Nearly every industry relies on a research and development function for continuous innovation. Hospitals, however, are just beginning to recognize that their survival may depend on developing a culture that encourages and tests new ideas. Fortunately, many trustees are in a unique position to help their organizations focus on enhancing innovation.

Hospitals are experiencing the same competitive problems plaguing other industries. But trustees from non-health care fields can help their organizations think more like retailers and other service-oriented businesses.

Innovation is a competency everyone can learn, and the board must encourage senior management to integrate it into the hospital's business.

The board of Memorial Hospital & Health System, South Bend, Ind., is a huge supporter of the organization's efforts to innovate. A board-approved policy on innovation established a research and development function that enhances community health and incorporates creative thinking into all clinical product lines and related business startups. The policy allows for investing up to 1 percent of net revenues annually in innovation efforts. Regular updates from management keep the board informed. Through this policy, management and staff have the support they need to develop a pipeline of new ideas and offerings.

For nearly 10 years, Memorial has used a process to identify and implement innovative ideas. It enables us to determine when a concept has promise or needs further development. It also taught us that innovation isn't a mysterious process reliant on flashes of inspiration. Rather, it demands rigor and discipline and encourages alternative ways of thinking.

All hospital leaders should look at innovation with three Cs in mind: competency, culture and courage.

Build Competency

Like quality improvement, innovation relies on a body of knowledge, theories, principles, best practices and tools. To develop it as a competency, boards should encourage management and staff to learn about it. Our staff, physicians and board members have gone on what we call "innovisits" to companies including Nike, Procter & Gamble and Whirlpool to study how these companies innovate. It was after a few of these visits that the board developed our innovation policy.

Innovisits demystify innovation and break it down into a set of skills. It's nearly impossible for our organization to possess every skill set needed for innovation, so we have partnered with other innovative companies to be more efficient and effective.

One such partnership occurred in developing our new Heart & Vascular Institute building. We were far along in the planning process, using standard architectural design principles, when we learned of an exciting design consultancy while on an innovisit. The firm showed us design ideas we had not considered, and we were so inspired that we immediately stopped and reworked our design efforts. Our physicians met with the consultants and incorporated their design principles into our new facility, which turned out better than we could have hoped.

Hospitals often lock themselves into doing things the way they always have been done, and some leaders may think that their organizations don't need competency in innovation. However, without innovation a hospital can lose the ability to identify creative ways to solve problems. Sometimes it takes a fresh perspective to move away from ingrained, outdated assumptions.

Create the Culture

Innovation and creativity thrive in a culture in which new ideas, models and methods are embraced and championed, and employees regularly experiment and form innovation teams. They don't work in a culture that fights change. In a toxic culture, employees resist new ideas on principle or they believe management won't approve them. Senior leaders should remember that culture trumps strategy every time. That is, no matter how good your strategy, you won't be successful if your culture doesn't support change.

Innovative ideas can come from anywhere and anyone; however, fostering new ideas should be an organized process. We use a rapid prototyping method where ideas are first implemented on a small scale. For example, to redesign a nursing station, a cardboard model of it is constructed and gradually improved upon until the station is exactly how we want it. This approach minimizes the risks involved in bringing an idea to fruition.

Have Courage

Boards and senior leaders need courage to launch and support innovative ideas. This is particularly important in a tough economic environment where most organizations want to avoid risks. Yet, there is no better time to begin the innovation journey, develop those competencies and change your organization's culture.

Innovative programs fail not because they are bad ideas, but because an organization doesn't allow enough time for them to succeed. Frequent CEO turnover is another reason for failure. In this case, nothing that is tried, whether or not it is rock solid, will last long enough to make a difference.

To ensure that innovative ideas succeed, an organization also has to shed its "reimbursement mentality." This perspective prevents hospitals from seeking innovative avenues because the only question the board and senior management ask is whether payers will reimburse for it. In that case, the hospital will miss out on a lot of innovation happening on the edges of traditional health care. Innovation helps broaden your perspective.

Philip A. Newbold, FACHE (pnewbold@, is president and CEO of Memorial Hospital & Health System in South Bend, Ind.