Do You Have an Innovation Strategy?

An article by Juruzelski, Loehr and Holman from Booz Consulting (www.strategy-business.com) noted that there is no statistically significant relationship between financial performance and innovation spending. What's more, they identified that the two primary elements of innovative companies are 1) a focused innovation strategy, and 2) a corporate culture that is wired for innovation.

There has been a lot of talk about innovation to get us out of our sick care spending mess. Every CEO in any industry, including healthcare, cite superior products and services and quality as their #1 strategic goal. Whether you are in private practice, a corporate entrepreneur, a social entrepreneur or one of the rising numbers of employed physicians, you should ask yourself whether you or your company has an innovation strategy and culture to execute on that strategy.

The Booz consultants mention three core innovation strategies. The strategies are based on the approach to incremental v breakthrough innovation and the role that end customers play in defining future product or service needs.

Need seekers use design thinking to actively and directly engage both current and potential customers and patients to help shape new products and services based on superior end-use understanding. For example, doctors interact with patients directly and via social media to get feedback about their care and how it might be improved.

Market readers, sometimes called market perceivers, closely monitor their customers and competitors, but are more cautious and incremental in their approach. They are "fast followers". Are you following other industries, like telecommunications, IT and other service industries for the next "new, new thing"?

Technology drivers, also referred to as technopreneurs, they seek to solve the unarticulated needs of their customers (think Steve Jobs) through leading edge technology. They don't do focus groups, because they anticipate, not respond to customer needs and wants. They create new drugs and devices that leapfrog the competition.

In other words, are you working inside out, inside in or something in between?

There is a fourth, more common strategy, which is to sell more existing products and services to more existing customers and just call it innovation.

Thus, depending on whether you are marketing new or old products to new or old markets, there are four boxes in the two-by-two matrix.?

Here is another model.

• New processes.?Sell the same stuff at higher margins:?Cut production and delivery costs, automate for efficiencies, cut fat in the supply chain or manufacturing,?and utilize robots.
• New experiences.?Sell more of the same stuff to the same people: Increase retention and share by powerfully connecting with customers. An example is the Apple Store experience, which many would argue is as compelling as the company’s products.
• New features.?Sell enhanced stuff to the same people: Add improvements that drive incremental purchases. An example of this is every new phone Apple release, with better cameras and so on.
• New customers.?Sell more of the same stuff to new people: Introduce the product to new markets with needs like your core, or to markets where it might address a different need. For Apple, this goes back to reaching the mainstream rather than the design community.
• New offerings.?Make new stuff to sell: Develop a new product — not just enhancements. Find new needs to solve within existing markets or invest in a new category. Think Home Pod or the iPod.
• New models.?Sell stuff in a new way:?Reimagine how to go to market by creating new revenue streams, channels, and ways of creating value. This can be as simple as moving to a subscription model, or as transformative as Apple’s creating iTunes.

Here is the Ansoff Matrix

Any of these strategies work. However, of the top ten innovative companies surveyed, 60% were need seekers. In other words, they focus on being a problem seeker before being a problem solver.

Using the lean startup techniques and the iCorps methodology, here is how one corporation ran their intrapreneurship program.

Here are Google's nine rules of innovation.

Here is how to keep track of doing something new.

The latest trend in management theory is what's called?organizational ambidexterity.?It's the social scientists take on being a switch hitter and is defined as an organization's ability to be aligned and efficient in its management of today's business demands while simultaneously being adaptive to changes in the environment. In other words, being able to simultaneously lead the now, the new and the next. Some describe it as?bimodal people management.

There are several ways to innovate, not just creating new products.

Now you can use artificial intelligence to help you strategize. This article presents a classroom experiment that compared a strategy developed by a team of MBA students in the traditional way with one developed using a virtual AI assistant, which was an interactive tool that linked a tried-and-tested strategy toolkit as a plug-in to the generative AI underlying Chat GPT. The results of the two independent processes were similar, with the AI-assisted strategy being, if anything, more original. The difference? The students took a week and the AI just 60 minutes.

Health care and biomedical innovation will drag until we move from a reimbursement driven model to an innovation driven model. It will happen, but there is no way to know how quickly, or what the unintended consequences will be. Regardless of when it happens, you should be creating an innovation strategy in your company, probe leadership in your organization to create and adopt one and build a culture that can execute. Your future, and the future of US sick care depends on it.

Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack and Editor of Digital Health Entrepreneurship