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Leading innovation in Australia, interview with Amanda Hagan

posted 18 Dec 2016, 18:49 by Stuart Jones   [ updated 18 Dec 2016, 20:17 ]

Building on the successful innovation breakfast seminar held for our clients and colleagues in October 2016, The Leading Partnership’s Stuart Jones interviews Amanda Hagan, CEO of Australian Unity Healthcare, about her experience introducing and leading innovation in the organisation.


Introduction

As the CEO of Australian Unity, Amanda is responsible for all healthcare operations and strategic development of the business. She is also responsible for executing the Australian Unity Group’s digital agenda, leading the newly created Digital Transformation Centre.

Stuart Jones is a Director of The Leading Partnership. Stuart has a deep interest in innovation and working with clients to achieve strategic change. For his PhD, Stuart researched barriers to innovation and strategies for overcoming barriers using techniques such as action learning cycles.


Transcript

Stuart Jones: As someone deeply involved in health insurance innovation, what does innovation mean in your view?

Amanda Hagan: At Australian Unity, we are embedding a culture and practice of innovation and we have been really clear from the outset of our journey what innovation means to us.  We have a definition that it is ‘change that adds value’.  I do think it’s really important when you go on these journeys that everyone understands what innovation means to their company.  It’s not a right or a wrong, or a one size fits all, but having what it means to us in common language.


Stuart Jones: So you've actually gone to the effort of describing and it’s in words and everyone has the same understanding?

Amanda Hagan: Everybody knows what it is, if you asked anybody involved in it, they would tell you the same thing.


Stuart Jones: What form does this innovation take in your experience with leading Australian Unity, and how have you brought it to life?

Amanda Hagan: Australian Unity decided to take a very structured approach to embedding innovations... we believe in healthcare there is a bit of a burning platform, and that people involved need to innovate or we will become irrelevant in the longer term.  We can’t just leave it to chance, or the skill of an individual leader. We needed to invest in an end-to-end process.  It has three core pillars - structure, leadership and people.

On the people side you need to work on capabilities like how to developing and test hypotheses, interview customers, run experiments, make decisions and so on. These are not natural ways that people work, it’s a more scientific approach to it, so you do need to really skill your people up and get them practicing over and over again.

With structure we decided to develop a process that drives all the way from idea through to market, so we needed to look at resource allocations, dollars that we put into it and how you put the right people in the right amount of time... it’s taken us 24 months to refine, how we allocate our resources, whether it’s full time secondment or part time.

We also looked really heavily at measurement.  Innovation effort has to be able to be quantified, but not in a traditional manner that we all go about doing business cases on ROI, we look at different metrics such as speed through the cycle, the number and duration of experiments that you are running, the conversion rates through the implementation, the number of staff trained, the capability levels through the cycle. Because it is a journey, if you are really going to embed an innovation culture you have to be able to demonstrate progress to the board or other stakeholders towards revenue generation, because it’s not going to just come over night.


Stuart Jones: Are you saying, in terms of setting and managing expectations of a board, it’s a three-year journey?

Amanda Hagan: I think so, you can’t just start turning out new products into market, that hit the target market and deliver revenue in a short period of time.  I imagine you can get lucky, but to develop a pipeline of things that you are innovating on an ongoing basis, I think it takes 2 to 3 years to build the capability of people and a pipeline of things that keep you going beyond random ideas that people have.


Stuart Jones: Are you talking about innovation that is externally visible, as an impact to your customers in the market, not just internal things?

Amanda Hagan: Yes, we have done a mixture of both. I think you also need to look at internal incremental innovation, just to get people learning as well, how you do it, but the majority of what we are focussed on has been customer facing ideas, and testing real ideas in market on real customers.


Stuart Jones: Could you describe one particular innovation that you have led, or been involved in that has been successful?

Amanda Hagan: I led the development, literally from a blank sheet of paper, of a business called Remedy Health Care, and this business has just passed delivery of its one millionth episode of care.  That business looks to disrupt current pathways in healthcare for things like rehabilitation after a knee or hip replacement.  So we have successfully implemented rehabilitation in the home, instead of it happening in a hospital. This has dramatically lowered healthcare costs and simultaneously delivered better health outcomes than the standard care. 

Another example and a passion of mine involved changing the model of healthcare itself. We recently put a new model of care in for anxiety and depression, that was bought out from the UK and this is achieving 60% recovery rates in people with anxiety and depression... The key is that it delivers the care at a time and location that is convenient for the patient, rather than the provider, because our whole healthcare system at the moment is geared around the provider.


Stuart Jones: Picking one of those two that you have just described, why do you think it was successful?  Was there a key to success, or were there many factors?

Amanda Hagan: I do think that there were a couple of keys to success.  We were very clear from the outset what the problem was that we were trying to solve, and how we would measure success, and how we would keep going or not.

It’s been a really, really tough journey.  Those two ideas were 8 years in the making, of idea to market, because you are disrupting traditional care models in the private system, where all the incentives are designed to reward activity rather than outcomes. Being very clear that we were going to systematically collect data to answer the question on whether or not we were making a difference, has actually developed into a key strategic advantage now, beyond just helping us make decisions on how to create the business model.

I think another key to the success of this, because it is so hard in healthcare to change business models, is the passion of the leadership team, to take an idea to the market and persist through all the barriers that still get thrown at that business, even though it’s quite established now.  It is really key, if you don’t have the people who truly believe in this idea and that it can make a difference, it can pretty easily fall by the wayside.


Stuart Jones: We have just talked a bit about successful innovations... why do you think innovations fail, even good ones?

Amanda Hagan: We have had many failures, way more failures than we have had successes, and I think there are many reasons for it. Sometimes I think you can be ahead of time with the idea. I’ve seen plenty, particularly if you take the view that you are going to try and disrupt an entrenched market.

Sometimes you have a great idea, and you just can’t find the customer who has the need at the time. I do think it’s not just about the customer need, but you need to be able to find a path to market, and most of the ideas of ours that have failed, we have proven that there is a market, but finding the person at the right time, has been where we have failed. 

I think that they can easily fail if they don’t have the right champion.  I know for sure when you are in an established company, if you don’t have the person with that burning passion to persevere through the hurdles, there is a really high risk of failure, even if it is a great idea that has a market for it.

And conducting many iterations of experimentation before you heavily invest in any infrastructure would also be part of my advice.


Stuart Jones: Looking more broadly at Australia, how do you think we can better support innovators like Australian Unity across all aspects of our society?

Amanda Hagan: I go to the US quite often to look at what is going on in that market. The US seems to have invested in collaboration between different institutions.  For example I was recently in Philadelphia at a Healthcare accelerator, and they are bringing together really bright individuals, who have this burning passion to solve the difficult problems existing in healthcare, putting them together with a large medical institution, with a large healthcare funder, and then the accelerator sits in between them. They are bringing together the idea, the technical know-how, the funder and the customer so that they can test in the real world on customers, and really focus on rapidly de-risking the key assumptions in a new innovation in the real world.  I’m sure this must be happening, but it’s not as obvious in Australia, this collaboration…

Bringing all the key players together, who often could be at war with each other, I mean in healthcare the funders and the providers, they often don’t play well together, but if you can get someone in the middle and particularly these really bright people who are trying to solve problems, you can get past some of those natural barriers that are within systems so yes, it would be really good if we in Australia could somehow invest more in that.


Stuart Jones: What would a more innovative Australia look like to you?

Amanda Hagan: Well, I’m in healthcare, so I know I’m biased. But I thought of a really big one: given that we are spending more than $150 billion dollars per annum on healthcare - and it’s growing year in year out at between 7 and 9% - an amazing innovation would be one that simultaneously lowers that cost and delivers better outcomes. This is entirely possible. You can lower cost and get better outcomes at the same time.

What that would look like to this country would be the budget deficit coming under control, because healthcare is such a driver of our deficit, so it means that we wouldn’t have to ration healthcare to achieve it, we would be able to invest in other areas of the economy. Money would be freed up to be able to be spend in other areas. 

I also think it would look like less of our people having to go to Silicon Valley to progress their ideas, I think if it happened more in Australia, people wouldn’t have to go offshore.


Stuart Jones: Amanda, this has been a great insight into your experience with innovation, thanks very much for your time.

Amanda Hagan: Thank you Stuart, it’s been a pleasure.

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