Is Innovation Compatible with High Reliability?
Q&A with Innovation Expert David Duncan, Innosight and High Reliability Expert Craig Deao, Studer Group
High reliability is about reducing variation…identifying a best practice and then relentlessly scaling it in search of perfection. And yet, the art of leadership is about accepting and operating in uncertainty, which requires the ability to adapt and innovate. Can an organization be successful doing both? In this interview, David Duncan, senior partner at Innosight and Craig Deao, senior leader at Studer Group, weigh in.
HR: Can you begin, David Duncan, by sharing a bit about Innosight and how what you do there can be helpful to healthcare organizations?
DD: At Innosight, we work with leaders confronting disruptive changes in their industries—changes that often require them to fundamentally rethink how they will be successful in the future. We help them to navigate this type of change through an integrated approach focused on mid-to-long-term strategy and innovation.
When change is happening on such a large and rapid scale, as it is in healthcare, the traditional approach companies take to develop strategies— often based on extrapolating a set of assumptions from the world of today—doesn’t work. You need a longer view…what we call “Future Back Strategy,” because it starts by asserting a view of the future and then working backwards. We’ve applied this approach successfully with some of the largest companies in the world, in industries that range from healthcare and life sciences to telecom and energy.
HR: High reliability and innovation are both critical capabilities in healthcare today. Are they mutually exclusive? How do you manage a team for zero tolerance in some areas and ensure they have tolerance for failure in others?
CD: With respect to high reliability, risk must be minimized. But that assumes there’s already a known “best” way to do something. In that case, the goal is to lock it in and deploy it with zero variation…only allowing carefully controlled experimentation where harm can’t occur. Conversely, to innovate, you need to place some bets with full knowledge that some will fail. So we must do both things: Require a preoccupation with failure when it comes to high reliability—how to anticipate it to mitigate it—while demonstrating a willingness to tolerate failure for innovation.
Goal-setting is useful here. In some areas, you can set goals around zero defects; in other areas, set goals that anticipate failure. Leaders need to develop both sets of tools and understand when to use the right one. When pathways are clear and context is fixed, use high reliability approaches. When pathways aren’t present and the environment is very dynamic, use the innovation toolkit.
In the same way, language is important. While it’s the right thing to say you’re striving for “zero harm,” that’s very different than saying you have a “zero tolerance for failure,” which squelches innovation and intelligent risk-taking.
HR: When it comes to innovation, do structure and constraints help or hurt?
DD: If your goal is to enable innovation in an organization, it may seem that establishing structure or constraints around that is somehow antithetical to what you’re trying to accomplish. But in fact, constraints can generate more innovation because they focus both your efforts and scarce resources on what matters most.
One type of constraint we recommend is to define the “innovation types” you want to pursue in your company. Clearly defining these types ensures that you are pursuing the innovation that is needed for your specific strategy – and this typology can then be used to organize the goals you have for innovation, as well as the systems and processes that enable it. Another type of constraint we often help leaders to develop is what we call the “innovation guidelines and boundaries.” An organization might be looking to pursue new, more transformational business models that, by definition, look quite different from what it does today. But important questions always then arise, including “How different are we willing to consider?” and “What’s out of bounds?” We help leaders to answer these questions, and, importantly, to align on their answers, because again they focus innovation energy.
HR: Are there other ways to constrain and focus innovation?
DD: Innovation always involves some level of exploring new, unfamiliar areas; therefore, it’s important to have a disciplined process around how to learn what you don’t know and then adapt your ideas to what you learn. There are well-established processes for intelligent risk taking—these go by a variety of names, including emergent strategy, discovery-driven planning, and “testing & learning.” What they have in common is a disciplined approach to identifying assumptions and sources of uncertainty, and then testing them in a methodical way before expending too much energy and resources, much as entrepreneurs do.
Another technique we use to provide structure and focus to innovation at a more strategic level is what we call “strategic opportunity areas” (SOAs). You can think of these as defined “fishing holes” for where to look for new opportunities to create growth and value. An SOA is narrower than an innovation type but still general enough to encompass many potential innovation ideas, and is typically the intersection of a customer group, a set of unmet customer needs, and a high-level type of solution.
An example: A hospital looking for new growth opportunities might study trends and conclude that there is an “SOA” defined by improving weight management (the unmet problem) for baby boomers in Florida (the customer group) using data tracking & analytics technologies (the high-level type of solution). This intersection then becomes a fishing hole to explore for new growth and innovation ideas.
HR: One of the challenges with respect to high reliability is that we have excellent people, but broken processes. That combination frequently delivers results that are just average. How can we innovate to get to even fewer defects?
DD: I think it’s important to separate the aspects of the problem that have already been successfully addressed from those that need work or that might be improved further. Then separate the teams (or the processes) that are implementing the current solution that is effective from the teams who can tinker with the next iteration.
It’s not necessarily the job of the people implementing the process to innovate around the method while they are executing on it. It’s up to researchers to test and question, or if the executors are involved, they surface ideas for improvement outside of implementing the process itself. This is how innovation moves you closer to the ultimate goal of zero defects.