A. Bringing new ideas into established firms

Established organizations must maintain the flexibility to acknowledge new approaches while respecting the importance of fulfilling their long-standing objectives.

The survey noted that, despite the relative strength of new entrants with respect to innovation in many domains, established firms are expected to lead efforts at innovation in basic medical research, electronic medical records, and pharmaceuticals. Though responses varied with each particular area of innovation, no one source emerged as a clear champion; participants see a mixed innovation environment with two general predilections:

1. In general, they expressed greater confidence in the ability of the private sector, rather than the government, as a “critical” source of innovation; in eight of the eleven innovation areas, the private sector was expected to lead the way.

2. Speed-to-market has been the hallmark of disruptive technologies produced by startup companies. In seven of eleven innovation areas, survey participants believed new entrants would prove more critical than established firms.

These results highlight the fact that healthcare is characterized by numerous established organizations that cannot simply be bypassed by new entrants. Rather, we must find ways to improve established organizations by incorporating the learning that emerges from decentralized innovation. As William W. Chin, MD, Executive Dean for Research, Bertarelli Professor of Translational Medical Science and Professor of Medicine, Harvard Medical School, observed, “Product life cycles are getting shorter, but the need for new therapies remains. When our usual way of doing things costs too much and takes too long to make effective, safe therapies, we need to find alternative models for progress.”

Fig 5.1: More critical to foster innovation: private sector or government?

Fig 5.1: More Critical to Foster Innovation: Private Sector or Government?

Fig 5.2: More critical to lead innovation: new entrants or existing firms?

Fig 5.2: More Critical to Lead Innovation: New Entrants or Existing Firms?

Reflecting on the limitations of current innovation models, Viehbacher noted that the old model of intensive internal research and development, focused on precise molecules, is not as effective as it used to be. “One of the things we are doing as a company is to get our scientists outside those walls and into the ecosystems” of research beyond the company’s own laboratories. The challenge is that these ecosystems of related ideas and innovations may be too broad in scope to be practically useful. He added, however, that “there are ways of filtering and synthesizing information coming from around the world, and you can direct that to ultimately finding solutions for patients.”

“How do we improve value within the existing system? What innovations are necessary so that our biggest institutional investments become, not dinosaurs, but dynamic contributors to progress?”

– Robert S. Huckman

Albert J. Weatherhead III Professor of Business Administration, Harvard Business School

Mussallem highlighted the conflict between efficiency, which requires a narrowing of options, and discovery, which must open up more options. “We need some kind of harmony and a system that could do both,” he said. “It’s a challenge we struggle with broadly as a society.” Our largest delivery systems—complex networks of teaching hospitals, physician practices, and specialized care units—are not just “too big to fail”; they are too rich with talent and experience to be neglected. In his introduction to the Improving the Value of Care Delivery panel, Robert S. Huckman, Albert J. Weatherhead III Professor of Business Administration, Harvard Business School, turned the conversation from speculative potentials to present realities. “We still have to think a lot about the system we have,” he said. “How do we improve value within the existing system? What innovations are necessary so that our biggest institutional investments become, not dinosaurs, but dynamic contributors to progress?”

Gary L. Gottlieb, MD, President and CEO, Partners HealthCare, noted the unique challenges faced by tertiary teaching hospitals at the heart of many of the most advanced delivery networks. “As we focus on value in the context of shrinking resources, there is significant tension within the multifaceted mission and multiple purposes of our institutions. These institutions exist to provide extraordinary care,” Gottlieb noted, “but they also must use that care to inform science and develop science that improves and informs care. The traditional revenue streams that support these activities are intertwined, and each of them is challenged in the public and private economies they face in the short- and long-run horizons.”

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