Theories of Innovation
- Clayton Christensen (Harvard Business School)
- Problem of funding appropriate medical care: "The problem is
not 'How can we afford medical care?' It is 'How can we make
medical care affordable?'"
- Usual explanation is "we're paying for advanced medical
techniques".
Innovator's dilemma
- invention and innovation: not the same!
- invention: discovery of a new product or process
- innovation: taking a new product (or process) to market
- example: 1960s radio
- best products based on "vacuum tubes" (RCA, Philips, etc)
- transistor invented in 1954
- low power technology: to provide equivalent quality, need
tubes for power amplifier ("mixed technology")
- could not miniaturize enough to be worthwhile if tubes were
included anyway
- SONY's transistor radio
- all transistor: low power, poor quality sound
- cheap (cheap enough for teenagers to buy)
- portable (not too heavy, battery-operated)
Technology improvement
- vendor technology improves quickly: concentration
- customer needs improve slowly
- new technology: low quality, unprofitable for existing
customers
- improves until can undercut incumbent leaders
Why do incumbents fail to innovate?
- They don't! But they concentrate on sustaining innovations.
- Why don't they recognize the "disruptive innovation" that is
coming? But they do!
- Nycor (case study, Christensen): molded plastic
- Multiproduct molds, large expensive machines => long
production runs
- New technology needed to supply short production runs of
many varieties: developed at Nycor
- Offered new technology to factory managers -- about half
refused, of the rest 80% gave the machines back after a
6-month test period, only 2 factories kept them
- Why? The new production process did not fit the old business
process! Sales incentives, customer requirements, etc. Even
the two exceptions continued long production runs (it's just
that the new technology fit their particular products better
than the old did).
Application to Medical Industry
- Very rapid technological progress in medicine
- A subtle side: precision medicine is now possible
- Intuitive medicine: the doctor looks at the patient, and uses
knowledge and experience (= expert judgment) to diagnose and
prescribe -- if prescriptions fails, the same doctor adjusts the
diagnosis and prescription and tries again...
- Empirical medicine: there is a process that is statistically
valid for finding good diagnoses and prescriptions, but we don't
know why!
- New drug research: find a new chemical
- Inject a mouse
- Mouse dies or gets better
- If it gets better, figure out what disease
this might help
- try dogs/pigs/monkeys
- If they don't die, try people
- If they get better, faster/more likely/less
side effects than existing treatment, you have
a product!
- Precision medicine: design a treatment to fix a problem by
eliminating the cause
- Type I vs. type II diabetes
- Type I: insulin treatment, self-monitoring. Rarely have
future problems once trained
- Type II: not so lucky -- need doctor's supervision, be
prepared for emergencies
- knee surgery (arthroscopic surgery) to repair torn ligaments:
90-day warrantee!
Precision medicine vs. the bureaucracy et al.
- Precision medicine is not about medicine! It's a business
process.
- General hospitals have a problem: they are requred to treat
everybody
- The special-purpose hospitals are "cream-skimming"
- General hospitals cannot cross-subsidize expensive research and
"complicated" cases with surplus revenue from easy cases if the
easy cases go to low-cost specialists