Just about everyone in health care — providers, payers, suppliers, technology and product developers — is preoccupied with innovation. What’s not so universal is how to develop an innovation strategy or, for that matter, how innovation is defined.
Resolving these matters is foundational to success, note Scott Kolesar and Dave Vreeland, co-founders of Caduceus Capital Partners in a recent report.
Organizations should view innovation as requiring a series of separate skills and behaviors that demand a different kind of leadership than exists in many health care organizations.
4 Keys To Advance Innovation
1 | Choose leaders with the right skills.
Success requires both health care and investment experience. Many organizations tend to promote those with limited health care investing experience and place innovation under the chief information officer’s purview.
2 | Be a collaborator, not just an investor.
Hospitals and health systems should invest with likeminded organizations to shape startups to ensure they can scale rather than simply providing capital. This will help build opportunities for success.
3 | Don’t hang strategy entirely on innovation hubs or incubators.
Supporting entrepreneurship programs can be a worthwhile endeavor, but often these efforts don’t align with a hospital or health system’s needs.
4 | Know where to look for innovative thinkers.
Often the best candidates emerge from the female and minority ranks, groups that tend to be overlooked. Make a concerted effort to identify and consider leveraging this untapped talent pool of energetic young leaders to help drive your most important initiatives.
After examining your innovation approach, consider these guidelines Kolesar and Vreeland recommend for establishing a winning innovation strategy.
Guidelines for Developing an Innovation Strategy
- Set clear objectives that align with your long-term growth strategy.
- Designate a leader who understands health care, has experience with startups and is familiar with venture capital or private investing.
- Budget appropriately. A good starting number is $25 million to $50 million. Starting too small will lead to suboptimal returns.
- Develop a small but powerful oversight group comprising strategy, IT and operational leaders. Select members who can commit to regular meetings and likely lots of weekends and early-morning calls.
- Give the committee the power it needs. Remove traditional bureaucracy, even if board approval remains a requirement.
Health Care Leaders’ Top Innovation Focus Areas
The good news is that many organizations have accelerated and stress-tested their innovation strategy and execution during the pandemic and have begun planning how to achieve their innovation aspirations, notes a McKinsey & Company report from last May. Among eight essential innovation practices, health care leaders who were interviewed identified the following as most critical in light of the pandemic.
Continued investing in innovation.
It is more important than ever to actively manage innovation portfolio initiatives and consciously choose to invest in innovation even during a crisis, the report notes. By regularly reviewing innovation pipelines, organizations can identify initiatives that are less likely to succeed based on the latest data and assumptions, while strengthening investments in projects with high potential.
Accelerating innovation practices.
Rapid development and deployment of innovations will be critical even after the pandemic has subsided. Health care has embraced the “beta” mindset, one executive noted, and soft-launch models of releasing test versions (where safety permits) that are approved based on user feedback.
The pandemic has highlighted the benefits of nontraditional and creative partnerships and collaborations to quickly find creative solutions to urgent problems. Experts expect this to continue in the future, with more partnerships and consortia that pool capital, assets and capabilities to bring operational synergies and drive innovation.