Innovation Management - The Healthcare Industry and Innovation in the Industry - Assignment Example

Executive summary 200 Introduction 300 The purpose of this report is to explore how an organisation can improve its innovation potential. The report is based on an anonymised case study. For the purpose of the report, the case study is an organisation known as Global Health Cambria. Global Health Cambria is a multi-national corporation in the healthcare sector. The company develops products and services that are used to support the development of innovation in human health. Therefore, Global Health Cambria can be regarded as an important company with regard to innovations that are related to human health. Global Health Cambria undertakes both research and development (R&D) and manufacturing. Its customers include biotechnology and pharmaceutical companies, as well as industrial and consumer companies. Global Health Cambria has a workforce of approximately 350 people working in different business areas. The company can regarded as a knowledge intensive company since a lot of knowledge is required, especially in R&D. This is seen through the fact that the employees of the company include people with doctoral qualifications. The workforce of the company also includes management and administration, for instance human resource, and legal services. Going by these measures, Global Health Cambria is well established company both globally and nationally. The report’s analysis will focus on identifying where and how Global Health Cambria can improve its innovative services. This will involve looking at areas in which there are gaps and areas of potential improvement within the company. Using results Bessant’s Innovation Fitness Test model analysis that was conducted for the company, the report will identify areas where Global Health Cambria does not currently achieve the ideal or highest score for each dimension and suggest measures for improvement. Based on the analysis of the scores, the report will address the following areas. First are the types of initiatives and activities that Global Health Cambria should consider so as to improve innovation in various dimensions, i.e. strategy, linkages, innovative organisation, learning, and processes. Another issue is evidence of usefulness and impacts of the various activities that Global Health Cambria will have to engage in so as to improve its level of innovation. As well, various examples will be used to illustrate the appropriateness of the choices that will be made in the report. The entire analysis will be based on an understanding of the context of Global Health Cambria – that is the healthcare industry within which the company operates. Overview of the healthcare industry and innovation in the industry 634 The healthcare industry is an intricate area because of the nature of its value chain. The composition of the value chain in the healthcare industry is complex because there exist three key sets of actors as well all as two sets of intermediaries between the two actors (Burns 2012, p. 1). The three sets of actors include the institutions and individuals that buy healthcare products and/or services, offer healthcare services, and produce or manufacture healthcare products (the three sets of actors can be referred to as buyers, providers and producers) (Burns 2012, p. 1). Then there are two sets of intermediaries that separate the key actors. These are the firms that provide finance healthcare and those who buy healthcare products in bulk and distribute them to others (Burns 2012, p. 1). The complex nature of the relationship between different players can be illustrated using a model of the United States healthcare are value chain as shown in the figure below. Figure 1: The United States healthcare value chain Source: (Burns 2012, p. 2) In figure 1, a great deal of the innovation in healthcare begins on the far right (producers such as Global Health Cambria) and spreads to the adjoining boxes on the left while resources flow from the left (payers) to the adjacent boxes. The two flows meet in the middle, among providers of healthcare services (Burns 2012, p. 2). Healthcare providers such as hospitals and doctors then have to decide on how innovation from the right side they can afford to use the treatment of patients given the scarce resource that are received from the supply side (Burns 2012, p. 2). This means that producers, such as Global Health Cambria, also have to keep in mind what Healthcare providers needs and can afford as they innovate. Innovation in the healthcare industry remains to be a driving force in the mission to balance the cost and quality of healthcare (Pearson & Rawlins 2005, p. 2618; Omachonu & Einspruch 2010, p. 2; Russell Reynolds Associates 2013; Schumacher 2015, p. 39). Innovation is also widely recognised as an important driver of economic productivity and growth (IBM 2007, p. 3). Yet despite the massive resources that are invested in innovation and the level of opportunity that exists for innovators in the healthcare sector to do well, many efforts often fail, resulting in massive losses (Herzlinger 2006). For instance, examples of healthcare innovations that were not successful in the United States include the unsuccessful outcome of the managed care revolution, the loss of $40 billion that was incurred by biotech ventures, as well as the collapse of many businesses that were aimed at ensuring the disjointed physician practices attained economies of scale (Herzlinger 2006). Australia is also another country hat has invested significantly in innovation in healthcare but still ranks poorly in terms of the results. The country has been one of the leading countries in biotechnology for a while with approximately 450 companies involved (Pfeffer 2012, p. 297). Publicly listed biotechnology companies in Australia spend about $500 million on R&D annually. Australia also has world-class medical research companies that generate top-notch science (Pfeffer 2012, p. 297). In spite of these developments, Australia’s healthcare industry ranked poorly during the 1990s and the early 2000s. Innovation in healthcare rose between in the period 2004-2005, most notable in trade mark activity, which increase more than twofold. Over the years, there has been significant improvement in R&D activity in healthcare. However, there have only been marginal improvements in managerial and organisational innovation and productivity in the healthcare industry in Australia. From the discussion above, it can be noted that companies in the healthcare sector, such as Global Health Cambria, need to widen the scope of their innovations. This means that such companies not only have to innovate in order to address the needs of consumers and remain competitive, but they also have to deal with the challenges that are associated with managing innovation. The next section will analyze how Global Health Cambria has performed in innovation based on results of the Bessant’s Innovation Fitness Test questionnaire Analysis of Global Health Cambria’s Bessant’s Innovation Fitness Test model results 450 Bessant’s Innovation Fitness Test is self-assessment tool that was created to help organisations think over how well positioned they are to address the challenges of managing innovation (Bessant 2013). The framework specifically deals with how organisations “search, select and implement” innovations (Bessant 2013). Through the framework, organizations are able to ask themselves about how they deal with challenges of creating linkages into new innovation spaces and restructuring the strategies that they adopt in innovation. Organisations also ask themselves whether they construct the type of organization that sustains entrepreneurial behaviour and enables experimentation with new ideas. Also, through the Bessant’s Innovation Fitness Test, organisations ask themselves whether they learn and develop capacity for the future (Bessant 2013). In summary, Bessant’s Innovation Fitness Test an organisation with regard to the organisation’s innovation strategy, key enabling processes, level of innovative organisation, proactive external linkages and learning capacity as well as continuous improvement (Bessant n.d., p. 14). Forty questions are used in the test. These questions are grouped and the results are related to the various dimensions of ‘strategy, processes, organisation, linkages and learning’. An ideal organisation is supposed to attain a score of 7 in each of these five categories. The results are plotted in the shape of a pentagon. The scores obtained by are shown in table 1 and figure 2 below. Table 1: Totals of scores Strategy 5.875 Processes 4.875 Organisation 3.25 Linkages 4 Learning 4.75 Figure 2: Graphical illustration of Global Health Cambria’ scores The scores show that Global Health Cambria has scored relatively well (4.5 or more out of 7) in the following dimensions: strategy, processes, and learning. However, the organisation does not have a so good performance in terms of linkages (4 out of 4) and it has an even lower score in organisation (3.25 out of 7). Even then, all the scores are below 6 meaning that Global Health Cambria is not close to attaining a score of 7 in each of the five dimensions with respect to how it manages its innovation and challenges related to innovation practices. This means that the organisation has not been able to achieve what an organisation is supposed to accomplish in order to be regarded as an ideal organisation in terms of innovation practices. In particular, Global Health Cambria has scored below 5 in regard to the key enabling processes, innovative organisation, proactive external linkages and learning as well continuous improvement, it can be said that the organisation is not performing so well in these areas. Therefore, the way in which Global Health Cambria manages its innovation should focus on attaining improvements in the aforementioned areas, including improving the innovation strategy, which did not attain an ideal score in the Bessant’s Innovation Fitness Test. The next section of the report discusses the initiatives and activities that Global Health Cambria should undertake in this regard. Initiatives and activities that Global Health Cambria should undertake to improve its innovation level 550 As noted above, Global Health Cambria should focus on the following areas in its efforts to improve its innovation: key enabling processes, innovative organisation, proactive external linkages and learning and continuous improvement. More importantly, there is need for Global Health Cambria to revisit its innovation strategy to ensure that the strategy is aligned with other aspects of innovation. This will be achieved when the innovation strategy aspect gets a score of 6 up to 7. Since has a relatively high score in terms of innovation strategy (5.875) but a considerably lower score in regard the key enabling processes (4.875), it appears that the organisation does not pursue the critical factors that can support its innovation. Enabling innovation processes are the mechanisms through which the top managers of an organisation develop the contextual conditions that favour the growth of strategic initiatives (Garzia 2011, p. 25). There two kinds of enabling processes, namely the formation of the organisational context and firm management of resources (Garzia 2011, p. 25). These are sophisticated processes that are featured by sluggishness and interruptions between any given action and execution stages, and should therefore be planned and supervised by the top managers (Garzia 2011, p. 25). The fact that did not attain an ideal score in terms of innovation strategy means that the company lacks a clearly formulated and well-communicated technology and product innovation strategy. This is a common occurrence among many firms (Cooper & Edgett 2010, p. 33). Yet, such a strategy is very important and is strongly correlated with positive performance in product innovation (Cooper & Edgett 2010, p. 33). This means that the enabling innovation processes can only be successful if the strategy being pursued in the context of the innovation is designed well and communicated effectively. For instance, instead of merely coming up with new products, Global Health Cambria should focus on a bold innovation strategy. Bold innovation refers to breakthrough services, products and solutions that can develop growth engines for the future (Cooper 2011, p. 3). Therefore, Global Health Cambria innovation strategy should be focused on the future of healthcare, so that the key enabling processes can be implemented along the same line. With respect to the aspect of innovative organisation, Global Health Cambria needs to adopt a concept such as Mintzberg’s adhocracy concept. Under this concept, an organisation features a highly organised structure with little standardisation. The organisation focuses on innovation and avoids involving itself in fixed patterns of behaviour (van Dam & Marcus 2007, p. 413). Adhocracy also implies having a cohesive group of people working together, having trained workers from different fields, working on ad-hoc projects, having an environment that is characterised by mutual coordination and cooperation, as well as decentralised decision making (Morton & Hu 2008, p. 393). The advantage of this system to Global Health Cambria is that it would enable the 350 employees of the company to better utilise their knowledge through creative thinking and collaboration, hence increasing the organisation’s level of innovativeness. Turning to the aspect of proactive external linkages, there is need for Global Health Cambria to establish external linkages as it pursues innovation. The importance of establishing external linkages to promote the innovation potential of organisation has been noted by various authors (e.g. Rothwell 1994; Freel 2000; Bodas Freitas et al. 2011, p. 120). For instance, according to Bodas Freitas et al. 2011, p. 120), external actors embody information sources that can be used for innovation, and hence, there is a positive correlation between the level to which a firm relies on external linkages and the firms level of R&D performance. Therefore, Global Health Cambria needs to create external linkages with other players in the healthcare industry such as suppliers and its customers (biotechnology and pharmaceutical companies, industrial and consumer companies) to better determine what the future looks like and hence innovate based on future needs. With regard to learning and continuous improvement, Global Health Cambria needs to realise that learning is what transforms an organisation into an innovative one. This can be achieved by having a transformation leadership style that emphasises long-term and vision-focused motivational activities (Soliman 2015, p. 196). Since Global Health Cambria is already a knowledge-based company, it needs to emphasise to lederships style that transforms the knowledge into a continuous learning and improvement process, which will then transform the company into an innovative organisation (Soliman 2015, p. 196). Evidence of usefulness and impacts of the various types of activities that Global Health Cambria should undertake 500 The various activities that have been suggested as part of what Global Health Cambria are useful and impactful in the following ways. To start with, having a clearly formulated and well-communicated technology and product innovation strategy will help the organisation to better manager the innovation process. This because when the innovation strategy it clear and well communicated, it becomes easier for managers to execute the plan and come up with innovation enabling processes. In particular, it has been pointed out that firms need to have a clear innovation strategy as this will guide their process of developing competence, creating linkages with the outside world and making decisions regarding which types of innovation the company should focus on (Enzing 2009, p. 90). This was established in a research that was conducted by Enzing 2009, p. 90) in a study on innovation in food and beverage industry in the Netherlands. Pertaining to Global Health Cambria’s pursuit to improve its position as an innovative organisation, the adhocracy approach has been suggested because is one of the approaches that are best suited for biotechnology and computer firms (Yeung et al. 1999, p. 94; Hatch & Cunliffe 2013, p. 105). This is based on the fact that such companies (Global Health Cambria included) have highly educated employees who are inspired to learn new things on their own (Yeung et al. 1999, p. 94). Examples of such companies include Intel, Johnson & Johnson, HP and Apple (Yeung et al. 1999, p. 94; Cameron & Quinn 2011). http://www.tandfonline.com/doi/abs/10.1080/089856200413482 (Literature) - Idelchik and Kogan RTM 2012.pdf innovation 3 Conclusion and recommendations 250 Reflective summary 150 http://www.innovation-portal.info/wp-content/uploads/Combined-audit-and-explanation-May-2013.pdf http://www.theguardian.com/healthcare-network/2015/jan/23/barriers-healthcare-innovation References Burns LR 2012, ‘The business of healthcare innovation in the Wharton School curriculum’, in LR Burns (ed), The business of healthcare innovation, 2nd edn, Cambridge University Press, Cambridge, pp. 1-31. Omachonu, VK & Einspruch, NG 2010, ‘Innovation in healthcare delivery systems: a conceptual framework’, The Innovation Journal: The Public Sector Innovation Journal, vol. 15, no. 1, pp. 1-20, viewed 22 May 2016, . 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