CHAPTER TWO
A Willingness to Change
The Imperative for Transformative Innovation in Health Care
You must be the change you wish to see in the world.
The needs of the patient come first.
We live that. The core value of Mayo Clinic arches over the gateway to our ethos. We see it every day, our patients see it every day, and it guides our every action, our every behavior, and our being. We deliver on it.
So why are we so concerned about innovation? What is it we are trying to change or move forward to? What’s wrong with the status quo? Why do we need a 21st century model of care?
Even with the recent major changes laid out in the Affordable Care Act (more completely, the Patient Protection and Affordable Care Act of 2010), most outsiders still perceive today’s health care industry as complex and hard to change. More and more, they perceive an industry that needs to become simpler and more affordable, but yet, there are few alternatives. When you’re sick, you need health care, and yes, it’s expensive and complex. But for about three-quarters of us, it’s paid for by someone else, so there are other things to worry about. Compared to many industries, “demand” is relatively fixed and relatively insensitive to cost. Although medical tourism exists and is growing, it still accounts for only a very small fraction of health care. No competitor is going to steal your business overnight. So if you’re in the health care business, what’s there to worry about?
At Mayo, we see it differently.
At Mayo, we see major threats—and major opportunities—in the health care space. First, there’s the macro problem—the “giant hairball,” as author Gordon MacKenzie would describe it: the necessary transformation of health care to a simpler, more cost effective system that provides better health outcomes for everyone. We are proud that Mayo Clinic offers cutting-edge medical treatment and does it at a cost that over time is less than other major medical institutions. But we’ll be the first to agree that the current model is too expensive, can be very inefficient and wasteful, and often doesn’t deliver a fast, friendly, and effective patient experience. We must evolve toward a 21st century model of care that costs less, that delivers outcomes commensurate with the cost, and that is intuitive and easy to interact with. Put simply, if the United States is to have the most expensive health system in the world, it should also be the best.
NPR’s John Hockenberry, who among his many pursuits makes an annual pilgrimage to Rochester to moderate the Mayo Clinic TRANSFORM symposium hosted by the Center for Innovation, puts it this way: “It’s easier to have a debate on Syria than on the future of health care. … We tend to embrace such symbolic issues and leave the harder ones for later” (Figure 2.1).
FIGURE 2.1. JOHN HOCKENBERRY MODERATING THE ANNUAL MAYO CLINIC TRANSFORM SYMPOSIUM
Suffice it to say, the macro health care problem is daunting. Yet we believe that through innovating toward a 21st century Mayo model of care, we can contribute to long-term systemic improvement.
But there are also significant micro, or enterprise-level, issues lying at our doorstep. As a large, “best in class” health care institution, one might think that Mayo Clinic is insulated from most of the challenges facing other medical institutions, but we are not immune. The forces of technology, competition, and mobility, to name just a few, are coming home to roost, causing us to question whether our current business model can continue. Can a destination health care model thrive? As the alternatives to the traditional fee-for-service model continue to surface and be tested, does our current model of care still work? How will the Affordable Care Act influence patient behavior? As Medicare cutbacks threaten our financial stability, can we continue to offer our signature patient-centered care?
We’re a not-for-profit institution. But still, if we don’t generate a small profit to fund our three-shield mission of patient care, education, and research, we perish. As Sister Generose Gervais, a larger-than-life part of the history of Saint Marys Hospital and the Franciscan alliance with Mayo Clinic, once said, “No money, no mission.”
As Starbucks CEO Howard Schultz recently put it, “Any business that embraces the status quo as an operating principle is going to be on a death march.” Former GE CEO Jack Welch said it this way: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” We recognize that even if the big picture of health care doesn’t change much over the next few decades (and we think it must), our approach to health care—our care model—needs to evolve, and it needs to evolve quickly and decisively.
Doblin president and cofounder and Deloitte LLP director Larry Keeley explains in his book The Ten Types of Innovation : “Innovations that change industries can seem like they come out of nowhere. In fact, you can see the early warning signals that reveal when big changes are needed—and then seize on them.”
Those early warning signals are coming in—loud and clear.
In this chapter, we’ll examine some of the forces of change—the early warning signs—we’re working to address. You may not have a “health care problem” in your industry. But if you’re part of any complex modern organization, it’s virtually certain that you face many of the same enterprise-level forces of change that we do. Times are changing fast. Even if there’s no imperative to transform your industry, there may be one to transform your enterprise. As we noted in the Introduction, sometimes transforming your industry is the best way to transform your company. In our case, transforming our enterprise is likely the clearest path to transforming our industry. That’s what we’ve done from the beginning, going back to the early 20th century transformations into an integrated medical practice model under the leadership of Dr. Plummer. After describing the forces of change confronting Mayo, we’ll take another tack to identify some of the opposing forces that typically make change in complex organizations difficult. Then we’ll come back to our definition of transformative innovation—and how we use that model to deal with the opposing forces that make change difficult.
The Giant Hairball: Challenges to the Health Care Industry
This book isn’t about the national “health care problem,” nor is it directly cast toward solutions for that problem. There is plenty to read on that topic, and the extensive debate would be hard to keep up with in book form anyway.
Instead, as you’ll recall, this book is about innovation in complex enterprises in complex industries.
Still, it would be incomplete to ignore the greater health care problem. Obviously, much of what drives the needs of Mayo Clinic as an enterprise, arises from it. Ultimately, if we’re on target, achieving new levels of health care delivery excellence at Mayo Clinic will put a dent in the larger health care universe.
At the Center of the Storm: Health Care Costs
While not getting overly immersed in this, it’s important to touch on some of the facts and figures from U.S. health care today, all of which provide background and context for our thinking and our model of care vision.
According to a report released in early 2013 by the Commonwealth Fund, health care “constitutes 18 percent of GDP, up from 14 percent in 2000 and 5 percent in 1960.” The report predicts a 21 percent share by 2023. Continuing: “The U.S. spends twice as much on health care per capita and 50 percent more as a share of GDP, as other industrialized nations do.” And yet, “we fail to reap the benefits of longer lives, lower infant mortality, universal access, and quality of care realized by many other high-income countries, … and there is broad evidence that much of the excess spending is wasteful.” These are big numbers—daunting enough to sap the growth of entire swaths of the economy and lead to economic dislocations (for example, the transfer of jobs to other countries) that would be otherwise unjustified, leading to further economic malaise.
Washington Post columnist T. R. Reid, author of The Healing of America: The Global Quest for Better, Cheaper, and Fairer Health Care, noted that an average Japanese citizen sees a physician 16 times a year, compared to 3.5 times a year for a U.S. citizen—and yet Japan’s health care costs per capita are less than half. In a comparative examination of health care systems, Reid notes that the United States has four different systems in play: private payer/private provider (typical employer-sponsored health plans, about 50 percent of the population); public payer/private provider (Medicare model, 16 percent); public payer/public provider (Veterans Administration model, 6 percent); and the rest, out of pocket (15 percent). The remaining 19 percent are unclassified or a mix of the above. He points out that the United States is unlike every other country because it maintains so many separate systems for separate classes of people, driving both complexity and considerable inequity depending on who you are in the system. Most other countries have settled on one dominant model.
According to research published by the Kaiser Family Foundation, while health insurance cost increases have indeed moderated in recent years, the cost of family coverage has still increased 80 percent over the past 10 years—about three times as fast as wages (31 percent) and inflation (27 percent). Furthermore, employees, though covered, are being tapped for almost 28 percent of the cost of that coverage—an average sum of about $4,500 of their own money toward family coverage that costs on average just over $16,000 per year. This and other trends toward defined-contribution health plans noted below are gradually exposing consumers directly to more of the cost—and thus more of the choice—of health care.
Forces Driving Change: Cost Plus
Obviously, much of the current crisis is driven by cost, but there are other “tangles” in this giant hairball, making major change a far greater task. Pressures to manage cost have been growing and are starting to be legislated. The Affordable Care Act formalizes some of the mandates to reduce cost, first by aiming to reduce or eliminate the out-of-pocket payer segment through mandatory coverage, then by streamlining and reducing Medicare costs and setting up insurance exchanges to reduce some of the friction in the private payer/private provider market. Some will lose and some will gain as these initiatives gain traction. We won’t dive too deeply into the merits and pitfalls of the Affordable Care Act, but clearly it’s a watershed event in the definition of the 21st century model of care for all providers and payers.
It’s worth taking a look at the biggest external forces and where the current state of health care has brought us. Among them are the following:
Cost pressures are increasing. As health care costs escalated relentlessly, first Medicare, then private insurers, and then the people buying that insurance, largely employers, started to revolt against the burden. Pressures were put on providers, even on individual physicians, to reduce costs. In many cases, Medicare reimbursed providers at a level 20 to 50 percent below the cost of providing care, and those efforts continue not only through lower reimbursements but also through an increased emphasis on limiting utilization—that is, admission, length of stay, and discharge planning. Meanwhile, physicians and providers do not want to exclude Medicare patients, nor do they want to compromise on the quality of care given to them.
Consumers are footing more of the bills, and they want more choices. As Sam Ho, M.D., chief medical officer of UnitedHealthcare, puts it, “Health care is the last sector of society to be consumer driven.” Pressure from consumers will eventually cause providers to become more accountable and to pull back on costs. Today, for the majority of U.S. citizens, someone else pays the tab. As time goes on, however, consumers will be increasingly driven into the loop. To some extent, that has already occurred as consumers covered by employers foot more of the bill through copays, coinsurance, and other accompanying out-of-pocket payments. The trend is also being driven forward by the Affordable Care Act and the approach taken by many employers in complying with it, which is to get away from paying all the costs and taking all the risks associated with employee health care, as described next.
Companies are moving away from defined-benefit health coverage. Companies have already largely transitioned away from paying all the costs and taking all the risks associated with employee retirement benefits—and the model is starting to be applied to health coverage. As a first step, noted above, employees must pay for an increasing share of their coverage. The second and more aggressive step is the transition modeled after the defined-benefit retirement plan (pensions, typically) conversion to defined-contribution plans, where the company pays a fixed sum and the employee/retiree takes the risks and responsibilities for making the money last. Today, as the transition begins to be made, leading companies are giving a fixed health care benefit and turning their employees loose to shop for coverage on the new insurance exchanges set up under the Affordable Care Act. Within this model, participants are more likely to choose a less expensive, higher-deductible plan—and thus, they are more exposed to the actual costs and choices of care. Walgreens is among the first to adopt this new model for its 160,000 current employees. IBM, Time Warner, and others have recently dropped guaranteed health insurance for retirees in favor of a fixed stipend model. Shopping for insurance will turn participants into consumers who will be sensitive to choices and demand transparency of cost data, again driving us to become more efficient.
The Medicare landscape is changing. Initiatives begun years ago to cut Medicare reimbursements have been strengthened under the current legislation. The Affordable Care Act mandates a $716 billion cut over ten years (2013–2022) in total Medicare costs. Admissions and discharges are receiving much greater scrutiny, and special auditor teams are “taking back” Medicare payments in the millions. Medicare is also trying to reduce readmissions by assessing penalties to hospitals with “excess” readmission rates. Further, the Affordable Care Act places more emphasis on the patient experience, and Medicare reimbursements can be reduced if hospitals fail to provide a sufficient level of patient satisfaction. At Mayo, we lose almost a billion dollars annually on Medicare; that’s a lot for a $9 billion a year enterprise. We must become more efficient, and we must make sure our services align for Medicare and non-Medicare patients. These forces will drive transformation. Consider, for instance, how the new penalties for readmissions might drive physicians and provider organizations back to doing house calls or e-versions of house calls. In this context, one can start to visualize a more mobile medical force, with more technology, and more nonphysician care providers—this could all make a big difference.
Accountable care organizations are growing in number. The so-called accountable care organizations (ACOs), piloted as part of the Affordable Care Act, have driven providers away from fee-for-service systems to payment systems that are tied to patient health outcomes, with upper limits—capitation—for many kinds of services. Savings for Medicare under this model are split between Medicare and the providers. Capitation drives providers toward reducing costs both for the most “well” patients and for the sickest patients in their base. Those reductions are achieved through providing more continuous and proactive care to reduce the cost and frequency of adverse events, by providing care by less expensive professionals like nurse practitioners and physician assistants, and by making other delivery model changes. As of 2013 about 500 provider organizations use the accountable care model.
The administrative complexity is increasing. Physicians and provider organizations are becoming overwhelmed by administrative chores. We have become an increasingly litigious society. Furthermore, new regulations concerning patient privacy, byzantine private and government insurance reimbursement systems, and the complexity of a highly specialized medical system all mean that doctors are spending increasing amounts of time filling out forms and giving instructions to patients and colleagues. The widespread implementation of the electronic medical record has helped, but not by much, and achieving administrative and process efficiency remains a huge challenge.
The population is aging, and the burden of chronic disease is growing. In the meantime, people are surviving longer with chronic diseases, as evidenced by the $200 billion spent in the U.S. economy on Alzheimer care alone. Obesity affects larger percentages of the population—and requires more and more expensive care as more people become obese and live longer. People are living longer and getting more expensive to care for as time goes on. Preventative care and wellness are becoming increasingly important.
The infrastructure is outdated. Although some process improvements like electronic medical records have taken hold, the basic “legacy” service infrastructure has changed little since the 1950s. Patients get sick and go see a doctor. That is disruptive in their busy lives, time-consuming, inconvenient, and often not necessary in light of connected care alternatives. It becomes an order of magnitude more complex and less efficient if it’s a complex disease—networks of specialists, providers, payers, and administrators make complex care a daunting task. While other “service” industries have modernized their processes, that has largely not happened in health care.
Acceptance of the normalization of deviance. As a result of all of the preceding forces, there might be what Dr. Eric Manheimer at New York’s Bellevue Hospital calls “a normalization of deviance,” where failures, cost overruns, high costs, and mediocre performance become accepted as the norm. It’s similar to the familiar models of government bureaucracy. The health care industry, which has been able to pass on its overruns and errors for years, must enter a new age.
As you can see, this is a fairly daunting—really, disrupting—list of challenges we face from the outside, a major storm to weather. But, as if these aren’t enough, we also face many challenges at the enterprise level driven by structural changes in the health care provider market.
Challenges at the Enterprise Level: Mayo Clinic Must Compete Too
Aside from the needs-of-the-patient focus and the drive to “advance the science” and to educate the next generation of health care providers, Mayo has some real threats and opportunities in our sights, including these:
Competition. Yes, you read that right. As strong and revered as the Mayo brand is today as the “Supreme Court of medical opinion,” as a 1961 market research study described it, there is new and emerging competition. Thousands of Mayo patients come from outside the United States, and new state-of-the-art medical centers in those countries are giving residents less reason to make the trip. Hospitals are merging into larger health systems with greater brand awareness. Tenet Healthcare is one large example; organizations like Dignity Health on the West Coast and BJC Healthcare in St. Louis are but a few of the many regional or local smaller examples. The Cleveland Clinic is advancing its brand beyond its traditional core of cardiac care. The upshot: we must keep moving to continue our brand prominence as the most trusted medical center in the world.
Evolution away from the destination model. We just noted the forces challenging international destination care. Beyond that, responding to a busier, more mobile society and enabled by advances in technology, there’s greater opportunity in the expansion of local care delivered anywhere, anytime, beyond the bricks and mortar. Although complex surgeries and other remedies still warrant the trip, many consultations will no longer require a pilgrimage to Rochester or one of our other destination locations. Surgeries and procedures will increasingly be delivered in remote ways such as with robotics. With our extensive destination location investments, this evolution could be perceived as a major threat. But we also see it as an opportunity for Mayo to extend its knowledge and expertise, not by building expensive facilities everywhere but by partnering and backing other care providers through Connected Care technologies. As an example, Mayo Clinic has established a Mayo Clinic Care Network extending Mayo Clinic’s knowledge and expertise to physicians and providers in like-minded organizations that share a common commitment to improving the delivery of health care in their communities through high-quality, data-driven, evidence-based medical care. Through this network, organizations such as NorthShore University Health System in Chicago retain their complete autonomy while having direct access to Mayo Clinic’s expertise. The partnership and brand extension benefit both the local organizations and Mayo Clinic. So this transformation is hardly a threat; it’s more of an opportunity to extend our reach and our brand.
Trend toward data-driven solutions in service industries. Translation: “Big Data” and all of the analytic tools around it. Progressive health care organizations will drive toward predictive modeling, which might help deliver better, more predictive, more targeted, more cost effective care and eliminate the waste around it. A number of service industries, including police, schools, and airlines, have already been moving in this direction, toward data-driven methods in which they closely monitor their processes for anomalies. The result has been more efficient systems with fewer errors. “Separating the signal from the noise,” as Vidant Health Network CEO David Herman, M.D., puts it, is hardly a threat at all. It is a huge opportunity.
Everybody’s getting involved. With these often-confused seas of change, it should be no surprise that health care organizations of all types and sizes are getting on the innovation bandwagon. More and more providers and payers are putting innovation teams in place and defining internal entities like Mercy’s Center for Innovative Care or Kaiser Permanente’s Garfield Innovation Center. When participants in the 2013 Mayo Clinic Center for Innovation TRANSFORM symposium were asked in an informal poll “Do you have a design team or some other innovation-centered body in your organization?” some 61 percent said yes. In some ways we see this as an affirmation of our early, and at the time unique, efforts to incorporate design and design thinking into how we frame and solve problems in our practice—as we’ll learn more about in the next few chapters. No doubt, there is a lot on our plate, and much of it can be perceived either as a threat or as an opportunity. They’re threats if you’re complacent and allow the confused seas of change to swamp your boat. They’re opportunities if you think things through, allocate the resources, put your raincoats on, and set sail aggressively through the storm. By setting sail aggressively, we can transform these threats into opportunities through optimizing the delivery model as we move toward a 21st century model of care.
Bottom line: “a willingness to change” has become more important than ever.
Clearing the Way for Big Change
Larry Keeley puts it this way: When “in the course of human events” it becomes necessary to have a revolution, you’re better off to just do it. Revolutions are part of the landscape in military history, technology, and education—but not so much in health care. Moving toward a 21st century model of care will require improving both the pattern of progress and the velocity of progress. To all in the industry: it’s “our job to reinvent the mechanics and economics of health care delivery.” He’s not surprised that efforts to improve today’s situation seem more complex than ever and perhaps even futile. We’re “climbing the confusion curve,” as he sees it. But that’s not all bad, for that happens before things become elegant and simple. We’ve seen that in a lot of other business environments.
As an industry, we feel we’ve been climbing the confusion curve forever. However, the Affordable Care Act has introduced an additional layer of change and confusion (albeit well intended) into the ongoing efforts to standardize health care in the long run and to achieve cost savings through process efficiencies beginning with Medicare. We would hope that, if writing this book 5 to 10 years from now, a lot of change would already be behind us and we’d be discussing opportunities to fine-tune, not so much to revolutionize, the system.
But that’s not where we are now. Change has been happening, some driven by the Affordable Care Act, and some driven by other forces already in progress before it came along. In response, our first step, an important one, was to cast aside organizational impediments in the way of pursuing the vision—that action led to the formation of the Center for Innovation in the first place. Recognizing and dealing with organizational barriers in complex environments is not unlike clearing a storm drain before a heavy rain—not a bad thing to do anytime but best before something big happens.
A Pattern of Resistance: Why Large, Complex Organizations Can’t Innovate
As an important summary and helpful lesson for the many readers who participate in complex organizations in complex industries (like ours), we’ll switch gears a bit. The new gear takes us to identify the resistance to innovation, to deliberately calling out some of the forces and factors that make innovation difficult in complex settings. We’ve identified 15 factors that typically get in the way—both from our own experiences and observations elsewhere. As more of a checklist than a full course, here they are—you’ve probably experienced many of them yourself. The idea here is to assess your own organization and context with this list—that is, to assess where you are and where you’re starting from. Our list is presented in no particular order:
1. The problem is not clear, or the vision or strategy is either unclear or out of alignment. What defines success? Our favorite Yogi Berra quote resonates: “If you don’t know where you’re going, you won’t get there.” What is your future? What defines your success? It’s good to have achievable goals (program and project outcomes), but if they don’t point to a transformation or at least a rapid evolution, you’ll be left behind even if you are able to bring some innovations to market.
2. The organization is too focused on its core or its inner products. We see this often—organizations that are too focused on what they already do and that are overly centered on physical products. They fail to see the larger context and possible innovation frontiers that lie everywhere from customer service to supply chain to internal organizational matters that can also deliver better value and better experiences. Remember that the product is just part of what you do. We’ll come back to this idea as we reexamine Larry Keeley’s “Ten Types of Innovation” model in Chapter 4.
3. The organization fails to “get” the customers. My, we see this so often! You can think you know the customer, and you can spend a lot of time thinking about customers—but do you really get them? Common ills are these:
a. Leaving it to someone else. Do you personally do the research and spend time with customers? Or do you outsource it to someone else outside the enterprise? Apple, famously, did not spend a dime on outside customer research, except to design their retail stores.
b. Not seeing the customers’ intentions or their latent or tacit needs, only their stated ones. Listening to what they say isn’t enough. Reviewing patient satisfaction surveys isn’t enough. You must get to a deeper, more holistic understanding of your customers’ needs. We’ll return to this in Chapter 4.
c. Yielding to groupthink. Do your team members, especially those on the line, get to freely express their thoughts and observations about their customers’ reactions to your products or services? Or do organizational dynamics and hierarchies suppress customer insights? Be careful if all of your team members have the same backgrounds and same organizational roles—and thus the same biases in how they interpret customer feedback.
4. There is a risk-averse culture. Does your organization encourage—or suppress—taking prudent risks?
a. Are people admonished for thinking differently or failing? Does the reward system encourage—or at least, accept—failure? Most organizations now proudly declare that they “embrace failure” and that they want to “fail fast.” Yet very few if any have translated that into action. In your organization, are failures really viewed as positives in performance reviews or in board meetings?
b. How strong or omnipresent are the “organizational antibodies”? Do certain individuals or groups find it easier to find someone else’s failure or to resist change than to contribute to change? Do the organization’s leaders as a whole adopt a find-the-fault mentality with everything they see?
5. Day-to-day rules the day—the organization’s leaders are too absorbed in short-term performance. Is the enterprise culture or leadership so engrossed in meeting short-term numbers and objectives that they can’t see clearly or act toward the big picture? This can manifest itself in four ways:
a. There is insufficient time or resources dedicated to innovation.
b. There is no tolerance of “skunk works” or anything not exactly aligned to the plan.
c. Transformative innovation is not part of the leadership message.
d. Transformative innovation is not part of the organizational scorecard.
6. The organization is trying to maintain the status quo, and it is resisting any transformative or disruptive innovations—even when they are “sure things” backed up by sound research. This pitfall is typically a combination of the last two: (a) the organization is too risk averse and short-term focused, and (b) individuals on teams are looking for short-term obvious rewards because they must do so to survive. Here, the “arrogance of success” can enter the picture as well—the feeling that the organization is already at the top of its game (for example, as happened with Kodak and Blockbuster), so why bother to change anything?
7. Innovation is not centered or embedded within the “main” organization. Too many times, innovation teams and labs are set aside, off in separate facilities, not tuned in or acting in concert with the main business. They don’t involve individuals and business units that deliver product or sit in front of the customers.
8. There is poor internal communication of innovation efforts. As they say, if you wink in the dark, nobody will know you winked. Are employees—and leaders—at all levels tuned into the transformation? Visions, innovations, innovative accomplishments, and the innovative spirit must all be front and center throughout the enterprise. We call this diffusion into the organization; it is the centerpiece topic of Chapters 5 and 6.
9. The organization’s focus is on the process, not the results. This is the bane (one of them, anyway) of large, complex enterprises—and frequently the innovative entities within them. They must first follow the process or methodology, whatever it is. That becomes an end in and of itself. Process becomes more important than result. Ask yourself: Does the process serve the innovation (good)? Or does the innovation serve the process, often becoming a mere checklist item in a business plan (not so good)?
10. The organization’s pyramid is upside down. If innovation is driven only by the organization’s leadership, one very important component is left out—the day-to-day customer experience. Organization leaders are not normally in daily contact with customers. The result: innovation can become internally focused on factors that benefit the organization but may not benefit the customer experience. When it comes to innovation, the frontline folks should top the organization’s pyramid!
11. Innovation teams, when they exist, aren’t diverse enough. You have an innovation team—but they’re all engineers. They’re steeped in the technology and know all about your products. But you fail to bring in the insights, the global perspective, the “gestalt” of the real world, the problem-solving abilities that, for instance, a fashion designer or architect (we have both) would add to a team. We’ll cover this in the next chapter.
12. Your organization has a poor understanding of key industry trends. Similarly, you and your team are aware of what you hear from your own people, your own sales force, or your own designers. But how “clued in” are you to industry and world trends? Make sure to formally “infuse” people with current trends; designate “trendwatchers.” More about this in Chapter 6.
13. Innovations are described in two-dimensional designs and documents—not in working prototypes and examples. Many designers do the research and science on paper or computer screens, with the result that they miss the nuances and customer usability insights that would come sooner in the process if there were a working prototype. Whether designing a product or process, your design team should have “real” ways to noodle with something before settling on a design. Chapter 5 elaborates.
14. Innovation investments occur and resources are made available only in good times—not bad. Especially in the for-profit world, we’ve found that innovative discovery is funded only, or it is better funded, when times are good, and it can be among the first things cut when things are bad within or outside the enterprise. This is upside down: the greatest innovation efforts, especially transformative innovation, should occur when the road gets rough.
15. There is too little—or too much—collaboration. The “ill” of too little collaboration is straightforward—people feel left out, and many of them, especially those on the front lines, can’t contribute their experiences or insights. However, some organizations—like ours—are built on collaboration, and sometimes we take on too many collaborators! Mayo has been described as an “organization of 2,000 VPs,” meaning large numbers get involved in everything and can potentially bog it down. The secret is to set up the right, and right number of, hooks into the organization and communicate accordingly.
This checklist is presented as a tool for self-assessment. If you work in a complex organization, undoubtedly you’ve run into and will have to overcome some of these barriers. We did, and much of the rest of this book describes how we overcame them. Innovating in complex organizations means getting the context and setting right first—otherwise innovation energies get absorbed and reversed by the frictions inherent in the organization. Your first task is to recognize those frictions and then move toward putting a culture and process in place that works.
Innovation the Mayo Clinic Way: Transformative Innovation in Complex Enterprises
We believe that removing barriers and adopting a transformative innovation model is a vital part of building a successful innovation culture. In this context, transformative innovation is both a goal and a process, the idea being to transform an enterprise, even an industry, with a strategic “layering” of high-potency improvements.
To help you toward this goal, we bring you back to the definition and key attributes of transformative innovation as we see it. The concept and its definition have worked for us. First, the characteristics:
The innovation is customer focused. Innovation starts with the customer and, in our case, the customer experience; there’s no credit for any other answer.
The approach is iterative, incremental, and scalable. We don’t just strive for one “boil the ocean” change—which usually gets bogged down by its own size. We seek a sequence of layered innovations—all achievable, directed toward an evolving vision, all with successes and learnings, aligned with a prevailing strategy.
The innovation is an assembly of existing technologies and ideas. We’ll invent a new technology if we have to, but it’s distracting and it consumes resources. Where we can, we’ll assemble and adapt existing and emerging technologies, like apps and telecommunications technologies, to our needs.
The innovation development process merges diverse disciplines—in our case strong design and scientific discipline. We’re designers and scientists, and we adhere to a rigorous scientific discipline, which means forming hypotheses, testing, prototyping, modifying, learning, concluding, and documenting our exercises. We are a true lab, merging a rigorous laboratory approach with design thinking and design research principles.
The innovation emerged from end-to-end thinking. Any time we conceive a project, it must fit the big picture or emerge from it. Projects that don’t fit the vision of the greater health care delivery goal don’t fly.
The innovation turns negative experiences into positive ones. It isn’t always the case, but frequently transformative innovations “transform” a negative experience into a positive one, which allows the customer or patient to think more positively about the product or service while simultaneously becoming used to the idea of further improvements. Think about electric starters or automatic transmissions for cars, or ATM machines in banks—these innovations helped transform their industries by transforming the negatives of these experiences into positives.
The innovation is fully “transfused” so as to eliminate the organization’s inertia and “antibodies.” True transformative innovation doesn’t happen in a vacuum. Instead, it gets the organizational support and dedication that it deserves and needs to carry on. It becomes a common goal and a way of life for everyone in the organization, a well-lit sign both at the entrance to the lab and the greater organization. Team members are truly excited to see a product come to market. A solid two-way, formal communication effort supports the task and gets all members of the organization, from the leadership to the rank and file, on board.
With these ideas in mind, we present a comprehensive definition of transformative innovation, as we use the term at Mayo Clinic:
Transformative innovation is an evolutionary form of innovation built on an undivided focus on the customer and customer experience. It uses design discipline and scientific methods to integrate and deploy new and existing technologies to improve experiences and efficiencies, and it is often associated with discovering and turning negative experiences into positive ones.
Transformational innovation is innovation that has an impact on the customer irrespective of scale. A transformational innovation substantially changes an experience. It does not matter if the substantial change affects a person, a group of people, or a whole organization. It is transformational irrespective of scale. We use this definition to guide every decision we make in the Mayo Clinic Center for Innovation. We constantly ask: Will our actions have the potential to profoundly impact the experience and delivery of health and health care?
This definition, and its component characteristics, has worked well for us. It keeps us on track and thinking toward the future 21st century model of care.
Working within this model, we can remove some of the barriers to innovation, and we can look at how to make it all happen, first organizationally by building a Center for Innovation (described in Chapter 3), then strategically and tactically (described in Part II).