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Audio Insights: Chat with the Chair–“The Innovator’s Dilemma”

William Morice, II, M.D., Ph.D., Chair of the Department of Laboratory Medicine and Pathology (DLMP) at Mayo Clinic in Rochester, Minnesota, and President of Mayo Medical Laboratories (MML), sits down with Gina Chiri-Osmond, Marketing Channel Manager for Media and PR within DLMP. The two discuss the book, The Innovator's Dilemma, by Clayton Christensen. Connect with Dr. Morice on Twitter @moricemdphd to let him know what you would like to hear next.

Transcript

Gina Chiri-Osmond: Hi, I am Gina Chiri-Osmond, and I work in the Marketing Department at Mayo Clinic. Today, I am speaking with Dr. William Morice. He is the Chair of the Department of Laboratory Medicine and Pathology at Mayo. He is also the President of Mayo Medical Laboratories. We are happy to have you here today, Dr. Morice.

William Morice, II, M.D., Ph.D.: And Gina, I am happy to be here!

GCO: I would like to talk today about a book I know that you have read, and we have also discussed it in several meetings. It is called, “The Innovator’s Dilemma.” It is by Clayton Christensen, which we were just discussing that a friend of yours actually met him, so we will talk about that a little bit later.

WM: Sounds good.

GCO: In general, did someone show you this book? I know we are big into innovation at Mayo, but how did this come about that you were like, "I need to read this book"?

WM: So, I am from a family with one sibling, an older sister Like most older sisters, she has pretty much been trying to run my life since I stepped foot on planet earth. When I took this job, she was very proud, and it turns out my sister is actually an HR executive in Chicago, so she does "onboarding" for executives. She has sort of a package that she sent to me, and this book was part of that package, and so I read it. That is how I actually got exposed to the book. Probably, I would like to say, I do not know if she had that insight. I think part of the reason why she sent it is because change and responding to change is something that every industry faces. That is one thing I think, oftentimes, in medicine for us in our day-to-day in the laboratory, we think of ourselves as so much different than other enterprises or industries that are in the world, and we're really not. I mean, there are some things that are common to anyone who is trying to do something at a level that is organized and sustainable from a financial perspective. And they are going to face changes that they have to adapt to, to be able to continue to execute the mission, so I think that is why she sent me the book. And also, I think she knows me a little bit; my whole family, myself included, tends to be pretty restless and always looking to do things better and to change, and so I think she knew that book would resonate with me.

GCO: I think there are some interesting concepts in the book, and I kind of had to wrap my head around a couple of his theories, and I do not know that they are necessarily Mr. Christensen’s theories, but he brings them up and just the whole concept of this "dilemma," so I want to read a couple excerpts and then I am going to let you comment.

WM: Okay.

GCO: In one part in the beginning, he does talk about good management and how a lot of these companies that he looked at have good management, but that was why they failed. So I thought that was really interesting. In one part, he says, “What often causes this lagging behind are two principles of good management taught in business schools: that you should always listen to and respond to the needs of your best customers and that you should focus investments on those innovations that promise the highest returns, but these two principles in practice actually sow the seeds of every successful company’s ultimate demise. The innovator’s dilemma—doing the right thing is the wrong thing.” And then in another part of the book, he sort of goes on to talk a little bit more about that and he says, “Most companies with a practice discipline of listening to their best customers and identifying new products that promise greater profitability and growth are rarely able to build a case for investing in disruptive technologies until it is too late.” So, I thought that was really interesting because that is like what we grow up learning, Dr. Morice, to “listen to your customers” and to “give them what they are asking for, think ahead of what they are going to need next," but this is kind of saying that is not necessarily how you are going to continue to be a great organization. Can you talk about that a little bit?

WM: Sure, and it is interesting. I am going to take a little bit of a different tact than I often take in these conversations we record to share a little bit about why I personally might be starting at this point. So, my parents actually took a very nontraditional course to becoming Ph.D.s in psychology. They worked with oncology patients, now retired. But my parents actually got married at 19 and did not even go to college until they were in their late twenties. My dad was a construction worker in New York City, and my mom was a housewife. And because they took a nontraditional path, and they worked with a newer university, they really struggled to get their degrees recognized. They really could not get licensure and some other things, and so I always really aspired to get educated and to work in a place with a lot of tradition. I really valued that, and I do value it today. I value the tradition of Mayo Clinic, and yet I also have sewn within me this whole sort of, for lack of a better term, “hippy culture” that says, "Hey, we should always be challenging the past and thinking about ways to do things differently." That is, I think in a nutshell, what the premise of that book tells me—you need to do both. So, tradition is built through excellence in any sphere of life, right? And Mayo Clinic is no different. It started as a father and his two sons, and they built a tradition of excellence here focused and predicated on providing the absolute best patient care for every patient who comes to us. That is a great tradition, and that is something that we really, really have to embrace and recognize: Those are the broad shoulders that we stand upon. However, we cannot also let that be the concrete around our feet. We have to continually challenge ourselves to say, “That’s our tradition. How are we going to continue to re-establish that tradition?” So, you have become so focused on what you are known for that you become less focused on what you need to be. And to me, that is what that book is saying, and so I worry about Mayo Clinic because I believe in Mayo, and I want to make sure we do not fall into that trap. And I saw ourselves, particularly in the Department of Laboratory Medicine and Pathology (and many academic institutions), because it does not have such an exquisite patient focus in many academic institutions and also because it does not serve as a reference laboratory like we do at many academic institutions. The laboratory and pathology are sort of places where the researchers and the quirky people go and do a modicum of patient service and then a lot of research, and I saw us as our excellence today as "DLMP" is in our exquisite focus on the patients and their current needs. Our challenge in DLMP is our exquisite focus on the patients and their current needs, and we need to somehow find a way to access and tap into that investigative spirit that many of us go into pathology with, but in a way, that is actually not just grass roots but actually systematized like everything is at Mayo Clinic so that you can actually embrace change and embrace “stretch goals” in a way that actually are congruent with our real responsible approach to doing things for patient care.

GCO: In the book, the author talks about "value networks" and how every organization starts to have those because, obviously, you start to kind of understand who your audience is, and then you build your resources, your processes, the people all around that, etc. And as new technology comes along, hopefully, that all still works correctly. But he talks about disc drive companies and how that changed quickly. Also, the steel mills, and he brings up another industry . . . . I cannot remember off the top of my head right now, but what I thought was interesting was he talked about the companies that kept succeeding and doing well, when these disruptive technologies came along. They did not necessarily try to shove it into the process that works for the bigger organization. They sort of said, “Listen, this could be a big thing, but it is not going to work with the processes in the value network that we have right now. Can we put it in either a separate company or a smaller part of the organization and let those people tackle it?” So, you know, here at Mayo, we have all these inventors and scientists and very, very smart people. How do we do that? Like in our department, how do we, when we see something coming along that is probably disruptive, not a sustaining technology, you know, what are we going to do with that?

WM: Well, I mean, that is an excellent question that I have been trying to solve for us, not alone, of course, but in working with a lot of smart people across the institution and also outside of the institution. Our response is a Mayo Clinic response. It is not “the rest-of-the-world response.” So, what do I mean by that? I would say that we have been responding to these disruptions but mostly in a “rest-of-the-world response” kind of way. And most academic institutions that, again, do not have the systematized practice of Mayo Clinic and do not have a reference laboratory, you look to individual investigators and researchers to sort of be your eyes on the event horizon for disruptive change—to be working on that and then figuring out a way. If they actually stumble onto something, they bring some value back to the institution that houses them, typically through grant funding or through spinning off a company, right? And that is actually a path we have been going down at Mayo Clinic because we say, "Oh, gosh, we want to inspire 'inventiveness' in our staff. " So, they need to have access to these sorts of venues to get the return on the investment. However, the discussions that I have been having with our board, ask "Can we find a way to understand how to do that and make those inventions, inspire those inventions, and have them linked to what we do as 'Mayo Clinic' in terms of Mayo Medical Laboratories and our diagnostics and find ways to bring that to market?" And it is a challenging thing for all of us because, in part, this is a unique situation here. So, how do you link inventiveness and link it back into the institution? That is sort of what Clayton Christensen describes in his book. I love it because the book is not an “or” proposition. It is not, "You spin this out and have it run completely independently, OR somehow you keep it within your organization." It is that you spin some of these things out in a sense and liberate them from some of your current constructs and somehow maintain a cogent link to those constructs so that when it becomes relevant, you can actually bring it back into your organization. To me, that is a perfect world. We find the way that Mayo Clinic is responding to these disruptions in a very innovative and nimble way, but once we figure out the right way to do it for patient care, we bring it into those systems that we know work for delivering the best possible patient care. And so that is a little bit of a harder needle to thread if you just say, “Let’s spin stuff off,” and this is a little easier. But in the end, it is what is best for patients—Number One. It is what is best for Mayo Clinic—Number Two. And it will be unique, and that is what makes it cool.

GCO: Something else the author talks about too (and I think you do a really good job of this as chair and, of course, I am not just saying that because I am sitting here with you and I am one of your employees), but I do think you do a good job of telling your employees, "Everybody’s ideas matter." And something in the book that Clayton Christensen talks about is that really good managers do not mean to do this, but they will take all of these ideas that they have accumulated, and they realize they have to go talk to their execs. So, they look at which one of these ideas is going to make the most money or have the best margins or, in the long run, be the best for their customers, and then they pick maybe three of those ten ideas, and they go forward to the executive committee and say, “Hey, these are the ideas that I have accumulated.” But that is not necessarily the best thing, and Christensen talks about that, where sometimes,  the best ideas are from the employees that some engineer thought of or someone, you know, who works with patients every day just said, “Hey, this could be a good thing that we should do," to change the process of something. So, can you talk a little bit more about that?

WM: I can try. I mean, one of the things that I have kind of grown to recognize about our institution is we tend to be more of a “push” institution as opposed to a “pull” institution. Meaning, if you are someone who has an idea that is novel, you typically have to push it. You have to champion that idea through multiple committees to get it to see the light of day. And I think that what Mr. Christensen is speaking to in his book is that the really good organizations are “pull” organizations (i.e., when something might really flourish if it sees the light of day, then you find a way to pull that forward if it is rational and well-thought-out). And that is the whole concept of liberating because it might be that the decisions you make for your current customer would demand that you not actually act on that idea. But if the idea is about what your customer might need, then you probably should be acting on it in some way. And the other thing that is really important (and I think is difficult for us in the medical field to recognize), is going back to your prior question, and it really speaks to, when you talk about customers and customer needs, you talk about value, right? And so one of the things that is difficult for us is that the "value proposition" in medicine is continuing to change. And for laboratories, in particular, our primary value proposition when I started in this role was producing really good results and getting paid well for them. And delivering results quickly was a primary value that we added to medical care. Now, our value is, "How do you take the data that is produced from the lab results and put that into a system for big data analytics and machine learning?" Our value, "How do you understand how that data is created?" These are huge things that we have to recognize. If that is how people see our value, then we have to be able to create constructs that deliver on that value, while we continue to deliver on the current value as well. And that is where people get trapped is they get convinced that they get to define value. And when you are a purveyor of any technology or service, in the end, it is the customer who defines value, so you have to have an ear to the ground and be able to diversify your activity. If you have differing views of value, then you need to make sure you are actually serving the value propositions of the future as well as the current state so that you do not get trapped serving the value propositions of the past.

GCO: Dr. Morice, you know we are talking about The Innovator’s Dilemma, the book by author Clayton Christensen. It is a great book. It is very interesting about companies that have succeeded and those that have eventually not succeeded. But here at Mayo Clinic, I think we can be very innovative, and sometimes, I think we cannot help ourselves because we are so large. But in the Department of Laboratory Medicine and Pathology, let’s talk about how we are creating an Innovation Laboratory.

WM: Sure. So, the two things that I would say about this Innovation Laboratory or Advanced Diagnostics Laboratory, is, "How does what Mr. Christenson describes in his book play out in our day-to-day lives?" You can think of it in a couple different ways: 1. If we have to justify a new piece of equipment, we have to go through all of these devices that show that our current customers want this piece of equipment, and it will support our current activities. And likewise, 2. We have to show that we will have a return on the investment that people in the current state will see value in it—whatever we produce from that instrument or process—and be willing to pay for it, right? Both of those things, if you read The Innovator’s Dilemma are discussed. So, strip away any names and what you really need is a place where we can "insource" technology because it has potential to be valuable—not because we know it is going to be valuable or not because someone is asking for it today, but because we think there is a chance that someone will be asking for it tomorrow. If that is why we want to insource it, then that value proposition to Mayo Clinic is different. The value proposition is understanding how that device could or could not be used or understanding maybe that the device never gets used, but the data we generate from it has value to Mayo Clinic in some way going forward. And so, you know, you are nodding (people cannot see that). And so you explain that and that makes sense. Well, where is that happening today at Mayo? There is no place, right? And so, without some place for these things to happen, they are just ideas. And ideas without a plan are just dreams. And so we need to get to where we get beyond dreaming to actually actions. And so, although it is small right now, the whole concept is that we are going to create a physical space where we can insource these technologies that have promise and start to use them and explore their use in patient care even if, right now, an insurer or a payer is not willing to pay for it because we, as practitioners of medicine and laboratory medicine and as physicians and scientists, feel that this technology has potential value or the data has potential value for patients and patient care going forward, and then we will figure it out. And if it is the next big thing, then we will be ready to know how to use it. And we can still, when we are ready to roll it out and expand its use, if it comes to that, we will do it with the same pragmatism and eye toward stewardship and utilization management that we have every other kind of innovation that we have insourced here at Mayo Clinic. It just gives us a physical space to be more exploratory and to actually live at the edge of that envelope.

GCO: I think we are running out of time here, but I want to ask one more question. We talked about this at the beginning of the show. You or one of your friends actually met Mr. Christensen. He may have mentioned something about wanting to come visit us at Mayo. So, hopefully, he is listening, and he can come visit.

WM: Well, yes, hopefully. I do not know. One of our leaders at Mayo Clinic was speaking at a conference, and Mr. Christensen was there. He has a team at Harvard Business School that goes out and works with different industries in terms of this whole idea of “the innovator’s dilemma,” and he has an interest in coming to Mayo Clinic. Again, I am sure, just like we sometimes see, they see the old marble walls, they see the tradition, and they wonder how we are going to maintain relevance. Because of the great work that is done in our department and within Mayo Medical Laboratories and because we thread that needle between the academic practice, this individual thought we might be someone that would really benefit from working with Mr. Christensen and his team if he does choose to come. I have not heard on that yet, but it is nice to at least actually be thought of in that way by our institutional leadership. I think, to me, if Mr. Christensen never comes, to have that person actually discuss with me that potential opportunity, is really important because not only did we have to fight our own fight getting trapped in “the innovator’s dilemma,” we actually had to fight the fact that because we are part of an integrated institution, we actually started to be viewed that way by our own institutional leadership—that we actually were not interested in being at that cutting edge of health care and laboratory diagnostics. And again, the argument was that it was not that we do not want to be there, it is just for us that to execute on a “for-profit mission” and to be there, we need some support as part of an integrated institution about how we build the constructs to get there. So, it just shows real evolution and thought by institutional leadership to see us as where I think we need to be as a department at Mayo Clinic in laboratory medicine, where we are actually driving transformational change—not just for Mayo Clinic but for laboratory medicine at large—because this challenge of how to insource technologies is not unique to Mayo. It is not unique to any one health care institution. It is really for all of us. So, to be seen by our institutional leadership as another bastion for leading change, I think, is really important.

GCO: Well, Dr. Morice, thank you so much for being here today. The name of the book is The Innovator’s Dilemma, and it is written by Clayton M. Christensen. Hopefully, he comes to visit. Hopefully, you get to meet him, Dr. Morice. I do not know how you do it, but I appreciate that you had some time to come and talk with us today, and I am excited about this new Innovation Lab with DLMP and Mayo Clinic.

WM: I am too and that is why I really appreciate the chance to chat about it, so thanks, Gina.

William Morice, II, M.D., Ph.D.

William Morice, II, M.D., Ph.D.

William Morice, II, M.D., Ph.D., is the Chair of the Department of Laboratory Medicine and Pathology (DLMP) at Mayo Clinic in Rochester, Minnesota, and President of Mayo Medical Laboratories. Dr. Morice received his M.D./Ph.D. degrees from the Mayo Graduate School in 1993 and completed his subsequent pathology residency and hematopathology fellowship at Mayo Clinic.