Trustees often ask me for my perspectives on the characteristics important in a CEO. The need for experience in health care is obvious enough, including a background in finance, operations and clinical care. But the characteristic I always emphasize as being by far the most important is strategic muscle. Strategic muscle is what you build when you actively engage with uncertainty and resistance in all its forms. Strategic muscle is akin to what an elite gymnast brings to bear when she works the balance beam. Attacking the beam has become intuitive, unconscious and natural because she’s battled the beam so many times before.
Both the formulation and the execution of strategy benefit from depth of insight. Insight strengthens judgment; the richer the pool of insight and the more intentional its application, the better the results. An organization can be rich in insights but haphazard in their application. Or it can be superficial in its insights but aggressive in their application. In both cases, the result, at a minimum, will be underperformance. High performance results from the combination of rich insight and rigorous application. The fundamental characteristic that defines superior leaders is superior application of superior judgment to produce superior results.
Organizations, like organisms, are hierarchical for a reason. Some things are more important than others. Leaders are expected to discern what’s most important, then focus their organizations on those important things. When the wind is roaring, the waves crashing and the organizational structure groaning, it’s no time for a show of hands, quiet contemplation or a conditioning regimen. The race is already on. By the time the CEO reaches the top of the organization, insight and application should have already been transformed into judgment and strategic muscle.
Change is, of course, a constant. But the rate, pace and intensity of change varies. In health care, I think we are in the midst of a period of accelerating change. Among the indicators of this is a rapid shifting of consumer expectations, erosion of deference to institutions, breakdowns in professional barriers such as licensing, and the abandonment of long-standing economic models, most notably the independent practice of medicine. Intensified change intensifies uncertainty and resistance, making well-toned strategic muscle all the more essential.
Change invariably demands adaptation. Falling out of sync with change will make an organization irrelevant. The ultimate responsibility for ensuring organizational relevance and sustainability lands on one desk alone — that of the CEO. That’s the deal a CEO cuts, knowingly or not, when he or she accepts the position: to become the protector of relevance and the perpetuator of sustainability. There is one skill set that becomes more important than all others when that deal is sealed. A CEO must, above all else, be an effective strategist.
Strategy involves moving the organization to a better place in the face of uncertainty and resistance. As Harvard strategy professor Cynthia Montgomery has observed, “All leaders must accept and own strategy as the heart of their responsibilities … . A clearly defined strategy steers the company, providing a compass for where you want to go. It makes you a better communicator, giving you the words to articulate what you are doing and why. Your customers and investors will understand you better. Your employees won’t have to guess what you’re up to and they will know how their work fits into the whole and what will be expected of them.”
It’s often been said that armies suffer because they position themselves to fight the last war rather than the next one. That’s probably true, but how does an organization prepare to fight the next war when it is invariably obscured by the thick fog of uncertainty? A big part of the answer is to build in advance the strategic muscle needed to sustain an advantage when faced with uncertainty and resistance.
The Japanese business strategist Kenichi Ohmae described the importance of mental exercise to tone strategic muscle in his book The Mind of the Strategist: He has suggested that what is required is “constant practice in strategic thinking. It is a daily discipline, not a resource that can be left dormant in normal times and tapped at will in an emergency. There is no such thing as a line of ready‑made, packaged strategies waiting to be picked off the supermarket shelf. The drafting of a strategy is simply the logical extension of one’s usual thinking processes. It is a matter of a long-term philosophy, not of short-term expedient thinking. In a very real sense, it represents the expression of an attitude to life.”
Strategic muscle is shaped by insight. Strategic insight arises not from “big data” but from “big information” or, more specifically, the big patterns in the data. Data without patterns is just noise. It takes thoughtfulness to pull useful insights out of the big patterns and transform them into judgment and muscle.
Leading with Physicians
More than ever, strategic muscle needs to be built beyond the traditional confines of the executive suite and the boardroom. Today, an ability to lead effectively with physicians has moved to the top of the list of essential attributes. And it is this capability that must separate a new generation of health care CEOs from their predecessors, all of whom have related with physicians, but probably didn’t spend much of their careers trying to lead with them.
Peter Drucker was once asked for his recommendations related to the best books on leadership. Interestingly, three of the five books he identified were centered on outsiders who demonstrated an ability to get people with deeply different values moving toward a compelling shared vision. One of those books was John Mack’s Pulitzer Prize-winning biography, A Prince of Our Disorder — The Life of T.E. Lawrence. It explains how a young archeologist turned junior officer in the British Army was able to unify and lead fragmented Arab tribes. T.E. Lawrence, one of the most muscular strategists of the 20th century, didn’t get his insights at Sandhurst or in the trenches. He got them by wading knee-deep into the culture of nomadic Arab tribes. Lawrence learned to stand next to the Arabs rather than in front of them. That earned him the trust he needed to convert strategic muscle into results that mattered.
Trust is, perhaps, the most undervalued of strategic assets. Lawrence advised his fellow officers that, “The beginning and ending of the secret of handling Arabs is unremitting study of them … . Your success will be proportioned to the amount of mental effort you devote to it.” What was true for leading with Arabs is true for leading with physicians. Physicians are much different from the MHA- or MBA-trained executive corps. They respond best to “first among equals” leadership rather than a “CEO on top” hierarchy. Because of their training and experience, they embody a high degree of cultural uncertainty and resistance. But no health care organization is likely to prosper without transforming physician insight into strategic muscle.
Lawrence had another characteristic I always encourage board members to seek in a CEO — informed optimism. Developing and applying strategic muscle requires optimism. Optimism fuels the motility of strategic muscle. In his book, Thinking Fast and Slow, Daniel Kahneman, a Nobel laureate in economics, observes that, “Optimistic individuals play a disproportionate role in shaping our lives. Their decisions make a difference; they are the inventors, the entrepreneurs, the political and military leaders — not average people … . Their confidence in their future success sustains a positive mood that helps them obtain resources from others, raise the morale of their employees, and enhance their prospects of prevailing … . The main benefit of optimism is resilience in the face of setbacks … .”
Optimism in the Rust Belt
Few health care markets have been reshaped by strategic muscle like Cleveland. Positioned in a deteriorating neighborhood in a down-on-its-luck Rust Belt remnant of America’s Industrial Age, the Cleveland Clinic could easily have dried up on the vine. That it didn’t is a credit to the irrepressible optimism of its founders. On May 15, 1929, the Cleveland Clinic endured a tragic explosion that ripped its building apart and killed 123 people. Then, within months, the banks in Cleveland and throughout the country began to fail as the Great Depression arrived.