The Operating Model: Closing the Strategy-Execution Gap
Leadership Transformation Series
The Operating Model: Closing the Strategy-Execution Gap
This is Part 3 of a Four-Part Leadership Transformation Series (LTS).
Transformation in healthcare is personal: it requires the transformation of health system leaders. This LTS begins to speak to key differences in some of the fundamentals of transformational vs traditional leadership in healthcare.
This article focuses on how leaders operate.
You have a strategy. How do you rate your organization’s execution of that strategy on a 1-10 scale? For most, it is not high – or as high as they would like. Closing the strategy-implementation (aka, the knowing-doing or what-how) gap is the leadership Achilles heel of any business, but especially for hospitals, a business recognized by Drucker as the most complex organization to lead. Given that his observation pre-dated some of today’s larger and more evolved and blended academic-community healthcare systems, the complexity he referred to then has only increased. Across industries, the results of studies consistently identify unsuccessful execution for the vast majority of strategies; and the results of CEO surveys cite execution as the biggest current challenge, but reasons for such failure and concern vary widely. A sampling of HBR articles on the topic cite too much of an internal focus, poor CEO preparation in both strategy AND execution, “a people problem.”
Perhaps the most common trait about healthcare system strategies is the perception of their authors that their strategy is unique. As JP Morgan Healthcare Industry Conference observers noted, most health system strategies look alike. What is unique is the execution – the How. Notes Rosabeth Moss Kanter, “When a strategy looks brilliant, it’s because of the quality of execution” (Smart Leaders Focus on Execution First and Strategy Second, HBR, 11, 2017). Because transformation is a journey and one size does not fit all, it is more apt to say there are no integrated healthcare systems, but many integrating systems. For healthcare systems to evolve and execute well, they need an operating model that will help them ‘discipline the change process.’ They need to have a way that is lived by all.
Have a ‘Way’
The “run fast and do your best” approach is common among well-intended, hard-working senior teams. It also means the team does not HAVE a way. While this approach initially ‘feels good’ because it puts individual autonomy first, it is a common trap of senior leaders who have a lot of experience and “know what works for them.” This is the management version of the analogous complaint that some providers put their autonomy (“I gotta do it my way”) ahead of outcomes (what is evidence-based).
When senior team leaders are asked how they operate or improve, leaders on the same team often either do not have an answer or they have different answers. This means they do not have A way, i.e., a unified approach. This is another common trap of senior teams who struggle to agree on one consistent approach. Since no approach is perfect, it is easy to see why a better or ‘magic’ approach is always perceived to be just around the corner. Once again, this approach reflects an autonomy- or ego-centric default path. The well-intended leaders may indeed be a team of experts, but they are not an expert team.
And when leaders on the same team have an answer to “how do you operate/improve?” their answers are often not succinct and consistent. This variation means they do not have a WAY. Just as with clinical variation, leaders need to reduce or drive out leadership variation to achieve better outcomes. And as with the slow (estimated 17 year) spread of a clinical “best” practice, the small fraction of actual use and adoption of evidence-based leadership methods is a sobering...and a great opportunity.
Having a ‘Way’ sounds simple. But ironically, often the more experience executives on a team have, the more they resist committing to a way. Why? Because they “know what worked for them in the past.” The problem with this thinking is two-fold. First, the real focus for whom this needs to work is others. And second, the relevant time orientation is the future.
Shared by All
When a senior team has a ‘way’, i.e., an operating model that is understood, evidence-based, and followed, it has the potential to achieve ‘next level’ performance. The trap is that many teams stop there. The senior team may get it, but they have not sufficiently connected with all colleagues in all areas to empower ownership. The accelerating flywheel effect only gains traction to the extent every person in each department/unit/entity understands and strives to live the Way. For this to happen, ‘the Way’ needs to be viewed as integral to the Vision that is, as Gino Wickman in his book Traction notes, “shared by all.” This is the loop closer: Vision and strategy must be integrated with the operating model (the Way).
The tall order to “integrate” a health system often starts with the more visible governance, service/function and information structures. But the cultural integration work that is critical to success is typically overlooked, under-prioritized and/or under-resourced. Yet success depends on cultural, i.e., value system shift: new attitudes, beliefs and behaviors. While the values transformation sequence is typically perceived as “attitudes and beliefs change before behavior change” (heads and hearts before hands), a robust operating model will support the reverse. This enables humans to not only “think their way into a new way of acting” but to ALSO “act their way into a new way of thinking.” Adult learning requires both. Because the operating model – and values shift - takes time to take hold, it requires intestinal fortitude and support over time. During this time, leaders must persist in ‘leading out loud,’ as Daniel Prosser puts it. This means embracing our vulnerability to lead conversations in a way that builds connectedness. Every organization’s cultural immune system has a reaction to anything new. And there will be a tendency by some to react to the symptoms in the form of false narrative, negative monologues or dangerous memes. Prosser refers to these collectively as the ‘Execution Virus.’ If boards and leaders catch this virus and do not commit and persist through the inevitable emotional and behavioral “valley” inherent with such large-scale transition, then they will pull the plug on strategy execution and/or the leader(s).
Keep in mind that the ‘Way’ needs to be dynamic and evolve. It is more important to have the ‘XYZ (name of health system) Way’ that is adapted and viewed with pride as “Our Way,” then it is to chase the perception of the latest right or best way. The sense of pride is palpable when a colleague sees how his/her work fits into a bigger picture and reflexively translates it for a new colleague into ‘this is how we do it here’ language and tasks. It is important that colleagues and departments feel empowered to adapt and locally shape the Way so it makes sense for their environment. Only they can answer ‘what does this mean in our area?’ This dynamic strengthens the ownership culture required to translate strategy into reality.
If you rated your team’s execution less than an eight in closing the strategy-execution gap, it may be time for a tune-up or overhaul of your operating model.
Rob Thames, FACHE, FHFMA, has helped teams install, overhaul and tune evidence-based operating models to achieve breakthrough performance as CEO, COO and consultant.