“Innovation theatre" has become a commonly understood expression to describe the loud enthusiasm of corporates towards innovation, while committing very little.
It happens everywhere — even in healthcare. As the specialised digital health data and innovation firm, we have been working with the major pharma, medical device and insurance companies for the past 5 years and have had a front seat on how they approach digital health innovation.
80% of digital health partnerships have been done by just the top 24 pharma companies. What are the rest doing?
There are lots of digital health partnerships happening — since 2016, more than 725 partnerships have been established. But 80% of those have been done by just the top 24 pharma companies. What are the rest doing?
In too many cases, startups are paraded in front of the corporate C-suite and leave the room feeling good and with the illusion of having made an impact. In fact, most corporate innovation programmes are wrapped in intense PR and designed mainly to create a bright aura around the company. The result is that nothing much happens. The entrepreneurs end up drained and disappointed and the company grows distrustful about startups as a force of real change.
See if you can recognise some familiar types.
We’ve identified some common patterns among the corporates we’ve worked with, that are detrimental and counterproductive. We started out by giving these patterns 'character names' for our own amusement. But then we thought this was too important not to share. See if you can recognise some familiar types — or recognise yourself — among these:
- The Lotto: they believe in luck and… karma. Indeed, they quickly build a partnership with the first startup they trip over, hoping for an "a-ha" outcome. This leads to disenchantment and frustration, as impactful innovation requires more research and due diligence.
- The Shiny Ball: these innovators suffer from acute gullibility and fall easily for the latest gimmick or buzzword. As a result, they tend to build a partnership with the startup that has the best PR machine.
- The Tinder: these characters are usually looking for a quick match by adopting a laid-back approach. They attend a variety of events and conferences hoping that the best fit startups will be there. However, their goals in digital health (much like some people’s relationship goals) are unclear and these conference-sideline conversations only result in confusion.
- The Echo Chamber: these characters perform little “soul searching” but take their network’s “expert” words as gospel. Deafened by noise, they invest resources in very lightly-vetted opportunities.
- The Show Biz: they are the egomaniacs who are looking for glory within the company — and on social media feeds. They establish the company’s first in-house innovation hub — but it turns out to be inhabited mainly by community and marketing managers.
- The Contrarian: this character has issues with consistency. They like to speak at length about the complexities of innovating in healthcare and then, end up engaging a generalist provider.
- The Bargain Hunter: they try to be clever and save costs by partnering with an accelerator and making loud claims that they are innovating. This tactic doesn’t give them any better results.
- The Parrot: this character talks a good game about the value and importance of digital health but makes all kinds of excuses about why it isn’t the right time to do it yet.
- The Shell Shocked: these characters will tell you many war stories about things they tried, why it won’t work and why it can’t be done. They never seem to be able to use the lessons learned to move forward.
- The Scrooge: they think that innovation can be done only if ROI can be achieved within the same year. Sorry to break the news, Scrooge, but change needs more time and resources.
These types of approaches are causing a lot of damage. They waste time on both the corporate and startup side and leave entrepreneurs frustrated. On the corporate side, the exercise, which could have turned into a fruitful investment, ends up being just an expense. Apart from being a missed opportunity, it also, over time, erodes the company’s faith in startups being able to bring real solutions.
How can this be fixed?
There is work to do on both the startup and corporate sides.
Startups need to become much savvier about vetting the corporates that they are considering working with. They shouldn’t be afraid of asking corporates some of these uncomfortable questions:
- What is their objective? When do they need to produce results? Is it a pure exploration exercise?
- What is their track record? How many proofs of concept have they run and how many of these went on to become a broader deal?
- When was the last time they closed a partnership?
- What has the experience of other startups been with this company?
- What ratio between “doing” and “saying”?
- How senior are the people involved?
- How much resource/capital will be allocated to this?
The corporate side
On the corporate side, we recognise that the healthcare industry is complex, and affects people’s lives meaning that regulatory rigidity, quality protocols and security are needed. We are not suggesting cutting any corners when it comes to startup partnerships.
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But doing nothing is no longer an option — and there are some easy fixes making the process work better.
The most important thing is to make sure the leadership team has skin in the game. The startup partnerships should involve leaders from strategy to medical affairs to technology and market access. The success stories we have seen all involve a committed C-suite, pushing for solutions in front of difficulties rather than playing the devil’s advocate or even worse, giving up.
Real commitment means having senior leaders’ personal KPIs connected to delivering on the innovation projects.
Real commitment means having senior leaders’ personal KPIs connected to delivering on the innovation projects. Then, you see partnerships up and running within a year.
A second pillar is making sure there is strong alignment between innovation goals and the overall company strategy for the next 3 to 5 years: problem statements belonging to the “nice to have” category, by definition, will be abandoned at the first glitch.
The key questions the C-suite should ask are:
- Are we sure we have understood digital health and not confusing it with plain marketing strategy (remember: one offers a new product or service, the other one just offers a new means to express the old product or service)?
- Have we designed the near-to-long-term future scenarios?
- Are we getting the right information on how the landscapes around the globe are changing or are we watching the world through biased views?
- Are we engaging in a structured way with the right innovators or are we just having fun with newbies?
- How are we building internal readiness and maturity? You need to be part of the conversation in order to be able to shape the conversation.
The third pillar is money. In initial conversations, we often hear that money is not a problem. However, the deployment of budget often falls short, as the company gets lost in deciding which function or unit is responsible.
Change is here. The past 15 months of the pandemic have pushed all companies — especially in healthcare — to react. Healthcare companies have to be prepared to lead the change rather than holding back and being overtaken by the next tech giant offering a set of digital health solutions.
Ana Kollcaku is the healthtech innovation lead for Galen Growth, the specialized digital health data and innovation firm with offices in Singapore and Basel.