How the Cleveland Clinic Quantifies the Return on Investment of Innovation
Posted on Tue, Dec 13, 2011 @ 09:36 AM
One of the more important topics for any organization today is innovation and, in particular, the results achieved through innovation. While every company sees a role for developing new innovations, many are not able to put in place a process that sustains this discipline and measures its value.
As the educator Laurence Peter, the creator of the Peter Principle, said, “If you don’t know where you’re going, you’ll probably end up someplace else.”
In this installment of our series of interviews with Dr. Toby Cosgrove, CEO of the Cleveland Clinic, Global Partners, Inc. discusses how the Cleveland Clinic sees innovation and measures its value, both to the Clinic as well as to the patients it serves.
The Cleveland Clinic is an unquestionable leader in healthcare innovation. We think that all organizations can benefit by understanding how the Cleveland Clinic has created a culture of discipline for innovation. None of us want to end up someplace else.
GLOBAL PARTNERS: Do you have an R&D group within Cleveland Clinic, a so called R&D or an innovation center?
DR. COSGROVE: Yes, we do. Cleveland Clinic Innovations is essentially a tech transfer group. It’s interesting what has happened. The flow of money has gone gradually from devices and pharmaceuticals to IT.
GLOBAL PARTNERS: What are some of the results?
DR. COSGROVE: We’ve seen it spin off to the creation of about 35 companies, and the spin offs are increasingly IT solutions to healthcare problems. So we are able to see and measure results from our internal developments for our operations and our patients.
GLOBAL PARTNERS: How do you put in place a process so that innovations are sustainable?
DR. COSGROVE: We do two things. We’ve established Foundation Medical Partners. It is now a standalone group venture capital fund. The Cleveland Clinic serves as the anchor tenant for investments and provides advice from the doctors. And the second one is the tech transfer which is called Innovations.
GLOBAL PARTNERS: How do you quantify the return on investment (ROI)?
DR. COSGROVE: This group has gotten about 270 patents issued and about 35 companies spun off and we’re now doing profitable tech transfer for other medical groups around the country. But it’s taken us about 10 years to get it to where it is now.
GLOBAL PARTNERS: Do you have any advice for other healthcare companies who are pursuing innovation within their organizations?
DR. COSGROVE: Just like a start up, it takes a long time to get innovation within companies off the ground, but, with the right structure and investment strategy, it gathers momentum and, if you diversify and place an emphasis behind the areas generating real returns, the percentages can be nice.
These insights from Dr. Toby Cosgrove can provide tremendous help to any business, not only in terms of benefiting your own business, but also in terms of adding value for your customers.
The importance of establishing a realistic process for creating new innovations, and one that
can quantitatively measure the ROI of these fresh ideas, cannot be overstated.
We would be interested to hear how your organization tracks its ROI on innovation. How does
the Cleveland Clinic’s approach to innovation provide worthwhile ideas for your company?
