Act One of corporate innovation is over, says Todd Dunn.
What happened? “Many organizations have not developed innovation as a strategic and ongoing source of competitive advantage,” he writes in a recent LinkedIn piece, “Innovation: The Driving Force of Competitive Advantage.”
In this podcast episode, we talk with Dunn about what Act Two needs to look like. Dunn was until recently the Vice President of Enterprise Innovation at Advocate Health. He has also served as Director of Innovation at Intermountain Healthcare, and worked in operations roles at GE Healthcare, McKesson, Siemens, and Albertson’s.
In this podcast episode, we delve further into guidance and examples from Dunn’s career, as well as companies like Intuit and Procter & Gamble.
You can subscribe to our podcast, “Innovation Answered,” on Spotify, iTunes, Stitcher, or Google Podcasts.
Scott Kirsner: Welcome. You’re listening to the Innovation Answered podcast. Innovation Answered is the podcast from InnoLead, the web’s most useful resource for corporate innovators and change-makers. If that sounds like you, we encourage you to subscribe to the podcast, so you’ll catch all of our future episodes.
I’m Scott Kirsner, CEO and co-founder of InnoLead, and in this episode, we talk with Todd Dunn about what it takes to really move the needle on innovation in large organizations. Todd was previously the Vice President of Enterprise Innovation at Advocate Health. Advocate is headquartered in Charlotte, NC, and it’s the fifth biggest nonprofit health system in the US, serving six million patients a year, operating 67 hospitals, and generating more than $27 billion in annual revenue.
Todd was previously Director of Innovation at Intermountain Healthcare and worked in operations roles at GE Healthcare, McKesson, Siemens, and Albertson’s.
I wanted to talk with Todd about an article he published on LinkedIn recently, “Innovation: The Driving Force of Competitive Advantage.” In it, he suggests that the last decade has been Act One for innovation in big companies, and that we need to transition to Act Two. Here’s Todd reading an excerpt from that piece:
Todd Dunn: For too long — let’s consider the past 10 years Act One of Innovation — many organizations have not developed innovation as a strategic and ongoing source of competitive advantage. Instead, some organizations have used it for reputational points in the public eye but not to deliver measurable value to consumers, customers, and the company. …
To avoid common “innovation” pitfalls and to have innovation as a weapon of competitiveness, companies should reframe their approach in the following ways:
- Innovation must move from being a job of the few to a responsibility and capability of the many.
- Innovation must move from being disconnected to being deeply engaged with strategy.
- Innovation must move from idea-driven to demand- and struggle-driven.
- Innovation must move from acting as if assumptions are facts to following methods like Rita McGrath’s discovery-driven planning, supported by tools from other leading thinkers.
- Innovation must move from the mystical to the tangible with the tools, language, and methods of a replicable, reliable process.
- And finally, innovation MUST move from not being on the C-suite agenda to being a top five topic. If not, innovation is NOT and never will be an ongoing and reliable source of competitive advantage.
Innovators – good ones – are not magicians miraculously creating transformational ideas from thin air.
Innovators – good ones – are not magicians miraculously creating transformational ideas from thin air. Great innovators are actually consumer-driven business-model engineers! Many organizations declare they are “innovative,” but if pressed to show the documented innovation performance model, innovation system, leader expectations, etc., they cannot produce it. They aren’t developing innovation as a legitimate system for staying ahead.
Scott Kirsner: Okay, Todd, so, if we’ve been watching Act One of corporate innovation over the last 10 years, what do you think Act Two is going to look like — or needs to look like?
Todd Dunn: I think Act Two needs to morph a bit. I believe it needs to turn into an integrated transformation system for corporations. The reason I say that is when I originally arrived here, I did 71 onboarding, interviews. And a lot of people kind of said “Innovation is this thing over there. It’s really cool team over there,” and in my opinion, innovation is really the refresher or the indication of future competitiveness and stability for corporations.
So, I think it needs to be an integrated system to where we think about it, literally, to the integrated way we think about finance; it’s just part of what we do. That’s going to require that we have an enterprise performance model, that we have an innovation system, and we connect all of these things systematically, even with a calendar. And so that to me is the change, Scott, that it’s seen as a competitive necessity, versus an interesting thing that a bunch of crazy people like you and me do “over there.” It’s just an integrated system. That’s the change.
Scott Kirsner: Are there some organizations that you think are already living in an Act Two world that can kind of be role models?
Todd Dunn: Yes. When I met Dr. Clay Christensen, in late 2010 or early 2011, I literally only had one question for him and I asked him “Clay, who’s the most innovative company in the world and what causes you to say that?” He quickly said Intuit, because they have a repeatable system that they can improve and measure over time. I stay with that fact that Brad Smith, leading Intuit, Roy Rosin, and who you and I both know, I believe, Ben Blank, but, now, Sasan Goodarzi, they have a system.
You can look at just their financial performance and their customer satisfaction to know that they’re staying ahead, but they have a system. A very integrated system started with Design for Delight in 2007 and has moved to customer obsession programs like Follow Me, etc. It’s the system Procter and Gamble, under A.G. Lafley., had “consumer as boss.” Kathy Fish was the Chief Innovation Officer. They moved from “consumer as boss” to superiority, but it is a system of renewal and innovation that they’ve had in place for a very long time. Those are two that I admire a lot, because it’s very much ingrained into how they behave as a corporation.
Scott Kirsner: You say something in your piece that kind of makes me worry a little bit, you say, “Innovation must move from being a job of the few to a responsibility and capability of the many.” The reason I worry about that is, often, I’ve seen that effort of trying to distribute innovation responsibility throughout an organization to busy people, leading to the demise of kind of the centralized group of people who really care about it and measure it, and continually improve it and keep the bonfire burning. So, do you feel like there is a way to kind of go from the few to the many, without, you know, kind of killing that core group?
Todd Dunn: I do. I believe that the core group has two jobs: go an inch wide and a mile deep on some very complicated business model innovation projects to where their depth of expertise is really essential. Then, I think about an inch deep and a mile wide, Intuit is another great example, you have a team led by Ben Blank and others, and they go super deep in some projects. But also what they have done, is they have the Innovation Catalyst program, they have the Follow Me program to where they’ve defined the principles and behaviors and knowledge sets of innovators across the organization.
So, if you take for instance, if they record or if we were to record your follow-me hours, how many hours do you go into the context and circumstances to have someone to really understand the problem, I believe that the central team now has an expanded role, frankly, of building capability, slowly. To your earlier point, Scott, it’s not a 2024 thing. This is a multi-year discipline.
I believe that business leaders need to understand business models. So, does your central team then partner with HR to teach what business models are and what business modeling is? Yes. Do they then go super deep with some teams to help redesign business models? Yes. If we did it well, those teams would become far more important in the organization than they are today versus just being project-based. They will also be capability-based. Their responsibility would be to make sure they’re building the acumen across leaders and frontline people to do innovation that’s appropriate for their context.
Scott Kirsner: What do you mean, in your piece, by innovation being demand and struggle-driven? I think I get the demand part of that but tell me about the struggle part of that and maybe you can also give us an example from from your career.
Todd Dunn: A nurse came to the innovation team at Intermountain Healthcare back in early 2014. He said, “We need a watch or a band to remind us to wash our hands.” This was kind of a demand, but also an idea that was driving it. So, what did the team do? They ran off and built a watch that worked with Intel 3D printing.
These watches were really smart, Scott. But, we didn’t take the time to go to the context. Clay taught us that circumstances are the essential unit of innovation. Our team didn’t go to where the struggle was happening. By doing that, we found out that most people won’t wear a watch. We also found out that you can’t wear a watch where germs on the hands are the most critical. NICUs, the PICUs, the ICUs, and the ORs.
The reason I articulate that is I often don’t think we really understand the struggle. If I remember some of your articles, you talked about the unstated deeds, where people can’t really articulate what their struggles are. The burden to some degree on innovation is to understand the struggle in context. Once we did that, we stopped working on the watch because it was this demand for a watch, you could say it that way, or the idea driven which was the watch, versus what is the struggle we’re trying to solve for?
Understand the struggle before you try to start creating the answer…
Diagnose it before you prescribe it. It’s almost pain-storming before brainstorming. Understand the struggle before you try to start creating the answer, because you don’t know what the question or struggle is.
Scott Kirsner: You talk about in your piece, you need to develop an innovation process that people can explain and that stays in place long enough to start generating results. What are your recommendations there? Because as you and I know, senior leadership changes pretty frequently, and strategy changes pretty frequently. There is often an initiative du jour initiative of 2024 that everybody gets focused on and can pull focus away from just consistency.
Todd Dunn: My recommendation goes back to something that’s always troubled me a little bit and motivated me at the same time. It was Deming’s quote that says, “If you can’t show me in a written process what you are doing, then you don’t know what you’re doing.” That summarizes what he said.
I think we need to first and foremost document what we mean by innovation, not just the definition, but how do we do it? What does it look like?
What we did here, even early days of COVID, when I got here, the team was incredible but I said, “So, show me how we do our work.” We got out this large whiteboard, and we started documenting all of the sections of what we do and a process that we call Designed for Impact from understanding the struggle, what’s driving the need for change, what’s the problem of consequence, or the opportunity of significance, and how do you know? What observations have you done? What interviews have you done? Have you documented that? Then, what’s your consumer understanding? What’s your business model work? What would implementation look like?
Document it down to the point that you can hand it to someone to read and get feedback on it. And we did a lot of that work, Scott to where we documented design for impact. And then we would go out and try to explain it. And we would look for questions of the browbeating with people. We just kept refining it and refining it. You also have to run it by some leaders who you trust will really relentlessly just interrogate you like a good VC would if you’re asking for $10 million. Then, just keep refining it.
The next thing is to put it into reality. Put it out into the wild, you know, Steve Blank said your your first plan never survives first customer contact. So we just put it into the wild with projects. We had some early adopters that wanted to work with us. Through that, we discovered what was well understood and what wasn’t, and we refined it from there, but document the daylights out of it so that you can explain it looks far more credible. That way also moves it from the mystical to the mechanics of it.
Scott Kirsner: You’ve spent the past 15 years or so working in health care, a very operationally focused, quality, focused, highly-regulated industry. In that context, how do you make sure that innovation is getting the right attention and resources when daily operations reporting regulatory oversight can draw a lot of focus?
I think if we position ourselves where we know we have to ‘earn our keep,’ then we will be far more interested in chasing down really hairy problems that the corporation cares about.
Todd Dunn: Solve some problems that people care about. Start off by seeing yourself as a tax to the operator, versus a 401(k). I think if we position ourselves where we know we have to “earn our keep,” then we will be far more interested in chasing down really hairy problems that the corporation cares about.
Once you start delivering an impact that the corporation cares about, that the consumer cares about, I think you will start to create space and budgets in people’s minds to embrace the system more often.
One example I have here is the work we’ve done around dialysis that we wrote about in our white paper. We’re having a number of struggles just in the dialysis business model, so we’ve brought to bear our Design for Impact process. We’ve saved over 10,000 hours of documentation time, who cares about that? Nurses and the nursing leadership. Okay, great, reduces turnover with dialysis nurses, it saves on cost per treatment, and it’s enabling people to be able to do home dialysis more often.
Now we’ve delivered something that the consumer cares about whether it’s an internal consumer or an external consumer, the more you do that, the more space you get in the corporation. Because if you look back over the last 10 years, McKinsey said that, what was it, Scott? Eighty-three percent of CEOs aren’t getting what they want from innovation? If you start delivering an impact that the consumer and the company care about, that’s the way to get the resources and the tension that it needs, but the C-suite also must make it a part of the agenda.
Scott Kirsner: How does AI impact the innovator’s agenda and 2024 and what else is on your agenda for 2024?
Todd Dunn: Man, I tell you, that’s a great question. I’ve worried about the vacuum, the oxygen-sucking power of AI. This is the way I think about AI. You know, Clay talked about the functional social, and emotional dimensions of the job to be done. In Todd’s opinion, right now AI is playing a big social dimension for big companies. Look at us, we’re innovative, we’re forward-thinking in artificial intelligence, but that can mean so many things. Functionally, for instance, on one end of the spectrum, I would say robotic process automation is a little bit of AI. That is a low-risk, high-impact way of making a company more productive. One could argue that that’s the efficiency innovation bucket. You’re extracting what I call coins on the couch, dollars in the dryer, ticks on the clock, to reinvest into the future.
Move it all the way to the other end, where generative AI is supposed to be guiding patient care. Well, on the emotional dimension, that’s missing the currency of trust. So where I believe that innovation can come into play goes back to the system. What’s the context and the circumstances of the problem and what’s the real struggle? I think if we were to write down, “We believe that doctors struggle with X,” diagnose before you prescribe is, what I would argue, the scientific method.
We need to step back…and do all of the rigorous work so that we’re actually making evidence-based investments of time and money into AI.
So, it does offer systematic innovation approaches to help shape where AI should go. If we just run and we throw money and time at it, it worries me that it’s going to suck the air out of doing business model innovation and other types of innovation. We have to be very careful as corporations not to give it so much credit and hype. I think it’s a little bit in the hype cycle right now. We need to step back, go back to diagnose before we prescribe, the scientific method, and do all of the rigorous work so that we’re actually making evidence-based investments of time and money into AI.
But never forget the fact that the currency of trust is going to be essential, especially as they get closer and closer to affecting outcomes for people. And another thing on my agenda, I’m working on a book. And so I want to tell the story of what it’s like to have been an innovator for, well, more than a decade. All the lessons learned from the front line.
Scott Kirsner: Todd, thanks so much for spending time with us to talk about this piece you wrote.
Todd Dunn: Thanks, buddy.
Scott Kirsner: You can find Todd Dunn’s piece “Innovation: The Driving Force of Competitive Advantage” on his LinkedIn profile, or by going to the URL bit.ly/dunninnovation. That’s Dunn with two n’s. You can learn more about InnoLead, sign up for our email newsletter, or find out about our annual conference, Impact, at innolead.com. To listen to more than 60 of our earlier podcast episodes, search for Innovation Answered wherever you listen to podcasts.
Thanks to Todd Dunn for his time and to our editorial assistant Hadley Thompson for her help on this episode.
I’m Scott Kirsner. Thanks for listening.
