1. Viewpoint
Healthcare Radius January 2013 Healthcare Radius January 201334 35
Viewpoint
W
hile attending the
Executive Education
Programme on ‘Driving
Innovation’ by Harvard
Business School, I had
the opportunity to be a part of a discussion on
how some world-renowned companies have
successfully championed innovation. Here I at-
tempt to encapsulate my learning and its likely
implication on healthcare, particularly in the
Indian context.
As per the Wall Street Journal (May 23, 2012),
over 250 books have been published in 90 days
with the word ‘innovation’ in the title. While it
has become a ‘way of life’ to a large extent for
many industries, in healthcare, innovation has
been confined to affordability and technology.
To us, serendipity is not innovation. In-
novation needs a much more structured and
disciplined approach.
However, organisations fail to realise the im-
portance of innovation and recipes to innovate.
To make matters worse, the healthcare industry,
in particular, also suffers from insularity and
fails to appreciate the need and opportunity to
learn from other industries.
The ten commandments
Think simple
‘Simplicity is the ultimate sophistica-
tion’ is a line we have heard many
times. However, there cannot be a
better example than Apple. Instead of
focusing on too many product lines, Apple has
proven time and again how just ‘one’ product,
be it iPod, iPhone or iPad, can not only change
the fortunes of a company, but also redefine
the industry. Apple, like many others, also
does not believe in ‘adding’ features. On the
contrary, it mercilessly strips its products of
irrelevant frills.
Most of the healthcare delivery models,
however, have multiple service offerings. Their
inward-looking mindset had led to an increas-
ingly complex set of processes and layers of
bureaucracy. The way the entire discharge
process continues to be handled in a typical
hospital illustrates the point. It not only takes
endless hours, but also makes ‘leaving’ the
hospital such an ‘I-wish-I-could-forget’ kind of
an incident for the patients. There is no reason
why simplicity, technology and strong customer
orientation can’t help arrive at the right solu-
tion. For some projects in the
past, we have tried to streamline
this process with technology tools and have
achieved commendable results creating a
strong differentiator for the hospital.
Question the status quo
Whenever we have a great product or
service, we focus on communicating
the same to the external world. How-
ever, often, it is the internal team that
is resistant to the concept.
Aqualisa, a company that specialises in show-
ers, had introduced a new range of showers
with digital temperature controls instead of
manual mixing that required lesser installa-
tion time. The sales team was quite averse to
selling the new range, citing that ‘plumbing has
not changed since time immemorial’ and that
the innovation was ‘good for elderly’. At the
same time, plumbers, who were paid per hour,
resisted it as lesser installation time meant
reduced payments.
Aqualisa was faced with a classic problem,
where the company had a revolutionary prod-
uct without a marketing strategy. It decided to
reach directly to the customers with a well-de-
fined marketing plan, bypassing the sales force
and plumbers. In December 2001, when the
company was facing the problem, the sales were
600 units per month. Exactly one year later, the
sales shot up to 2,000 units per month.
In healthcare too, we come across ‘plumb-
ers’—people who are resistant to change. These
include management, sales force and others. We
need to find them, and, at the same time, engage
the customers directly whenever we introduce
an innovative model. As a consulting firm focus-
ing on innovation, the number of times we hear,
‘this is not possible, it can’t be done’, or ‘it has
never been done before’, or even worse ‘health-
care cannot be marketed’ is no surprise to us.
Change with time
Starting off with a customer-centric
approach will ensure quick gains, but
not sustaining it could have adverse
effects. CISCO, a large routers and
networking solutions multinational company,
offered customised solutions to customers in
the initial stages. It gave an immense advantage
since the customers did not know what they
wanted. With more entrants in the space, the
with developing recovery techniques. Even the
brightest minds in the industry could not solve
the problem of separating frozen oil from water.
In 2007, OSRI got a game-changing solution for
$20,000 from a chemist, who suggested a tech-
nique used in the concrete industry for keeping
cement fluid during large pours.
There are immense opportunities for health-
care to learn from others only if it were willing
to think like an outsider. For instance, airlines
can help in redefining discharge process, hotels
can teach the softer aspects and from banks,
we can learn how to maintain confidentiality of
records. Unfortunately, in healthcare, we always
come across more ‘explanations’ than ‘solutions’
to problems. Not ‘thinking as an outsider’ is cer-
tainly a deterrent to innovation in healthcare.
Create a culture
Many ask us a simple question: ‘why
innovate’, ‘what if the innovation does
not work’. Apart from citing reasons
such as creating a differentiated
model, we have always believed that innovation
is pertinent to creating a culture, which takes
time to create. While some innovations fail
others take time. Still they make a larger case
within the organisation.
M&M, one of the largest Indian automo-
Lessons in
innovationRitesh Dogra lists 10 things that Harvard Business
School taught him about innovation in healthcare
market matured and the firm lost personal
touch. At the same time, the industry too be-
came price sensitive. A crisis prompted culture
change in the organisation, leading to subse-
quent erosion of profits. To regain the market
share, the firm launched a host of consumer-
focused initiatives, while creating different
market segments. The entire approach again
seemed too confusing for customers.
So often, we come across senior physicians or
nursing homes, which simply lose touch with
the changing times when they scale up or reach
high volumes.
Think like an outsider
“No matter who you are, most of the
smartest people work for someone
else” – Bill Joy, co-founder, Sun Mi-
crosystems.
There are numerous times when we hear
‘healthcare is different’. When asked why it is
so, people cite endless examples to prove their
point. Large companies have often benefit-
ted from ‘open innovation’, a concept that is
gaining increasing popularity. Some of the most
innovative solutions have come from people
outside the industry. After the 1989 Exxon
Valdez oil spill in Alaska, Oil Spill Recovery
Institute (OSRI) was formed and was chartered
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It's been observed that some of the most innovative solutions have come from people outside the industry

2. ViewpointViewpoint
Healthcare Radius January 2013 Healthcare Radius January 201336 37
a much higher capacity utilisation and revenue
per bed than something that caters to everyone.
Even models that start off with a vision to pro-
vide services to a particular segment, end up ad-
dressing all segments, tempted by the ‘perceived
possibility’ of a faster breakeven.
Observe, don’t just see
Human-centred design is now at the
forefront of innovation and design-
based thinking is the future. Although
market forms an important aspect of
innovation, sometimes keen observation helps
in figuring out what customers actually need.
Large firms attach significant importance to this
approach. IDEO is a classic example of a firm
that helps create solutions based on the design-
thinking approach. The firm focuses on learning
from the field followed by a quick prototyping
culture: rough, rapid and right. Learning from
failures is equally central to the innovation
process. Redesigning the mammography experi-
ence for GE was one such project undertaken
by the firm. The project uncovered nine key
insights about the mammography experience,
each of which led to design opportunities that
addressed women’s basic needs for support,
information, and inclusion during a mammogra-
phy. Needless to say, it led to a wider acceptance
of the cancer screening campaign.
Observational studies, especially in a health-
care delivery setting, could help understand in-
herent problems and resolve them. In one of our
studies in a hospital, a simple observation about
the transport staff and the stretcher created an
altogether different experience for the patients.
In creating innovative healthcare delivery mod-
els, for instance, specialty hospitals, promoters
can never do justice unless they understand
all specificities associated with the particular
discipline for the entire patient cycle.
Get customers to participate
We often come across the word ‘co-
creation’. In reality, co-creation is
nothing but encouraging customers to
innovate along with the organisation.
This requires empowering the customers and
presenting them with tools that could help
them run experiments. It also helps customers
know that the firm is in a process of continuous
innovation. It is equally important to select the
right customers. Bush Boake Allen, a lead-
ing firm in the business of supplying specialty
flavours to customers, had a tightly integrated
network involving customers, marketing de-
the target segment. The brand slowly got into
the ‘professional golfers’ category leading to a
decrease in profitability.
Often, in healthcare, we find people creating
delivery models that target ‘every section’ of
society. The models, as such, have a number of
inherent problems. A model providing services
to a specific target segment has the potential for
bile company, worked on a concept to create
a vehicle that would meet farming as well as
transportation needs in villages. The concept
was not an immediate success, but that did not
bother M&M. Instead, it created a culture of
innovation that eventually led to the creation of
many successful products.
In healthcare, for long, we have been ‘sacrific-
ing’ innovations to maintain ‘status quo’. What
most healthcare organisations need is to take
the lead and create such a culture, and innova-
tion will, of course, follow.
Focus on your core segment
One of the key tenets that we believe
in is ‘doing something for someone’.
Unfortunately, today, the larger target
segments we address, the larger the
numbers. Callaway Golf Company, manufactur-
ers of golf equipment, focused on new golfers
and the entire product line was customised for
Ritesh Dogra is
engagement manager
with Hyderabad-based
Medium Healthcare
Consulting.
Although the market
forms an important
aspect of innovation,
sometimes keen
observation too
helps in figuring out
what the customers
actually need
partment, flavourists and qual-
ity control. The firm could
command profits only
from flavours that
were selected and
only 5-10 per cent of
all flavours made it
to the market. At the
same time, innovation
capacity was lim-
ited by internal resources.
Customer needs were subtle and frequently
changed. The solution envisaged was to
help customers innovate by deploying
machines, which could make alterations
to the base flavour.
In healthcare, co-creation is a power-
ful tool for medical equipment manu-
facturers. In one of our projects for
a leading medical equipment MNC,
the brief was to design a product
based on customer needs. Differ-
ent stakeholders were interviewed
and changes were suggested for the
product purely based on needs. A
surprising fact that emerged was that
the stakeholders needed only 20 - 30
per cent of the features present in
the current equipment. Closely
explaining the model to end
users with live demonstration of
imaging features helped the firm
create one of the best imaging so-
lutions for tier-2 and tier-3 cities.
Look beyond the next
quarter
We have often asked one single ques-
tion to our partners – ‘Are you willing
to innovate?’ Since the same requires
a lot of conviction, it elicits a mixed response.
Many of them have believed that any innovative
model is synonymous to shorter gestation pe-
riod. P&L statements, on the other hand, could
be a major deterrent to innovation. It is simple
to project numbers on an Excel sheet and even
simpler to justify cost-benefit analysis, but for a
firm focused on innovation, projecting numbers
does not make sense.
In fact, relentless focus on operational
efficiency can drive innovation out. Cutting
innovation budgets can improve short-term
financial results which, in reality, is a ‘waste’.
Let’s take example of a firm like 3M. There
was a time when leadership at 3M implement-
ed Six Sigma, trained thousands of black belts
and
slashed
spending. On
the contrary,
what the firm re-
ally needed was a thousand for
one successful business. When
GE started the Business Innova-
tion initiative, it recruited 5,000
engineers, 2,000 marketing ex-
perts, invested in growth leader
skills, and defined five traits of
next generation leaders. The
organic growth objective was raised
from 4 per cent to 8 per cent. There
were five imagination break-
through (IB) proposals costing
$100 million in three years. All of
these initiatives are accompanied
with discipline, accountability
and flexibility. And these initia-
tives have made GE as one of the
most successful organisations in
the world.
Empower, not manage
Promoters of new health-
care start-ups, often get into
micromanaging the entire
project. Doctors starting
their own ventures often believe that they can
manage the entire show, right from planning
the building to marketing and service quality.
Building a team early is crucial for an
organisation to innovate. For instance, right
from the early days, Nestlé’s historic success is
built on deep agricultural supply chains, strong
local market teams and strategic acquisitions.
Although it employed over 2,75,000 people and
sold products in 130 countries, the organisation
was decentralised and is relatively flat. Country
managers had a fairly large degree of autonomy
in matters dealing directly with customers. The
company felt that the local managers were in
a better position to understand the knowledge
about customers and transform it into products
tailored to meet their needs leading to long-
term customer relationships.
Compared to some of the developed coun-
tries, which have gotten into a mess, having
done too many things and spent endless sums
of monies, we have the luxury of making an
almost clean start rather than get to a situa-
tion, where things would need to get re-done.
A culture to innovate can be the most crucial
approach to reach our goals in healthcare and
create ‘breakthrough’ products or services. We
do have a few champions even in healthcare,
be it Aravind Eye or Narayana Hrudayalaya,
who have demonstrated how innovation can
help scale unimaginable heights.
As per a Business Week survey, long develop-
ment times, lack of coordination, a risk-averse
culture, limited customer insights, poor idea
selection and inadequate measurement tools are
some of the major obstacles to innovation. We
certainly know what not to do. It’s high time, we
stopped doing it.
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expert view
According to Regina E Herzlinger, the Nancy
R. McPherson Professor of Business Adminis-
tration at the Harvard Business School, three
kinds of innovation can make healthcare better
and cheaper: One changes the way in which
consumers buy and use health care, another
taps into technology, and the third generates
new business models. But the system erects
barriers to each, which can be overcome by
managing the six forces that impact healthcare
innovation: Players—the friends and foes who
can bolster or destroy; funding—the revenue-
generation and capital-acquisition processes;
policy—the regulations that pervade the
industry; technology—the foundation for
innovations that can make healthcare delivery
more efficient and convenient; customers—the
empowered and engaged consumers of health
care; and accountability—the demand from
consumers, payers, and regulators that innova-
tions be safe, effective, and cost effective.