Circle managing partner Ali Parsa on what Clayton M Christensen’s thinking on innovation means for the NHS.

Clayton Christensen’s contribution has been the exposition of a simple yet powerful economic truth: incumbents in any sector regularly do incremental innovation, while groundbreaking innovation comes from new entrants. But does this discovery present the NHS with a threat or an opportunity? 

Christensen argued in The Innovator’s Dilemma that those in the existing value chain are too interested in preserving the status quo to invent the new. It is therefore rare to find a dominant provider that has come up with a new solution to challenge an old value chain.

Consider the technology sector. For decades, IBM dominated and people therefore presumed that all future innovation would come out of that company. A single event changed this. In 1975, the PC was invented. Barriers to entry fell from millions to thousands of dollars. The floodgates were opened.

Microsoft did what IBM could never do. Neither of these organisations achieved what Yahoo did. Yahoo was soon outpaced by Google. Google did not create YouTube, Facebook or Twitter. The trajectory is clear: none of these names will create the next big thing in technology.

In healthcare, our country needs groundbreaking innovation to change the value proposition. In economic terms, value is defined as quality relative to price. In healthcare, quality is clinical outcome plus patient experience. This equation provides a tool to assess the value of our healthcare.

The conclusion is stark. Over the past decade, the denominator of the equation has tripled, from £40bn to £120bn, while the numerator – patient experience and clinical outcomes – has only improved incrementally.

HSJ readers are well versed in the need to improve the numerator at a time of tightening budgets and increasing demand. It is clear that only groundbreaking – non-incremental – innovation will transform this value equation for patients and taxpayers.

Christensen shows how his discovery presents a huge opportunity for those working in the NHS. The part about groundbreaking innovation that many fail to appreciate is this: Microsoft and Oracle were created by people who used to work for IBM. Yahoo came out of the Microsoft generation. The boys in Google worked closely with Yahoo.

New solutions come from new entrants – but new entrants are rarely inexperienced players. They are those already operating inside the current system who ask the difficult questions, who challenge old assumptions, and who strive to go further and faster for their customers.

In the NHS, the future will be created by the people delivering services today. This is not incidental. Any groundbreaking innovation comes out of a deep knowledge of the system, and the needs and demands of its end users. For those in the NHS focused on creating new solutions, Christensen provides a powerful toolkit of both theory and practice.

The lesson of Christensen’s book is simple yet profound: we should concern ourselves less with safeguarding the structures and institutions of the old, and focus more on freeing its participants to create the new.