Five ingredients for a culture of innovation

Over the last several years, MATTER has worked with dozens of hospitals and health systems. The majority of health system leaders we meet want to be innovative, but very few feel confident in building the kinds of systems and culture that an organization needs to continuously transform new ideas into solutions.

So how do you create a culture of innovation in an environment that is inherently (and understandably) risk-averse? While the journey to becoming “innovative” looks different for every organization, we have found that there are five essential ingredients that every health system must have to effectively build innovation into their organizations.

Here are the five ingredients:

1. Imprimatur of the CEO

First and foremost, the CEO must be behind the drive to become ever more innovative. Within every large organization exist many and varied “innovation antibodies” that reflexively shut down new ways of thinking, risk-taking and intrapreneurial activity. Combatting those antibodies has to start from the top; otherwise, it’s too hard for innovators to gain momentum within a complex and multi-layered organization such as a health system.

The CEO who wants to encourage innovation must clearly communicate that experimentation, creativity and speed are valued and expected, and that they understand not every innovation experiment will be successful. Leadership matters, and without leadership dedicated to creating the right conditions — to infusing an organization with a shared set of values conducive to innovation — it’s difficult to create the kind of environment needed for people to transform new ideas into meaningful solutions.

The CEO who wants to encourage innovation must clearly communicate that experimentation, creativity and speed are valued and expected.

If you are a CEO, you need to ask yourself: Are you enabling your workforce to be innovative? Do your words and actions reflect a dedication to the process of innovation which, as discussed below, can be messy and doesn’t always work out perfectly? While a health system does not have the same freedom to fail as a Silicon Valley tech company, innovation requires a certain amount of risk. Have you set clear expectations about where it’s okay to take risks and where it’s unacceptable?

If you are reading this and wondering how to convince your CEO of the value of innovation, you need to identify areas within your span of control where you can achieve small wins, and then use those to demonstrate the value that innovative thinking, smart risk-taking and unorthodox thinking can bring to your organization. (Or, you can move to one of the growing numbers of health systems with visionary CEOs who embrace innovation and encourage their teams to push the boundaries on behalf of improving the quadruple aim!)

2. Empowered innovation team

For an organization to be innovative, there have to be people who are empowered to lead innovation programs. Too often organizations tack “innovation” onto someone’s already full job description, so it gets five percent of that person’s focus on the weekend. Innovation requires rigor and accountability, not only to help shepherd projects forward, but also to evaluate a project’s success and evolve based on learnings.

Innovation requires rigor and accountability, not only to help shepherd projects forward, but also to evaluate a project’s success and evolve based on learnings.

The person leading innovation needs to have a deep understanding of the health system’s strategic priorities, so they can actively survey what exists beyond the hospital’s walls and pick the right solutions to implement. They also need enough clout within the organization to be able to navigate complex bureaucracy and help move innovations forward.

The innovation leader doesn’t need to be the most creative individual within the organization, nor do they need to be a boundary pusher or someone with a startup background. It is most important they understand how to get things done within the organization, how to prioritize projects that align with the larger strategy, and how to gain consensus to advance initiatives inside of a complex organization.

They also need to have an open mind. They must be a “yes, and” kind of thinker — someone who enjoys digging for the roots of ideas and then figuring out how to help them grow within the construct of the organization.

Finally, they need to be a strong process manager. In order to drive innovations forward, they need to know how to navigate the complexity of the organization and be able to manage many moving pieces involving multiple functions, personalities and priorities. They probably need to develop the processes and establish the governance within the system, which requires a deep understanding of how organizations work and how to build processes to enable action and change.

Of course, they also need to know — and everyone else in the organization needs to know — that the CEO has their back, in order to ensure that they do not get knocked out by the corporate antibodies.

3. Dedicated resources

Actions — or, in this case, resources — speak louder than words. To foster a culture of innovation, leaders must allocate resources to innovation projects. If it’s a case of passing a tin cup every time there is a project to do, the project is going to compete with every other priority in the organization. Short-term priorities almost always win when matched up against long-term goals, and innovation projects are, by definition, longer-term plays.

One large organization — not a health system, but the analogy is relevant — allocates 10 percent of their budget to innovation, and protects that part of the budget against cuts. If there is a down year and they need to shave expenses, they shield the innovation funds from cuts and apply the scalpel elsewhere. The theory, which I think more leaders should subscribe to, is that if you don’t expressly protect innovation funding, it will always be the first to get cut and the organization will never get traction on long-term innovation projects — and ultimately will fall behind in the market.

If you don’t expressly protect innovation funding, it will always be the first to get cut.

The amount of money allocated for innovation doesn’t need to be huge. It needs to cover paying for things like development, pilots, external partnerships or internal transfers to allow other departments to allocate personnel when needed. Importantly, the ROI on those dollars can’t be measured year-over-year: Innovation is not an event, but rather a long-term process, and the payoff will likely be several years in the future.

4. IT support

IT support is crucial for most innovation projects to succeed, but typical IT organizations have dozens or hundreds of things in their queues that need to get done. The role of the CIO and the IT organization is not inherently to develop new solutions or identify novel technologies to improve business processes or clinical outcomes. Their primary role is generally to make sure that the organization can function, which means managing dozens or hundreds of integrations, a beast of an EMR system, and systems that break all the time. When someone’s pet innovation project gets thrown in, it’s not surprising that it frequently gets sidelined for the next month or year, or gets allocated to the proverbial “circular file.”

In order to avoid innovation projects dying in the IT queue, some level of IT resourcing is required. There are different ways to configure this support. In some cases, we have seen that there is a dedicated group within the IT organization that is focused entirely on innovation. They aren’t responsible for the core processes of the organization or for fixing broken things; rather, their jobs are tied to innovation. Another way is to allocate a percentage of people’s time to innovation projects or to create a separate queue of initiatives for innovation projects and a commitment to get them done within a certain time frame. There are a number of ways to make sure that the IT organization does not become part of the “barrier layer” that often kills innovation projects: The key is ensuring that innovation projects don’t have to compete for the IT organization’s time with mission critical updates and fixes.

5. Process for vetting solutions

Finally, it is important that the organization have a governance process for vetting innovative ideas and deciding which ones to test and implement. There needs to be some way to get agreement among multiple departments and leadership that a certain project is important.

We have seen startups do pilots with health systems that are driven by an individual within a particular department. That individual is enthusiastic, and the pilot goes well — but then when it comes time for wider deployment and the rest of the organization gets involved, the project gets killed. That happens because when there hasn’t been agreement up front about the need to do the pilot, and about what will happen if the pilot is successful.

Successful organizations have established formal or informal councils, involving multiple departments, that regularly review innovation projects. They determine which ones align best with the system’s strategic priorities and measure them against other metrics that they have developed, such as cost, ROI, patient benefit, or workflow implications.

Not all innovation processes need to look the same. Some successful innovation programs are highly centralized, with strategic priorities filtering down from the top. Others are more opportunistic, with internal innovation teams acting almost like consultants to various departments. But in every successful case, there is a clearly defined process with an accepted method for vetting and decision-making.

Adopting the right mindset

If what I’ve outlined above are the essential ingredients for a culture of innovation, there is still a missing piece. In addition to these ingredients, the organization needs to adopt the right mindset — a set of shared values around encouraging and supporting innovation. Following are some recommendations from two of my favorite philosophers about the values organizations need to embrace to be innovative.

In addition to these ingredients, the organization needs to adopt the right mindset — a set of shared values around encouraging and supporting innovation.

First, as Yoda said, “Patience you must have.”
Innovation in a health system, or any large organization, aligns more closely with the tortoise than the hare: It takes a long time and it requires a lot of persistence. Organizations need to make a long-term commitment to innovation, and recognize that the ROI may not come in year one or even year three. It takes time to develop new ideas, incorporate new solutions into existing processes, and evolve the organization to operate differently.

Yoda also said: “Do or do not. There is no try.”
Except in this case, I think Yoda was wrong: You have to just try things. One of our values at MATTER is “never stop experimenting.” We see health systems all the time waiting to figure out what the perfect thing to do is, and the reality is that you don’t know until you start trying things. Succeeding on the first try is less important than creating safe spaces for people to experiment and learn.

Last, but certainly not least, a lesson from the Hitchhiker’s Guide to the Galaxy: “Don’t panic.”
A lot of things aren’t going to work, and that’s okay. What’s important is what you learn from those mistakes. That’s how startups operate, and it’s why they can be so successful at rapidly evolving their offerings in response to market feedback. They test things that aren’t perfect, get feedback and iterate. The key is that they learn from those experiences and then double down on what does work until they’ve created something new. That’s only possible in an environment where it’s okay to experiment, and where it’s understood that most experiments will be learning exercises that will advance the organization toward an important goal, rather than be solutions in and of themselves.

At MATTER, we’ve seen dozens of health systems innovating in different ways, and have found that these five ingredients, combined with a set of supportive values, can really work to allow an organization to develop and sustain an innovation culture.