Living Through Budget Cuts: Mission, Communication & Metrics


What happens when times are tight. I worked at Kaiser-Permanente during the 2008-2009 recession, but it felt like that didn’t affect the health care industry, or our company, in a significant way. People continued to need health care. But when I was at Boston Children’s Hospital, as Chief Innovation Officer, there was a major budget cutting initiative of about 10-15 percent. So there was a lot of work done by everyone to try to slash the overall budget. For the innovation team, it was a period of belt-tightening. We weren’t immune from the pressures.

One of the impacts on us was that we had to freeze some of the newer, untested elements of our program. For example, we were setting up some internal social media capabilities and communities, but hadn’t yet had time to demonstrate the benefit, and didn’t have metrics. That project was shut down. But other core pieces where we’d had successes — and where people understood the value — continued. Examples included our digital health accelerator and our seed fund program. Obviously, in that time frame, the innovation program didn’t grow in headcount or tap into external resources. We learned to do more with fewer people.

My advice on how to respond.  First, you have to be able to defend your mission, and explain why your function is still critical to the organization. Downturns are an opportunity for further education on the value of an innovation program. It’s also an opportunity to focus on being part of the solution by applying innovation to achieve cost savings, improve efficiency, or create new revenue streams. I think a recession can be an opportunity for innovation teams to get into the spotlight and showcase what they do. Sometimes, the focus of your projects will shift when there’s financial pressure — to things like cost savings and revenue generation. Those things will get more attention.

What you can do in advance.  Continuous communication about the mission and value of an innovation program is critical. If the organization recognizes that your innovation program is integral, and responsible for some successes, it won’t occur to them to cut your function. Nobody tries to eliminate human resources or finance in a recession. If an innovation program has demonstrated its value, and people understand how critical it is to the organization’s overall success, the program is better positioned to survive a downturn or reduction in budget.

I think it’s good innovation program “hygiene” to always be marketing and educating people about the program, and sharing successes as they occur. If a group is doing these things, they’re going to be able to better weather a recession or budget cut.

In terms of communication, we published an innovation report to share the stories about our innovators’ success. We were heavy users of internal communication modalities, such as the electronic bulletin boards around the hospital and the digital newsletters. We made a point to always provide information and updates through these channels. But the relationship-building, including going from department to department and meeting regularly with the department heads, was the most impactful. People get more out of face-to-face meetings than reading a brochure. And yes, that takes a ton of work.

If you haven’t been building strong relationships in good times, it’s really hard to do it in tight times. You should think of it as an investment in good times from which you reap the rewards when times are tight.

The innovation group at Boston Children’s Hospital has continued to grow and is bigger than ever today. The hospital is very committed to innovation. The leadership believes in innovation as a core value and an important part of the business.

On metrics. You should be tracking metrics all along, so you’re not suddenly scurrying to create metrics once you’re under pressure. Metrics allow you to demonstrate your program’s success and progress over time. Metrics become more important when people are looking for a reason to cut your program.

What I’ve seen happen with other companies. The most common thing I’ve seen in recessions or periods of budget cuts is that groups get shut down completely. People can get laid off en masse, usually because the parent organization just doesn’t understand, appreciate, or recognize the value of the innovation program.

Being able to articulate an innovation program’s purpose and its contribution is critical. It serves you well in good times and can keep the program going in tough times. But it’s something that people often forget about in their haste to get quick wins on the board or to run certain high-profile projects. Innovation leaders need to invest in things that are not so sexy — like education, relationship building, and communication — but are vital for the group’s overall well-being and longevity.

Naomi Fried has served as VP of Innovation and Advanced Technology for the health plan Kaiser-Permanente, and as Chief Innovation Officer at Boston Chidlren’s Hospital. She is now CEO of the consulting firm Health Innovation Strategies. Featured image by Markus Winkler on Unsplash.