Those rare organizations with a strategic plan that the entire organization helped create are in better shape to take advantage of opportunities.
A primary reason to undergo a strategic planning process is to produce a written document called a strategic plan. But this may be one of the least important benefits of a solid planning process.
Strategic planning provides a powerful opportunity for a leader to take a stand and point the way. Teddy Roosevelt once said the presidency makes for a “bully pulpit.” The same can be said for any CEO’s position.
While primary responsibility for strategy and strategic planning resides in the executive suite, smart leaders reach out and enlist the rest of the organization in defining a future worth achieving and determining the best way to get there.
People tend to own what they help create. And they tend to implement what they own. Setting off a strategic conversation throughout the organization builds ownership and commitment. Strategic planning launches such conversations. A solid strategic planning process forces the organization to think strategically.
The CEO is the organization’s chief strategist. The strategic plan is an important tool with which to establish leadership and convey direction. When the plan is well-crafted, it is an engaging story of the organization’s future--where it intends to go and how it intends to get there.
In my experience, hospital employees as well as physicians are hungry for institutional direction and focus. In a complex and turbulent environment, ambiguity is the natural state of things. But there’s a big difference between ambiguity and ambivalence.
Ambivalence is a kind of indifference. It is disorienting, demoralizing and destabilizing. Take a human being, any human being. Put him on a ship headed into an open sea with no clear destination in sight and the first question out of his mouth will be, “Where are we going?”
As a number of studies have confirmed, strategic planning is a rare occurrence in far too many organizations, even among executives who are being paid to be strategic. It is true that it’s hard to think about draining the swamp when you’re up to your eyeballs in alligators. But it’s also true that if you don’t spend some time thinking about draining the swamp, you’d better develop a tolerance for both water and alligators because that’s what the future is sure to hold.
Ultimately, the alligators write the strategic agenda: The resources of the organizations all go to day-to-day problems while the opportunities starve. Activity gets confused for action in a way that brings to mind Alice as she confronts the Cheshire Cat in Wonderland and asks him:
“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where--,” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.
“--so long as I get SOMEWHERE,” Alice added as an explanation.
“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”
A transparent strategic planning process can be a phenomenal trust builder. Done well, it involves a lot of information sharing and respectful dialogue. There are few better ways to cultivate trust than through disclosure and the sincere solicitation of someone else’s perspectives on an important question. I’ve watched mistrust melt away in many hospitals when managers started sharing information openly with physicians and asked them for their advice on the future of the institution.
Any strategic plan requires choices. How leaders allocate scarce resources says a lot about them and the organizations they are responsible for. When an executive team endorses a set of strategic choices, they are communicating what they stand for. Such choices can be high-minded and inspiring. Or they can be pedestrian and deflating. For example, a leader can regard a margin target as an end. Or he can treat it as a means to an end.
In health care, there is no shortage of options. Indeed, more often there is a paralyzing overabundance of options. A solid strategic planning process identifies an organization’s best options and thus generates focus. This focus is liberating because it breaks up logjams of indecision and concentrates the energy of the organization. Even if every option selected isn’t optimal, getting moving is usually better than standing still and scratching your head.
Decisions have quality. Some decisions are better than others. I’ve never been an adherent of the notion that groups always make better decisions than individuals. I do, however, believe that better decisions often emerge from groups. Not because the group came up with a better idea, but because the idea was debated and forced to withstand constructive scrutiny.
Smart organizations subject their most important decisions to a Darwinian environment in which the strongest ideas survive and evolve to higher levels of fitness. In our strategic planning projects, we carry decisions out into the organization where they can be tested and refined. By the time we bring them back to the executive suite, they’ve been well vetted. The result is that they are more durable.
Strategic thinking deals in uncertainty and resistance. Without uncertainty and resistance, there’s no need for a strategy. Strategic thinking also deals in what is important. Strategic decisions are the organization’s most important decisions. Operations deal in the execution of strategic decisions. Operational decisions are less important than strategic decisions. That’s why the ultimate responsibility for strategic decisions resides at the top of the organization. All organizational hierarchy is based on the presumption of importance. Some things are more important than others.
Too often, organizations without a plan end up being victims of the plans of others or of blind luck. They write their own agenda, they become a bit player in somebody else’s agenda or they drift. Now there’s nothing wrong with drifting as long as you’re lucky. There are many organizations and leaders who have achieved extraordinary success because they happened to be at the right place at the right time. But more often than not, a little peeling back of the strategic onion will reveal that even lucky organizations often combined good fortune with a sense of destiny and opportunism.
Destiny and opportunism, of course, beg questions. Destined to be what? Opportunistic toward what end? As they are fond of saying at Johns Hopkins, “Fortune favors the prepared mind.” And when it comes to leadership, the prepared mind is thinking ahead.
One powerful consequence of a solid strategic planning process is the potential it holds for replacing pessimism with hope. This is particularly important in organizations that have endured tough times. Nothing so lifts the spirit of an injured enterprise than the picture of a future worth achieving.
On May 15, 1929, The Cleveland Clinic endured a tragic explosion that ripped apart its building and killed 123 people. Then, within months, banks in Cleveland and throughout the country began to fail, hailing the start of the Great Depression.
Either event would have crushed many people and many organizations. But The Cleveland Clinic’s founders, George Crile and Ed Lower, both over 60 at the time, had a clear sense of where they were headed. They rebuilt the clinic building and began construction of another three-story building, placing it on a foundation that would support nine more stories. To support their bet on the future, Crile and Lower put up the value of all they had left--their personal life insurance policies. Then they, and every employee of the clinic, took a 35 percent salary cut.
The founders’ sense of destiny continues to this day. Former CEO Fred Loop envisioned a Cleveland Clinic positioned near the top of America’s most respected health care institutions. He foresaw a clinic that would drive vitality back into the heart of a struggling Rust Belt city. Today, things in Cleveland are much as he imagined. Loop saw himself as a steward of Crile and Lower’s legacy of optimism and confidence. He captured that legacy and told his own compelling story about The Cleveland Clinic’s future in an elegantly written and packaged strategic plan.
Today, Loop’s successor, Toby Cosgrove, is in the process of crafting the next chapter in story of The Cleveland Clinic’s future. It includes a new million-square-foot heart hospital and the infrastructure necessary to spin hundreds of new medical enterprises off the pool of talent and experience that has been assembled in Cleveland, a city that is in desperate need of capital entrepreneurialism and the jobs that will follow. In this way, Cosgrove will honor and leverage Crile and Lower’s legacy.
East Cleveland is home to America’s most impoverished urban population. The situation is not much different in East Baltimore.
Just as The Cleveland Clinic defied the odds and expanded its preeminence in a decidedly hostile environment, so did Johns Hopkins when it took over the struggling Baltimore City Hospital and transformed it.
In 1982, under city ownership, the old hospital was hemorrhaging $8 million a year (government-owned hospitals were failing nationwide). The mayor wanted to get rid of it. Hopkins said it would take it. A year later, losses had been reduced by $7 million; three years later--even after millions spent on facility improvements--Baltimore City Hospital was operating in the black. Today, it is a 700-bed hospital surrounded by busy clinics and a 130-acre, parklike campus.
The powerhouse that is Hopkins continues to remake East Baltimore and itself. The CEO and dean, Ed Miller, is using his bully pulpit to focus the organization on a future in which Hopkins sets the standard in patient safety.
Ron Peterson, the man most credited with the miracle of Baltimore City Hospital, has suggested that they don’t do strategic planning at Hopkins. But this is true only in a technical sense. Because Hopkins’ strategic planning, in many ways, has become so inherent and so continuous, it has become almost invisible even to those who practice it. It extends back to the institution’s founding and the articulation of a simple triangle that has research, teaching and patient care at its corners. Those who founded Hopkins saw that triangle clearly then; it is seen just as clearly today.
The environment in which Hopkins continues to pursue this destiny shifts, so Hopkins is compelled to shift as well. But it is rarely confused about who it is and where it’s headed. Its future is to occupy the position it has always occupied as America’s preeminent health care institution.
In determining whether an organization has a solid strategic planning process in place, the following are appropriate criteria:
The answer to all these questions at Hopkins is, in my view, yes. Because of that, I would say Hopkins has a strategic plan and has always had a strategic plan, even though it may not have what would typically constitute a strategic planning process. It is one of those very rare organizations that may not need a process because its strategic plan is timeless and well-embedded in its organizational DNA.
Ron Peterson knew what he needed to do with Baltimore City Hospital. Just as Ed Miller knows what he has to do with patient safety. They are Hopkins. They know what that means and what it requires.
The number of hospitals and health systems that have developed their organizational DNA the way Hopkins has is relatively small. Mayo Clinic fits into this small club. Its CEO, Denis Cortese, has launched an initiative with IBM that will allow Mayo to mine its vast reservoir of patient data. It’s an asset that Will and Charlie Mayo--with the help of their ingenious partner, Henry Plummer--wisely systematized a century ago. Now Cortese is pushing that asset into its next iteration in a way that holds the promise of revolutionizing American medicine. Cortese knows what Mayo is and what it requires. And as CEO, he recognizes his role in developing the strategies to get it there.
Most hospitals don’t enjoy the benefit of having their destiny clearly written in organizational DNA. That’s why having a disciplined strategic planning process is so important for them. It provides the vital mechanism for developing and perpetuating a sense of purpose as well as transforming that purpose into reality. Absent that, or good luck, they are left with the prospects of being victims or being adrift.
Leaders make meaning. They lead toward a place followers believe worth going. Like destiny and opportunism, leadership begs the question, “Leading toward what?” A sound strategic planning process provides the disciplined method of delivering an answer to that timeless question.
Dan Beckham is president of The Beckham Company, a strategic consulting firm based in Bluffton, S.C. He is also a regular contributor to H&HN OnLine.
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This article first appeared in the on March 21, 2006 in HHN Magazine online site.