A strategic plan is a leadership tool. To generate impact it must incorporate a clear articulation of purpose and aspirations, a dynamic assessment of the organization’s situation and identification of what to do to secure its desired future. And when effectively applied, a strategic plan delivers five key outcomes. It:

  1. Defines, develops and sustains a value advantage.
  2. Produces meaningful differentiation.
  3. Focuses, allocates and aligns resources.
  4. Develops understanding, insight and commitment.
  5. Drives accountability and effective implementation.

The key questions

In strategic planning in healthcare, “process efficiency” should always be a concern — by this, I mean making good use of participant time. There is a delicate balance between having enough dialogue to reach clarity and stalling out. People are busy and, regardless of their level of commitment, they have a limited amount of time and attention available. Dialogue and decision-making should always be focused on the organization’s most important questions, which include:

  • Vision: Within the bounds of our mission, what are our aspirations for the future?
  • Strategic issues: What are the most significant challenges we’re likely to face as we pursue our aspirations?
  • Value proposition: What will we be really good at that will make us different in a way that’s meaningful and valuable to those we serve?
  • Strategic intent: What is our proximate goal — the next measurable milestone on the way to realizing our vision?
  • Driving strategies: What are the five to seven high‑level steps we need to take to realize our aspirations in the face of the challenges we anticipate encountering?

Purpose is specified through statements of mission and vision. Mission is properly articulated as a single-sentence statement that defines why the organization exists. Vision is best conveyed in a short paragraph with enough specificity to be directional. Periodically, vision needs to be recalibrated. It changes because the organization and its situation change.

Where to start

You can’t figure out where you’re headed unless you first determine where you are. And where you are is someplace between your past and your future. The “present” isn’t a static location. In fact, it’s more like water moving past a rock. Any effort to pin it down is just a snapshot in time. As William Faulkner once observed: “The past is never dead. It’s not even past.” To define where you are, the past, as well as the future, requires consideration. The past holds legacy accomplishments and stories to be leveraged into the future. It contains the organization’s memory of strategic consequences worth emulating as well as avoiding.

Every strategic plan should spring from an assessment of the organization’s situation. A situation assessment concerns itself not only with the external environment but with the organization’s internal environment as well. What matters in those environments are the big patterns with volume and velocity. It helps to squint to see the dominant forces likely to be the most consequential.

Then ask a simple question with a complex answer: “What are the most significant challenges we may face over the next three to five years?” Make a list and prioritize it. You can do that for multiple stakeholder groups, then consolidate each group’s prioritized list into a single list of a dozen strategic issues. A robust strategic planning process will allow these issues to be debated at the onset then continuously modified as the organization’s situation shifts, which it surely will. With prioritized strategic issues in hand, development of a strategic plan should address each of the questions above. Your organization’s strategic direction should be set within the context of its most significant challenges and its aspirations for the future.

The chief strategist

Executives, board members and physicians should serve as the key architects of a strategic plan. The CEO — not the board chair, not the chief strategy officer, not the consultant — is the organization’s chief strategist. In theory, the CEO can create a strategic plan alone. But obviously, there are good reasons to have others participate. Participation enriches insights and fortifies decisions while building ownership and commitment. Such participation, though, comes at the invitation of the CEO, who is ultimately accountable for ensuring that the plan can carry the organization toward its aspirations.

Good listening skills are an asset for any leader, particularly when the organization’s most important decisions are on the table. Tragic air disasters have occurred when a pilot failed to heed warnings emanating from the cockpit crew. A health system can find itself in a similar situation when its CEO has all the answers and is “locked on” to one path forward.

But there is a difference between thoughtful listening and passivity. The CEO should be an active participant in planning sessions rather than a stoic observer. An effective leader can posit a position and share perspectives in a way that invites input. Still, it’s the CEO’s job to counter emerging consensus when he or she believes it is contrary to an effective course of action.

An active board

Board members should be actively involved in strategic planning for a couple of reasons. Trustees often have significant insights derived from their own professional and entrepreneurial activities. And because strategic initiatives often carry high price tags and involve policy considerations, they usually require board approval. If board members are involved in developing the strategic plan from which such initiatives emanate, they will be more likely to understand their underlying rationale and be more willing to support them.

Trustees are frequently overwhelmed by insider terminology. No industry is as pathologically prone as health care to converting ideas, methods, policies and technology into abbreviations: ACOs, MSSP, CINs and MARCA are recent examples. A few board members may be assertive enough to ask for an explanation, but many don’t. Too often, health care executives remain impervious to the confusion or disengagement apparent in the faces of their board members. They also often fail to tap the experience and insights of trustees by not encouraging them to engage in strategic dialogue on the organization’s most important questions.

As important as board involvement is to the development of overall direction, including driving strategies, it should not extend to the development of tactics and action plans. Tactics and action plans should remain the prerogatives of executive leaders and managers. I liken this to those moments on Star Trek: The Next Generation when Captain Picard swings around in his chair, looks at the crew and says, “Make it so.” Having been active participants in developing overall strategic direction, the board chair should empower the CEO to “make it so,” then be diligent in making sure the plan is accomplished.

Include physicians

In defining the organization’s situation and setting strategic direction, it’s important to have input from those with a real stake in the enterprise. Caterpillar and Harley‑Davidson are recognized for their strong dealer networks. Input from dealers plays an important role in defining their situations and shaping their strategies. Hospitals are also dependent on a dealer network — their physician network. It is the unique role of physicians that shapes many of the most critical challenges facing hospitals and health systems.

Most physicians today are overburdened. Involvement in strategic planning takes time, something physicians have precious little of. But their involvement is essential. There is no way a hospital or health system is going to differentiate itself on value or meet the other challenges of sustainability without physician involvement in strategic leadership. Furthermore, in my experience, many physicians want and expect to be involved. Absent involvement, they are unlikely to become committed supporters of a strategic plan.

It is a well-worn criticism that physicians are poor businesspeople. But, in truth, there are many physicians who are exceedingly entrepreneurial, and some have built substantial medical enterprises from scratch. Because of this, they often bring a blend of clinical and business insights that won’t be found in most hospital executive suites and boardrooms.

It is important to include respected physician opinion leaders in strategic planning. It’s less important that they be respected by administrators and board members than be respected by other physicians. Key to physician respect is a colleague who is clinically sound. Frequent involvement of the same physicians in strategic planning provides continuity, but such physicians can come to be regarded as insiders by their colleagues. Physicians new to strategic planning should be continuously encouraged to participate.

Open up

Potential stakeholders in a strategic planning process may be skeptical, even cynical, about participating in development of a new plan. Invariably, this results from past experience. Common complaints include wasted time, a sense that their input wasn’t valued and poor implementation.

Physicians can be particularly disinclined to recognize the importance of strategic planning. Past experience often bolsters their skepticism, but there are other factors. Most physicians are not used to a group process and group decision-making. Many have spent their careers focused on challenges with relatively short time horizons and outcomes. And there is often tension between physicians, administrators and the board. Collectively, the medical staff has a culture different from that of the executive suite. A strategic plan is usually seen as a product of the administrative culture and, therefore, is often misunderstood and suspect. A strategic plan requires trust to develop and trust to implement. Transparency is critical to generating that trust.

A solid strategic planning process can help build trust. A balanced situation assessment involves qualitative information, including summaries of personal interviews, and quantitative information in the form of data, all openly and forthrightly shared. If interview summaries aren’t honest, if the data are managed to avoid negative impressions or if there’s clearly an effort to advance an agenda, physicians will discount the assessment and the overall process. Hidden agendas can be crippling. Physicians and others will do a quick sniff test on a strategic planning process. It usually doesn’t take long for physicians to figure out they are being manipulated.

Sharing sensitive information and decision-making openly with physicians says, “We trust you.” If physicians see that executives and the board are open to discussing tough issues candidly, they will be much more likely to engage.

Avoid the group hug

There’s toughness required in strategic planning. Too many planning processes are compromised by anesthetizing politeness. Brutal realities — e.g., our patient experience is poor — are glossed over for fear of offending. As a result, shortcomings go unaddressed. Strategic planning processes too often pander to the masses. The most egregious examples of this are organizationwide “group hugs” in which hundreds of individuals are invited to participate in developing overall strategic direction. This is a profoundly unwise for a couple of reasons.