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The Path to Innovation...Through Failure

by Jonathan Bush, President & CEO

“When Dean Nohria asked me to make this program my top priority, you can imagine that failure was not an option.” – a top faculty member at the Harvard Business School

Ouch! Hearing that one, I pitied poor Nitin Nohria, Dean of the Harvard Business School.

“The Path Dependence that has accumulated in our defense health care community makes it nearly impossible for us to contract for results…even though we do have the facility to do so.” – Captain Michael Weiner, US Navy

Ouch again! Poor Captain Weiner wants to improve the military’s health care information management, but can’t bring aboard the best of the commercial sector because those models are designed around outputs, not inputs.

“I must say that when we analyze the company, we aren’t seeing the analysis that leads to your conclusion that 30% is the right growth rate for athenahealth. Is there more you can share on this?” – a financial analyst

Oy! A poor buy-side analyst, at an athenahealth investor day two years ago.

Okay, here’s a last quote, one that I may hear within the hallways of athenahealth: “You say you know we can do it, but I’m going to sign up for something here that could so easily disappoint you and my team? You are basically asking for failure.”

YES! I am! I am asking everyone I know to set themselves up for failure! Not all the time for EVERYTHING, but ALL THE TIME FOR SOMETHING!

Yes, I am asking my favorite educational institution, my government, Wall Street and my own bloody teammates for failure.

All the best innovation comes from failure.

If you want to assess any marketplace’s ability to innovate, look for three things:

  • The relative number of buyers
  • The relative number of sellers
  • The freedom of both to seek satisfaction

Then you have to look for these conditions: 

  • Can buyers change the scope of what they buy?
  • Can they opt out and just keep their money?
  • Can they expand what they buy to include things they used to do themselves?

If the answers to all these questions are “yes,” if these conditions are true, then innovation will certainly ensue…simply because there is sufficient freedom to fail!

The model works like this: Some sellers will cut costs. Some will increase service and raise prices. Some will attempt to guarantee results.

Some buyers will try each of these…for a while. Over time, the buyers will gravitate to one option in numbers, which will fund the scale for the seller who guessed right. Then price and relativity will improve, but innovation will decline as the number of players dwindles.

We know this. It’s been true forever. This is why Internet-based apps and services are improving and changing at such a ridiculous clip while banking, cars and health care don’t move much.

The question is: How do we make health care look more like the Internet/cloud-based marketplace?

Obviously, there are top-down things that could help us all. Our favorite institutions could teach and live by the benefits of failure. Government could find places to experience failure. (OK, let’s not have failure when it comes every aspect of government, but certainly with management of SOME health information.) Wall Street could figure out that failure is what creates sustaining innovation…they could then ask about it and REWARD it!

athenahealth isn’t so much better at this. We occasionally put out some real duds…but we kind of quietly move on without discussing them, when we should be celebrating them and spending a ton of time understanding them.

As I sit here typing, I can think of a great example of a beautiful failure…but I am NOT going to mention it. Despite my certainty that my mention would help us celebrate this failure, I’m too afraid of hurting or discouraging the folks responsible for this blooper to draw too much attention to it. Hence, I discuss it with my senior team and they attempt to quietly starve it.

Holy mackerel! I’m doing it.

I’m casting aspersions at all these august institutions for not embracing failiure and I’m DOING IT RIGHT NOW THIS SECOND!

Help me! How do I fix this?

Well I guess I realize that I’m failing at doing what I say to do…so that is a start.

And to become a part of this, tell us about your most glorious failure and what you learned from it!

In the meantime you can read more about the importance of learning from failure in an article here, by Amy Edmondson, Novartis Professor of Leadership and Management at Harvard Business School.

Jonathan Bush is the President and CEO of athenahealth.

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