Organizations today are navigating constant disruption, driven by technological shifts, changing customer expectations, economic pressures, and workforce dynamics. While Lean and continuous improvement methods have helped optimize operations, they often fall short when addressing complex, open-ended challenges.

Fieldwork at UC San Diego Health demonstrates that transformational innovation can be successfully in-sourced. Rather than outsourcing change or acquiring startups, organizations can leverage their internal talent and capabilities to create new value, enter new markets, and reposition themselves. This approach is applicable to a wide range of institutions seeking to evolve their service offerings and societal impact.

Understanding Innovation

Innovation efforts must be aligned with the type of change being pursued. Core innovation focuses on optimizing existing processes. Adjacent innovation expands into related areas, while transformational innovation creates entirely new value propositions (Nagji & Tuff, 2012).

UC San Diego Health uses Lean methods to drive core innovation, improving operational efficiency. However, persistent high readmission rates revealed the limits of incremental change. The organization shifted to adjacent innovation, implementing cross-functional strategies that significantly improved readmission rates and post-discharge access and elevated their national ranking.

Later, they pursued transformational innovation by reimagining their call center as a Care Navigation Hub. This initiative brought together stakeholders across departments to create a system that anticipates patient needs and integrates services such as nurse triage, pharmacy refills, and care assistance. This wasn’t just a redesign, it was a redefinition that turned a reactive function into a strategic asset.

The Value Transformation Framework

Established Organizations can structure an environment to successfully drive innovation. The Value Transformation Framework (Figure 1) supports this.

Figure 1: The Value Transformation Framework illustrates the relationship between organizational maturity and value proposition.

The framework maps innovation efforts along two dimensions: organizational maturity and the novelty of the value proposition. The vertical axis represents the maturity of the organization, ranging from startups to established institutions. The horizontal axis reflects the nature of the value being delivered, from existing offerings to entirely new ones. This structure creates four quadrants: Improvement, Entrepreneurship, Unmet Needs, and Intrapreneurship.

Improvement occurs within mature organizations focused on refining existing processes. These efforts are typically structured, data-driven, and aligned with known standards. They support operational excellence, reliability, and cost-effectiveness. However, improvement can be limited by organizational inertia and may not be sufficient when external conditions change rapidly. The key to success in this quadrant is fostering a culture of continuous learning and empowering frontline teams to drive change.

Entrepreneurship is the domain of startups and early-stage ventures. These organizations operate with agility and creativity, developing new value propositions that often disrupt existing markets. While they benefit from freedom from legacy systems, they face challenges such as limited resources and regulatory barriers. Their strength lies in bold experimentation and rapid iteration to find product-market fit.

Unmet Needs represent areas where value is lacking and no organization has taken ownership. These gaps may include underserved markets or systemic inefficiencies that persist due to lack of visibility or incentives. Navigating this quadrant is difficult due to ambiguous problem definitions and unclear stakeholders. However, it offers significant potential for impact. Success requires systems thinking, ethnographic research, and cross-sector collaboration to uncover hidden needs and design inclusive solutions.

Intrapreneurship involves creating new value within established organizations. It combines the credibility and infrastructure of mature institutions with the creativity and agility typically associated with startups. Intrapreneurs challenge the status quo, identify opportunities, and develop novel solutions while operating within organizational boundaries. They often face cultural resistance, including fear of failure and risk aversion. Research shows that intrapreneurial success depends on cultural support, time to innovate, and internal credibility. Organizations that cultivate these conditions can unlock the full potential of their workforce and lead industry transformation.

Intrepreneurship in Action

When an established organization leverages its Improvement quadrant culture and channels Entrepreneurial quadrant traits such as agility, resourcefulness, and vision, the conditions for intrapreneurial success begin to take shape.

UC San Diego Health demonstrated intrapreneurship during the COVID-19 vaccine rollout. Rather than defaulting to clinic-based distribution, they set a transformational goal: vaccinate as much of San Diego County as possible, as quickly as possible. With only three weeks to prepare, they partnered with the San Diego Padres to launch a mass vaccination site at Petco Park. Through rapid iteration and intrapreneurial execution, they vaccinated 25 percent of the county in just 68 days, earning recognition from state and federal leaders.

Another example involved transforming their reputation to expand their impact. Historically known for advanced care, UC San Diego Health sought to become a provider of choice throughout patients’ lives. They convened 55 stakeholders for a week-long design sprint, which led to the launch of CommUnity Care and a redesigned patient experience. Over seven years, market share grew from 2 percent to 10 percent, reshaping their identity and resource allocation.

Conclusion

The Value Transformation Framework offers a strategic lens for guiding innovation. One of the most important insights the framework offers is that innovation is not the exclusive domain of startups. Established organizations can lead transformation from within. By embracing intrapreneurship, they can leverage their scale, trust, and expertise to deliver bold, impactful change.

Whether through partnerships or internal innovation, mature institutions are often best positioned to execute transformational change at scale. The framework encourages leaders to move from reactive problem-solving to proactive, purpose-driven innovation - unlocking the full potential of their organizations.