November 22, 2016, By Ben Sawyer, President of the Strategy Deployment Institute, and Donovan Kendrick, MD, Neurosurgeon and Chief Medical Officer, Baptist Health, Montgomery, Alabama
Like navigating a ship in rough seas, healthcare executives have spent the last six years acclimating to the turbulence caused by the Affordable Care Act. Just when many thought they had found safe passage, the presidency of Republican Donald Trump promises to bring challenging winds of change from the opposite direction. While no one knows exactly the size and direction of the turbulence, all executives agree that change is imminent and want to get out ahead of the storm. Fortunately, there are some competencies that can be developed to enable healthcare organizations to navigate safely to the right strategic position.
The first competency is understanding where your organization can best thrive in the new market. When asked the secret to his success, Wayne Gretsky, perhaps the greatest hockey player of all time, said: “you have to skate to where the puck is going to be”. That seems pretty obvious when stated so clearly, but just knowing that does not make it easy. That’s why he is Wayne Gretsky, and we’re not.
Given the turbulence of healthcare, “skating to where the puck is going to be” is considerably harder than in hockey. No one can tell the future, but the variables of strategy remain the same. They include answering these four questions:
- Where do we compete?
- What unique value do we bring to win in those markets?
- What resources and capabilities do we utilize to deliver that value?
- How do we sustain our ability to provide that unique value?
Together, these variables make up the ‘right strategy, right time, right place, right execution’ equation.
The second competency is being able to successfully navigate within a rapidly changing marketplace. In complicated markets, like healthcare, where the entire delivery and reimbursement system is transitioning from volume to value, not knowing where the puck is going to be can mean you can be out of the game – quickly. As this graph and list of current market conditions demonstrates, there is a lot of turbulence, and the roadmap is unclear.
Era of the hospital as we know it is ending
Financial crisis in the economy is accelerating hospital losses and the need for change
New business models are emerging and accelerating
Cost pressures are rising on the healthcare enterprise
Profitable volume is declining
Performance accountability is accelerating: HCAHPS, VBP, Bundles, ACO’s Population Health, and Full Risk Scenarios.
The third competency is operational responsiveness and strategic execution. Peter Drucker said, “turbulent change does not scare me. Living by yesterday’s rules in today’s environment does scare me.” It’s not the current turbulence that should concern us. The scariest thing is to try to navigate this rapidly changing environment using outdated rules, ways of acting that are too rigid or slow, or depending on approaches that no longer match the times. For example:
- Decision making processes – Is your organizational decision-making decentralized and empowered, or top down and bureaucratic?
- Responses to changing market conditions – Is your organization nimble, or does it still take a while to turn the ship?
- Customer service – Is your organization streamlined and responsive, or silo-based and delayed?
- Process execution – Is your organization efficient, or wasteful?
- Planning and deployment – Is your strategy implementation orchestrated and effective, or is your planning and deployment process synonymous with your budget cycle, and your responses reactive?
Wayne Gretsky and Peter Drucker are both providing us the same advice. We all need to develop the organizational competencies to effectively “anticipate and execute” no matter what the conditions! But, since change is nearly constant in many organizations, and your people are being pummeled by wave after wave, they’re often left feeling depleted. How do you achieve organizational readiness when your team is already struggling with change fatigue? Nothing energizes an organization like knowing they are winning. When your team has clarity of purpose, which Dr. W. Edwards Deming referred to as the “aim of the system,” along with the delineation of core business fundamental strategies, key process measures, and change management mechanisms, your associates can focus on making positive progress.
The diagram below represents the Strategy Deployment process, the ultimate “anticipate and execute” system. In Japan, strategy deployment is referred to as Hoshin Kanri. Ho means “direction”, shin means “needle”, and Kanri means “execution”. Appropriately then, Hoshin Kanri is represented by the metaphor of “a ship in a storm going in the right direction”.
This metaphor is important, as Strategy Deployment is often implemented during turbulent market conditions. In fact, as its metaphor implies, Strategy Deployment is the solution to implement when there is turbulence, and aggressive market conditions.
Effective Strategy Deployment requires both vertical integration and cross-functional alignment so that everyone is on the same page and working together for a shared purpose. No role is left out of the process. From executives to frontline associates, everyone is involved. Silos are overcome in the most effective way within the Strategy Deployment process. Departments that used to be pockets of knowledge and control, now become active participants in an enterprise-wide customer first, zero defect journey.
The Strategy Deployment process reflects the natural maturation of high-performance organizations. Operational improvement occurs in this order:
- Stabilize – Ensuring that the four M’s (manpower, methods, machines, and materials) are adequate and functioning effectively.
- Flow – Eliminating bottlenecks, unnecessary delays, or workarounds in the process so that production progresses smoothly from one functional area to the next.
- Pull – Creating just-in-time demand fulfillment so that upstream actions consistently fulfill downstream production requirements.
- Improve the system (seek perfection) – By continuously evaluating performance against target measures, and conducting rapid cycle improvements, called Kaizens, to ensure that goals are consistently achieved. (Kaizen is the practice of continuous improvement).
Even though political events like the direction of the new administration can’t be fully anticipated in advance, the resulting challenges can be anticipated and planned for so that your organization can navigate safely and effectively to a successful strategic destination, and win. The imminent changes will likely be disruptive and a catalyst for necessary improvements. A well-executed Strategy Deployment process, launched now, can lift your organization to new levels of success. As Peter Drucker famously stated: “Strategy is a commodity, execution is an art”.