Kaiser Permanente Crosses the Innovation O-Gap

In corporate innovation, it’s all about the O.

At the recent Frost & Sullivan Executive MindXchange in San Francisco, Dr. Naomi Fried, VP of Innovation and Advanced Technology for Kaiser Permanente, presented her organization’s approach to managing innovation.This was a great opportunity to hear practical advice. Kaiser’s approach to innovation was recently profiled in BusinessWeek.

Kaiser Permanente, which generates $40 billion in revenue, has a well-thought out series of six stages that define its innovation life cycle. The stages are presented below:

Kaiser Permanente provides integrated healthcare delivery, through doctors, hospitals, pharmacies and insurance. Dr. Fried’s presentation described how innovation is managed in such a large organization (156,000 employees, 14,000 physicians). The mission of the Innovation and Advanced Technology group is threefold:

1. Innovate: identify, assess and introduce innovative technologies
2. Cultivate: enhance adoption by leveraging research, resources, tools and platforms
3. Connect: advise and support innovators and their projects, foster collaboration and build a culture of innovation

Her insights about the innovation process are shared below, including how Kaiser addresses the dreaded O-Gap.

Initiate

Create the vision and understand the conditions for innovation

Dr. Fried stated that it’s a myth that corporate innovation doesn’t need guidelines. Companies need to invest the time in identifying the areas on which they want to focus. Leadership sets the stage for innovation, defining scope and providing resources and sponsorship. In Kaiser Permanente’s case, these are their focus areas:

1. Improving clinical workflow
2. Time saving and enhancing communication
3. Chronic condition management and prevention
4. New forms of care (including personalized medicine and robotics)
5. Telehealth

In the Initiate stage, these are the focal issues:

• Who is responsible for initiating innovation in the organization?
• How is the vision for innovation shared?

Ideate

Extend the vision by sourcing, creating, evaluating and filtering ideas

Ideas are the fuel of innovation, and sourcing them is a critical component in the life cycle. In Kaiser Permanente’s case, ideas are found through a variety of sources. Brainstorming sessions, not surprisingly, are a critical part of this process. Research shows that group brainstorming sessions can produce some of the best ideas.

Kaiser Permanente also scans for cross-industry solutions. Solutions that address a need in one industry can have applicability in Kaiser Permanente’s operations.

Finally, filtering through the ideas, applying research and getting input from end-users is a critical part of this stage.

For the Ideate stage, these are the focal issues:

• Not all ideas need to be new inventions
• Repurposing works well

Those focal issues make a great point. Innovation doesn’t need to be new inventions, developed out-of-the-air. Innovation includes application of existing ideas and technologies in novel ways that address an organization’s specific needs.

Prototype

Build and test a functional mock-up of the idea

OK, so you’ve gotten ideas, and you’ve determined which ones have the most potential. What’s the next step? Prototyping. Create a simulation of the solution. Simulating the innovation is a powerful way to evaluate its potential. When Jeff Hawkins, creator of the Palm Pilot, had a balsa wood prototype designed, which he carried around to get a feel for the potential product. From the simulated solution, a working prototype can be developed, and piloted.

In the software industry, prototyping solutions is relatively easy. Developers can code logic and user interfaces relatively quickly to give a feel for how a solution might work. But what are the prototyping tools for Kaiser Permanente’s healthcare-related ideas? Turns out, software is important here as well. Kaiser Permanente’s prototyping tools include: funding support, the Sidney R. Garfield Innovation Center, a software sandbox and an innovative software development team.

The Innovation Center is a really good idea in its own right. It’s a controlled environment for prototyping technologies, design and clinical workflows and processes. Philosophically, the Center takes a rapid-cycle iterative approach.

For the Prototype stage, these are the focal issues:

• Set goals and criteria for success
• Define metrics and parameters
• Forecast resource needs

The O-Gap

The transition from prototype and pilot to operations

This is the area where many companies are challenged in the innovation cycle. Innovations are new, they disrupt existing processes and routines. Driving adoption, especially in large organizations, includes a strong dose of change management.

Dr. Fried provides a series of tasks companies need to consider as they seek to operationalize innovations. The activities in this part of the cycle are more strategic in nature, whereas the tasks of the earlier stages included many tactical considerations. Organizations need to develop strategies for deployment, diffusing successful ideas out to all relevant parties.

The Ideate and Prototype stages are governed by project teams, working the necessary details to identify innovative solutions that have legs. In the O-Gap, senior leadership re-engages in the process. An aspect that companies can count on is that people will listen and act when executives set priorities.

In the O-Gap, these are the focal issues:

• Ideas need to get shared across departments
• Engaging thought leaders and early adopters

That second bullet is a bit of advice we’ve seen time and again. Find those most open to trying new ideas. Their adoption, along with successful outcomes, paves the way for others. They become a reference point, and create the early success stories that are so important for helping others understand an innovation’s value.

Operationalize

Scale up and diffuse the new idea beyond prototype

Getting the word out about a new innovation is a key aspect in this stage. Communication is the critical activity. Every organization will have its own communication networks: email, portals, internal mail systems, posters. If an organization employees social software internally (blogs, wikis, forums), these tools can also help in raising awareness.

A key call-out by Dr. Fried here is that leadership drives implementation. It’s no secret that in a busy day, employees must constantly make prioritization decisions for their tasks. The sponsorship of new innovations by an organization’s leadership is a critical part of ensuring adoption is a priority.

Aside form the innovation itself, best practices must be socialized. Initial best practices are gleaned from the work of prototyping and usage by early adopters in the O-Gap.

For the Operationalize stage, these are the focal issues:

• Training, incentives and change management
• Role of communication

Optimize

After successful deployment, an idea may be further improved

Dr. Fried’s presentation includes this note: “Innovation has become mainstream.” An organization is reaping the benefits from the adoption of the innovation. With this usage, there will inevitably be new opportunities for improvement. “Small-scale innovation” is how she terms this work.

This is a natural process, and all of us recognize how we do this. During the Q&A with Dr. Fried, I asked her about the nature of these optimizations. Certainly, many will be specific to the circumstances of a given locale. But assuredly, there will be optimizations that apply to other employees in the organization. A good question to ask is how these employee-driven ideas are made visible throughout the organization, and which ones should be adopted elsewhere.

For the Optimize stage, these are the focal issues:

• Optimization occurs locally
• Maximize the value delivered

Obsolete or Repeat

Terminate solution that can no longer meet the need

I like the inclusion of this last stage. If new innovations are the start of the life cycle replace prior technologies and processes, the last stage represents the point where new innovations are needed.

What are the signs that it’s time to obsolete an innovation?

• The solution can no longer be optimized
• Workflow has changed
• New technology offers new benefits
• Leadership drives this step informed by new business drivers or vision

Thinking in terms of the innovation life cycle, what Dr. Fried has done here is tie the last stage back into the first stage, Initiate.

For the Obsolete or Repeat stage, these are the focal issues:

• What is the right time to retire a solution?
• Is this an abrupt or gradual process?
• How do you carry forward the learnings?

Key Observations

Dr. Fried’s presentation wrapped up with the following takeaways:

• Six distinct phases of innovation
• Leverage innovation tools
• Transitional handoffs are critical
• Themes across the life cycle: (i) collaboration with end user; (ii) communication

Good advice here for companies that are working on their innovation initiatives.

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Hutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.