Last I wrote about the great presentation by Dr. Jason Hwang, the coauthor of The Innovator’s Prescription: A Disruptive Solution for Health Care, and the challenges of planning strategy in a time of industry disruption (see The Disruption Of Strategy all members). The big surprise for me was Dr. Hwang’s research that found that current market leaders rarely remain market leaders following a period of disruption due to rapid innovation. In fact, his research revealed that only one organization has survived multiple waves of market disruption. That organization? IBM.
Like me, you may be wondering about IBM’s secret for successful strategy implementation in the time of innovation. The answer? Autonomous business development units. Simply put, this means that IBM created independent business units – separate organizations – that are independently managed for the specific purpose of developing the “next” business model. Essentially, a unit designed to put the current services lines out of business.
It may seem extreme. But Dr. Hwang described efforts to imbed emerging technologies in current business models (i.e. telehealth, TMS therapy, scanning diagnostics, service driven by decision support tools, consumer-driven technologies) as “business model malpractice.” His premise is that organizations operating successfully in the current service model don’t have the incentives to change – philosophically, financially, operationally – to fully embrace the promise of new technologies. Without development by autonomous teams, new market entrants are likely to win and replace even the “enhanced” market leader.
The prospect of creating an autonomous business unit presents interesting challenges for health and human service organizations. Both the notion of intra-organizational “competition” and practice of embracing highly divergent clinical practices and service models are new. The creation of an “experimental” unit that may fail is also new to boards of directors and key managers who are looking for a “sure thing.” And, there is the financing of an autonomous organizations. Without adequate capitalization for the ramp up period – including completely separate staff, initiatives to develop the “next generation” service is likely to fail before it is fully launched. What do these models look like? Check out IBM’s innovation model in, Why Did IBM Survive?
Other good examples include 3M’s open innovation efforts and Procter & Gamble’s connect + develop programs — all models for cost-effectively leveraging scale while exploring potential innovation opportunities.
While the statistics about the prospects of current market leaders is sobering, I had to smile when I read a related piece by consultant Dale Jarvis (see What is a Disruptive Innovation and Why Should I Care?). He said, “I view disruptive innovation like the melting of the polar ice caps. We know major changes are afoot, they likely began long before we knew it, and ignoring whatever is happening is probably not a great idea….”
In my closing thoughts last week, I identified three questions for health and human service organizations to answer about their strategy. The first, how does your organization develop a “vertical” strategy to have influence in the emerging care management models in your markets (see Sustainability – During & After The Perfect Storm all members)? Second, how do you identify the “next generation” business model that incorporates the decentralization of expertise for the consumer you serve (more on that later). And finally, how does your organization move to that next generation business model and stay a market leader? The answer to that question – the secret to remaining a market leader in the midst of multiple forces of innovation and change – appears to be, to create the organization that will make you obsolete.
For another free resource, see Making Innovation Your Secret Weapon all members