Strategy and Visioning: Creating Order from Chaos
While consulting with a hospital, the chief medical officer (CMO) was lamenting the lack of success of the hospital’s strategic planning process. At the chief operating officer’s (COO’s) urging, the senior staff conducted an offsite retreat, facilitated by the CMO, to create a 3-year strategic plan. The outcome of the retreat was the framework of a strategy focused on increasing the quality of the patient experience while continuing to grow hospital patient volumes. The senior team identified four major initiatives to accomplish the strategy and charged the CMO with getting them implemented.
The CMO subsequently met with forty skeptical leaders throughout the hospital to help each of them create goals for their areas to implement the overall strategic initiative. These leaders had been the subject of numerous previously failed organizational and management development programs that were begun but never completed. The CMO planned to follow up with each leader on a quarterly basis to both monitor their progress and assist as needed. However, as with previous similar initiatives, within 3 months the strategy had been put on the shelf, having given way to the urgencies each day brings to a hospital. The CMO, already swamped with his regular job, had difficulty following up as promised. In addition, the CMO received little support from either the CEO or the chief financial officer (CFO) to continue the process. They argued that the hospital was already successfully running in the black and receiving some important national health care awards. Was a strategic planning process really necessary or just another distraction? Needless to say, the following year’s planning was primarily budgetary and only for the subsequent year. The strategy and its four major initiatives comprised yet another failure. Does this sound familiar?
The hospital leadership failed to recognize that the greatest benefit of strategic planning lies in making a good organization a great one through the discipline of preparation, forecasting, analysis, and relentless follow-up. They fell victim to the greatest threat to strategic planning, and, ultimately, organizational improvement—entropy. Entropy is rooted in not understanding the value of having a mission, vision, and strategies; not having senior support; being overwhelmed by the perceived volume of work involved; not having a complete process to execute. It is always easier for an organization to excuse itself by addressing the urgent at the expense of the important. In health care, especially, there is always the urgent!
Elements of Strategy
Organizations that are serious about growth and sustainability always prioritize establishing their mission, their vision, and core strategies. This process is crucial for organizations, no matter what the size or industry. They give organizations direction and momentum while serving to engage their employees. Because these concepts are so misused, and often misaligned, we will review them here.
Mission: The mission of any organization describes its reason for existence and provides the parameters that define the products, services, and markets in which the company will compete. This is crucial for any company to effectively establish itself and align its employees’ behaviors with the organizational goals. A good mission answers three questions:
- •What does the organization do?
- •Who are the organization’s end users?
- •How does the organization perform its tasks?
The organization’s mission is as important for what it excludes as for what it includes. For instance, in health care, a hospital provides medical services (what) to patients (who) through highly qualified medical staff (how). This mission can be narrowed further if the hospital specializes in a particular disease process (cancer, drug and alcohol recovery), narrowing its patient base and the kind of specialists that provide services. It is clear, however, that the hospital is not in the retail or food business, although physical space may be leased to companies for whom selling within a hospital is their expertise.
Once an organization’s mission is established, it changes only when there have been dramatic changes in the market, industry, or products and services. It is when organizations begin dabbling in areas outside their core mission that problems usually occur. For instance, Starbucks is known for providing high-end coffee (what) to customers willing to pay a premium (who) through baristas in their coffee shops (how). In 2010, Starbucks, aiming to increase its customer traffic later in the day by offering an “Evening” program, ventured into serving alcohol and tapas. Although it eventually had an Evening program in over 400 stores, it discontinued the program in early 2017, claiming that it had failed to attract the kind of customers it had hoped it would. Starbucks had strayed from its core mission, changing the what, who, and how of its organization (Team 2017).
Vision: The vision of any company is a statement about what the company wants to be in the future. It is aspirational in nature and provides a clear focus for the business. It should evoke the passions of those in the organization. A vision can be about growth (bigger or the biggest), quality (better or best), or contributing significantly to mankind (e.g., eradicating cancer). However, the vision is more of a compass than a roadmap to the future. It is not tied to details. It is clear, memorable, and concise. A good example of a vision statement is that of Habitat for Humanity, “a world where everyone has a decent place to live.” In health care, MD Anderson’s vision is “to be the premier cancer center in the world, based on the excellence of our people, our research-driven patient care, and our science. We are Making Cancer History.”
Unlike the mission statement, the vision can change over time depending on changing conditions (maybe the company has achieved its goal of being the best or biggest; or, like Kodak, the need for its original services has diminished). Typically, a company’s vision will be reviewed on an annual basis. However, some visions, like the one for Habitat for Humanity, are so big and broad that they would change only if the original mission of the organization changed (such as adding the goal of feeding the world as well as housing it).
Strategy: Once a mission and vision have been established, companies create a set of strategies to accomplish the vision. These strategies are small in number, and they identify the most critical initiatives that need to be accomplished to achieve the organization’s mission. Strategies take the vision to deeper levels of detail and become more tactical and tangible. In order to move from the conceptual to the execution stage, each part of the business, each function, and each service line needs to develop more specific tactics that align with each strategy, assigning owners, timelines, and processes for monitoring the tasks.
Case Study
Setting a Vision: Refocusing for Better Results
A large health care system had recently appointed a new physician-leader CEO to manage its growing regional business. The new CEO had been a physician within the system who had moved up the ranks to increasingly broader leadership roles. She was well respected as a leader and well liked. She had experienced success in her previous roles, and the board of directors saw her promotion as the next logical step in her career and in the evolution of the system.
However, once she was in her role at the top of the organization, she began to panic. In previous roles, she had always had someone above her, and even peers, with whom she could confer. Now she felt strangely alone and isolated. In large measure, her anxiety was related to her recognition that the system had grown quickly with no forethought given to whether this growth was either manageable or sustainable. Instead, the organization’s growth was opportunistic rather than intentional. This resulted in having a system that was unbalanced with regard to types of patients, excessive services, and a strange mix of physician specialties within the system. These problems all seemed daunting and out of control. She saw the need for the organization to develop a multiyear strategy, something that had not been employed in the prior administration. She called us for a consultation.
At our initial meeting, the CEO laid out her concerns about how unwieldy the system had become. This sent her mind racing to find ways she could make changes to address the numerous concerns she had. She had developed pages and pages of notes on ways to address the problems. Immediately, we were able to see that she had fallen victim to the tendency of seeing all of the trees but not the forest. Without stepping back to see context, she was reactively addressing one problem after the other in a tactical manner, without looking at the greater need to have a strategic plan. She was figuratively rearranging the deck chairs on the Titanic.
We helped her focus on two major issues. The first was that, in any organization, a very well-understood, articulated, and communicated strategy is the foundation for everything else that happens: structure, processes, people, programs, and so forth. Making changes in the absence of a very clear strategy perpetuates the problems, rather than resolving them. The second, and equally compelling, issue was that the essence of strategy lies in choosing what not to do, according to the wise counsel of Harvard professor Michael Porter. By trying to be all things to all people, you fail to be of maximum benefit to anyone! New CEOs often fall into the trap of trying to prove to their board, staff, and constituents that they can do it all. As a result, they tend to say yes to everything and fail to look at what is realistic out of the fear of disappointing others. With the full support of the board, the CEO asked us to facilitate a strategy-setting process to create a longer-term context for the organization.
The strategy development process lasted several weeks and required looking at the bigger external issues such as the following: What are the needs of the communities being served? What are the resources required to serve these needs? Which of these needs are already, or can be, well served by other community resources? What services can the health care system provide that are in the best interest of both the community and the health care system?
By beginning with larger questions like these, differentiating between what the health care system can do and what it should do became clearer. By narrowing the settings, services, and patient needs that the health care system should address, creating a strategy became a manageable endeavor. Once the strategy had been created, the process continued through aligning the organization to the new strategy. That meant reconsidering the organizational structure, processes, people, and services. Implementing that strategy resulted in some short-term pain, with the closure of some clinics and the reduction or elimination of some services. Within a year following the strategy development, organization realignment, and communication, the health care system had a coherent plan that was meeting the needs of their target patient group, with the highest impact services and the right number of resources to address these needs. An added bonus was that the system was beginning to see a profit!
Purpose of Strategy: Bringing Order from Chaos
The purpose of creating a strategy is twofold. First, and most obviously, a strategy provides a glimpse into the future of an organization and the direction toward which the leaders of the organization want to take it. Second, and more importantly, a good strategy creates a framework for all of the work in an organization toward a common vision. It is the link that connects, and aligns, the work of those in the organization to the mission, vision, and goals of the organization. This linkage is crucial for high levels of employee engagement, motivation, and productivity. This linkage has implications for fundamental issues like organizational culture and climate; the stability of jobs; the potential for upward mobility, compensation, and job satisfaction. The better the strategy, the clearer the linkage. The clearer the linkage, the greater the likelihood of high employee engagement.
In a broad sense, setting strategy year over year ensures that the organization is not simply working on a number of unrelated and misaligned initiatives. Strategy setting is a consistent process of initially bringing order out of chaos and, subsequently, refining the strategies needed to accomplish the organization’s vision (Figure 5.1). A well-designed strategy not only gets everyone marching in the same direction but also provides momentum for accomplishing the organization’s vision. In a high-functioning organization, the strategy cascades down to each function or business unit in the organization. Every function or service line within an organization should have its own strategies that are aligned with the organization’s strategy and provide employees with greater specificity with regard to their work. This takes the strategy from the more conceptual level to greater degrees of tactical and practical implementation.
Figure 5.1 Strategic planning coordination
Strategy Development
There are a variety of established approaches to strategic planning and thousands of consultants and facilitators available as guides. Whether an organization invests in an external resource or undertakes the challenge of strategic planning internally, the basics will remain the same.
Commitment of time and effort to properly conduct the basics of strategic planning will assist any organization in creating a vision, defining core strategies, and translating those core strategies into operational tactics. Keep in mind that strategy development is rarely effective as an individual endeavor. Success requires input from organizational leaders and stakeholders in a collaborative fashion.
Understanding the current state of the organization is a necessary component of strategic planning. A common tool that can be used is a SWOT analysis. Essentially, this is brainstorming designed to identify the organization’s strengths, weaknesses, opportunities, and threats. Understanding the current state often requires a review of the organization’s history and the milestones that have shaped that history. In our experience, this is often an eye-opening endeavor for those involved, and we are no longer surprised to discover that leaders do not truly understand their own organizations.
Understanding the landscape is another basic and required component of strategy development. Apart from understanding your own organization, it is essential to understand the external environment, including your customers and your competition. Who are your customers, and what are their needs? Who are your competitors, and what are their strategies? It is also important to identify external trends and drivers such as the government and legislation, societal and cultural factors, or financial markets. An organization must understand the landscape within which it exists in order to craft a successful strategy.
Identifying core strategies is an obvious step in the strategic planning process. Using the information learned about the current state of the organization and the external landscape, leaders can effectively establish a vision and core strategies for their organization. Core strategies or goals should adhere to the principles discussed in the next section. These core strategies and goals define what an organization should be focusing on and doing. Just as important, they define what the organization should not be focusing on.
Once the core strategies are identified, the organization must cascade and execute the strategic plan. It is incumbent on leadership to communicate the vision and core strategies throughout the organization so that each operational unit can create its action plans and tactics designed to achieve the core strategies. Identification and communication of timelines is crucial. Strategic plans should be forward thinking and long term on the scale of one year and usually multiple years. Depending on the specific organization, the exact timeline will vary, but identifying and communicating it is always required. Execution also requires identifying and tracking the metrics required for the organization to know whether it is successful in pursuing its core strategies and goals.
Updating the strategic plan is the final basic component of the process. Strategic planning is not a singular, quantized event. It is an ongoing, never-ending process. Once created, the strategic plan needs to be evaluated and updated on a regular basis, usually annually. At times, the organization will determine that enough internal or external factors have changed so that an update is not sufficient. In this case, the organization can start from scratch, fully performing every stage of the strategic planning process.
Principles of Strategy and Goal Creation
When creating any strategy, the steps are simple, but the execution can be difficult. The basis for any effective strategy is good information. The better the information, the more likely a strategy can succeed. With poor or incomplete information, creating a strategy can range from difficult to impossible. Assuming the mission and vision are clear, the question always arises about how many goals an organization should have and how detailed they should be. This is answered by two observations: The Law of Parsimony and Goals versus Accomplishment.
The Law of Parsimony is a psychological principle, also called the “Principle of Economy.” The problem-solving theory of Occam’s razor is often cited in this regard. William Occam was a thirteenth century English Franciscan monk and philosopher. He created the maxim that when looking at a number of possible hypotheses, the simplest explanation is usually the best. This is another way of encouraging people to see the obvious. In our work, we have found that the more complicated goal setting becomes, the less likely the goals will be executed. An applicable acronym could be Keep it Simple Stupid (the KISS method).
It is also important to consider the number of goals, strategies, or initiatives to set. The Covey organization has conducted research on the number of goals set and the likelihood of their accomplishment. Their research has found, unequivocally, that the fewer the goals a company or individual has, the more likely the goals will be accomplished. Figure 5.2 illustrates this research.
Figure 5.2 Goals versus accomplishment
Source: McChesney, Covey, and Huling (2012).
On the face of it, setting fewer goals of higher impact makes perfect sense. You want to invest the organization’s time, energy, and resources on those few initiatives that will make the most difference.
Goal Definition
In our work with organizations, we have identified the criteria for a “good goal.” For a goal to be worthy of all of the work and effort that will be required to accomplish it, the goal needs to meet certain criteria. We call these criteria the HUGS method of goal development (Beard and Weiss 2017).
- 1.Huge: Any goal worth setting should be greater than what is currently being done and at least somewhat of a stretch to accomplish. Otherwise, it is only incremental and included in the normal work of employees. However, it must also be realistic. Goals that are too high or those that are too easily achieved are equally unmotivating. It is important to set goals that motivate without overwhelming. Keeping in mind the Law of Parsimony, goals can be big but should not be overly complex. So in this case, “huge” means ambitious and inspirational but not large in complexity.
- 2.Ubiquitous: Good goals affect the broader organization as opposed to a few departments or business units. These goals will be seen by those in the organization as synergistic with repercussions for all. The more generalizable a goal is, the more impact it will have on the organization in the long term. A ubiquitous, far-reaching goal will have positive consequences across the organization and across customers, creating a true win-win scenario.
- 3.Groundbreaking: Disruption has become the new catchword for innovation. Goals that bring about innovative solutions will help a service line or function create separation from the competition in the market. Innovation should be not simply a solution that is different from the status quo but also one that provides greater benefit for the end user. In that sense, any innovation must be linked back to customer data. Groundbreaking goals typically bring solutions to customers that include ease of use or access, less expense, higher quality, timelier delivery, or unique uses for existing products and services.
- 4.Strategic: Understanding the context for developing a strategic plan is a prerequisite for having a strategy that can be successful in the longer term. Being strategic means that the goals and objectives created will be in the long-term interest of the organization. To understand the culture of the organization; what the organization can, and cannot, tolerate; the appetite of the organization to change at a specified pace; and being realistic about the resources that an organization has available to use for change are all considerations that are strategic. Understanding context is a key requirement of a “good goal.”
By adhering to the HUGS method in goal setting, the organization will be able to ensure that its goals are meaningful, consistent with the organization’s vision, and move from the status quo to the aspirational.
The Physician-Leader: Challenges and Opportunities
Understanding the value of mission and vision along with the creation and execution of strategies and goals can be daunting for any organization. These challenges are only more pronounced in health care. All health care organizations share the common purpose of improving patient health. This common purpose is the unquestioned foundation for the mission and vision of every health care organization. As a result, efforts toward defining mission and vision can feel unnecessary and redundant. At a glance, all health care-related missions and visions can sound the same, adding no real value. The reality that many health care organizations are not adept at defining their mission and vision in a meaningful way only reinforces this perception.
Clinicians and nonclinicians alike are frequently presented with their organization’s mission and vision. Inevitably, what they hear is “provide great care to patients.” Why would anyone waste time and effort to simply restate the obvious? Again, the Law of Parsimony is probably the best answer to this question. Yes, all health care organizations care for patients, but truly successful organizations create a mission and vision not simply to restate the obvious but rather to refine the obvious. An effective mission and vision in a health care organization defines what that organization does and what it aspires to be primarily by defining its limits. What is it that the organization does not do? What does it not want to be?
A community hospital may want to have only a local or regional impact as opposed to a national or international one. A cancer center may aspire to diversify into other service lines, but that may or may not be a good idea. A postacute care facility is unlikely to have acute care in its mission. Academic medical centers and medical schools often refer to the triple threat of clinical care, education, and research. Perhaps some would be better served to accept that the triple threat is unachievable for them and should not be part of their mission or vision. So, although it may seem that the mission and vision of a health care organization is simple and preordained, the most successful of these organizations employ the methods discussed in this chapter to refine their path to success. As always, the devil is in the details, particularly in health care!
It is no surprise that physician-leaders have some unique challenges to consider when tackling the task of strategic planning. While their intelligence and analytical ability are major advantages in this endeavor, there are some common pitfalls that they should watch for. Clinical care is often acute care that requires clinicians to focus on the short term as opposed to the long term. Strategic planning requires leaders to think about the future, using the present only as a foundation. The “do no harm”-founded risk aversion of many physician-leaders can result in strategic plans that lack aspiration and inspiration. Finally, adhering to the Law of Parsimony requires successful prioritization. Prioritization for a leader is different from that for a clinician. A clinician prioritizes in order to determine what is more important or time sensitive and that should henceforth be done first. At the same time, the clinical setting usually requires that all the items on the list, or checklist in this case, must be done. If all the clinical tasks are not completed, the patient may have an adverse outcome. For the leader, prioritization includes not only creating a rank order for the list, but drawing a line on the list and accepting that the items below that line will simply not be done. Too many goals for a leader will result in fewer goals being achieved.
Remember that many physicians are high in conscientiousness from a psychological perspective. This conscientiousness is a strength for physicians in the clinical setting but can make it difficult to prioritize in a way that requires some items to be forsaken. Because of this psychological predisposition, many physicians transitioning into leadership roles experience discomfort with an administrative “checklist” that is infinite. They often work long hours only to go home and feel high levels of anxiety over the tasks that they were unable to complete. No doubt, physicians suffer from this in the clinical setting as well, but it is even more pronounced in the administrative setting as the coping mechanisms will differ, and a different approach to prioritization is required.
From the psychological perspective, we also learned that the factor of extraversion is higher in physicians than in the general population. Physicians high in extraversion are assertive, gregarious, and energetic. They are able to easily meet others in a variety of settings. This is a great characteristic for leading strategy development in the right doses. However, this same assertiveness that brings energy to a process can be overwhelming, or even intimidating, when used to excess. Any effective strategy development requires multiple inputs. The potential domination of the extraverted personality may discourage others from making worthy contributions of their ideas and solutions and may thus be disruptive. In addition, the strategy development process requires patience along with energy and discipline. Highly energetic leaders can create a pace that exceeds what is required for the process to be thorough and successful.
The fact that physicians are higher in agreeableness than the average population bodes well for working with a team to develop strategy. Agreeable individuals are cooperative and collaborative, both being desirable characteristics for the planning process. However, agreeableness carried to an extreme can lead to a desire to be liked and to please, rather than doing what is best for the institution. Once again, physician-leaders need to balance their ability to work effectively with others with a need to be overly deferential or pleasing. As cited in Chapter 3, agreeableness can complicate the decision-making process when people agree to something that they do not actually support just to reach a consensus without offending anyone.
As we think about the strategy development process, in light of the physician-leader’s personality, it is imperative that the physician-leader regulate their strengths and recognize their weaknesses. Balance, as always, is paramount.
A thoughtful and defined mission and vision is crucial to the success of every health care organization. Paired with concise strategies and appropriate goals to create a comprehensive strategic plan, organizations can achieve alignment of efforts in their operating units and departments to accomplish the seemingly impossible!
- 1.Review your organization’s/department’s mission, vision, strategies, and goals
- •Does this strategic plan have enough specificity to provide direction and alignment? If not, how might you employ a strategic planning process to achieve this goal?
- 2.Understand yourself
- •Reflecting on your personality and psychology, identify the strengths and weaknesses that you bring to the strategic planning process.
- 3.Find balance
- •Develop a personal approach to the strategic planning process that balances your strengths and weaknesses.
Beard, M., and A. Weiss. 2017. The DNA of Leadership: Creating Healthy Leaders and Vibrant Organizations. New York, NY: Business Expert Press.
McChesney, C., S. Covey, and J. Huling. 2012. The 4 Disciplines of Execution. New York, NY: Simon & Schuster.
Team, T. January, 2017. “Starbucks Is Ending Its ‘Evening’ Beer and Wine Program.” Forbes. https://www.forbes.com/sites/greatspeculations/2017/01/13/starbucks-is-ending-its-evenings-program/#128beeaf40c4 (accessed December 11, 2018).