically enabled processes into our operational infrastructure, objective mechanisms that allow us to make calls more quickly today versus five years ago. But we may give inventors the benefit of the doubt and nurture their inventions a little longer than industry typically does. Sometimes it takes more cultivating for the actual novelty and merit of an invention to shine through. We lead innovators through a more intensified filter to glean the elements of their disclosure with the greatest impact or through a remediation process that redirects creative thought down a path more suited to ultimate commercialization. There is no prescribed time limit to this process; we accommodate the clinician who has intensive patient care responsibilities or the scientist who has a grant submission deadline looming. Although we favor expediency for many reasons, such as being the first to file and achieve market primacy, we adapt our process to meet the realistic demands faced by our innovators.

Validation. Mission-driven and commercial innovation share the final validation: does the innovation sell?

Failure. Everyone in innovation espouses the fast, frugal failure, filtering promising solutions from the inferior as quickly (and cheaply) as possible. Failure is a real and accepted by-product of discovery. Just don’t get too good at it!

Conclusion

Our universities and medical institutions will continue to be the prime locations for pioneering discovery that improves and extends human life. They will also lead in fostering the innovative culture, human capital, and connectivity necessary to form networks where researchers, entrepreneurs, investors, and manufacturers can convene and engage in vital cross-pollination that promotes successful innovation.

Members of the medical innovation ecosystem can assist the basic science researcher, engineer, or computer scientist who is contributing breakthrough scientific inquiry but does not profit from the potential commercial impact that his or her discovery might foster. Replacing the historical research and development moniker with a research with development mantra destigmatizes the concept of potential financial benefit from pure discovery science. Lending the process of the more mature virtuous cycle can accelerate success in the scholarly circuit.

There may be philosophical differences in the views of advocates of innovation from academia, medicine, and industry; however, there are enough similarities that, when united, can stimulate collaboration and deliver success. “I think, therefore I’m innovative” isn’t a philosophy limited to one group, but can be shared, supported, and sustained by an innovation ecosystem dedicated to the mission of helping humankind and advancing knowledge.