Driving strategies also should address the question, “What is ours uniquely to do?” No organization has the luxury of being “all things to all people.” As Porter has famously and frequently reminded, strategic advantage is as much about choosing “what not to do” as it is about choosing “what to do.”
An academic medical center is not a community hospital. It shouldn’t try to be a community hospital. Its fundamental value proposition is predicated on its ability to deliver complex care. Complex care is what an academic medical center is most uniquely positioned to do. Its driving strategies and resources always should be focused with that powerful distinction in mind.
An appreciation for core differentiators, disciplined identification of core competencies combined with focus, and a pragmatic assessment of internal and external challenges provide the context out of which high-impact driving strategies can be generated. For example, an academic medical center with the core competencies described might reasonably generate a driving strategy to “orchestrate and demonstrate improvement of population health statewide.” Such a strategy would require depth and breadth of capability, collegiality, proximity enhanced by technology, and the decentralized decision-making and autonomy that loose coupling engenders. It is a driving strategy that community hospitals would find very difficult to emulate.
Deliberate Incrementalism as Key to Strategic Success
Organizations that achieve strategic success are deliberate in their pursuit of mission, vision and driving strategies. But they are incremental in how they conduct that pursuit.
There are many threats to the formulation of good driving strategies and their effective implementation. Among the most seductive and dangerous of these is boldness. Academic medical centers have often been encouraged to boldly transform themselves. Boldness suggests a significant, potentially revolutionary leap from a current state to a place of discontinuity — presumably to a fundamentally different and better place. That, of course, implies that the better place is knowable and attainable. But knowability and attainability require predictability.
Doyne Farmer, a professor at Oxford University and the Santa Fe Institute, is also a pioneer of chaos theory and complexity science. In a rapidly changing and uncertain environment filled with volatility, Farmer has suggested that while you may be able to predict short, you can’t predict far. Bold leaps are, by definition, long leaps. Predicting long in the face of significant change and uncertainty has a name: gambling.
Because the direction and magnitude of consequences are always uncertain in situations with high volatility, a big bold move into the future is more likely to push an organization irretrievably out of sync with its environment. The likely outcome of a bold thrust was captured by one of the 20th century’s most respected military strategists, Sir Basil Henry Liddell Hart, who in 1954 observed, “A plan, like a tree, must have branches if it is to bear fruit. … ”
All robust and sustainable progress is of the branching variety. An incremental path doesn’t put the organization too far out on a limb to climb back. Incremental moves at a tactical level reduce the risk of being significantly out of sync as conditions shift. Pursuing deliberate intentions incrementally reduces reliance on long predictions and thus improves the odds of making progress in volatile environments.
Boldness that encourages a break with the organization’s prevailing path threatens its ability to maintain the momentum of past accomplishments and leverage current strengths into the future. Deliberate incrementalism recognizes this “path dependence” by not venturing wildly beyond the organization’s realm of demonstrated competence and value. It keeps a strong tether to the characteristics and accomplishments that have anchored past success. While academic medical centers are encouraged to boldly transform themselves, they are less often advised to identify and reinforce those characteristics that have served them well in the past and may be well-suited to their future. Core differentiators and core competencies represent such characteristics.
Good strategy requires flexibility. While formulating a handful of driving strategies is key, so is the development of what Taleb calls “optionality.” Optionality suggests that because a complex environment is beyond prediction, trial and error will provide the most robust path forward when facing disruptive surprises. Central to optionality is the “option to change.”
Resolve is critical to the implementation of a driving strategy. Too often, organizations snatch defeat from the jaws of victory through premature abandonment of a driving strategy. On the other hand, flexibility is required when resolve is confronted by volatility. While the organization remains resolved in its pursuit of its driving strategies, it must be flexible in how it accomplishes those strategies. A driving strategy can be made flexible with a handful of tactics that are changed incrementally through trial and error as the situation shifts.
Today, academic medical centers benefit from the momentum of a legacy of past accomplishment. But momentum has its limits. Absent continued investment of energy and resources, inertia sets in. A volatile future will demand that academic medical centers translate what makes them unique into continuing advantage. And that will require deliberately and incrementally leveraging core differentiators and core competencies into driving strategies that deliver recognized value.
Author’s note: An in-depth monograph describing the merits of deliberate incrementalism related to strategy formulation for academic medical centers can be downloaded at www.hcstrategyinnovation.com.
Dan Beckham is the president of The Beckham Co., a strategic consulting firm based in Bluffton, S.C. He is also a regular contributor to H&HN Daily.