1. How innovation changes your organization s competitive advantage

Transcription

1 Monica E. Oss, Chief Executive Officer, OPEN MINDS June 15, 2011

2 1. How innovation changes your organization s competitive advantage 2. Can innovation be orderly? Integrating innovation into your service line planning 3. Do you have a plan for dealing with the tipping point? The challenges of innovation in health and human services 4. Can your organization innovate? Assessing your organization s entrepreneurial IQ reserved. 2

3 How Innovation Changes Your Organization s Competitive Advantage reserved. 3

4 Innovation is defined as the creation and development of a new product, process, or service, with the aim of improving efficiency, effectiveness or competitive advantage. Sustaining innovations are: Incremental improvements Serve existing customers Maintain current systems Sustaining innovations can be transformational or evolutionary reserved. 4

5 Disruptive innovations are technologies or practices that permit cheaper, simpler, and/or more convenient service in unexpected ways Permit services to be delivered in less intensive environments from facilities to community-based care (tele-health, on-line support groups, remote monitoring of group homes) Move treatment from specialists and high-trained professionals to generalists and less highly-trained professionals (and permit self-care) Key market factor in disruptive innovation is surprise market did not expect this change reserved. 5

6 Produces unexpected competition Threatens organizations with speed-tochange problems reserved. 6

7 Competitive advantage is -- The means by which an organization attracts revenue and sustains its position against competitors The possession of various assets and attributes (including natural resources, location, technology, methodology, workforce) which gives a competitive edge over rival organizations reserved. 7

8 Cost advantage a positional advantage that organization delivers equivalent product for less Differentiation advantage a positional advantage that organization delivers product with greater benefits that competitors for the same price Some combination of cost advantage and differentiation advantage creates value and forms the organization s product value proposition and market positioning reserved. 8

9 Mobilization of either resources and/or capabilities form unique competencies -- and either cost advantage or differentiation advantage Resources: Patents, trademarks, information assets, and intellectual properties know how Brand, brand equity, and reputation Customer base Capabilities are organized ability to use resources: Workforce Organizational abilities and practices Organizational ability to respond and/or change reserved. 9

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11 Benefit = Addiction treatment Branding = Famous bookwriting Medical Director Marketing value = e-health sessions; on-line coaching; medication assisted therapy reserved. 11

12 Benefit health coverage Branding Humana Marketing benefit web-based counseling, health and wellness reserved. 12

13 Benefit Autism support services Branding Tech, teaching, treatment Marketing benefit On-line virtual speaker, podcasts, library reserved. 13

14 Market Scope Cost Advantage Product Uniqueness Broad (Industry Wide) Narrow (Market Segment) Cost Leadership Strategy Focus Strategy (low cost) Differentiation Strategy Focus Strategy (differentiation) reserved. 14

15 Integrating Innovation Into Your Service Line Planning reserved. 15

16 Key questions What innovations will negatively affect your market share and competitive advantage? How do you decide what innovations to adopt and leverage? Answer is in looking at your services and innovations that affect them in the context of product life cycle reserved. 16

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19 Product Diversification - Creating different product variants New Product Uses - Applying the core product to different uses Changing Product Layers - Altering the product features and creating different product families These extensions can often be accomplished with adoption of new innovations 19

20 Step #1: Analyze where your service lines are at today re: value proposition and positioning Your current market segment and competitive advantage? Your benefits? Your brand equity? Your marketing benefits? Growth market or no? Profitable or no? Other? reserved. 20

21 Step #2: Identify innovations likely to have effect on each service line Step #3: Anticipate likely market/competitive changes due to innovation changes on positioning, demand, etc. Which innovations? Preference of current consumers? Preference of current payers? Affect on your competitive advantage? Affect on demand for your service and marketshare? reserved. 21

22 Step #4: Evaluate viability of service line in postinnovation market Run the numbers re: revised market demand, revenues, and profitability at future point reserved. 22

23 Step #5: Decision on each service line: No investment continue until margins not met Investment for extension of service line Investment for replacement service line reserved. 23

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25 Brand Innovation 25 reserved.

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28 Customer Service Inn reserved. 28

29 Process Innovation 29

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32 32 Channel Innovation

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34 Business Model Innovation 34

35 Service Performance In 35 OPEN MINDS 2009 All rights reserved.

36 Service Performanc Innovation 36 OPEN MINDS 2009 All rights reserved.

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38 egetgoing On-Line Addiction Treatment 38

39 Teengetgoing On-line Addiction Treatment For Adolescen 39

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41 ResCare RestAssured Staff Sharing Model Using Remote Technology & Staff Remote caregiver Telecams Sensors Two-way audio On-call first responder 41

42 ResCare RestAssured Telecams 42

43 Service System Innovation 43

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57 Customer Experience Innovation reserved. 57

58 Business Model Innovation 58

59 Value Network Innovation reserved. 59

60 1. Monitor market evolution of innovations continuing market intelligence 2. Invest in small organizations, pilot services, or collaborations that might adopt these innovations 3. Push adoption of innovations in core markets so performance stays above what disruptive technologies can achieve reserved. 60

61 The Challenges Of Innovation In Health & Human Services reserved. 61

62 Initially innovations can have service and performance problems in practice Established organizations reluctant to adopt because of competition with existing profitable service lines Deceptively small market available (compared to traditional market) before acceptance the tipping point question reserved. 62

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64 The technical/ethical conflict Reimbursement for innovative services Inability of federal and state regulatory agencies to cope with changing environment Protectionist regulation and lobbying by established stakeholders Fragmentation of funding Focus on prescriptive processes as opposed to accountability for outcomes reserved. 64

65 Move away from FFS financing More consumer control of $ Demonstration of clear outcome with innovation either cost or quality reserved. 65

66 Assessing Your Organization s Entrepreneurial IQ reserved. 66

67 Historical non-competitive industry status leaves legacy of organizations unprepared for adoption of new practices with a consumer focus Lack of access to capital and lack of investment mindset in executive team or boards (for non-profit organizations, in particular) Traditional service practice patterns not documented in a method that permits evolution with new technologies Process and billing regulation inhibit process reengineering necessary to adopt new technologies Leadership and management team culture not a fit with entrepreneurial environment reserved. 67

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69 Able to respond rapidly to change Externally focused Customer responsive Willing to take reasonable risks (and fail repeatedly) Enterprise perspective reserved. 69

70 An entrepreneur is someone who organizes, manages, and assumes the risk of a business operation... (Sobel) Entrepreneurs always search for change, respond to it, and exploit it as an opportunity (Drucker) Entrepreneurship is the process of finding new ways of combining existing resources reserved. 70

71 Innovators Create prototypes and work out the kinks, not as concerned with financial viability Entrepreneurs Turn prototypes into financially viable going concerns Professional managers Install and oversee the systems and infrastructure needed to make sure going concerns keep going and growing reserved. 71

72 An intrepreneur is a person who has an entrepreneurial skill set but works within an organization, enterprise, or venture... reserved. 72

73 Social Contract Mentality - Feeling of obligation to employ existing staff Performance Criteria - Managers not rewarded for risk-taking -- rather rewarded for maintaining status quo Planning Cycles - Rapid market changes and sudden opportunities don t fit in old school model of organizational planning and customer response Budgets & Boards Budgeting processes that don t support risk-taking and/or boards that don t support risky undertakings reserved. 73

74 1. Is there a clear transmission of vision, strategic intent, and focus on the future? 2. Do we tolerate risks and failure? 3. Do we support intrepreneurs? 4. Do we empower cross functional teams? 5. Do we allow decision making by the doers? 6. Do we allow intrapreneurs to stay hands on and cross agency boundaries? 7. Do we encourage rapid and accurate feedback? reserved. 74

75 Four Key Practices To Enhancing Your Organization s Entrepreneurial IQ 1. Incorporate your innovation assessment function into your overall strategic planning process Strategic alignment of new initiatives increases the likelihood of success 2. Use a structured process and tools in evaluating and selecting innovative practices Knowing your customers and competition Conduct financial testing 3. Create a new organizational model for implementing innovation Identify your intrapreneurs Giving a great idea to a non-intraprenuer won t make it happen (designated new service development staff) 4. Make new service decisions promptly Speed to market is increasingly important reserved. 75

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