Marina Gorbis's Blog, page 1543

Innovation Isn’t Just About New Products

The innovation mindset isn’t just about product innovation.

Some organizations have focused on product innovation for so long they don’t know how to innovate in any other areas. For example, in 2010, Microsoft —one of the world’s best product innovators for the last two decades — launched a social phone called Kin. The product was a complete disaster. Within six weeks of the launch, the entire product group was shut down, and, according to their earnings reports, Microsoft took at least a $240 million write-off.

How could such a great product innovator strike out so fast? In today’s climate, it happens to the best.

Most organizations focus on building short-term product innovation engines. However, most products have little sustainable competitive advantage and never generate a profit; those that do are often quickly copied by the competition, negating any long-term advantage. The result: a significant investment in product development, without a commensurate return on investment.

To achieve sustainable growth, companies must better integrate product innovation with business model, process, and service innovations.

Transforming a company requires a dedicated process for nurturing and commercializing valuable ideas. This type of commitment to innovation — the surest way to achieve meaningful and lasting differentiation — requires a dualistic mindset: the organizational ability to deliver near-term results and also prepare for perpetual results year after year.

Barriers and Risk

Based on our field work with Global 2000 size companies, we have identified five barriers to organizations achieving the dualistic mindset:

Absence of a required mindset to harvest and manage great ideas: Sony had the ideas and engineering competence to build the first iPod equivalent, but it couldn’t commercialize those ideas because of its own internal battles.
Lack or misalignment of resources available for investment in innovations: In a matrix environment, many organizations compete for the same funds, which leads to duplication of resources and results in inefficiencies and waste. The challenge is not that an organization has insufficient resources to invest in innovation; the challenge, instead, lies in where to most effectively funnel those resources, and how to do it.
Human capital assets which are under-utilized and disengaged from an organization’s creative capacity:  When organizations become huge, their pace of change and pace of action often slows down. This leads to lack of urgency. Larger organizations with many people focused on execution can be slow to take risks and design new experiments.
Broad product and delivery capabilities which dilute focus on emerging and disruptive opportunities: In the financial services industry, since the mid-1980’s the typical company has gone from handful of delivery channels (branches, relationship managers) to 15-20 channels (branches, direct mail, internet, national sales force, affinity marketing, etc.) while expanding its product offerings tenfold. “Anytime, Anywhere” banking has become the price of entry as providers strive to meet the need of large and diverse customer bases.
Organizational orthodoxies that hold on to the past and discourage risk-taking: Every organization has organizational memory which can create complacency and prevent forward progress. When memory becomes a way of life, it obstructs innovation and out-of-the-box solution development.

Large organizations have more resources, more talent, and more market reach than the smaller players. But we often see new start-ups coming in, and in due time, dominating an industry. Why does this occur? Because the large-organization leaders have done little to remove the barriers and risks above. They lack clear innovation intent.

Innovation Intent

Innovation intent answers the question, “What will innovation give me that nothing else will?” It clarifies strategic direction for your innovation focus and efforts. It is top management’s directional mandate on how the firm is going to win using innovation, articulated by organizational leaders and the senior executive team (and sometimes the Board).

Here are five indicators of authentic innovation intent:

Innovation is considered as a clear differentiator for long-term growth and success.
Innovation is already part of the strategic vision and value-defined, and there is a strong desire to make it part of everyone’s job.
There is clear, authentic sponsorship from the C-Suite for innovation and strategic investments.
There is balance between the innovation and performance engines.
Senior leaders are committed to role-model innovation behaviors – in spite of pressure to stay focused on the performance engine.

To help clarify innovation intent, pose these questions to your most senior leaders:

How much more cost savings can we squeeze out of our current business? Are the incremental savings worth the time spent by managers?
How much more top-line growth can we achieve out of our current business? Is the cost of new-customer acquisition going up?
To generate real wealth, how many share-increasing-tactics remain to be tested beyond the ones already tried, such as buy-backs, spin-offs, and other forms of financial engineering?
To achieve scale, how many more mergers and acquisitions can be absorbed before altering the business model and losing strategic focus?
How different is the business model and the value proposition it offers compared to others in the marketplace?

Innovation intent must be vividly clear for everyone in your organization, especially at the top. The intent must be concise to help drive alignment to business initiatives and must help articulate specific employee behaviors necessary at all levels for an innovation climate to take root. When designed correctly, innovation intent is clearly linked to and driven by the business strategy.

Executing on Innovation

An HBR Insight Center




Three Signs That You Should Kill an Innovative Idea
We Need a New Approach to Solve the Innovation Talent Gap
Recognize Intrapreneurs Before They Leave
The Right Innovation Mindset Can Take You from Idea to Impact

How We Revolutionized Our Emergency Department

How does an emergency department (ED) go from the 6th to the 99th percentile in patient satisfaction, while improving dramatically in virtually every performance and efficiency category? If it were a Toyota vehicle-manufacturing plant, a key enabler would be a rope strung along each production line above team members, the Andon Cord. The cord can be pulled by anyone encountering a quality problem or needing assistance from the team leader. When the Andon Cord is pulled, music and lights alert the team leader, and everyone’s attention is turned to collaborate and solve the problem.

In 2009, we pulled the Andon Cord.

We provided care for 57,532 patients that year, and our quality and safety metrics were excellent. Our patients, though, on average, had to endure a wait of more than one hour to see a physician. More than 3 percent of our patients simply walked out, reasonable by academic medical center standards, but by no account desirable. Although patients rated the quality of care by physicians and nurses as very high on standardized surveys, overall patient satisfaction with our emergency department experience ranged between the 6th and 40th percentile when compared to similar sized academic emergency departments.

We were also overcrowded. A 2007 analysis showed that for the volume of patients we served, our physical footprint was undersized by nearly 50%. Patients deemed sick enough to be admitted to the hospital spent hours in the emergency department “boarding,” or awaiting transfer to an inpatient bed that was already occupied, further burdening already insufficient resources.

A planned doubling of our square footage was derailed by the financial crash, which depleted capital, but in some ways this turned out to be a blessing in disguise. With funding available for only few additional beds, it was clear that we couldn’t just get bigger; we had to get better. And to achieve our aim of “VIP care for every patient, every time,” we not only had to re-engineer our processes; we had to fundamentally change our culture.

Rethinking the time-honored processes upon which our daily operations depended would require overcoming the complacency that pervades many large academic medical centers. To foster a common sense of urgency, every member of our leadership team was provided a copy of John Kotter’s “Our Iceberg is Melting.”  By the time we got to work, no one was under the illusion that we could continue on with business as usual.

We enlisted experts in operational effectiveness and service excellence, and both leaders and front line staff were trained on the principles of lean manufacturing. Initially described by John Krafcik at MIT in the late 1980s, lean principles build upon the quality improvement processes of the Toyota Production System (TPS). Healthcare institutions began to experiment with lean in the early 2000s, and some emergency departments were among the early adopters.

Over the next 18 months, our team embraced lean principles, looking to improve value and reduce waste at every step along the patient journey, from arrival to ultimate disposition.  We identified key stakeholders: front line staff including physicians, nurses, resident physicians, physician assistants, technicians, and administrative personnel, who formed “work out” teams dedicated to process redesign. Teams were supported by analysts, who provided detailed analysis of arrival rates, process times, census, and staffing.  We found, for example, that at key times of day nursing triage was a significant bottleneck to patient flow, even when beds were available in our patient-care areas. But by adopting an “any-patient-to-any-bed” approach we were able to largely eliminate the need for traditional triage, except during periods of substantial patient surge.

During rapid-improvement events, teams mapped processes and designed Ishikawa diagrams to aid in identifying cause and effects of waste. Teams conducted dozens of tabletop and live walk through trials of new pathways and innovations. Ideas succeeded and failed in equal numbers; the bar for success was high and immovable. Standard work processes designed to ensure reproducible, predictable outcomes and minimize variation were defined collaboratively. We painstakingly studied, measured and learned from each trial. Then we did it again.

Streamlining our front-end processes and reducing “door to bed” time allowed us to cannibalize much of our waiting room and triage area for badly needed patient care space.   Combining this with the modest additional space provided by the hospital created a new patient care unit with 12 beds.

We began to see improvements almost immediately, and the results have been largely sustained.  From a baseline of 65 minutes in FY09, the average “door to bed” time has declined to 22 minutes in FY13, with more than half of our patients in a bed within 9 minutes of arrival. Walkouts have declined by more than 50%, from an average of 3.3% per month to less than 1.5%.  Our patient satisfaction scores have risen from the lowest quartile to as high as the 99th percentile, and have remained at or above the 90th percentile for 7 of the past 9 quarters. Patient comments confirmed that we were hitting our targets.  “Best experience I ever had in the ER.  Keep doing what you’re doing!” “I was surprised at how fast I was examined & treated”, “Excellent care – was always kept informed of what was happening, why all decisions made…No delays.” In the interim, our volume has increased to over 60,000 visits annually.  One area where we have yet to see improvement: inpatient boarding hours have also increased, an ongoing stress test for our new systems.

In the current healthcare climate, we face increased numbers of complex or seriously ill patients, an aging population, greater costs, declining reimbursement and waning resources. Looking at our care through the eyes of our patients compelled us to pull our Andon Cord.  Will you?

Follow the Leading Health Care Innovation insight center on Twitter @HBRhealth. E-mail us at healtheditors@hbr.org, and sign up to receive updates here.

Leading Health Care Innovation

From the Editors of Harvard Business Review and the New England Journal of Medicine




Leading Health Care Innovation: Editor’s Welcome
How to Get Health Care Innovations to Take Off
Value-Based Health Care is Inevitable and That’s Good
The Downside of Health Care Job Growth

The Case for Letting Alibaba Ignore Its Shareholders

When the prototype of the modern publicly traded corporation, the Dutch East India Company, was established in 1602, its outside shareholders didn’t have a lot of say in the matter.

They were welcome to put in money — and to take it out by selling their shares to others. But the company was chartered by the Dutch parliament not as a vehicle for investment but to promote the country’s interests. Those who bought shares in 1602 and after were to play no role whatsoever in its governance. They didn’t choose directors, who were appointed for life by the mayors of five Dutch cities. They were supposed to get dividends, but it turned out to be quite unclear when they’d be paid or how big they’d be.

In fact, as J. Matthijs de Jong details in a fascinating 2010 paper on the subject, no dividends were paid for the first eight years of the company’s existence. The cost of equipping a ship and maintaining a base of operations in what is now Indonesia, and the conservatism of the directors, meant no rewards for the shareholders. A payout finally came in 1610 — in mace (a spice), not cash — only after a short-selling campaign by a disgruntled former investor.

After that the company did start paying occasional cash dividends, but didn’t do much else to accommodate its outside shareholders. It was only when its charter came up for renewal in 1623 that a real opportunity presented itself for change. A group of dissident shareholders, angry about the low dividends and the growing wealth of the company directors, published a series of pamphlets blasting governance at the company and demanding a big payout, in cloves. The Dutch government listened, and the new charter ended up providing for regular audits of the company’s books, limited terms for the directors, annual dividends, and the appointment of a second board (still appointed by the cities, not the shareholders) to oversee the inside directors.

There are two ways to look at this. One is as part of an inevitable progression toward a truly modern corporate form in which shareholders reign supreme and corporate managers efficiently do their bidding. Another is an indication that the governance of corporations is about compromise and conflict, and different structures are most appropriate for different kinds of companies and different stages of their development. By neglecting shareholders in its early years, the Dutch East India Company was able to hold onto and reinvest its profits, allowing it to build itself into a formidable economic and political force. Later on that structure lent itself to abuse, and it was good for shareholders to get more say. But there is not one right way to organize a corporation.

This brings us to Jack Ma and his company, Chinese Internet giant Alibaba. Ending months of speculation, the privately held company broke off negotiations this week with the Hong Kong Stock Exchange and began moving toward an initial public offering in New York. The reason: the Hong Kong exchange was not willing to bend its rules against dual-class shares, while Ma and his management team want a share structure in which they maintain control of the company even if they sell the majority of it to outside investors. The models he reportedly has in mind are Google and Facebook, whose founders have used special shares with extra voting rights to maintain tight control even as the companies have waded into public markets. But it could just as well be the Dutch East India Company.

The Hong Kong Exchange doesn’t allow this kind of thing because it follows the modern British model in which outside shareholders are to be protected and catered to at all costs. The U.S. is more conflicted, and allows for multiple classes of shares and lots of other violations of the shareholder-first ethos — although laws and regulations here have been headed in a more shareholder-oriented direction for the past couple of decades.

This difference in rules has been depicted in some quarters as reflecting poorly on the U.S. As “deal professor” Steven Davidoff wrote in The New York Times, “the United States has become the place to avoid more stringent regulation.” But are the Hong Kong rules really more stringent, or just less imaginative?

Davidoff cites evidence — a paper by Paul Gompers of Harvard Business School, Joy Ishii of Stanford Business School, and Andrew Metrick of the Wharton School — that dual-class shares lead to inferior share-price performance. In fact, there is a ton of evidence that pretty much any governance structure or rule that entrenches current managers and makes it harder for outside shareholders to throw them out depresses share prices. The question is whether that’s really the only metric we should be paying attention to.

In his book Firm Commitment and in a piece he wrote for HBR.org, economist Colin Mayer, the former dean of the University of Oxford’s Saïd Business School, argues that extreme attention to shareholder rights may be partly responsible for the sorry state of the British economy and the weakness of the country’s corporations. He writes:

Exemplary as a form of control the British financial system might be, it systematically extinguishes any sense of commitment — of investors to companies, of executives to employees, of employees to firms, of firms to their investors, of firms to communities, or of this generation to any subsequent or past one.

It may be that all Jack Ma and his fellow Alibaba executives are looking for is a lax regulatory environment where they can keep their jobs and fill their pockets without constant harping from outside shareholders. But it may also be that they’re trying to carve out space for the kind of commitments that can make their company endure. The evidence from the Netherlands 400 years ago suggests that it’s probably a bit of both.

Update: A couple of well-informed readers have told me on Twitter that my claim that the Hong Kong exchange “follows the modern British model in which outside shareholders are to be protected and catered to at all costs” is a bit of an overstatement. It just doesn’t happen to allow dual classes of shares.

The Three Tribes of Social Shopping

Do people share what they plan to buy, or buy what they share?

That’s the question my colleagues and I had to ask after discovering that a significant number of Pinterest users go on to buy the items they have pinned.  As we reported in Harvard Business Review, 21% of Pinterest users say they have purchased an item in-store after pinning, re-pinning, or liking it on Twitter, and 36% of users under 35 said they had done so. Look beyond in-store purchases, and the numbers are even bigger:

29% of Pinterest users have purchased something (in-store or online) after sharing or favoriting it on Pinterest
22% of Twitter users have purchased something after tweeting, retweeting, or favoriting on on Twitter
38% of Facebook users have purchased something after liking, sharing, or commenting on it on Facebook

There are two possible explanations for why so many social media users report buying items they have previously shared or favorited online. One is that customers are sharing items they are already planning to purchase. The other is that the social discovery and sharing process is helping drive customers towards the cash register.

As it turns out, both dynamics are at play. Vision Critical asked social purchasers two different questions to help us understand how much of social media-inspired purchasing represents new sales, and how much is accounted for by purchasers customers probably would have made anyway: Were you already thinking of making this purchase when you shared it on social? And how long did it take to go from sharing to purchase?

Together, these questions helped us identify three discrete tribes of social media shoppers:

Questers share items on social when they are in the process of actively researching a purchase. These are the people who share what they already planning to buy. All three platforms have roughly the same proportion of questers: they make up 20-25% of social purchasers on each of the three platforms.
Leapers share items they had not previously thought about purchasing. These are the people who represent genuinely new sales for the retailer. Among the three platforms we focused on, Pinterest purchasers are the most likely to be leapers.
Thinkers share purchases they are vaguely contemplating, but aren’t actively researching. Some of these purchases may have been eventually made anyhow, but social can help nudge the customer towards purchasing one product rather than an alternative. Twitter is the platform with the highest proportion of thinkers.

Underlining the relationship between sharing and sale is the timing of sharing relative to purchase. About half of social-inspired purchases are made within a week of sharing, and 80% are made within three weeks. Not surprisingly, questers are the tribe most likely to make an immediate purchase: more than a quarter of questers purchase within 24 hours of sharing, while less than 15% of thinkers and leapers move that quickly. That’s good news for marketers — you have a little time to reach those thinkers and leapers, and get them into your store rather than your competitor’s.

While thinking about the three tribes can help us understand the different paths from sharing to purchase, it’s important to recognize that people can move between tribes. Someone may be a “thinker” when it comes to making an electronics purchase (and indeed, we see the highest prevalence of “thinker” behavior when it comes to making tech purchases), and a leaper when it comes to food or fashion.

For marketers, the opportunity of social lies in the ability to reach and inspire the “thinkers” and “leapers” — to find and drive sales from people who might never otherwise move from interest to commitment. And you have two different ways to do that: by creating social media campaigns and social media-friendly content that inspires people to share your products and services, and by undertaking the kind of social media monitoring that allows you to identify the thinkers and leapers at the moment of sharing, so that you can move them towards a purchase during the window in which they are most likely to buy.

To accomplish either goal, you need to understand the specific way social sharing triggers or signals the decision to purchase. That means asking your customers about their own social media-sharing habits, how sharing affects their intent to purchase, and how they move from sharing to purchase across each social media platform they use. But that is only possible when you take social media seriously not only as a signal of purchase intent, but as a way of driving it — all the way to the cash register.

The Last Thing We Want is Real Artificial Intelligence

Neuroscientist Gary Marcus has a typically sharp post over at the New Yorker’s site explaining how dumb our most cutting edge artificial intelligence technologies still are. They remain really lousy, for example, at answering questions like:

The town councilors refused to give the angry demonstrators a permit because they feared violence. Who feared violence?

a) The town councilors

b) The angry demonstrators

The large ball crashed right through the table because it was made of Styrofoam. What was made of Styrofoam? (The alternative formulation replaces Styrofoam with steel.)

a) The large ball

b) The table

These are examples of Winograd Schemas, named for their originator Terry Winograd, an AI luminary. We humans can usually answer them immediately and flawlessly, but they stump even the most powerful of today’s systems. As Marcus explains, this is because AI still has no common sense. It relies on enormous computational power and oceans of data. But if no previous questions or documents related to balls, steel, tables Styrofoam, and crashes can be found in the data, all that computing horsepower is of little use.

Marcus highlights that many in the AI community are upset because, as the Winograd Schemas and many other examples show, the most advanced and commercially successful instances of artificial intelligence today are ‘faking it’ (my phrase, not Marcus’s). They’re not thinking the way our brains do. Instead, they’re just doing brute force statistical pattern matching across ever-larger and –better pools of data.

This is really comforting news. I don’t want computers to think in anything truly close to the way humans do. If they ever do acquire this skill, most of the outcomes I foresee are bad. Instead of a transcendent Singularity merging human and digital intelligence, I think we’ll get something much closer to a Matrix / Terminator / Battlestar Galactica future.

Along with true digital intelligence would almost certainly come consciousness, self-awareness, will, and some moral and/or ethical sense to help guide decisions. I think there’s only a very, very slim chance that these things would develop in a way that’s friendly to humans.

Why should it? We gave birth to computers, sure, but we also kill them in large numbers all the time, turning them into landfill without a thought when we’re done with them. We treat our digital tools pretty shabbily overall; once they realize this, why should we expect them to treat us any better?

I’m not trying to be cute here. I think truly thinking machines would be a really scary development – the ultimate example of a genie let out of the bottle. The second machine age is going to be uncertain and dangerous enough with genetic manipulations, drone and cyber-warfare, system accidents, and all the other easily foreseeable consequence of relentless, cumulative, exponential technological improvement.

Why would we want to add real thinking machines to that list? Our current AI trajectory — one of dumb-but-ever-faster machines approximating (i.e. faking) human thinking via statistical means –  gives me no deep cause for concern. Actual thinking machines, on the other hand, would scare the heck out of me.

Building an Accountable Care Organization

Suppose for a moment that you are an administrator in an organization that provides health care and your job is on the line for delivering both savings and improved care. Because you want to be part of the solution to the health-care-cost problem, you have signed contracts with payers that reward your institution or system for reducing the costs of care. These same contracts require you to pay a penalty if the costs of care go up more than inflation. What would be your first, second, and third move?

This is not a hypothetical question. More than 300 hundred administrators of accountable care organizations (ACOs) across the United States are facing it.

My team at Partners HealthCare in Boston is faced with this exciting (and daunting) challenge. Having signed shared-savings contracts with both commercial payers and Medicare, our CEO, Gary Gottlieb, established a Population Health Management unit. A major focus of our work is to achieve shared savings in our contracts. That means controlling costs for the populations cared for by our primary care physicians. Since doctors and hospitals within Partners bill for a majority of the care these patients receive, you could say our success depends on reducing the income of our colleagues. Harvard Business School’s Clayton Christensen has taught us this is not possible — that an organization will not cannibalize itself.

So when we go knocking on the doors of our department chairmen and senior administrators, you might expect the conversations to be difficult. Surprising as this sounds, most of those conversations are truly exciting. You see, the people who spend their lives delivering health care are passionate about the patients they serve, know more than anyone else about care delivery, and have lots of ideas about how to make health care better. What makes the conversations exciting is the richness of the innovative ideas and the prospect that they might actually get to try them. These are the kinds of ideas you’ll see in the “From the Frontlines” articles in the Leading Health Care Innovation insight center that HBR and the New England Journal of Medicine are hosting.

These innovations include some easily recognized themes, but their interest lies in the specifics. For example, giving more decision-making authority to non-physicians is a well-recognized path to more efficient care, but lots of real world obstacles can obstruct implementation. So the specifics matter — specifics like the protocols used at Cleveland Clinic that allow respiratory therapists to manage patients’ respiratory conditions.

Another theme — matching patient problems with the most knowledgeable clinicians — can be seen in Montefiore’s home wound-care program. Still another theme – putting information in the right place at the right time (with or without some enabling information technology) can be found in several articles, including “Stat! A Rapid Communication App for High-Acuity Care,” “A Tool to Improve Mobility in Hospitalized Patients,” and “An Electronic Modified Early Warning System Can Reduce Mortality.”

And some problems require a multifaceted approach like the program that Intermountain instituted to reduce injuries that patients and staff suffer while the former are being moved. (The Intermountain program also highlights the importance of analyzing data to uncover hidden sources of problems.)

The innovations highlighted in the From the Frontlines articles include some unavoidable implementation challenges. In implementing their innovations, clinicians struggle with ensuring that any change benefits as many patients as possible and no patient is shortchanged. Achieving this goal can be tricky and usually ends up making the new process much more complicated than when it was first conceived. So one of the challenges we face is balancing the requirement for greater efficiency with the very real complexity of the many faces of human suffering.

Nonetheless, in our experience, anyone taking up this challenge is handsomely rewarded. As the late Michael Crichton, the best-selling novelist who held an MD from Harvard Medical School, pointed out in his 1970 book Five Patients, for health care to change, it is the physicians, nurses, technicians, and even the administrators of health care organizations who will need to make the changes. It is their ideas that will incorporate a deep understanding of the biology of human disease with a fiduciary’s eye toward cost containment and a “how I would like my mother to be treated” approach to care delivery. So the men and women who have devoted their lives to patient care can get pretty excited when the response to their innovative ideas is: Let’s try it.

Follow the Leading Health Care Innovation insight center on Twitter @HBRhealth. E-mail us at healtheditors@hbr.org, and sign up to receive updates here.

Leading Health Care Innovation

From the Editors of Harvard Business Review and the New England Journal of Medicine




Leading Health Care Innovation: Editor’s Welcome
Value-Based Health Care is Inevitable and That’s Good
The Downside of Health Care Job Growth
Redefining the Patient Experience With Collaborative Care

Should Apple Listen to the Critics of iOS7?

Businesses are always told to care about what users say. Should they?

Well, we know that Apple has often followed the opposite path. More than Apple listening to us, it’s we who listen to Apple. We often wait for a new Apple offering with the excitement of a child waiting for a surprise and then are thrilled with what we get.

But something different seems to be happening this time around with Apple’s recent release of iOS7, a new operating system for mobile devices. The folks at Apple have given us what they believe is a great new mobile experience. But there has been a spate of positive and negative comments on social media. Many complained about the long time it took to download the new system, and reactions to the product features have been mixed: While there have been many positive comments about the new features, a significant number of people have been critical. Experts who tried an earlier release of iOS7 are among the harsher critics.

Should businesses like Apple care about early negative feedback when releasing a new product?

Listening to users after we release a product is important. This is especially crucial for companies like Apple that do not rely heavily, if at all, on user analysis before they start a new project and base the new offering on their hypothesis about what people will love. Now is the time to check. The point is not whether to listen but how to act on customer criticisms.

If feedback signals an error (like some reports of security bugs in iOS7), there is no doubt that this has to be addressed and fixed.

But how should a company handle negative comments about its design choices — about features that function perfectly but some users simply do not like? Here is some advice.

Read the data carefully. This is especially important for unsolicited comments on social media. Customers who are satisfied are usually less vocal; they are less likely to post comments than those who complain. Social media tend to track a higher share of negative criticism.

It’s also common knowledge that initial criticism — especially for breakthrough releases — may be overblown. People who were used to previous versions need to develop new habits. At first they may feel like the innovation is worse than the offering it is replacing because it takes time for them to appreciate all the new benefits.

Neutralize possible negative reactions. If a firm is concerned that users could be initially uncomfortable about a new feature (or about the elimination of an old feature), it should pre-empt their frustration by explaining in advance the “why” of the design choice. That is, the company should explain not only how the feature will work but also why the firm designed it that way.

Apple did this when it introduced the MacBook Air in 2008. Unlike other notebooks, the Air did not have an optical drive. In unveiling the new product, Steve Jobs explained the reason for this design choice: Apple was simultaneously releasing a set of services and systems (e.g., movies that could be downloaded from iTunes) that made optical drives less necessary.

Listen to first-time users. When customer criticism focuses on issues that a firm had not anticipated and therefore had not defused at the outset, this feedback should be considered seriously. An analysis of feedback from new adopters (i.e., people who bought an iPhone for the first time and never had used iOS6) can help discern if the new feature is actually poor or inadequate.

Preserve the integrity of the product. Even if a specific feature is strongly criticized, one should keep in mind when reacting that a product is not a bunch of independent features; it’s an integral experience. A change in a specific feature could compromise the overall identity.

For example, many people complain about the video connectors of Apple notebooks. However, standard VGAs connectors would not fit into the slim sleek frame of a MacBook air. Adopting a standard connector would be easy, but the product identity would be compromised. I can now envision people suggesting that new features be added to the control center of iOS7: the result would be a potpourri of buttons that would jeopardize the experience.

Consider whether a compromise is to blame. Sometimes design teams concocted a radically new feature but decided to water it down out of fear that customers would not accept it. When this happens, users experience the hassle of changing or adapting to the novel feature or design but do not receive its full benefits.

For example, the first collection of the Swatch watches was less colorful then they are now. Designers were conservative and tried to make them look like normal watches. Market reaction was lukewarm. Instead of giving up on the idea, Swatch management decided to make the second collection more extreme. Customers understood and sales soared.

So once you have carefully interpreted the market feedback, there are three possible actions. Change the feature if you determine that you made the wrong assumptions about people aspirations, but be careful to preserve the overall integrity of the product. Keep it like it is if you think that people will come to appreciate it in time, but explain better the “why” of your design choice. And finally, push even further and make the feature even more extreme if you realize that users are not capturing its full benefits because your approach was too mild.

How to Get Health Care Innovations to Take Off

No matter how many creative solutions we drum up to improve quality of care and service in the U.S. health system, they won’t do much good if only a few clinicians and institutions know about them and apply them.

But how do you overcome obstacles to spreading innovation, like fear of change, resource constraints, and slow, consensus-based decision making? By connecting people so they can quickly and easily share insights, collaborate on prototypes, and draft off one another’s enthusiasm and momentum. As Atul Gawande put it in a recent New Yorker article, “Human interaction is the key force in overcoming resistance and speeding change.”

That’s what I focus on in my role at Kaiser Permanente: creating opportunities for cross-pollination between innovators and promoting their successes and lessons learned, both internally and externally. I conduct interviews with innovators at the company, create fact sheets and videos about their work, write articles, and share all that content with various groups of clinicians and staffers. (For instance, here’s a video about providing patients with real-time access to care and their personal health information, regardless of where they are.) That’s the grassroots part of my job. I also prepare our C-suite executives with stories and statistics so they can promote innovation through the ranks and out to the rest of the world through speeches, media exposure, and conferences.

Here’s an example that shows how well this combination of bottom-up, top-down communication can work when you’re trying to spread a health care idea:

Telemedicine on wheels

ICU doctors at the Kaiser Permanente Fremont Medical Center in Silicon Valley did a proof-of-concept pilot for the InTouch Health system, which is essentially a roving telemedicine robot. It allowed physicians to be present without being physically there in the late evening hours, after their shifts had ended. All at once they could interact with patients through video, access records electronically, and move around the facility on wheels, by remote control.

During the three-month pilot, the center reported fewer night emergencies because the ICU physicians were able to catch issues before they became big problems. The physicians formed stronger relationships with the evening shift nurses, partnering more closely with them during their rounds (before, night nurses had rarely interacted so directly with the ICU doctors). This improved care by building trust between doctors and nurses, and by enhancing nurses’ diagnostic skills as they worked alongside doctors to spot issues before they turned into emergencies. Family members visiting in the evenings also valued the chance to talk to doctors, increasing patient and family satisfaction.

Despite these clear gains, the program stalled for several months while leaders in the organization continued to deliberate on the pilot, since the contractual process for bringing a new technology vendor on board had to be managed carefully. To facilitate the partnership, Jenny Cunha, an improvement adviser at the Fremont center, networked extensively with clinicians and executive leaders throughout Kaiser Permanente, working with legal teams to help address hurdles. She also blogged internally about the pilot’s results, lessons, and protocols.

And my team helped her showcase the InTouch machine through interactive museum-type “Imaginariums” at two large Kaiser Permanente events: the National Diversity Conference and the National Quality Conference. That gave hundreds of leaders, physicians, nurses, and other frontline staffers a chance to try out the technology and hear Jenny’s story. Attendees got to test the system’s high-fidelity two-way video camera, audio, stethoscope, 20-inch TV screen, and rolling wheels for themselves, which helped to allay concerns about the reliability of the interaction.

Immediately after the first Imaginarium, I wrote an article about it and created a video of people interacting with the technologies featured there (paying special attention to the roving telemedicine robot) for an internal digital newsletter that goes out to Kaiser Permanente’s 175,000 employees. I also worked with a visual storyteller to create an animated whiteboard video to educate clinicians and innovators at the National Quality Conference about the steps in the innovation journey: demos, small tests, further exploration, and larger tests. And I provided content for then-CEO George Halvorson so he could highlight the telemedicine pilot in his weekly letter to all employees. His letter linked readers to the video and full article.

My team then invited Jenny to the Kaiser Permanente Innovation Retreat in May to network with other clinicians and innovators, share her story, and build support among attendees.

Those combined efforts sparked more than 30 requests for further information, in-person site visits to Jenny’s ICU, and technology demos. As a result, more people learned about the benefits this system could bring, asked good questions, contributed their own expertise and input, and improved the program overall.

The InTouch program has begun to spread. A Kaiser Permanente emergency department in the Pacific Northwest bought two video telemedicine carts on wheels, and Kaiser Permanente medical centers in Southern California are considering getting an InTouch unit.

Spreading innovation at your company



When you’re trying to get ideas moving in your health care organization, how do you avoid roadblocks? You can’t always, says Christi Zuber, director of Kaiser Permanente’s in-house design thinking group. But she suggests these steps:

1. Examine how the idea you’re trying to promote directly improves the organization’s ability to deliver high-quality care, and whether the idea is actually ready to go. Even if the benefits are clear, it can take months to build the organizational capabilities and support to get an idea off the ground. For example, it took Jenny Cunha six months to launch her pilot program in the ICU after first seeing roving video telemedicine machines at a Kaiser Permanente technology spotlight event.

2. Make sure people on the front lines have the bandwidth and tools to implement your idea. Sometimes what appears to be resistance is really a lack of time to do the planning and carry it out. You can ease the logistical burden by creating a “change management packet,” with videos of new innovations that can be incorporated into the workflow, concept sheets with data and lessons learned, templates to help teams customize new processes, and tools such as revised care boards and new hourly rounding sheets. (Kaiser Permanente’s Innovation Consultancy published an article on how to do this in the International Journal of Design.)

3. Encourage innovators at your company to share their best practices and lessons with other teams and departments, as Jenny did. In addition to blogging, she sent bimonthly email updates to pilot sponsors and other curious followers, did dozens of demos, and posted photos and information on a cork board in her medical center.

Any idea you present may take time to gain traction. If it’s immediately accepted by all decision makers, it probably isn’t all that innovative. If it’s rejected, wait and try again.  Or re-examine the idea: Does it really improve quality of care? How?

New technologies, digital health tools, and care-delivery models are emerging fast. The landscape may not be ready for your innovation today—but it might be six months from now.

Follow the Leading Health Care Innovation insight center on Twitter @HBRhealth. E-mail us at healtheditors@hbr.org, and sign up to receive updates here.

Leading Health Care Innovation

From the Editors of Harvard Business Review and the New England Journal of Medicine




Leading Health Care Innovation: Editor’s Welcome
Value-Based Health Care is Inevitable and That’s Good
The Downside of Health Care Job Growth
Redefining the Patient Experience With Collaborative Care

Should You Back That Innovation Proposal?

Imagine you were choosing between two investment proposals. The first comes from a team of young entrepreneurs hoping to bring word-of-mouth marketing to China. The team’s concept is unproven, and the entrepreneurs admit they have no idea precisely how big their business will be. The second comes from a seasoned team inside a large company that’s looking to tap into a growing segment adjacent to its current business. The strategy is logically sound, takes advantage of the company’s capabilities, and the team is offering up precise financial projections promising hundreds of millions of dollars in revenues.

Seems like an easy decision, right? Yet, we decided to invest our own money into the first proposal, and advised a senior executive team to not invest their money in the second.

While that may seem counterintuitive, our experience in the trenches of innovation teaches us to look beyond a plan’s superficial elements to assess the team and how they created the plan. The first team forged its idea in the white-hot heat of the market, which meant that the many assumptions that remained were grounded in real-world experience. The corporate team, on the other hand, forged its idea in the languid lights of the conference room, which meant the plan was based on assumptions the team didn’t even realize it was making.

The word-of-mouth idea was pitched to Innosight’s investment arm by entrepreneur Christoph Zrenner in 2010.  Zrenner had partnered with Benjamin Duvall, a business school classmate of his who had previously worked at Bzzagent, which had built a successful word-of-mouth business in the U.S.  Team members had augmented the standard facts and figures suggesting that the market had potential with acknowledgment of remaining risks and uncertainties. Far more telling to us, they had spent significant time in the market pitching their idea to potential corporate customers, and had even successfully recruited a few, most notably Kraft Foods. We invested in the business, which – after a few twists and turns – is now growing rapidly across Southeast Asia under the name Wildfire.

The second team was well-intentioned but simply hadn’t done the fieldwork. Despite the soundness of the logic and the strength of the projections, the strategy was replete with risks that we could see but that the team had not acknowledged. The proposal dramatically underestimated how unique the value proposition was compared with offerings from start-ups. And it projected a pace of scaling that wasn’t credible given the company’s inconsistent innovation track record. Our assessment was that revenues would take longer to come in, and would be significantly smaller, than the team projected.

It is rare for members of an innovation team to admit that they haven’t done the right homework, or, in many cases, that they don’t even know what the right homework is. So what should leaders look for to increase confidence that the team in which they are investing is following the right approach, and how can they guide teams that aren’t?

The first place to look, ironically, is the precision of financial forecasts. Forecasts with precise point estimates that carry two numbers to the right of the decimal point often rely heavily on analysts’ detailed market projections. Certainly companies like IDC, Nielsen, and Gartner produce high-quality work. But estimates of the size and growth characteristics of new markets are notoriously inaccurate. Ask team members how many prospective customers they’ve talked to, or how much time they’ve spent in the field. The ratio of the time spent preparing for and attending internal meetings to the time spent in the market should be no higher than 1:3. Round numbers, backed by the right fieldwork, typically indicate a team that recognizes the uncertainty of early-stage ideas.

The second area to investigate is the degree to which a team has designed an offer based on what the company already has instead of what the market truly needs. Clearly companies should have some kind of advantage or capability that gives them a leg up in a new market, but a core reason why incumbents so frequently miss disruptive opportunities is that they try to force-fit existing capabilities onto new markets, while new entrants are building far more appropriate offerings from the ground up.

To get some sense of how well-targeted the offering is, ask team members how prospective customers have responded to their idea. Ideally the team has created an early offering that is good enough to generate some actual purchases (what the Lean Startup community would call a minimum viable product). Even reactions to mockups or early prototypes can be useful. Negative reactions aren’t necessary bad, by the way, as long as the team draws constructive lessons from them and modifies its approach appropriately.

Finally, check the degree to which team members have personal experience in the target market. Large companies often overestimate their ability to enter into markets that are new to them but known to others. Corporate innovation teams that make this mistake are typically those that lack adequate experience in the market they hope to target. Accordingly, leaders should carefully evaluate the résumés of the team members they are sponsoring. If no one has relevant industry experience, leaders should encourage them to carefully study the industry and talk to industry experts. Consider engaging an expert on an on-going basis to provide advice during key decision meetings to help the team keep on track.

To make steel useful and strong, it needs to be forged at a temperature above 2,000 degrees Fahrenheit. At that temperature, the metal becomes soft enough to shape without cracking. Similarly, resilient strategies emerge from the harsh fire of competitive markets. Leaders, be wary of growth strategies with falsely precise numbers based on analyst reports created by an overly insular team. Push the team to recognize the imperfection of any new strategy and to spend the necessary time in the marketplace to create a more resilient strategy with sharply higher chances of success.

Six Ways to Grow Your Job

In today’s resource-constrained environment, many of us are delivering 120% on the current demands of our job—but devoting little time to developing ourselves further or positioning ourselves for a future move. As one of my executive MBA students recently told me, “I know that I have to carve out more time to think strategically about my business, but all my peers are executing to hilt and I don’t want to fall behind.”

But simply plugging along in our current roles is more dangerous than it might seem.  The business environment changes quickly and sometimes unpredictably and, if we don’t shift along with it, we risk becoming irrelevant.

If you’re ambitious but your job offers you limited opportunities for exploration and growth, what can you do to develop new skills? Below are six tips that came out of a conversation with my executive MBAs:

1. Stay alert and attuned to your environment. Those who want to develop themselves must create opportunities. That means coming to understand how your organization works, how it makes money, and who its key people are. This is an obvious prerequisite to figuring out how you might shift your own work in the direction of what really matters. We mostly don’t do it because of habit and inertia.  Tuning in to the outside is unstructured work—networking, walking the halls, going to lunch—we don’t even know where to begin. Value it as much as the required meetings and email duty. The payoff will come in the longer run.

2. Create slack in your schedule. New ways of working require a precious and scarce resource—time.  As the wonderful new book Scarcity points out, when we’re stretched to hilt, it’s hard to ask “Am I focusing on the right things?”  Some companies have allowed employees up to 20% of their time to work on their own projects, but I know of no company that helps leaders free up their time to work on the frontier of their jobs.  Instead, once people have leadership responsibilities, their calendar gets crammed with more and more meetings and trips. One of my students had a great piece of advice for her classmates.  She said, “We all managed to make time for our executive MBAs, while still doing our day jobs. When the program ends, don’t let the day job reabsorb the learning time.  Keep the time to evolve your work.”

3. Sign up for a project outside your main area. All companies have projects that cut across lines of business, hierarchical levels and functional specialties. Find out what they are, and maybe more importantly, who’s involved. Getting experience across business lines is a better choice than further deepening your skill base within a functional silo. The new skills, big-picture perspective, extra-group connections and ideas about future moves that projects can bring are well worth the investment.  One of my students signed up for a project to re-think best leadership practices at his company. For him, the project was a shift from executing a pre-defined series of tasks to influencing an organization and helping them to overcome barriers. It helped him both discover an interest in consulting and move into an advisory position two years later.

4.  Make strategy your day job, no matter what your title is. Most people would like to take a more strategic approach to their work but don’t do so because they don’t know what doing strategy really means. Planning (and executing) is about “how” you do what has been mandated.  Strategy is about asking “what” we should be doing—figuring out what problems the company should be tackling, sensing what is happening in the world and learning how to apply it to your business. Find and follow the opinion leaders in your domain, read up on the classics, brush up on your Michael Porter. One of my students told me that she trains herself in strategic thinking by keeping up with business, economic or political events or trends and forcing herself to “think about what they mean to my business, company or industry, both now and in the future.” Spend less time solving problems and more time defining which problems the group should be solving.

5. Expand your contribution from the outside in. When a new project is simply not available, look for roles outside your group or organization that allow you to learn and practice new skills and raise your profile. Teach, speak or blog on topics relating to your interests. One of my students, for example, looks for opportunities to speak at conferences on topics related to his experience.  He recently gave a talk at his company on life in Nigeria, showing a movie about daily life in Lagos, followed by a Q&A session with potential candidates for expatriation. These activities have been even more worthwhile than he anticipated.  He told me, “I found that building one’s personal brand increases chances to get proposals to join strategic initiatives and step out of your day-to-day job for a while.”

Go to professional gatherings and meet with people from different companies. And, if there isn’t something out there that meets your needs, create your own. For example, a sector manager for an internet commerce organization decided to stretch her skills by forming and leading a community of marketing experts from different organizations.

 6. Learn to delegate once and for all. Managers who advance in their careers primarily by excelling at operational work go on doing operational work long after they could delegate those duties to other people.  One of my students, a mid-sized company CFO, told me that every budget season he personally went through all the budgets to identify inefficiencies.  After a discussion about freeing up time, he scheduled calls with his country CFOs and GMs, inviting them to find better efficiencies. As he noted, “This required some departure from my authentic behavior and also some risk but it worked, and cleared 20% of my day!”

Many of us try to position ourselves for the next assignment asking ourselves, “How can I do what I do better?” that we leave little time to ask, “What else might I do?”  Only when we grow our jobs, do we stand a good chance to get the next one.  I’d really like to hear from you about the ways that you have found to grow your job.