December 2012Innovation

Learning a Process for Innovation

A Process for Innovation

When the University of Pennsylvania Health System (UPHS) sought to improve its patient experience, it turned to an unlikely source: two of Wharton’s Operations and Information Management professors. Christian Terwiesch and Karl Ulrich have been teaching and writing about a method for innovation that has been used by organizations in a wide range of industries, including healthcare, for over a decade. Their book, Innovation Tournaments: Creating and Selecting Exceptional Opportunities, outlines that method, which includes soliciting a large number of ideas, judiciously selecting among them, and steering the best through design and execution.

The UPHS tournament, called Your Big Idea, was facilitated by Terwiesch, and engaged nearly one third of the workforce, with faculty and staff either submitting, commenting on, or rating an idea. “We set out with the objective of receiving good ideas from the front line. The quantity and quality of the ideas we received exceeded our most optimistic forecasts,” noted Terwiesch. “But the tournament ended up being more than just an idea management process — it released an enormous amount of creative energy and enthusiasm which left a true mark on the organization.”

For leaders seeking more and better ideas to drive top-line growth, Wharton Executive Education has developed a new program, directed by Terwiesch. The three-day Innovation Tournaments teaches participants not only how to run tournaments in their own organizations, but how to create a more innovative culture. “Many organizations do a great job managing processes like recruiting and sales training, but fail to do much of anything when it comes to innovation,” says Terwiesch. “And as a result, you get money thrown at mediocre projects with the hope that some luck will enter in and make them successful. What most companies don’t understand is that there is a very process-driven approach that they can use to drive innovation.”

While Innovation Tournaments was designed for any leader seeking a more innovative culture, its application for industries not traditionally known for innovation is significant. Karl Ulrich notes, “Teaching the process to executives for many years revealed that the demand for innovation isn’t limited to technical organizations. We have had some of our most engaging interactions with executives in financial services and healthcare. These are sectors that have been ignored historically by the R&D community, but they’re where some of the biggest opportunities in innovation lie.”

Ulrich stresses that these opportunities often come as a result of a need for internal versus external innovation. “Instead of meeting a need that arises in the outside world, such as a gap in customer experiences, internal innovation meets internal challenges, such as better manufacturing processes or more efficient service. Although they’re often thought of as vastly different, the approaches to internal and external innovation are almost identical. Innovation Tournaments work for both.”

And how did the tournament work out for UPHS? The two winning ideas, which involve web scheduling and check-in kiosks, are now in the pilot stage. Terwiesch explains, “It was an exciting success, and a great example of how an industry like healthcare can innovate. Because everyone is involved in the internal process of the business, every employee becomes an innovator. HUP’s Tournament attracted 5000 participants and generated over 1700 distinct opportunities. It’s clear that the next new solution can come from anyone.”