This article is an extract from Performance, Volume 5, Issue 2, May 2013. The full journal is available at
www.ey.com/performance
Case study
Case
study
A view beyond the horizon:
cross-industry innovation
in the health care sector
Why do firms within the health care sector frequently apply cross-industry
innovation? This article highlights cross-industry innovation initiatives within
this specialized market, and explores the organizational capabilities and
internal structures that could foster cross-industry innovation in products,
services and even new business models in this area.
10
Volume 5 │ Issue 2
This article is an extract from Performance, Volume 5, Issue 2, May 2013. The full journal is available at
www.ey.com/performance
Authors
Karoline Bader MA
PhD candidate at the Chair for
Innovation Management
Zeppelin Universität gGmbH, Germany
Ellen Enkel Prof. Dr. Phil.
Head of the Chair for Innovation Management
Zeppelin Universität gGmbH, Germany
Charlott Buchholz Bachelor student
Corporate Management and Economics
Zeppelin Universität gGmbH, Germany
Lorenz Bohn Bachelor student
Corporate Management and Economics
Zeppelin Universität gGmbH, Germany
11
This article is an extract from Performance, Volume 5, Issue 2, May 2013. The full journal is available at
www.ey.com/performance
Case study
CII is the process
by which firms
systematically
incorporate external
knowledge, concepts
or technologies
from more or less
distant industries
into their own
innovation process.
O
ver the past decade,
collaborations across
industry boundaries
have become
increasingly popular
in the corporate
world. Cross-industry
innovation (CII) is the
process by which firms systematically
incorporate external knowledge, concepts
or technologies from more or less distant
industries into their own innovation
process. In so doing, firms can foster
product, service and even business
model innovations.1 Used primarily in the
development of new products, CII is an
attractive method for generating both
radical and incremental innovations.2 The
CII process can be defined as:
1. Abstracting a problem uncoupled from
the company’s own industry
2. Finding solutions to this problem
through analogies in foreign industries
3. Transferring these analogies in a
way that they are applicable in the
company’s own industry3
Prior research suggests that firms
are able either to enhance a product’s
novelty value (e.g., create more radical
innovations) or increase effectiveness via
12
Volume 5 │ Issue 2
CII initiatives.4 In this context, analogical
thinking helps firms to discover such
innovations, and possibly increases financial
performance after a successful transfer
and implementation within the company’s
own industry.5 CII also assists firms in
cutting down uncertainty and risk in their
innovation processes, because the solutions
and technologies it introduces have already
worked successfully in a different market.6
The strict laws and regulations of the
health care sector can be challenging.
Therefore, firms in this sector are often
forced to achieve two simultaneous
objectives: an increase in innovation novelty
as well as an increase in efficiency. CII can
be a logical way to achieve these goals,
because differences in the mindsets of
cross-industry partners help firms to look
beyond their usual horizons. In addition,
cross-industry solutions might enable firms
to organize their innovation processes in a
more effective way.7
In analyzing CII in the health care sector,
we interviewed seven companies about
their CII initiatives and market position,
as well as organizational structures and
processes for cross-industry thinking. We
spoke to both large corporations and small
and medium-sized enterprises, in order
to guarantee an adequate data range.8 To
augment validity and evaluate the results,
This article is an extract from Performance, Volume 5, Issue 2, May 2013. The full journal is available at
www.ey.com/performance
A view beyond the horizon: cross-industry innovation in the health care sector
CII assists firms in cutting down
uncertainty and risk in their
innovation processes, because
the solutions and technologies it
introduces have already worked
successfully in a different market.
the data collection was based on semistructured interviews that were triangulated
with archival data, internal documents and
management literature.9
The following two case studies are good
examples of CII initiatives in the health
care sector — and the actions taken by
firms prior to their implementation. In this
context, CII products, services and even
business model imitations across industry
boundaries are covered topics. With respect
to the latter aspect, some firms in the
health care sector have obviously started
to imitate specific business model elements
of distant industries and integrate them
in their own business models. 3M and
Aesculap offer particularly useful examples
of CII processes, structures and formats,
and demonstrate how to approach partners
across industry boundaries.
Table 1. Overview of case firms within the health care sector
Company
Number of
employees
Preferred cross-industry
innovation formats
Concrete cross-industry
innovation examples
3M
84,000
► Integration of lead users across
industry boundaries (e.g., via
workshops)
► Cross-business unit innovation
Medical tapes, electronic stethoscopes,
surgical masks
MedCorp2
12,000
► Scouting initiatives across industries
(e.g., via fairs and conferences)
► Transfer of business model
elements from foreign industries
and integration within own, new
business models
Transfer of fleet management
idea from automotive industry on
surgical instruments for hospitals
and on protective equipment for
chemical plants
Aesculap
10,000
► Scouting initiatives across industries
► Transfer of business model
elements from foreign industries
and integration within own, new
business models
Procedure Kit: transfer of fleet
management idea from automotive
industry on specific instruments
for surgeries
MedCorp4
968
► Scouting initiatives across industries
and, particularly, transfer of foreign
process solutions in the own area
Process improvements, e.g., imitation
of air cargo processes and services,
and transfer on patient treatment
(including safety measures)
MedCorp5
640
► Cross-business unit innovation
Special lighting system with
highest degree of adjustability and
conscientious power consumption
(transfer of solution from
automotive industry)
MedCorp6
MedCorp7
300
220
► Pushing a single solution or
technology in a variety of distant
market domains
► Cross-business unit innovation
Internal improvement of different
production processes by transferring
single functions across several
business sectors
► Cross-business unit innovation
Bone cement, Teflon-covered implants
1. C. Herstatt and K. Kalogerakis, “How to use analogies for
breakthrough innovations,” International Journal of
Innovation and Technology Management, vol. 2 no. 3, 2005,
pp. 331–347 and E. Enkel and F. Mezger, “Imitation
processes and their application for business model
innovation: An explorative study,” International Journal of
Innovation Management, vol. 17 no. 1, 2013 (forthcoming).
2. K. Kalogerakis, C. Lüthje and C. Herstatt, “Developing
innovations based on analogies: Experience from design and
engineering consultants,” Journal of Product Innovation
Management, vol. 27 no. 3, 2010, pp. 418–436 and B.
Nooteboom, W. Vanhaverbeke, G. Duysters, V. Gilsing and A.
van den Oord, “Optimal cognitive distance and absorptive
capacity,” Research Policy, vol. 36 no. 7, 2007,
pp. 1016–1034.
3. O. Gassmann and M. Zeschky, “Opening up the solution
space: The role of analogical thinking for breakthrough
product innovation,” Creativity and Innovation Management,
vol. 17 no. 2, 2008, pp. 97–106.
4. C. Herstatt and K. Kalogerakis, “How to use analogies for
breakthrough innovations,” International Journal of
Innovation and Technology Management, vol. 2 no. 3, 2005,
pp. 331–347 and K. Kalogerakis, C. Lüthje and C. Herstatt,
“Developing innovations based on analogies: Experience
from design and engineering consultants,” Journal of
Product Innovation Management, vol. 27 no. 3, 2010,
pp. 418–436.
5. G. Gavetti, D. Levinthal and J. Rivkin, “Strategy making in
novel and complex worlds: The power of analogy,” Strategic
Management Journal, vol. 26 no. 8, 2005, pp. 691–712.
6. E. Enkel and O. Gassmann, “Creative imitation: Exploring the
case of cross-industry innovation,” R&D Management,
vol. 40 no. 3, 2010, pp. 256–70.
7. K. Kalogerakis, C. Lüthje and C. Herstatt, “Developing
innovations based on analogies: Experience from design and
engineering consultants,” Journal of Product Innovation
Management, vol. 27 no. 3, 2010, pp. 418–436.
8. K. Eisenhardt and M. Graebner, “Theory building from cases:
Opportunities and challenges,” Academy of Management
Journal, vol. 50 no. 1, 2007, pp. 2–32.
9. R. Yin, Case study research: Design and methods (Thousand
Oaks, CA: Sage Publications, 2003).
13
This article is an extract from Performance, Volume 5, Issue 2, May 2013. The full journal is available at
www.ey.com/performance
Case study
Case study
3M
A range of lead
users, from theater
makeup artists to
veterinary scientists
and oceanographers,
contributed to
the creation of
an antimicrobial
armor line.
14
3M (Minnesota Mining and Manufacturing)
operates in various industries and is one
of the world’s most innovative multitechnology companies. In 2011, 3M had
84,000 employees worldwide and achieved
a turnover of US$29.6 billion. It sells
industrial services, office supplies, a variety
of products for the health care sector
and much more. 3M’s ability to come up
with both radical innovations, such as the
Littmann Electronic Stethoscope or Post-it
Notes, as well as incremental innovations,
is highlighted by the firm’s successful
product launches in a variety of markets.
3M’s emphasis on innovation means that it
is important for the company that at least
35% of its products have not been on the
market for more than five years.
Since 3M generates a big portion of its
turnover from radical innovations, CII has
become a key initiative for the company.
3M also distinguishes between “inside-out”
and “outside-in” CII processes. As part of
its outside-in CII, 3M regularly integrates
insights gained from lead users in distant
fields into its innovation processes. For
instance, the lead user methodology was
applied to bring about a revolution in the
field of surgical infection control. A range of
lead users, from theater makeup artists to
veterinary scientists and oceanographers,
contributed to the creation of an
antimicrobial armor line. Until this time,
Volume 5 │ Issue 2
3M had only focused on surface infection.
Based on insight gained from the crossindustry experts, 3M was able to develop a
breakthrough product line that could armor
catheters and tubes against unwanted
microscopic visitors. Based on the success
of a variety of projects using the lead user
methodology at 3M, several different
business divisions have now systematized
this CII initiative.
The inside-out CII process at 3M
involves the transfer of specific solutions
or technologies across industries that have
already worked successfully in one of the
firm’s actual markets. One example is the
non-woven fabrics that have been applied in
several 3M products. In general, non-woven
fabrics are elastic, soft, flame retardant
and liquid absorbent. Their resilience and
semi-permeability make non-woven fabrics
suitable for use in filtration systems, and
their superior strength and dielectric
performance make them perfect for use as
electrical insulators in machines. As such,
non-woven fabrics are widely used in the
automotive and chemical industries. 3M’s
objective is to distribute this technology
through several markets if possible, as
non-woven fabrics have a significant variety
of potential uses. They can be used as
a bacterial barrier, which makes them a
perfect component for medical products
such as surgical masks, and they can be
This article is an extract from Performance, Volume 5, Issue 2, May 2013. The full journal is available at
www.ey.com/performance
A view beyond the horizon: cross-industry innovation in the health care sector
used for medical tape, in place of plasters.
Non-woven fabrics are also washable and
water-repellant, which makes them ideal
for clothing, such as coats and jackets,
enabling 3M to also enter the fashion
industry with this product.
Although there are several examples
of CII at 3M, it is sometimes still difficult
to identify lucrative partnerships across
industry boundaries. In order to know which
cross-industry solutions and opportunities
are already available within 3M, the
company is structured in a way that is
comparable to a big technology platform.
3M is organized so that technologies with
potential cross-industry implications,
for example, adhesive technology, are
accessible to every individual business unit
(e.g., for office supplies or medical tapes).
In turn, each business unit is committed to
sharing technology and innovation with the
rest of the firm. 3M’s philosophy dictates
that all technological solutions belong to
everybody within the company. Hence, this
organizational cross-linking encourages a
high level of cross-business unit innovation
within 3M.
In addition, 3M is committed to
stimulating employee creativity. The
company’s “15 percent program”
encourages all employees to allocate 15% of
their paid working time to creative thinking
and discussion of their ideas in teams
(even across fields and business units).
This program also has a positive impact on
employees’ work satisfaction and individual
performance, and has even reduced sick
leave. In addition, 3M encourages its
employees to switch jobs between industry
sectors from time to time, to develop their
skills in analogical thinking. Such initiatives
also foster organizational cross-linking
within 3M and facilitate innovation across
business units, as employees get a better
overview of technological solutions in use
throughout the business.
Because 3M can revert to such a
broad knowledge base and use internal
technological expertise from a variety
of industries, integrating partners from
outside the business is not always
necessary. However, if technology screening
across business units does not deliver a
solution for a specific problem, then 3M
addresses external partners and asks for
help. Consequently, when employees at 3M
need to solve a technological problem, they
are encouraged to first screen the available
solutions across internal business units
before looking for external solutions.
3M is organized so
that technologies
with potential crossindustry implications,
e.g., adhesive
technology, are
accessible to every
business unit (e.g.,
office supplies or
medical tapes).
15
This article is an extract from Performance, Volume 5, Issue 2, May 2013. The full journal is available at
www.ey.com/performance
Case study
Case study
Aesculap
Aesculap AG is an affiliated company of B.
Braun Melsungen AG, one of the world´s
leading health care companies. Aesculap
focuses on products and services for core
processes in surgical medicine. In 2011,
it had approximately 10,000 employees
worldwide and, over the last few years, it
has created an innovation-oriented culture
and philosophy of which every employee
within the company is aware. Today, the
firm’s product range includes surgical
instruments, implants, endoscopes, surgical
motor systems, suture materials, container
and storage systems, as well as vascular
therapy products.
Aesculap frequently involves external
partners from different fields, such as
biomaterials or computer hardware, in
order to generate novel solutions and
improve current products and services; for
example, updating surgical instruments
to reflect changing surgical techniques.
Because the health care sector is a fairly
stable market, enjoying few macroeconomic
fluctuations, Aesculap is a very attractive
collaboration partner for potential crossindustry partners. Aesculap also has several
important and productive collaborations
with a number of universities across a
range of fields.10 Working with universities
means that new ideas, concepts and
cross-field technological solutions can
already be integrated within the early
innovation phase.
16
The company also leads the field in the
development of innovative business models
based on CII processes. It has created new
business models by consciously imitating
and transferring specific business model
elements from other industries. In so doing,
Aesculap integrates concepts and solutions
that have already worked successfully in
another industry.
The Procedure Kit is one example that
shows how to transfer a service, such as
renting a car, into the health care sector.
The Procedure Kit is a tool for highly
complex surgeries that provides specialist
instruments and implants in every single
size. The kit also includes a full support
service, including transportation to
and from hospitals, the cleaning of the
instruments after each surgery and other
aspects of “fleet management.” This service
means that hospitals can rent a Procedure
Kit for a specific surgery that might only
be conducted a few times a year, and hand
it back afterward, rather than purchase
and store the equipment. This can result in
major cost savings for hospitals.
Aesculap’s development of this business
model involved insights gained from the car
rental industry and, in particular, its fleet
management procedures. For Aesculap, it
is a profitable change from selling products
to offering a wide service range, and,
additionally, has allowed the company to
extend its value chain.
Volume 5 │ Issue 2
The Procedure Kit
is one example that
shows how to transfer
a service, such as
renting a car, into the
health care sector.
10. Aesculap heavily focuses on university collaborations
across fields, e.g., with Furtwangen University (medical
engineering), University of Tübingen (material and life
sciences), University of Stuttgart (biomaterials), University
of Applied Sciences Esslingen (innovation management),
RWTH Aachen (medical engineering), University of
Heidelberg (life sciences, medical engineering),
Ludwig-Maximilian-University Munich (biomechanics),
University of Freiburg (engineering), University of Ulm
(biomechanics), Berlin University of Technology (medical
engineering) and University of Grenoble
(medical informatics).
This article is an extract from Performance, Volume 5, Issue 2, May 2013. The full journal is available at
www.ey.com/performance
A view beyond the horizon: cross-industry innovation in the health care sector
We learned that several firms have
identified the automotive and
aviation industries as lead industries
from which they can regularly
transfer technologies, processes
and concepts.
Conclusion
We found that firms within the health
care sector require unique organizational
capabilities and structures to actually
create cross-industry products and
services, or even conduct business model
imitation across industries. Furthermore,
a company’s top-level management needs
to support such initiatives and should
particularly foster analogical thinking across
industry boundaries; for example, via job
rotation in distant business units, regular
cross-industry workshops and exchanges
with external experts at conferences and
fairs. Otherwise, CII is likely to work less
successfully than initially planned.
Based on our case studies in the health
care sector, we learned that several
firms have identified the automotive
and aviation industries as lead industries
from which they can regularly transfer
technologies, processes and concepts.
Two of our case study firms were even
able to conduct business model imitation
across the boundaries of seemingly very
distinct industries — transferring the fleet
management expertise from the rental
car industry into surgical instruments and
safety equipment. However, such radical
initiatives are only feasible if a firm is
willing to accept a certain risk level and if
it is keen on imitating good solutions from
other industries.
Furthermore, scouting and screening
initiatives need to be promoted outside of
the firm’s own sector, because otherwise
an increase in the products’ novelty value
and the introduction of new trends are quite
unlikely. In order to increase efficiency via
CII, our case study firms predominantly
mentioned cross-business unit innovation as
a suitable solution. In this context, a certain
degree of cross linking among the more or
less distant business units is inevitable.
Most of the firms that we examined are
active in a variety of industries beyond
health care, such as the fashion industry,
office supplies, safety equipment and
power tools, transportation, electronics
and telecommunications. As a result, these
firms work hard to organize themselves
in such a way that distant business
units can support each other with novel
technological solutions.
To sum up, firms in general should not
undervalue the importance of CII, as it can
provide new ways of thinking about and
solving problems that can set firms apart
from their direct competitors. CII can also
help firms to produce more pioneering
solutions within a specific market.
Additionally, CII can be applied to achieve
two separate goals: namely, an increase
in novelty value as well as an increase
in efficiency.
17