Michael Porter: Changing the Delivery of Value

Michael Porter kicked off the World Innovation Forum at the Nokia Theatre in NYC today.  He spoke on healthcare – a topic which affects everyone – you can see a portion of this content in a video that was posted from Davos 2010.  There are also plenty of lessons around strategy that can be applied broadly.

Porter believes that there is a fundamental issue with how the challenge of healthcare is framed.  Most people are concerned about the cost of healthcare (where there is a downward spiral of losing as everyone tries to shrink the bottom line) while the focus should be on increasing value for the patient.  He defined value as the patient health outcome per dollar spent.  We know in business that the worst competition is based on price and that it is better to focus on solving customer problems.

In general, it is not a technology issue, but the delivery of the value.  Porter said, “We are delivering 21st century medical technology with 19th century organizational, management and pricing models.”  He gave an example of the German healthcare system which is focused on specialization. Similar to large organizations, there are cylinders of excellence (silos) where there are specialties for everything and an abundance of paperwork and processes which limit the flow and speed of information and care.  The German system changed by creating integrated practice units which changed the focus to the patient and specific connected areas (cancer, migraines, etc).  In corporations, while not every company can be flattened or reorganized around solutions, there can at least be cross-functional collaboration that can break through the walls of the silos.

Another change that Porter advocates for the delivery model is that healthcare providers need to look beyond their own resources.  In the old way, hospitals would try and treat every patient for every ailment and surgery possible.  In the new way, providers that have specific expertise around a specific disease or surgery can move beyond their current geographic limitation to provide services through affiliations and partnerships.  An example that he gave was that a hospital that did one knee replacement a week was inefficient, wasteful or resources and likely to be lower quality than a hospital that does dozens of these surgeries a week; they should partner.  This is the same sort of innovation that we have seen in business where companies create synergies with partners to deliver more value at lower costs.  To take it a step further, while companies have come a long way to improve manufacturing processes and partnerships in sales, most are still not leveraging and sharing information as well as they do resources.  People are good at looking at Google and Wikipedia for basic information, but through communities and social media networks, companies and individuals can get real-time answers and insights.  I would challenge you that if you have a process or technology that you are struggling with, consider reaching out to whatever community that you are on – Facebook, Twitter or LinkedIn and see if someone has an answer or idea to help solve it.  I know that I’m a little biased on the power of communities, since I’m not only active on those social media sites, but working at a company allows the IT community to share and collaborate.

The Twitter hashtag for the conference is #wif10 and you can follow me @stu.

Stuart Miniman



One Response to Michael Porter: Changing the Delivery of Value

  1. […] This post was mentioned on Twitter by Stuart Miniman, dbulmer, Aaron Pearson, Renee Hopkins, Susan M B and others. Susan M B said: RT @stu: [Blog] Michael Porter: Changing the Delivery of Value http://bit.ly/dwjOBe #wif10 #innovation […]

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