CLEAR VISION, HAZY EXECUTION
Lack of alignment between innovation ambition and innovation ability is curbing value for healthcare organizations
Innovation ambition at healthcare organizations A majority (84 percent) of healthcare organizations are looking does not match up with execution, and it’s hindering for the next “market shifting innovation.” In other words, innovation’s impact on creating value. According to they are seeking disruptive innovation, yet only 26 percent Accenture’s 2016 Healthcare Innovation Research, leaders say that their primary goal for innovation is to disrupt the of healthcare companies are increasingly likely to consider current market by creating a new process or business model. innovation to be an enabler of long-term success. Seventy-nine Organizations are taking innovation baby steps as opposed to percent of providers and payers state that their organization’s big leaps because they are not fully committed. Seventy-one strategy is extremely or very dependent upon innovation. percent say they tend to pursue product line extensions rather than new innovation. Half say their organizations struggle to Companies are thinking big—exploring new and novel learn from their mistakes, and 68 percent say their organization approaches, offerings and services. The problem is, their is risk averse with new ideas. innovation output is low, focused on incremental product and service improvements. Sixty-seven percent of participants The fundamental issue is that organizations are looking for report their organizations fail to produce disruptive innovation. innovation, but focusing on renovation. Both payers and providers want a big breakthrough, but many are going about it all wrong.
INNOVATION: A market-differentiating change that generates a sustainable competitive advantage in a product, service, process or business model that created measurable value. WHEN GOOD IDEAS GO NOWHERE
Innovation is so vital that These are all important steps forward, INVESTMENT: Current financial support more than half (54 percent) however at the same time, potential for innovation does not allow nascent game-changing innovations are slipping market opportunities to mature. Payers of healthcare organizations through the cracks. Outcomes fall short and providers are looking for quick wins are increasingly appointing of ambitions for a number of reasons, rather than long-term gains. In fact, chief innovation officers to including: 60 percent of providers and payers report their organizations have prioritized be responsible for innovation PROCESS: One major flaw is that 77 short-term financial results over across the organization and percent of healthcare organizations apply investing for the long-term for their the same development process for simple establishing formal innovation innovation initiatives. management systems. line extensions as they do for creating disruptive innovation. LEADERSHIP: Those tasked with Kaiser is among the provider leading innovation in healthcare feel that Small innovation often centers on the organizations that have innovative ideas in their organizations fail core business, and is therefore inherently appointed a chief innovation to flourish due to a lack of organizational not disruptive. Big innovation is a bigger, ownership and long-term financial support. officer, and Humana and bolder bet that also has a long-term When a chief innovation officer does not Independence Blue Cross are horizon of paying off in higher value. report to the chief executive officer, he/she This type of innovation requires a unique among the payers. Processes likely does not have the authority to push level of vision, engagement, budget for exploring new ideas also innovations through the process. and oversight, and should therefore be are becoming codified, with Or they may not have dedicated budget to treated differently. 66 percent of companies commercialize ideas. having established a formal Renovation or “small” innovation, might If the chief innovation officer does have innovation process. be adding a button on a website or other authority to bring innovation to fruition, features to an existing platform, whereas they should be measured on progress. “big” innovation could be redefining The organization should establish formal healthcare payment processes goals and performance metrics that leveraging blockchain technology, or encourage leaders to push innovative simply starting a greenfield business ideas into the organization and also bring taking a solid idea from concept to them to market. completion (see Figure 1).
FIGURE 1. EXAMPLES OF SMALL VS. BIG INNOVATION
SMALL BIG
A national payer opens its mobile app to Blockchain platforms are used for more the public to allow anyone to search for care transparent and eicient healthcare payments. options and estimate costs.
An academic medical center launches a An academic medical center launches a telemedicine oering that connects pediatric digital health platform business, facilitating specialists with primary care providers. virtual consults, urgent care visits and second opinions for patients.
A regional payer crowdsources ways to A national payer completely redevelops its streamline internal processes like customer consumer experience and launches a separate or compliance reporting through internal consumer-focused business. innovation challenges on its corporate portal.
An academic medical center launches an app An academic medical center launches to manage and track seizures. an app lab to develop EHR-linked apps to improve engagement. IS YOUR INNOVATION ENGINE RUNNING OUT OF STEAM?
To increase market share Accenture research has shown Thus, approaching each key component and add value to the that innovation leaders that use these differently will allow organizations to approaches follow an accelerated path achieve greater gains (see Figure 2). organization, innovation that is yielding higher rewards: between Leading companies are achieving leaders must make a shift. 3 and 7 percent annualized revenue lift success using a two-engine approach. Rather than following one and a corresponding growth in operating For instance, a large pharmaceutical model income with their industry peers.1 path for all innovations, company established a venture fund a two-engine innovation All successful innovation requires to dedicate funding to the pursuit of approach can help healthcare speed, risk management, measurement, innovation outside of the business’ core organizations achieve their portfolio management and skills, but not offering, while maintaining focus on innovation ambitions in all innovations are created equal. incremental innovation among existing product lines. the short and long term. Small innovation may be more comfortable, whereas big innovation involves risk, and may push the organization beyond its comfort zone.
FIGURE 2. A TWO-ENGINE APPROACH TO INNOVATION FUELS SUCCESS
SPEED RISK MEASUREMENT PORTFOLIO SKILLS MANAGEMENT MANAGEMENT
Streamline Follow a phased Monitor and Oversee a Those skilled at innovation approach to reduce measure success large number of process execution processes to gain or eliminate risk using operational smaller-scope can oversee small speed to market. as you go. KPIs. initiatives. innovation. ENGINE 1 mall nnovation
Gain speed to Identify, manage Aim for quality Explore a few “big Creative, big market, but also and balance risk. and eectiveness. bets” that require thinkers who are speed to learning; Success can be more attention willing to push allow leaders to gauged by diversity from executives, boundaries, collect, assess of ideas and integration across collaborate and and act on the concepts, potential functions and the work in less insights they gain target markets and organizational regimented ways ENGINE 2 from piloting the balance of the agility to quickly can lead big ig nnovation and testing innovation portfolio. course-correct. innovation. innovations.
1 Accenture, “Beyond the Product: Rewriting the Innovation Playbook,” online at https://www.accenture.com/us-en/insight-beyond-product-rewriting- innovation-playbook PUTTING GAS IN YOUR INNOVATION ENGINE
For the two-engine approach to work, healthcare organizations most healthcare organizations. Last, innovation leaders need must commit to innovation, creating specific processes and clear accountability for commercializing these opportunities. metrics to support and measure innovation efforts separate By taking these steps and fueling innovation through both from established businesses and products. Adequate engines, organizations will not just “think” innovation, but also funding is critical. Innovation funding should span a portfolio reap its rewards. of opportunities—big and small—and include funding for incremental innovation to mediate the risk-averse nature of
FOR MORE INFORMATION: ABOUT THE ACCENTURE 2016 HEALTHCARE INNOVATION RESEARCH An online survey was conducted by McGuire Research with 51 healthcare payers and 52 healthcare providers to explore innovation in healthcare services in the United States. Respondents were C-level executives, senior vice president/executive vice president/vice president or equivalent, or managing director/senior director/director or equivalent at organizations with annual revenues of more than Brian Kalis $500 million. The survey was fielded from [email protected] June to August 2016.
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