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S.M.A.R.T. Objectives: An Essential Step in Strategy Formulation

We are often asked to weigh in on organizational strategy when the proverbial “house is on fire” and a client’s business is experiencing challenges. Our first question to the CEO and his/her staff once we begin our consulting journey is simply, “what is your objective?” Many times there is uncomfortable silence, or clients offer admirable and ambitious objectives that are not quantifiable. Things like “we want to be the high quality provider” or “we want to delight our customers.” In one instance a CFO told us “I’ll worry about the financial objective later, I want to talk strategy!”

Aspirational and inspirational rhetoric is valuable in many contexts. Leadership arouses energy and enthusiasm with aspirational declarations from the podium. And Mission and Vision statements are appropriately fraught with statements that reflect aspirations and commitments to what we want our organization to “do and be.” That’s fine. What’s not fine is when we confuse these things with business performance objectives.

Needless to say, with no clear objective, there can be no clear strategy. When there is no clear S.M.A.R.T. objective, an organization has difficulty deciding how to align activities and resources in ways that will result in achievement of that objective. For example, “to be the Quality Provider” is much less clear than saying “by December 31, 2011, we will be in the top 15% of VHA Hospitals in Employee Satisfaction Scores.”

A clear, focused objective is the first step in creating winning strategy. But the discipline required for the first and crucial step is often deficient. Or if the willingness to articulate an objective exists, often times, the rigor necessary to create a truly focused one is lacking.

Before we can evaluate the strategy and tactical plan that supports the strategy in any strategic plan, we need a S.M.A.R.T. objective. Whether we’re talking about an organization, a business unit, or an individual, when we are faced with evolving terrain realities that are forcing us to change and we’re assessing our strategy, we must begin with the objective.

So let’s do a quick refresher on the S.M.A.R.T. acronym. All Objectives need to pass 100% rigor on each of the acronym planks:

Specific: Hone in with focus on exactly what it is you want to accomplish.

Measurable: Mathematics folks, mathematics. Every objective needs arithmetic components. Share growth, raw unit volume or dollar volume, number of measurable responses…etc.

Attainable: Stretch is good, but let’s not make our objectives so ambitious that there is NO way we’ll hit it. Too much stretch and your teams will never own the journey involved in accomplishing the objective.

Realistic: This is NOT redundant to the Attainable plank. This measure offers balance to the Attainable challenge. We don’t want too much stretch in our objective but we also don’t want to under-set the bar. The “A and the R” become checks and balances to assure the correct amount of healthy tension in our objective.

Time Bound: Put a stake in the proverbial sand regarding the drop-dead date that you want to celebrate having achieved the objective. Why? Because we need to know when to order the party favors and balloons for the celebration. Seriously folks, “Ongoing throughout 2011” as your drop dead date assures that energy and focus regarding the importance of achieving the objective will dissipate.

The remaining steps in the strategic process involve a thorough knowledge of oneself, the environment as well as the competition then culminating in an honest assessment of your unique strengths against the competition. Once those unique strengths have been distilled, the strength that yields the raw material for most efficiently accomplishing your objective should be chosen and tactically executed. Rigor in all aspects of the strategic process is sometimes lacking. Short term tactical distractions and quarterly earnings “panics” often times draw focus away from a longer view of our world and the rigors of sound strategic processes.

Rigorous strategic processes begin with clear intent and preferably, are grounded in S.M.A.R.T. objectives. So what is the S.M.A.R.T. objective in the development of ACO’s or for that matter in healthcare reform as a whole? “Improving the quality of care while lowering costs through collaborative care” sounds good, but does it pass the S.M.A.R.T. test? Since the reform law as written left a tremendous amount of latitude in HHS and CMS, many of the elements of sound strategic planning seem less than rigorous at this point. And frankly, a singular S.M.A.R.T. objective for healthcare reform might not pass the Attainable and Realistic test in spite of our best efforts at creating one.

A more prudent approach might have been to establish S.M.A.R.T. objectives for specific reform targets within the healthcare delivery value chain. Those might include Access, Quality, Commercial Insurance and Federal and State Government plans for example. Once the S.M.A.R.T. objectives were established within these targets, then one could determine more precisely and relevantly an ACO model.

Less than rigorous S.M.A.R.T. objectives often become a causative variable in organizational under-performance and contribute to morale challenges. When business units and individuals are unsure about how the organization defines a “win,” there will likely be a lack of commitment and focus. And since those two pieces of the reform strategic plan are wobbly at best, as Lewis Carol might have said “that ACO road looks pretty good too”!

Matt Modleski is a vice-president with Stovall Grainger Modleski Inc, a strategically focused organization that consults and trains clients who sell and market goods and services to the healthcare economy. Matt has extensive experience in strategic leadership, management, and healthcare consulting. Prior to his work in healthcare sales and marketing, Matt was an accomplished pilot moving up through the ranks in the U.S. Air Force. He was the 355th Wing Instructor Pilot of the Year and also a lead member of the United States Air Force Air Demonstration Squadron, better known as The Thunderbirds.

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Rebecca
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It is challenging from a consulting perspective to help a client regain their vision and focus for what they want since it is so easy to “lose your way” when distracted by so many issues on a daily basis in healthcare today.
On a similar note, I wrote a blog post about S.M.A.R.T. goals for Practice Managers in order to assist physician practices with realistic projections and vision.
Rebecca
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