Why does innovation stop at the boardroom door?

By Pamela Robertson and Stephen Urquhart

Managing Directors at ACG Inc.

Every business, agency and government office, whatever the size, uses organizational structures and processes to drive strategic planning, daily activities and fiscal procedures. These practices frequently settle into mere habit or routine and can remain in place for years before anyone stops to assess whether the status quo still works.

The problem with this kind of complacency is that new market forces will inevitably challenge traditional perspectives about staffing and resources and alter the approaches to commercialization and adoption of innovative products or solutions. The same old sales approach or allocation of resources is unlikely to meet the needs of a changing market dynamic. 

Historically, the established pathways for commercialization were effective, but they aren’t aligned to the speed and diversity of innovation today. Many businesses and governments currently aren’t prepared for leaps in innovation, and as a result, vital new products or solutions never make it past the boardroom door. Even as investment grows and more resources are funneled toward entrepreneurs and the structures that support them (i.e. incubators, accelerators, academic centres), we risk creating products that are never utilized.  

Changing Dynamics 

There are also new market forces at play in our current environment, including concepts like value for money, needs-based specifications, outcomes-focussed performance indicators and risk/gain sharing. These new approaches are particularly prevalent in health care, but inventors, entrepreneurs and companies often aren’t attuned to them when going to market with their new product.

Let’s break down a few of these concepts.

Value for money: This familiar phrase has specific implications for today’s markets, where models and frameworks are being used to evaluate and award contracts based on “value for money” factors. Only leading-edge organizations are prepared to address how their products meet the standards.

Needs-based specifications: In the past, customers would evaluate how well a product or solution met established specifications, but today’s organizations are instead looking at which needs they can fulfill or which problems they can solve. Rather than assuming specific criteria, they are leaving it to suppliers to offer ideas and demonstrate value.

Outcomes-focused performance indicators: While many innovations meet safety standards or clinical licensing requirements, they may be unproven in a practical and economic sense. Innovators are being tasked with proving their claims, and they are partnering with customers in order to gain market access. 

Risk/Gain sharing:  Suppliers and customers are increasingly sharing the risks or gains if a product performs as promised. Robust understanding of all aspects of the innovation and its impacts will be mandatory before signing off on a contract, which may commit to nonpayment for failure or bonuses for exceeding requirements.

We now need a monumental shift, not just a simple tweak. The metrics and measurements for success are substantially different, demanding that we move beyond transactional exchanges (i.e. I will build it and you will buy it) to increasingly complex interactions, greater collaboration and a more holistic systems perspective.

Consider the health care environment. Evaluating innovations now means looking beyond the actual price of a technology and instead looking at the more complex cost situation, such as how a new product or solution might create efficiency, shorten recovery time and reduce dependence on medication? Looking beyond the hospital walls, how might the innovation affect the family, length of absence from work, and so on. For example, a new cardiac intervention might be more expensive than the traditional surgery, but if it significantly reduces pain and recovery time for patients and is performed as an outpatient procedure, it saves the hospital and health system money and eases the time commitment for family.

For the innovators — from independent start-ups to multinationals — adapting to these changes means putting as much thought into re-assessing the business processes, management and organizational structure as with the product itself. Be willing to change the way you bring a product to market, consider alternative streams and new stakeholders to engage, and build a value proposition that truly distinguishes you from competitors or the current standard. Create internal objectives that represent more progressive thinking, e.g. short-term revenue targets for sales personnel may generate more activity but ultimately lead to missed opportunities for market access and advocacy to drive longer term and more sustainable success. For instance, introducing a new medical technology solution by selling only to the end user or through traditional procurement processes with no focus on system change or funding pathways will likely result in lower and slower uptake.

For the customers, this shift requires being prepared to evaluate how a technology affects the whole system. Don’t be just an “end-user”: choose the path of true collaboration with the innovators or suppliers so you can establish performance metrics, cost evaluations and adoption plans that reflect the complex reality in which you operate.

Einstein said that the definition of insanity is doing the same thing over and over again and expecting different results. If we are going to improve the adoption of innovation and fulfil the value propositions of so many new ideas, we need to be willing to challenge the status quo and do things differently.