Is your strategy doing the job?
Financial pressures and the strong possibility of significant health care reform are forcing many health care organizations to reexamine their strategic plans. In this environment it is useful to review some of the key theories of strategic planning that may apply to your organization.
Henry Mintzberg, in Strategy Safari, provides a comprehensive review of strategy and defines it in terms of a number of differing management activities.
Strategy is a plan. It is a direction, a guide or course of action into the future, a path to get from here to there. There is a high level of intentionality in this definition.
"In planning, strategies result from a controlled, conscious process of formal planning, decomposed in distinct steps, each delineated by checklists and supported by techniques. Planning responsibility usually rests with the chief executive and execution responsibility with staff to which it is made explicit so they can pay attention to budgets, programs, objectives, etc." –Mintzberg et. al. p. 58
Fully completed plans are usually handed down to staff from the board of directors, the CEO or analysts. The direction is usually firm and well thought through. Ideas have been tested and the plan is ready to go. A staff’s job is to implement the plan. Strategic thinking, left to an executive or management team, has been separated from executing the plan’s actions. As a result, this type of planning can be inflexible and creativity can be sacrificed for direction. The plan better be a sound one.
Most large health care organizations use this very traditional approach to strategic planning.
Strategy is a position. This involves the locating of particular products in particular markets. This is a deliberate approach to counter the positions held by rivals in the same markets.
"Strategy is the creation of a unique and valuable position, involving a different set of activities. If there were only one ideal position, there would be no need for strategy. Companies would face a simple imperative – win the race to discover and preempt it. The essence of strategic positioning is to choose activities that are different from rivals’. If the same set of activities were best to produce all varieties, meet all needs, and access all customers, companies could easily shift among them and operational effectiveness would determine performance.” -Porter p. 68.
Positions are usually defined in generic terms and tend to be directed by universally understood rules or laws of competition. Michael Treacy and Fred Wiersema, in The Discipline of Market Leaders, use the generic positioning categories: best cost, best product and best service. While limited in addressing issues that are organizationally unique, this generic positioning framework can be very useful in providing a broad view of a firm’s strategic relationship with its rivals.
Walk-in retail clinics are an example of this strategic approach with their focus on “best cost.”
Strategy is a pattern. This model is evidenced by a consistency of behavior over time. There is a high level of reflection in this definition and the implication is that strategies are emergent from the firm’s core experiences.
Planning and positioning are both deliberate activities that focus on controls so that the intentions of senior managers are realized. Strategy can also be emergent, growing from a rich understanding of the firm’s core competencies and how those competencies can be expanded into new markets or developed into new products and services.
Pattern recognition usually demands a democratic planning process where those closest to the business can determine where direction can be taken.
"To invite new voices into the strategy-making process, to encourage new perspectives, to start new conversations that span organizational boundaries, and then to help synthesize unconventional options into a point of view about corporate direction – those are the challenges for senior executives who believe that strategy must be revolution." – Hamel, p. 82
Pattern recognition and group learning may need a distinctive brainstorming component. In these cases two heads are better than one. Facilitated planning meetings play a significant role in this type of strategic management.
The Mayo Clinic is an excellent example of this strategy. Mayo has always valued group practice, teamwork and a systems approach to care. This consistent approach has supported Mayo’s growth from a small rural practice into an internationally renowned resource.
Which approach is right for you is dependent on your history, culture and leaders. I will address other aspects of strategy and leadership in future posts.
References:
Mintzberg, et al. Strategy Safari: A Guided Tour Through the Wilds of Strategic Management. New York: Free Press, 1998.
Porter, Michael and Elizabeth Olmsted Teisberg. Redefining Health Care: Creating Value-Based Competition on Results. Boston: Harvard Business School Press, 2006.
Treacy, Michael and Fred Wiersema. The Discipline of Market Leaders. Cambridge: Perseus Books, 1997.
Hamel, Gary. “Strategy as Revolution.” Harvard Business Review, July-August 1996.