Why Innovation Thrives at the Mayo Clinic

by Uri Neren

Start listening for guidance on innovation and you tend to hear a lot about Apple, Google, and other high-tech pioneers in Silicon Valley, Boston, or Seattle. You rarely hear about hospitals, especially those that operate closer to farm fields than oceans.

Yet in the extensive research my team has done to uncover the mystery of successful innovation, we've found few track records to rival that of The Mayo Clinic, in decidedly non-urban Rochester, Minnesota. The World Database of Innovation we are compiling, as a collaborative effort between my firm, Generate Companies, and several universities, represents over 20,000 hours of work to date. As well as over 200 in-depth case studies, it compiles the ideas of 4,500 or so innovation experts and consultancies.
Innovation is a multi-dimensional challenge; we have identified more than 105 areas in which it would be valuable to arrive at a definition of best practice. But one of the most fruitful areas has been "Conditions Needed for Innovation to Occur." As is the practice in each area of the database, we first pored over accounts of innovative environments (corporate, nonprofit, and public sector), many of them provided by our partners at some of the top innovation consultancies. Scanning for every mention of a workplace condition, we found 128 conditions we could put a distinct name to — and when we boiled the list down to common conditions, there were no less than 17. Our conclusion is not that all 17 are "must-haves", but that all should be considered by any large organization hoping to create a setting where innovation will flourish.

In the case of The Mayo Clinic, the right conditions were in place at the very beginning. While the word "innovation" has not always been attached to its work, the habit of developing better ways of treating patients and running its operations has been a signature trait since its founding in 1889 by brothers William and Charles Mayo. Three conditions in particular formed the climate that endures today:

Limited Resources. The hospital was born of tragedy, a result of a devastating tornado in 1883 that left much of Rochester in ruins. The town was only an outpost when Mayo began and today, as a world-renowned provider, it is still situated in the midst of cornfields in this town of 30,000. Interestingly, scarcity of resources shows up in our database as the single strongest driver of innovation in organizations in general.


Connectedness. The brothers established a place where teamwork was paramount yet where "cooperative individualism" would thrive. Early on they created an atmosphere open to new ideas and engaged in world travel to observe other physicians and spread the Mayo name. Mayo created the Surgeons Club in 1906 to allow doctors to watch surgical procedures in Rochester, anticipating by a hundred years the "open innovation" approach that has captured imaginations in the past decade. Today, Mayo's graduate school maintains the open door tradition.

Internally, Mayo has achieved a high level of connectedness among employees with systems and processes that enable — and oblige — everyone across the organization to find and connect with the expertise they need at any moment. Such systems are often associated with excellence in service and outcomes. Our research underscores that they also enhance innovation, by focusing attention, from multiple perspectives, on new problems and ideas.

Diversity. The brothers established and promoted the country's first real "group practice" concept where physicians in different disciplines would collaborate on the care of patients. The combined wisdom of practitioners, they believed, would result in better, more integrated care and better results. Their approach is sometimes called cross-functional teaming, and is now common in health care and corporate innovation practices. 

Just as important as these initial conditions was the Mayo brother's resolve to constantly re-invent their enterprise. They were dedicated to being the best in their field and, more importantly, to moving the entire field of medicine forward. Perhaps the best example was their decision to place doctors on salary, which would allow them to focus on health outcomes rather than volumes of health-related transactions, and give them the space for creativity, education, and research. This was a decision so controversial it nearly shattered the Mayo family, but one that helped to create one of the world's greatest medical centers.

More than a century old now, the Mayo Clinic enjoys brand recognition at nearly the level of The Coca-Cola Company. Its culture is known for collaboration, knowledge sharing, communication, and teamwork, and it takes pride in a legacy of important innovation. Many, many people have shared responsibility for building its practices and processes, but all had the advantage of the fertile conditions the Mayo brothers worked with at the start.

Higher Education Is Overrated; Skills Aren't

by Michael Schrage

With innovation, entrepreneurship and significantly smarter fiscal policies, America should eventually escape its "hireless recovery." But what won't hasten new hiring — and might even dampen job prospects — is the mythical belief that higher education invariably leads to higher employment and better jobs. It doesn't. Foolish New York Times stories notwithstanding, education is a misleading-to-malignant proxy for economic productivity or performance. Knowledge may be power, but "knowledge from college" is neither predictor nor guarantor of success. Growing numbers of informed observers increasingly describe a higher education "bubble" that makes a college and/or university education a subprime investment for too many attendees.

Are they right? I don't know. But painfully clear to many employers are serious gaps between elite educational credentials and actual individual competence. College transcripts spackled with As and Bs — particularly from liberal arts and humanities programs — reveal less about a candidate's capabilities than most serious employers need to know. Even top-tier MBA degrees often say more about the desire to have an important credential than about any greater capacity to be a good leader or manager. The curricular formalities of higher education — as opposed to its informal networks of friends and connections — may be less valuable now than they were a decade ago. In other words, alumni networks may be more economically valuable than whatever one studied in class. "Where you went" may prove professionally more helpful than "what you know." That certainly undermines "value of education" arguments. While higher education itself isn't marginal or unimportant, its actual market impact on employment prospects may be wildly misunderstood. In "Econ 101" terms for job-hunters: time spent cultivating your Facebook/Linked-In network(s) may be a better investment than taking that Finance elective.

Eduzealots have done a truly awful thing to serious human capital conversations and analyses around employment. By vociferously championing higher education as key to economic success, they've distorted important public policy debates about how and why people get hired and paid well. They've undermined useful arguments about "street smarts" versus "book smarts." Treating education as the best proxy for human capital is like using patents as your proxy for measuring innovation — its underlying logic shouldn't obscure the fact that you'll underweigh market leaders like WalMart, Google, Tata and Toyota. Dare I point out that Microsoft's Bill Gates, Dell's Michael Dell, Apple's Steve Jobs, Oracle's Larry Ellison and Facebook's Mark Zuckerberg are all college drop-outs? The point isn't to declare a college degree antithetical to launching a high-tech juggernaut but to observe that, perhaps, higher education isn't essential to effective entrepreneurship.

We have a huge branding issue. Pundits and policy-makers jabber about the need to educate people to compete in knowledge-intensive industries. But knowledge doesn't represent even half the intensity of this industrial challenge. What really matters are skills. The grievously undervalued human capital issue here isn't quality education in school but quality of skills in markets. Establishing correlations, let alone causality, between them is hard. (Michael Polanyi's classic "Personal Knowledge" brilliantly articulates this.) A computer science PhD doesn't make one a good programmer. There is a world of difference between getting an "A" in robotics class and winning a "bot" competition. MIT's motto isn't Mens et Manus (Latin for Mind and Hand) by accident. Great knowledge is not the same as great skill. Worse yet, decent knowledge doesn't guarantee even decent skills. Unfortunately, educrats and eduzealots behave as if college English degrees mean their recipients can write and that philosophy degrees mean their holders can rigorously think. That's not true. Feel free to comment below if you disagree....

As Atkinson's anecdotes affirm, there's no shortage of "well- educated" college graduates who can't write intelligible synopses or manage simple spreadsheets. I know doctoral candidates in statistics and operations research who find adapting their superb technical expertise to messy, real-world problem solving extraordinarily difficult. Their great knowledge doesn't confer great skill. Nevertheless, you would find their research and their resumes impressive. You should. But focusing on their formal educational accomplishments misrepresents their skill set outside the academy. Academic and classroom markets are profoundly different than business and workplace markets. Why should anyone be surprised that serious knowledge/skill gaps dominate those differences?

Higher education institutions do decently with knowledge transmission. Unfortunately, they do dismally transmitting skills. Pun intended, that's — apparently — not their job. That's also why "human capital" debates and investment policies going forward should weight skills over knowledge. When I look at who is getting hired, purported knowledge almost always matters less than demonstrable skills. The distinctions aren't subtle; they're immense. How do they manifest themselves? These hires don't have resumes highlighting educational pedigrees and accomplishments; their resumes emphasize their skill sets. Instead of listing aspirations and achievements, these resumes present portfolios around performance. They link to blogs, published articles, PowerPoint presentations, podcasts and webinars the candidates produced. The traditional two-page resume has been turned into a "personal productivity portal" that empowers prospective employers to quite literally interact with their candidate's work.

Unsurprisingly, this simultaneously complements and reinforces the employer-side due diligence that's emerged during this recession: firms have both the luxury and necessity to find the best possible candidates for open positions. Yes, they're looking for appropriate levels of educational accomplishment but, really, what they most want are people who have the skills they need. More importantly, they want to actually see those skills — be they written, computed, designed and/or presented. Professional services firms I know now don't hesitate to ask a serious candidate to demonstrate their sincerity and skills by asking them to show how they might "adapt" a presentation for one of the company's own clients. Verbal fluency and presence impresses headhunters and interviewers. But the ability to virtually demonstrate one's professional skills increasingly matters more.

This is part of the vast structural shift in the human capital marketplace worldwide. Firms have the ability and incentive to be far more selective in their hires. But project managers and professionals also have the bandwidth and desire to showcase their skills. The resume is rapidly mutating away from a documentary string of alphanumeric text into a multimedia platform that projects precisely the brand image and substance a job candidate seeks to convey. Did they teach you that in college or grad school? Of course not. Will you learn that by hanging around LinkedIn or Facebook? Probably not.

Is this how human capital markets will become more efficient and effective tomorrow? Absolutely. You've got to have skill to show off your knowledge.