Evolving Mindset Series: Innovation is Critical to Improving Our World - Part I
“Vulnerability is not weakness. Vulnerability is the most accurate measure of courage. Vulnerability is the birthplace of innovation, creativity and change.”
My first patent, a software design patent, was published in 1998. We were creating healthcare educational and surgical training tools. For example, we combined dozens of different edited surgical videos into one resource to present different anatomic anomalies as well as complications and how to manage them to help teach a laparoscopic surgical procedure. These training programs were so large (video compression was still evolving), they wouldn’t fit on a floppy disc, so we had to use a relatively new storage method, the CD-ROM. The problem was that most physicians didn’t have CD-ROM players yet. But we persisted, and the availability of CD-ROM players grew.
Our company had about 25 employees and several million dollars in revenue when the lure of the internet began to shift our focus. Our mission was to provide the highest quality education tools we could make for physicians. But, we also took the opportunity to grow our shareholder value through the acquisition of the rights to the domain .MD. We even changed our name to dotMD. The reason we did this was that we had started to work with an investment banking firm to prepare for an Initial Public Offering (IPO). The firm told us that if we had the rights to the domain .MD, they thought our valuation could be about $500 million post-IPO. In retrospect, I could see myself and our other company leaders gradually shift our vision away from improving the value of healthcare education to trying to become wealthy.
A few weeks after we closed the deal to acquire .MD, the dotcom bubble burst. It was gut-wrenching. We never went public and tried to salvage things over the next year, but we ultimately had to go into bankruptcy. As a part of the distribution of assets, the rights to the domain .MD were returned to its original owner, the country of Moldova. The lesson I learned was to never lose focus of the purpose of creating value for other people. The long-term financial reward should be a by-product of value creation for others.
What is “Innovation”? A more important question might be, “What is the motivation behind any effort to innovate?” Is it to make the world a better place for all people? Or is it to extract as many dollars as possible from people to become wealthy? There are many ways to extract dollars from people. The entire marketing industry is about getting people to buy stuff. One of the most ridiculous inventions that comes to mind is The Pet Rock. This invention was an idea by Gary Dahl in 1975 that came to him while at a bar talking with friends who complained about their pets. So, Gary decided he would put a rock in a box and sell it as the easiest pet to care for ever. He sold over 1 million at $4 each and became a millionaire. The fad only lasted a short time, but you can still buy one on Amazon for $19.95.
Making money off of a silly idea that has little or no value is probably no big deal. But some investors that make profit their only motivation can lead to significant harm. For example, a private equity firm purchased an established teaching hospital, Hahnemann University Hospital, in 2018, amongst a growing trend of private equity firms acquiring healthcare organizations to extract profits. The owners of Hahnemann University Hospital filed bankruptcy in 2019 and may be looking to profit from the land where Hahnemann is located in downtown Philadelphia. One of the unintended tragedies of this event is the physicians and other healthcare workers' lost jobs. It even resulted in the physician residency programs becoming assets in the bankruptcy proceedings sold off to the highest bidder. These young physicians in training became pawns in a financial transaction. This kind of profit motive demonstrates lower-brain thinking that focuses on the benefit to self above, and sometimes, at the expense of others.
Another example of an innovator that demonstrated lower-brain thinking has recently and famously been detailed in the book Bad Blood by investigative journalist John Carreyrou. With years of work and interviews by Carreyrou, a detailed description of a lower-brain mindset has evolved, describing the behavior of the founder and CEO of Theranos, Elizabeth Holmes. Typical of this type of mindset, there was a secretive technology that was oversold to the venture capital, communications, and healthcare communities.
Elizabeth Holmes was an engineering student who dropped out of Stanford to start a healthcare technology company that would supposedly allow many different tests to be run from one single drop of blood like a finger stick for a blood glucose check. Holmes stated she started the company due to the suffering she witnessed in a family member from multiple blood draws, a noble purpose.
But lower-brain behaviors seemed to be the norm in her leadership role for the company. She had narcissistic tendencies as she compared herself with Steve Jobs, even adapting her wardrobe to his famous look. She exerted a rigid hierarchy within the company. She and Ramesh “Sonny” Balwani, President of Theranos, would fire anyone that challenged the company messaging or stood up to either of them directly. There were rigid silos between departments, and information was not shared. Sometimes different departments were made to compete against each other, with the losing department's employees potentially being fired.
At least one person never believed in the potential of Theranos or the brilliance of Elizabeth Holmes, Phyllis Gardner, a professor of Medicine at Stanford. Dr. Gardner was a seasoned veteran of biotechnology businesses and served on several boards. She always believed that the technology, as described by Holmes, could never work. She discussed this with Holmes often and was frustrated that so many other people believed in her and Theranos. She was so passionate about this, when Carreyrou interviewed her for his book she said, “The hubris of that just drove me insane. Don’t call her ‘brilliant.’ She is just a whipper-snapper kid. It was very tough for me all of those years, and part of it was that women were idolizing her. I didn’t like that they were idolizing a fraud.”
Things began to unravel after raising about $800 million and achieving a valuation of around $9 billion. Carreyrou published a series of articles in The Wall Street Journal questioning the Theranos technology's validity before publishing his book. There were more questions and failed tests, including a shut-down of a Theranos lab by the FDA and CMS withdrawing reimbursement for Theranos lab tests which led the company to close all of its labs. Eventually, in 2018 Theranos ceased operations, and Holmes and Balwani are now on trial for fraud.
Innovation that genuinely transforms and improves our world is challenging. But it shouldn’t be. Whether we are innovators or leaders of current institutions, the thing that holds us back is how we think. Innovators who are arrogant and try to force change aren’t likely to be successful, even when they think they’re trying to improve our world. Innovators who are primarily self-serving, attempting to make as much money as possible, may become wealthy – still, they are not innovators, and their financial success doesn’t improve our world.
The higher-brain innovator shows vulnerability; they don’t hide behind a façade of certainty and power. True human-centered innovation is fueled by humility, empathy, transparency, collaboration, and accountability. This type of human-centered design led by innovators demonstrating higher-brain thinking and behavior will help transform our global healthcare system and improve our world. But for this to happen, we will need more leaders in healthcare and in our society to develop higher-brain thinking as well. The current lower-brain thinking that is entrenched in healthcare's status quo, and in our world, severely inhibits innovation.
The need for institutional leaders to develop higher-brain thinking that can facilitate innovation will be continued next week in the second part of this blog post.