Blog for the Strategic Innovation MBA Course at Vanderbilt University
I think the reason we don’t see a lot of innovation in education, healthcare or politics is because these are highly regulated industries. Every decision must be monitored from a regulatory perspective (ensuring regulations follow rules, laws, etc.), and thus creativity is of secondary importance and is often stifled. I worked for an ad agency before coming to Owen and one of the accounts I worked on was the Bayer Healthcare account. It was very difficult for our creative team to develop advertising for various products like Alka-Seltzer Plus and diabetes meters, as all advertising – every line of copy, every image, every logo – had to be routed through a very rigorous regulatory group who always provided long lists of feedback. Ultimately our finished advertising was very different and often much less creative than originally intended, and agency folk often begged not to be assigned to a healthcare account as the work just wasn’t exciting or creative. (Another way to look at, though, is that we had to be even more creative to work within the healthcare industry, because we had to find extra creative solutions for working within the regulatory guidelines).
Clearly, the regulations in these industries make it difficult for any sort of innovation to occur quickly. Politics and education are industries that have been around since the founding of our country. Often times, deep tradition can stifle innovation. The most innovative industries now are the newest ones because there has been less time to create regulations, restrictions, and protocols. Additionally, there are so many stakeholders involved that it is difficult to get things approved by enough people in a reasonable amount of time. For example, healthcare companies have to navigate insurance companies, the FDA, consumers, physicians, scientific research protocols, etc. This causes innovation to become stifled because there are always opponents to any major changes.
First of all, I do think we see a lot of innovations in education, healthcare, and politics, but since these are older, more mature industries, we don't see as many innovations as we do in newer industries (e.g. computer technology). Also, I think, particularly in the US, these are industries that are very regulated and face issues that can be very polarizing. Once certain practices have been accepted, it is very hard to change those, even if a better method is found (ex. the QWERTY keyboard), because it takes time to learn and people are reluctant to change.
In addition to the constraints of regulation, I think another reason why we do not see a lot of innovation, particularly in education is because competition is relatively low when you look at the educational industry generally. For example, people are always going to apply to schools. Also, most students make their school selection because of the brand name, not necessarily because of our innovative the school is. For example, Harvard will probably always get a lot of applications whether they show innovation or not. And in politics, while there can be immense competition amongst politicians during elections, the political system as a whole lacks innovation. Finally, in education, healthcare, and politics, innovation is not necessarily a pre-requisite to get customers. It's rare to have the citizens of a country secede because of lack of innovation in its political system.
Education, healthcare, and politics are incredibly large "industries" that consist of several thousand organizations within each, which I think is one of the key reasons why it's difficult to implement innovation here. There are many constraints involved because of how bureaucratic and regulated the 3 have become. I do, however, think there is innovation in these 3 but it is not drastic or constantly changing innovation. This is partially attributed to how well-established these 3 are in society. As a result, the innovation in these 3 is not top of mind like it is in other industries (i.e. technology) where it is more visible and known.
I think it is difficult to see innovation in these sectors because changing them implies too much effort; I mean that to plan one change requires doing a lot of activities, to have enough time for preparing the changes, and mainly, more resources. These resources are limited and it is not enough for doing improvements; it is only enough for maintaining the current processes.Also, I think that people responsible for doing innovation in these sectors is people with old and classic ideas or thoughts. In my opinion, rules for education or politics were designed for a specific culture (in the last century) and the system´s responsible do not want to change these rules because maybe many citizens would be against “no classic thought” and they may lose political power.
I guess the main reason why we don't see a lot of innovation in the mentioned sectors is simply because too many people would be affected by the changes. Politics, education or healthcare are sectors that affect practically each and everyone of us. We may sometimes not feel direct effects (e.g. as long as my beloved ones and I stay healthy I don't really care what the situation in a hospital is like) but all those sectors and potential changes in them may become extremely important to us at another point of our life (e.g. once I have kids I care about having a good school system in place).As many of you have already pointed out these sectors are indeed highly regulated. Regulation simply is an answer to addressing the needs and concerns of the many (i.e. each and every one of us).Lastly, all those sectors and their state are truly a reflection of a society (e.g. how do we want our political system to look like is often an almost religious-like question). Innovators often find it hard to have an impact on small organizations (due to all the constraints that we've learned), changing societies requires even more effort and societal consenus, thus reducing incentives to innovate.
I think, in all three industries (healthcare, education, and politics) there is too much government involvement. The government is decent at affecting an industry in a big way, but not so much in an innovation standpoint. I liken the government to the rudder on a massive ship. It can guide the ship and make the big turns, but it is not able to take the ship and navigate through an obstacle course of turns in a short distance. These industries are almost solely steered by the government, so innovation (i.e. the small turns that a ship must make) is almost not possible. In the areas of healthcare and education where there is less government involvement, there is significant innovation. Charter schools are challenging the way that education has always been done. Online degrees are changing how post-secondary and graduate degrees are handled. Healthcare that does not fall under government oversight does have some innovation (imaging, electronic records, research, etc.), but many areas of healthcare (insurance, standards of care, access to services) are held back by government involvement.
As Lindsay mentioned, I also believe that we have seen many innovations in the education, political, and healthcare industries throughout history; however, with these mature, massive industries small innovations are lost amongst the crowd of smaller, newer industries (computer technology). In addition, some things may happen at a local level in the education industry (for instance) that we never hear about because it is too small to influence the whole industry or there are too many regulations for it to impact everywhere. On the other hand, I think there are several constraints within those industries that affect the likelihood of innovations occurring: Technological (Long Feedback Loops and Time Required for Learning), Societal (Regulations), and Organizational (Structure & Complexity of Value Chain). In the political industry, it can take a year or two of campaigning before the voting period (when a candidate receives feedback – if they win or not) and in the healthcare industry it can take years of studying a type of procedure or drug in order for individuals to discover it does not work at all. Each of the industries faces many regulations, which are perceived social controls. Lastly, in both healthcare and education fields, there are hierarchy structures and processes that can often make it hard for individuals to create change. All of these constraints negatively affect the ability for each of the industries to innovate.
I would agree with Brian's comment above regarding the bureaucracy of healthcare, education and politics however I also think that with each a large part of the blame can be placed on resistance to change by the key stakeholders. The current incentive system for these sectors does not encourage efficiency or innovation.One example of this is fee for service in healthcare.
One of the major reasons why we don’t see much innovation in education, healthcare or politics is because people are so deeply opinionated and involved in these areas, and with change inevitably comes disruption and backlash by certain groups. Although one innovation might benefit a certain group, the same innovation might harm another group. There are numerous emotional risks that are created with innovations in education, healthcare and politics. Changes in these areas can affect people’s social status (emotion) and it can change the way that people currently live their lives (culture).There are also numerous societal constraints that come with innovations in education, healthcare and politics. The extremely diverse set of values within a society makes it difficult for innovations to get approved and accepted.
I agree with Sherene's comment above in that all three industries include organizations with thousands of people and too many innovations would be hard to implement. Also, give the regulatory implications within each industry, rapid change as we see in some other arenas, such as technology, would be nearly impossible. I do believe that there has been significant innovations within each industry, however the implementation is longer due to the size and not something that we can recognize quickly.
I believe that the problem is politics, with education and healthcare being a function of it. A lot of education and healthcare is of political nature, so I think that we have to look for the root cause in political systems. Political systems, at least in democracies, are subject to frequent change. Change, on the other hand, is a long term concept and strongly rooted in whatever ideology's in power: especially in the domains of healthcare and education! Change - and I agree with Lindsay that we have seen significant change over the years - is slow to be implemented and take effect, so the incentive for an elected government is relatively slow to tackle it in the first place. If, however, a government decides to take on a major change project in one of these spheres, the opposition is likely to fight it. If there is a change in power after elections, the newly elected government will also try to reverse the innovation they opposed in the first place, like Obamacare (best example EVER).
I believe that the real reason we don't see innovation in education, healthcare, or politics is because of the regulatory issues, HR practices, and the culture. Since each of these industries are heavily regulated it is hard to implement change that conforms to the standards and it has to pass so many regulatory steps. Also, since it is very hard to gauge performance for the education, politics, and healthcare fields, the people who may not be suitable for a position remain in the industry because it is difficult to fire anyone without an absurd amount of documentation. Lastly, I believe that the culture also contributes to the lack of innovation as everyone is set in their ways and are not used to change - similar to the law industry. It would be extremely difficult to make any of these industries innovative and would require a change in the regulations, hiring/termination policies, and culture.
We have seen in class that peoples' perceptions of ideas and changes are often the biggest obstacle to the adoption of progressive innovations. In these areas, many people are heavily invested in the status quo. They profit from it. They are employed within it. They feel important when it is in balance. They are afraid when they believe that an innovation may threaten that balance. They fight very hard to makes sure it's maintained, or that if changes are implemented, that they benefit them in the same way the old way did. This is the most important barrier to change in these areas. It is pervasive throughout the different layers of these organizations.
Education, health care and politics are the areas that affect a lot of people or the result of the change might have a great impact on specific person so there are rules and regulation to control these areas. For example, in healthcare, it takes a very long time for FDA to approve a new medicine because that new medicine can harm people life. In healthcare, innovation is not something that we can try and see the result and try other options because we might not have a second chance. In education also the same, what we teach children will impact the way they think in the future. What happen in politics will affect the whole nation one way or another.
Education, health care and politics are all necessities of the normal function of society. There is constant demand for each no matter whether there is innovation present within them. Also the sheer number of stakeholders involved in them makes change very difficult. There are so many businesses that function as a part of the systems of each that one change or new innovation throws a kink in many subsequent processes along the way. The cost to change/innovate within education, health care and politics likely prevents people from moving forward with their ideas for fear that resource constraints may prove too hard to overcome.
Speaking of education specifically...I think the difficulty of implementing new ideas in education arise with the current structure of the teachers' union. I think most people would agree that vast improvements could be make if more pay-for-performance compensation models were in place for teachers. However, the unions have a strong interest to object to these changes (i.e. huge organizational constraints).
I wouldn’t necessarily agree that healthcare is not very innovative, as from an outsiders perspective the US healthcare system has a lot of characteristics that are new to me; the healthcare system in the US is very different from the one in my country, and I believe a lot of other countries. About education, I think the lack of substantive innovations may in part be attributed to the fact that it is generally a public sector service, and we have noted during the course that public sector enterprises tend to be less innovative than the private sector (due to stronger organizational and industry constraints, and possibly weaker incentives for innovation). Also, the exceptionally high public importance of education means that there is bound to be a lot of social and political resistance to change here, which makes innovations less likely to succeed. Regarding politics, as far as strategies and tactics for winning are concerned, I think political campaigners / parties do come up with reasonably creative / innovative ways to get their message across. But if you look at the political structure as a whole, then it may suffer from the same constraints as the education system (public sector, societal resistance, etc.).
I think the key reason why there is a lack on innovation in education, healthcare, and politics is because there is no room for prototyping or experimentation. Any time you experiment with a new idea or plan in education, healthcare, or politics, you're essentially experimenting with people's lives. Because of this, anytime someone has an innovative idea or plan, there are 10x as many people arguing about why the new idea or plan will not work or is not fair. These naysayers can be motivated by a number of legitimate reasons. But when you consider the massive number of stakeholders in each industry, I suspect that most criticism to innovation comes from people who are worried that innovation may leave them out of a job.
The regulatory environment and self-interest are major obstacles to innovation in these industries. While regulations are created to address some need or mitigate potentially negative events, they often have unintended consequences that only create more bureaucracy, which reduces the opportunity for innovation. Also, many people are dependent on the current education, healthcare, and political systems, and they are resistant to change given its impact on their circumstances. This understandable, but it is also unfortunate as many times innovation would make society (and these individuals) better off in the long run.
With my little brother being a teacher, I hear a lot about his struggle to change things in the classroom and his school. It seems to me that this is mostly due to the regulations around the education system which are further tightened due to the unionized nature of the workforce as well. While not all of that is true for health care and politics, I think that regulations do play a big role in effecting each industry.
I think one of the main reasons we don't see significant innovation in politics is the pervasive complexity and uncertainty of how various levels of government interact with each other. Innovation at any one level could drastically affect other parts of the government (whether its another branch of the federal government, or state/local level). The idea that actions elsewhere could unilateral affect the role of a certain office or election elsewhere in the country generates significant opposition. Further, given how divergent the country is from a political ideology standpoint, the likelihood of achieving cooperative innovation that might favor one side over the other is unlikely.
I agree with Aaron that the biggest constraint faced by the industries mentioned above is the regulatory environment. I also think the sheer size of the industries and the complexity of the stakeholders make adoption a challenge.
Definitely the regulatory environment is a factor, but another factor is the high visibility associated with innovations that fail. Particularly in healthcare, this creates an incredibly risk-adverse environment for any truly disruptive innovation. I've seen it personally with the implementation of electronic medical records in hospitals still on paper or on antiquated systems. People are hesitant to change because of the high stakes of the worst case scenario, namely an adverse impact to a patient. The other issue with all of these industries is the huge number of stakeholder groups that are impacted and have opinions or concerns about any changes.
We've mentioned a few times in class that the size of organizations greatly influences their ability to innovate. I think that's a primary reason we don't see more innovations in education, healthcare, and government -- they're too big.Xerox and Kodak had the financial resources to fund the innovations that were brought to them, but they failed to see the significant return that they required. Only smaller companies, whose structure allows for smaller projects to be worthwhile, can maximize innovation.
I also think that size is the cause of limited innovation in education and healthcare. To some extent, education and healthcare are mandatory for all so the number of people under their influence is huge. Therefore, it is difficult to change these systems.
The reason we don't see a lot of innovation in education, healthcare or politics is because of the great importance that is placed on these professions. The importance of these professions to the long term well being of society is indisputable which makes everybody involved very risk averse. Arguably the people who work in these sectors require a high level of training/skillsets. Since these professionals are in short supply many are highly complacent which hinders innovation.
Reading over the above comments, there's a common theme of regulation coming through (of course, since this is business school.. yay, Milton Friedman). Unions and lobbyists certainly deserve a mention. But actually, there is a lot of innovation in each of these industries.. it just squeezes through the cracks. in education, the internet has ripped down walls, but even before this, an innovation in teaching was gaining momentum: "student-centered" classrooms (away from lectures, toward discussions, active learning). In healthcare, technology means changes in operations (my knee has a cadaver's achilles tendon in it). In politics, Obama might just have won in large part because of a statistical based population market segmentation strategy: he could target his pitch to the right people on the right issues to win reelection.Still, point taken.
I agree with most of the above responses citing heavy regulation as a key hurdle to innovation in healthcare, education, and politics. While this doesn't make innovation within these industries impossible, it does prevent industry-agnostic innovators from simply applying innovations from other industries without developing a deep understanding of the uniqueness of the industry.
I would argue there is a lot of innovation in these areas, but there are constraints on the levels of innovation that are acceptable and that those who are not directly involved are aware of. I think some of this is tied to putting up the capital to fund innovation. Since most of the institutions in this realm are publicly funded, there is an expectation that tax-payer funds are not "wasted" or used on something that could possibly fail. In terms of education, the evolution of charter schools, online learning, and smart learning technologies are innovations that involve this sector. Innovation in education is pretty localized and I think a lot of individuals are innovating constantly, but the ability to adapt it mainstream in quite a challenge do to the decentralized nature of school systems (often county/city run). I also think these institutions/industries are consumed differently by different segments of the population, thus their interest and criticisms of lack of innovation are derived from this. A doctor will realize the innovations in healthcare often times in advance of a patient, who may or may not be made aware or be effected by the change.
All three of of these industries are very traditional in the sense of being rooted in academia and thus have a lot of established status quo operations and structures in place. Not wanting to "fix what isn't broken" is definitely applicable in this sense. They tend to strictly follow past procedures often due to the seasoned professionals who stay in the field for many years (often times way past the traditional retirement age). This continuation of maintaining status quo, keeping professionals in the fold for longer than normal, and not seeing the value of change is why there is a lack of innovation in these industries.
We don’t see a lot of innovation in education, healthcare or politics because these are all industries that are government-regulated and subject to a number of laws. For these reasons, it can be difficult to push through any substantial change, when there are so many stakeholders that can weigh in (from voters, to unions, or legislators) and hold up the process.
These three fields, education, healthcare and politics, form some of the pillars of our society and are ever-present in the daily lives of Americans. They influence the way we raise our families, where we live and what we believe, and any change in the three is likely to have a direct impact upon most of us. A change that could affect hundreds of millions of Americans is unlikely to be received with unanimous, or even a majority of support, in part because people are simply averse to change, but mostly because it is extremely difficult to make a change that appeals to everyone. Because gaining support from key stakeholders at these levels is so difficult, and because processes can be so slow-moving when such large systems are in place, innovation is no easy feat in these areas. Even little changes must be run through the system, vetted and voted upon, giving innovators little incentive to put forth an idea.
thanks for share.
I disagree that we don't see innovation in education. My children's schooling is vastly different to the schooling that I myself had. My children have "smart boards" in the classroom (which are like projected computer screens in comparison to the blackboards that I used to have. They use computers for some assignments; learn to write blogs; they e-mail their teacher with questions on homework; and homework is posted on the class webpage which is part of the school website. Teachers run their classes in a collaborative manner, where larger groups form to discuss broader themes and concepts before being dividing into smaller groups( that may reflect ability level for example) to expand on an aspect of the concept. This is at primary school level. Heavens, Coursera is a prime example in how innovative education has become! I live in Australia, and I am discussing concepts with class mates from around the world!... Politics is less innovative because this business involves communicating ideas to large populaces. This is always problematic, because innovation by definition involves a new idea and consequently change. Persuading 100,000 people to try something new is always going to be more difficult than persuading one. Ideas that are familiar, or are variants of things that have been trialled before are more easily understood and agreed on by large groups. In healthcare the limitation to innovation is the size of the organisation, the beaurocracy,and most importantly the nature of the business. Health care is the business of maintaining and enhancing health,and people are justifiably more suspicious and want more certainty about changes that have the potential to alter one's state of health.