Viewpoints on Innovation

Innovation Agility in Healthcare Part 1

Improve Strategic Alignment

Medical Device Healthcare

Healthcare payors face an increasingly complex environment. Regulatory-driven restructuring, pricing and efficiency pressures from Medicare, self-insured corporations, and emerging and disruptive business models all combine to create an eerie projection of the future, not unlike the wild, wild west.1 In response, healthcare executives and product development professionals are grappling with the question – “Can we innovate fast enough to compete?”

In addition to an increasingly complex macro-environment, a typical day for a product manager in a health plan may include:

  • Evaluating the effects of the latest federal mandate across more than 200 in-market products
  • Answering sales team requests to meet a major customer’s demand for customization
  • Rushing to respond to a competitor’s entrance with a new and aggressively priced product in a core market

On top of this, they may discover that their Network Management group has completed a new Center of Excellence contracting effort for some esoteric, yet high priced procedure, and signed up for aggressive cost reduction targets which have not yet been incorporated into their health plans. Oh, and this needs to happen by next Thursday to make regulatory filing deadlines. Just another day on the front lines of healthcare product development.

The pace of change has increased to the point that organizations are challenged simply to respond, with no room to think ahead and plan for new innovations or products that match a long-term strategy. Our recent survey data indicates that, while plans face major changes in the market, they are challenged to deal with these changes from a governance, process and systems perspective.

To build the organizational capability and create the strategic agility required to succeed, payors must focus on three key areas: strategic alignment, agile development capability and a clear understanding of product data.

Let’s focus on strategic alignment.

Improve Strategic Alignment

How often have you experienced a disconnect between what you thought was the strategy and what your organization actually was doing? Or had no consistent visibility into what was being worked on or how to prioritize competing asks from different areas?

One healthcare organization we worked with spent over $100 million annually in development projects with no controls, no enterprise level reports, and no way to know if what was being done was either delivering on corporate strategies or generating return on investment. While individual projects were scrutinized, the total effort was diffuse and uncoordinated. With no structured process to develop and maintain organizational commitment to projects, executives had to fight to secure funding and resources to deliver their individual plans.

By aligning senior executive goals across functions, implementing a staged funding and resource release process, and creating regular portfolio reviews, we established project level strategic alignment and visibility to return on investment, eased executive disconnects and created a smoother running organization.

Increases in the pace of industry change and the need to focus scarce resources make strategic alignment of capabilities more important than ever. By ensuring agreement, commitment and organizational focus on strategic goals and objectives at the executive level, organizations can focus innovation resources on priority initiatives. As market and strategic priorities shift, a clear decision-making and review process increases nimbleness and ability to compete.

Leading companies deploy robust portfolio management capabilities designed to engage executives in collaborative decision making and cascade their desired direction throughout the organization. They regularly compare strategy to the supporting innovation portfolio and redirect resources accordingly, allowing them to maintain focus, increase agility and speed innovations to market.

1. What Will 2012 Bring for the Healthcare Industry? January 9, 2012

Originally published on April 10th, 2012

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Topics: Andrew Nygard, Drew Nygard, Healthcare, Healthcare Innovation, Healthcare Product Innovation, Healthcare Reform, Healthcare Research, Heatlhcare Product Development, Innovation

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