What Company Will You Keep? Strategy In Health Care’s New Era

Joe-FlowerHow do you plan? Obviously, you have to. Obviously, you can’t.

For your organization, and for you as a health care leader, the rapid and, at times, chaotic changes in the payment systems, the purchasers’ strategies, your population base, new technological possibilities, and the competitive landscape mean that you must plan for the future and act vigorously to make that future happen — or you fail. At the same time, those very same factors render traditional planning methods irrelevant, impossible, even deadly.

The movie line that comes to mind is, “Forget it, Jake. It’s Chinatown.” But we can’t just forget it. We must figure this out.

Let’s step through it: the shape of the complexity we are dealing with, how the process must change to deal with it. Then we get to a core issue that often gets overlooked: What kind of mind do we need for this new thinking, and how do we cultivate it?


Today, not only is the environment far more complex, not only is the rate of change higher, but the very nature of the change is far more complex, as each changing vector influences others in ways that rapidly lead us beyond any simple prediction or trend lines.

In the past, each strategic decision (say, to go big on a cath lab, or to pour capital into the cancer program) operated in parallel with whatever else you were doing. Each had its own revenue streams and outputs, often even its own sources of capital in bond programs and charitable funds. They were additive. They influenced one another only marginally.

Today, in the movement from volume to value and the roiling of purchaser markets, the output of any one strategy becomes the input of other strategies. For instance, if you are really successful at a program of marketing segmentation that targets superusers for extra help, your emergency department and acute admissions will drop, as will income from procedures. And the inputs and outputs shift in time: A population health management program keyed to an accountable care arrangement will require significant resources now to produce an unknown amount of savings or revenue in two years or more.

A set of vectors in which the output of one process is the input of another in overlapping and iterative feedback loops: This is the definition of a complex adaptive system, an irreducible complexity whose outputs are by nature unpredictable. This is health care today, with multiple new inputs and constraints, and multiple new interconnections.

Sneaker Waves

This complexity means that many of the strategy choices health care organizations are taking today are seat-of-the-pants guesses, operating on a wing and a prayer, in structures held together with chewing gum, duct tape and baling wire. They give good PowerPoint, but you only have to lift up a corner to see the patches and gaps and notice that one tire won’t even make it to the county line. Will it work? We can’t tell because we haven’t done it. It’s prototypes all the way down.

Experiments are great. Ad hocery is necessary. Prototypes are part of the process. But you can’t build your organization on prototypes and pilots.

You know what a sneaker wave is? If you’re a sailor, you do. All mariners know about sneaker waves or rogue waves, massive things two or three times the size of the waves around them that can arise without warning to swamp and even sink ships. A sneaker wave is an expectable artifact of any sufficiently complex system. Such overpowering anomalies arise from a combination of unknown, insufficiently known, rapidly changing inputs, interacting in a complex adaptive system.

Where are these sneaker waves hiding? They are hiding in your assumptions, in your unasked questions, in your lack of information, in the narrowness of your search.

How Is It Different?

Strategy planning today must be vividly different from what we used in Ye Gud Olde Days:

  • Broad: The scan of your environment, populations and possibilities must be much broader than we are used to.
  • Assumption-free: It’s not enough to simply declare the planning effort an assumption-free zone. The planning effort has to incorporate processes designed to ferret out the organization’s shared assumptions, examine them and overturn them.
  • Seek experience elsewhere: Your organization may not have much experience with these new strategic possibilities, but somebody does. For somebody, this is not a prototype but a proven model. You must gather those experiences and examine them to see how their environment and resources are like and not like your own. This is one of the major values of using consultants who have worked broadly with other organizations.
  • Experiment: In a changing environment, you will never have what feels like enough information to act. You must be willing to try things before you can prove that they will work. Then you must be rigorous about what each experiment teaches you, and act on that information early.
  • Constant process: Producing a five-year strategic plan, then implementing it, is a suicide pill. Strategic planning must be a constant dynamic process, ready to start, change or kill initiatives as new experience and inputs come to light.

Taken together, this means we have to learn to think differently, even perceive differently, both as an organization and as health care leaders. So it’s about the process, but it’s also about the mind — your mind and the group’s mind.

The Process

Let’s take a look at the process first.

What’s the process?

We’re going to take your bog-standard strategic planning process and add three important new elements to it.

In Standard Land, the world the way it was, we would start with scanning your environment, your internal environment and your intelligence resources. You know the drill: The environment is mostly your three Ps: payers, purchasers and politics. The internal asset scan is much more complex, ranging from physician relations to physical assets, capital capacity, present and potential revenue streams, cash flow vs. budget, and present organizational culture and politics. Then your intelligence and resources, the database of experiences elsewhere in health care that you have constructed or your consultant has brought you, strategies that have been tried elsewhere, the elements and results of those strategies.

Standard, but necessary. You must know this stuff in a way that can be written down. And because in this new era the process will be constant, all of this has to be brought into a database that is coded, tagged and easily accessible for your staff, all for the next iteration.

The three added elements the new era demands are roots, assumptions and loops.

Roots. It’s easy to get lost in all this change unless you are firmly anchored in the answers to two questions: Who are you, what are you here for? And: What kind of institution are you?

The first is a question of DNA and heritage. What is your mission (in plain English, not that wispy stuff most people use for mission statements)? Are you a for-profit? Are you out to help the poor and disadvantaged? Nurture the health of the whole community? Are you out to make health care really work better for a defined portion of the population (say, employees of major firms) by bringing them health care in a better business model?

The second is similar, but more nuts-and-bolts: Are you a major teaching and research center? A community hospital in an upscale area? A city general hospital with a Level I trauma center? A rural hospital? Part of an integrated delivery network?

You must also work through these two questions for yourself as a health care leader: What are you really here for? And: What kind of person are you, really?

A clear understanding of these two questions is key. You can set any aspirational stretch goals you like, but if there is visible variance between that goal and what you are really here to do, and what you are made of, then the goal is useless or, worse, a distraction.

This is best done at the beginning of the process.

Assumptions. Before moving onto solutions and strategies, take a side step: It’s time to root out assumptions and falsify them wherever possible. This is not easy. It calls for a process that is rigorous, written, thoughtful and direct.

You can use any number of specific processes. But the details of the process matter less than that you have one, and use it rigorously. You don’t think differently just by wanting to.

Loops. As you move forward to evaluating strategies, you must remain aware of the complex feedback loops that they will all participate in. For example: How are these new revenue streams likely to affect each of the others? Will your venture into neighborhood urgent care cut your acute and emergency income? You must attempt to ferret them out and try to predict their size and the nature of their influences.

From Intelligence to Action

Possible strategies will suggest themselves directly out of the process of intelligence gathering, internal and external scanning, and challenging assumptions. Gather them. Do not judge them prematurely.

Make a list; then process the list. If something is mandatory, set it aside. It’s not a strategy; it’s a task. A strategy is a separable set of tasks and tactics that solves a problem. Make vague strategies specific. “Go lean” isn’t actionable. “Institute lean manufacturing processes in each department” is closer. Make sure it is a separable strategy, one that can be followed independently of other strategies. If not, find the knot that it is part of — that’s a strategy.

That done, take your list of possible strategies and rate them by answering a series of questions, such as:

  • Solution: Does it solve a problem? Which? Whose? Yours or someone else’s?
  • Size: Is the problem big, measured by revenue, by impact on the populations you serve, or by laying the foundation for other large changes? Or, is it interesting but small-scale?
  • Alignment: Does this problem and this solution align with your roots questions, who you really are and what you are trying to do?
  • Allies: If the problem it solves is partly someone else’s, can you make that someone else your partner, ally, supplier or buyer?
  • Urgency: How urgent is this problem?
  • Immediacy: Is the solution something you can act on now? Take a first step toward? Launch a prototype?
  • Workability: How workable is it? If it is not very workable, it may be the wrong size. Can you slim it down? Can you carve off a chunk that is workable? Alternatively, can you go big, enlarging the strategy in a way that might bring in new resources, new partners, new revenue streams?
  • Prototyping: How can you prototype it? Far too many health care strategies go big on the prototype without sufficient testing. This is exactly what happened to Healthcare.gov in the fall of 2013.
  • Resources: What resources does it take — capital, personnel, physical plant, management? Can you gather or deploy them in a reasonable time frame?
  • Options: Does this option foreclose other possibilities? Or can it be run in parallel?

Honest and rigorous answers to these questions will give you a strong basis on which to eliminate possibilities and prioritize others. This is your strategy.

The Mind

To do this right, what kind of mind do you need, does your organization need, to foster?

What company will you keep?

So, we not only need different thoughts; we need in many ways a different mind, a paradoxical mind that can think in different ways, broader, with more suspension of disbelief, readily combining imaginative leaps with stepwise analysis, able to spin up scenarios and to break down the project and its inputs and outcomes over time, combining depth of experience with a freshness of thought.

In your organization, you do your best to put the right people in the right spots, implementers for implementation, team-builders for team-building, analysts for analysis, engineers for engineering. For your continual future-proofing you will use consultants and executive coaches. In doing this, you have to ask yourself not only whether they are technically competent, but also whose company you want to keep — because this will greatly influence the kind of mind you wish to foster in yourself and in your organization.

In my trajectory as a health care futurist, I was greatly shaped by the 60 classic masters of change and leadership from Peter Drucker to Jim Collins, Peter Schwartz to John Seely Brown, Warren Bennis to John Gardner to Ronald Heifetz, whom I interviewed over an intense period of 15 years. I was immersed with them in what works, what doesn’t and why. They are on the team of voices in my head who profoundly shape my thinking, even today. Who do you want on your team?

As you move forward into new territory, who would you choose to sit on your shoulder and advise you, whether you’re in a meeting at a long table, or alone at your desk, staring out the window? What must those angels be like? When you’re pushing forward to new horizons, it’s not just the external conversations that matter, it’s the internal ones.

Joe Flower is a contributing editor at The Health Care Blog. This column also appeared on the American Hospital Association’s Hospitals and Health Networks.

4 replies »

  1. “You must be willing to try things before you can prove that they will work. Then you must be rigorous about what each experiment teaches you, and act on that information early.”

    Lean 101. Rapid cycle PDSA.

  2. We tend to be risk-averse in the healthcare world. Being plunged into a rapidly-changing environment means an environment that is all risk, all the time. it is much more like the tech startup world, where we hear mantras like “fail quickly” and “fail forward.”

    These mantras acknowledge that most prototypes will not be perfect. That’s what prototypes are for: To show us the weaknesses in the concept. But to learn from the prototype and move forward to the next stage, we have to kill the prototype and re-position the assets.

    That is harder to do in healthcare, because it’s not just about re-deploying capital, it’s about providers’ careers, it’s about finding different funding sources and revenue streams, and its about the populations you serve and how to serve them better. It’s not only a world that our training and experience does not shape us for, it’s a world that is orders of magnitude more complex than the startup world that we need to emulate.

  3. Great post, Joe. Love this line in particular.

    You must be willing to try things before you can prove that they will work. Then you must be rigorous about what each experiment teaches you, and act on that information early.

    This is something many folks in healthcare have difficulty with. Why is this? What can we do to get this part right. Can you talk a little bit about that?

  4. “Constant process: Producing a five-year strategic plan, then implementing it, is a suicide pill. Strategic planning must be a constant dynamic process, ready to start, change or kill initiatives as new experience and inputs come to light.”

    Google “Effectuation.”