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Drive Innovation Infographics December 10, 2015

Points of View: Trademarks of Successful Innovator-Incumbent Collaboration

Senior Editor, Oliver Wyman
Key Takeaway
Innovators: Don’t sell features & functionality; sell around problem you’re solving - @EvolentHealth CEO Williams

During the December 8 Provider+ webinar on providers and innovators, the third in a series sponsored by Oliver Wyman and Foley & Lardner LLP, top executives representing different industry sectors shared their points of view on barriers to innovation and trademarks of successful innovator-incumbent collaboration. Oliver Wyman Partner Sam Glick co-moderated the discussion. Highlights below:

Glick kicked off the conversation by noting that innovation has been a buzzword in healthcare for a long time, but the kind of innovation taking place now is qualitatively different than what took place even a handful of years ago. Then, innovation budgets and activities inside provider systems were focused on physician-centric innovations, such as implementing EHRs, gathering clinical data, and empowering physicians to do things more efficiently, he explained. In the value-based market, innovation has evolved to be patient centric.

And while innovation can seem daunting to complex, risk-averse organizations, it need not be. One of the many myths surrounding innovation is that it is the result of randomness and creative, flashing insights. In truth, Glick assured attendees, innovation is often low-tech, the result of old-fashioned hard work, and highly achievable.

Ready for innovation?

When asked what makes a provider ready for innovation, Jeff Micklos, executive director of the Health Care Transformation Task Force, cautioned against confusing interest with readiness. Innovation is not turn-key and presents significant hurdles. Consequently, readiness—and subsequent success—is dictated by an organization’s preparation. “You need to assess your core competencies for ability to innovate,” he said. “Our Task Force membership has recognized that not everyone is going to be able to do it right out of the gate. You need to assess your competencies and improve.”

In most situations, market pressure is still the biggest driver of innovation, meaning external pressure—more than internal readiness—dictates when an organization moves toward innovation, said Frank Williams, CEO and co-founder of Evolent Health. “Where there has been market disruption, or provider systems have been tiered out of a market—in those areas where change isn’t theoretical but real, we will see more players move more aggressively.”

Even if you are ready for innovation, take your time in charting your path and choosing partners, Glick said. Demand that innovators know your business and your problem as well as you do, and don’t be fooled by a flashy pitch. “Where we’ve seen systems go wrong, it all starts with getting a really interesting pitch, but one that is not aligned with what they actually need to do,” he explained.

Organizing innovation

On the topic of how to organize innovation, several panel members cautioned against a silo-ed approach. “Sometimes, when you have a chief innovation officer, it feels very separate and segmented and there’s no buy in,” said Jan Berger, chief clinical strategist of Quantum Health.

Today’s innovations, which are focused on the shift to value, are so central to business success it is essential the process be fully integrated and supported at the highest levels, Williams said. “We’re not talking about a new technology or a new analytics platform,” he explained. “It’s the launch of an entirely new business model and operating model that is transforming entire businesses. I would love to see a C-suite-level of executive who is really a general manager driving it.”

Don’t be a solution in search of a problem

When it comes to outside innovators penetrating incumbents, participants said it’s more important to focus on the organization’s problem than whatever solution you have to offer. “Providers tend to see a ton of innovators, but none of them are a perfect fit. It’s a lot of solutions in search of a problem,” Glick said. “Don’t sell features and functionality; sell around the problem you’re solving,” Williams agreed.

Approaching incumbents as a partner, rather than a customer, is key, said Sanjay Shetty, president of Steward Health Care Network. “The easiest way for innovators to cross that barrier to entry is to frame it in terms of partnership,” he said. “For me, one of the things there has to be is an innovator who is willing to work with us, partner with us, and view this as a we-will-grow-together relationship.”

Finally, be patient, Glick said, saying penetrating an incumbent is not going to be easy or fast. “It’s an 18-month cycle, and you have to build a business plan that allows for that.”

Be patient, but strategic

Respect that innovation takes time to seed, said Berger, but don’t be afraid to pull the plug. “It’s delineating fast failure from having the patience for innovation to evolve,” she said. “People get very worried about all the costs and manpower that has been put into a product or innovation, but if you get to a point where you see it’s not going to get what you want, you’re better off just pulling the plug,” Shetty said. “That decision point is very difficult, but you need to sit back and say ‘there are better ways for us to do that and we need to drop what we’re working on.’”

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