Good Leadership Is Key In Medtech Innovation Strategies
Executive Summary
Innovation is often viewed as the solution to the global productivity crisis, but getting innovation “right” is more complex than it may seem.
Innovation is often viewed as the solution to the global productivity crisis, but getting innovation “right” is more complex than it may seem. So says Marcus Agius, non-executive chairman of PA Consulting Group, in the foreword to his company’s multi-sector survey and report, "Innovation As Unusual."
The key findings and assertions to emerge from the report are broadly valid across all the industry sectors included in the survey. Business leaders from health care, life sciences and seven other industries concluded that many companies struggle to realize the value of their innovation investment.
As a result, organizations are wasting hundreds of billions of dollars on their innovation investments every year, and that does not even draw in the lost opportunities. This is mainly because innovation has to move beyond the R&D department and become embedded in the culture, strategy and mind-set of the entire organization. A siloed approach to innovation is unlikely to succeed, the report says.
Much depends on the leadership qualities in the company or organization. Good leadership encourages innovation, and innovation leaders tend to record profitability increases. This was the case for 71% of the 751 survey respondents (which included 219 innovation leaders) in their respective preceding financial years. This concept works in the private and public sectors alike, say the PA Consulting report authors. On the public side, the successful organizations are those that are “doing more with less,” and innovating, despite austerity measures.
The qualities inherent in “leaders,” and comparisons with others in the organization, are shown in the PA Consulting report:
- 89% of leaders learn quickly from mistakes (whereas “quick learning” is apparent in just 60% of others in the organization).
- 57% of leaders back high-risk innovations that show potential (vs. 36%).
- 71% of leaders put innovation at the heart of their corporate culture and mission (vs. 43%).
- 87% harness digital technology (vs. 64%).
- 91% have the “right mix of skills” to make innovation happen (vs. 57%).
Among the industries included in the report, life sciences had the highest proportion of innovation leaders (15 executives out of 29 surveyed), and health care the fourth-highest proportion of innovation leaders (23 out of 75).
Frazer Bennett, PA Consulting health care technology expert says, “Across the board, people have come to the conclusion that you have got to change or die, and the only way to get growth is through being a truly superior innovator.” Companies are now seeing this as a shared endeavor – not simply the role of the R&D department.
Brilliant innovators look to adapt innovations from other industries, says the report. They also learn from direct competitors. And they often buy in innovation to stay relevant and competitive – the report quotes Actavis Group’s $72.7 billion acquisition of Allergan PLC (see (Also see "Deals In Depth: November 2014" - In Vivo, 9 Jan, 2015.)) as a prime example of a pharmaceutical M&A move that had “innovation” front and center. But this strategy can also come with risks, because the “innovation culture” has to be nurtured.
“Look beyond your sector, and then keep going,” the PA report exhorts, stressing that “innovation is as much about interpreting and repurposing existing ideas as it is about coming up with entirely new ones.” The best innovators create new alliances and partnerships, and crucially they prepare to rethink their whole mission, it says.
Many fail to do this. Indeed, the barriers to innovation can be high and manifold: rules, risk aversion, inflexible infrastructure and good ideas that are seen as hard to implement. Some ideas to tackle these issues include letting all in the company innovate and experiment, not just those with an overt R&D remit; incentivizing employees; giving an innovation mandate that enables people to talk through ideas, work on and select potential winners; and including the financial team early on to get its input and buy-in on the proposition.
PA Consulting’s report states that a narrow focus on profit and loss can stifle innovation, and the best innovations evolve slowly, and need regular reworking and simplification. They often look very different by the time they are finished.
Go Beyond Token Digital
In his interview with In Vivo, Bennett stresses the need to go beyond “token digital.” Leadership of the whole area surrounding the need to harness digital technology for productive approaches to health care delivery is crucial, in the current phase of the industry’s evolution. Innovative approaches are needed to, for instance, address chronic diabetes within severely stretched health care systems. More generally, the US PPACA (the Accountable Care Act) is leading to new delivery models and a shift to patient monitoring, preventive care, outcomes-based fees and hospitals being financially penalized for readmissions.
Against this backdrop, good leadership in terms of the innovation strategy is more likely to succeed if it encourages innovation time among staff, praises or highlights “near misses,” is ready to admit failure and follows the “Fail Fast, Fail Frugal” dictum. There is no shortage of good ideas and the ambition for innovation is high. The big issue is scaling up.