Setting the Stage for Digital Innovation

Digital innovation in healthcare holds transformative potential, given the immense costs associated with delivering care and the vast array of unsolved medical challenges. Yet, it consistently proves to be one of the most formidable endeavours for mature companies.

The most common explanation I hear when I pose this question is that the regulatory environment is so complex that many companies feel lost before they even begin. The intricacy of navigating compliance while pursuing innovative business ideas often discourages especially larger organisations from starting, humbled by the high probability of failure and the daunting task of figuring out how to approach digital innovation in the first place.

However, as the success of numerous startups demonstrates – and in my own experience leading innovation for a large pharma company – it is possible to overcome the regulatory jungle, even across multiple national legislations. While it’s far from easy, the key lies in setting the stage appropriately and focusing on factors within your control first. This way, when you get to the regulation, you can treat it just as the constraint that it is, but not as a barrier. 

So, what factors can you control? What other reasons are there for innovation struggles? And what might your company do to succeed despite them? 

Over the years, I have come to recognise two common but invisible barriers to digital innovation:

1. Failing to create strategic clarity: Companies often neglect to step back and answer critical questions about customer needs and the vision required to meet them.
2. Failing to generate innovative foresight and financial clarity: This includes not only the ability to uncover and validate opportunities but also the mindset and skillset necessary to pave the way for investment and value realisation.

The Need for Strategic Clarity

One of the most significant barriers to innovation is the failure to create strategic clarity. Companies often struggle to anticipate customer needs consistently, much less align their innovation efforts to meet those needs. Success requires clarity on critical questions, such as: What are the evolving needs of our customers, both now and in the future? Can we anticipate how to deliver value to them even before they articulate their pain points? For example, shifts in the political, social, economic, and competitive landscapes might create circumstances that give rise to new needs – needs that a business-as-usual approach won’t address. Developing a vision for meeting these future customer demands and understanding what it will take to realise it is essential. If your current model won’t suffice, you must identify alternative approaches and systematically explore how to implement them.

Without this clarity, innovation efforts are fragmented, reactive, and ultimately ineffective. A thoughtful strategy rooted in a deep understanding of your customers' evolving contexts is foundational for success.

Cultivating Innovation: Combining Foresight with Financial Clarity

Another key challenge is generating the right mix of innovative foresight and financial awareness within your organisation. Innovation demands more than just creativity; it requires an entrepreneurial mindset and a systematic approach. This includes embracing change as a prerequisite for innovation and evaluating emerging technologies and trends to anticipate future developments. It means exploring solutions that expand the company’s offerings, and proactively recognising opportunities and threats – even (or precisely!) those seemingly outside your current business model.

Equally important is assessing the financial viability of innovation opportunities. Thinking in numbers and telling a compelling story to secure buy-in and funding from stakeholders is an essential step in turning ideas into actions and results. Your company must strive for this financial clarity at every step of the way. Understanding the financial impact of innovation, both the costs and the potential revenues associated with it, will give you confidence in your endeavour, and at the same time prevent you from going too far in the wrong direction. 

Overcoming Barriers to Execution

Many promising innovation ideas still falter due to a lack of strategic continuity, particularly when leadership changes or external stakeholders push for safer, more traditional approaches. These pressures often stifle innovation by forcing companies to prioritise immediate returns over long-term value creation. However, when organisations align strategic and financial clarity, they create an environment where innovation thrives at every level of the company. This alignment ensures that decision-makers are empowered to champion bold ideas while execution teams are equipped with the resources and confidence to bring them to life.

Things Within Your Control

• Focus on strategic clarity and innovative foresight: Businesses that consistently engage with the evolving needs of their customers and reflect the insights in their strategic vision have more clarity of purpose. Those who continuously track and evaluate technologies and trends are better equipped to recognise and address emerging customer needs and competitive pressures through innovation effectively.
• Always do the numbers too, and as early as possible: Make sure to embed financial considerations early in the innovation process and keep enhancing them as you move forward. Estimating the costs and projecting potential revenues will empower your company to make well-informed decisions. This continuously evolving financial clarity will help you allocate resources efficiently and avoid pursuing ideas that lack sustainable economic potential.

An Afterthought

Despite having fewer resources, smaller (private) companies often have an edge over larger (publicly listed) rivals when it comes to innovation. They tend to be more agile, less constrained by bureaucracy, and better able to take calculated risks. This positions them well to achieve the strategic and financial clarity necessary for successful innovation. However, larger organisations can also foster innovation by addressing the barriers within their control: developing strategic clarity, building innovation capabilities, and committing to a long-term vision.