Carlson's Law

September 24, 2011 - In That Used Be Us: How America Fell Behind in The World It Invented and How We Can Come Back (Farrar, Straus, Giroux, 2011), Thomas Friedman and Michael Mandelbaum argue that most innovations occur from the bottom-up, from people on the ground who deal with real issues, rather than from the top-down, from Washington, D.C. or executive suites, from those who deal with problems from a distance.

To make their point, the authors cite Carlson’s Law. Curtis Carlson is CEO of SRI International, a Silicon Valley Innovative Laboratory, that advises major corporations and governments on what to do in a computerized, hyper-connected, rapidly evolving world in a driven by globalization and IT technologies.

Carlson’s Law is:

Innovation that happens from the top-down tends to be orderly but dumb. Innovation that happens from the bottom-up tends to be chaotic but smart.

The intent of the health reform law is to introduce order into the health system, but it is dumb because of its unforeseen consequences, which include increased costs and premiums, employers dropping health plans, and job-killing effects based on the uncertainties of its effects.

Meanwhile bottom-up chaotic market driven changes are underway - messy consolidations of hospitals and doctors, doctors not accepting new Medicare and Medicaid patients, abandonment of primary care, health plans leaving markets and raising premiums, doctors dropping out of third parties to form concierge practices, and states and business organizations calling for repeal of Obamacare.

Physicians are trying to innovate to adjust to the new economic and social realities by joining together with other practitioners, becoming hospital employees, and aligning with large hospitals and other health systems for capital, administrative, and technological resources and to meet compliance and legal obligations.

Practicing physicians are seeking to make changes that keep them in business. Much of what they are doing focuses on bottom-up changes - they are asking their office staff, “How can I do this better?”’ they are appointing a member of their staff as a Chief Innovation Officer; they are fine-tuning their information technologies to communicate better with patients ; they are sharing resources and expenses with other doctors.

Above all else, they are making up new bottom-up arrangements with patients empowered by information garnered on the Net . These new arrangements include direct-pay arrangements, concierge practices, negotiating with patients on health savings accounts, private pay contracts with patients, and new modes of online communications such as Twitter, Facebook, and YouTube. Doctors are communicating more by email, encouraging patients to enter their own history and data, and tracking patients through embedded medical and direct audiovisual and telecommunication devices such as Skype.

In effect, these doctors are practicing constant innovation by taking advantage of every ounce of brainpower – their own and their patients - and in the process, bypassing some the “dumb innovations” imposed from the top-down.

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