We have been talking a lot this semester about innovation. In my economics class, we talked about Clayton Christensen's model of disruptive innovation and the innovator's dilemma. To motivate the topic, we first discussed how the integrated steel mills were pushed out of market by the mini-mills in the 1970s and 1980s. The mini-mills were able to do this not by going after the integrated mills in rebar where the margins were the lowest. The integrated mills were happy to have the mini-mills take these markets since they could make much higher margins in the higher quality steel markets. But slowly the mini-mills moved into bars and rods, then into structured steel, then finally into the highest margin sheet-steel market. Each time the integrated mills thought they were better off to flee the low margin market and concentrate on the higher margin steel. In the end, however, the mini-mills put all but one of the integrated mills out of business. We next talked about how this applies to the health care industry. Does our health care system need this type of disruption? Will it come from inside or outside the current system? What is "the bottom" in the health care system? It was a really interesting discussion, which included CVS, Walmart, and other new entrants, direct primary care, public health car, home care, and other threats to the traditional health care system.
We also did a case study on hospital systems in India that are able to provide low cost, high quality care, to scale: treating both the affluent and the indigent.
Daron Acemaglu, an economist at MIT, has studied the determinants of creative, ground-breaking innovations in organizations. He and his colleagues find strong evidence that organizations that are open to disruption tend to be the most successful innovators. Firms that have young CEOs or top management are much more likely to produce important patents. Ironically, firms who have been most successful in the past are often the least open to disruption and tend to produce fewer innovations. It is not sufficient to have a good strategy, but an organization also needs a culture that is open to innovation. I think these ideas have tremendous application as we think about the future of the health care industry, but they also apply directly to our program. Trinity’s HCAD program is one of the most successful programs in the country, and we are very proud of the great contributions our alumni have made to the health care industry. Yet we face many threats and cannot be satisfied with the status quo. We do not want to become like the integrated steel mills, who allowed the mini-mills to push them out of the market by continuing to do what they were good at doing. In order to keep this from happening, our program needs to remain open to disruption. Our connection to you, our alumni, is one important way we do this. Your support of our program is highly valued. Many of you have offered to provide guest lectures, have mentored our students, have hosted Friday morning visits, have provided career advice to young alumni, and have enriched our program in many other ways. These types of contributions keep our program fresh and make sure that we keep our content relevant and our culture open to what our students need.
This summer the faculty will engage in a retreat to develop an update to our strategic plan. In preparation for this, we engaged our Advisory Council in a brainstorming exercise to begin to develop strategic goals. One of the main themes that came out of this was the intersection of leadership and innovation. They really challenged us to think about how we train innovative leaders. I look forward to reporting back to you soon on what this plan will look like.
If you have any thoughts on these issues, I would love the chance to speak with you as our program moves forward. My e-mail address is eschumac [at] trinity.edu. Thank you for your support of the program: our alumni are a key component of what makes Trinity special.
Edward J, Schumacher, Ph.D.
Trinity University Health Care Administration