Wednesday, November 5, 2014

Essential Strategy Execution: Make a Choice, Say No, Have Options


Making choices, saying no, and having options are three essential elements to successful strategy execution. I’ve been talking about them since this blog began and I wasn’t surprised to see these three listed among seven in a post by Jeroen DeFlander on LinkedIn. After all, they are basically gospel in the strategy world. It’s the execution of those elements, especially in healthcare, that’s hard. You can read his full post here http://jeroen-de-flander.com/
Let’s take a look at the three (in italics) as Jeroen sees them:

Make a Choice: You cannot be everything to everybody. You want to target a limited segment of potential buyers with the same needs. Next, you are going to tailor your activities in such a way that they meet these needs. Strategic innovation is the process to make those choices – defining a new who and how for the organization.
Say No: There will be customers that you are not going to serve, activities that you are not going to perform and services/products that you will not be offering. In strategy, choosing what not to do is equally important.

Have Options: Facts and figures can only go so far. You need to turn data into assumptions that will fuel your reflection process. The standard way to work with assumptions in a structured way is by scenario thinking – fix some parameters and let other vary. This technique helps your reflection process by offering you possible future routes (read: strategic options) for the company.

Here’s a perfect non-healthcare example of how to do this: Proctor and Gamble just announced they are going to sell off half their brands. Half their brands! This is P&G, the ultimate multi-brand business so this is a big deal. They are doing it to reduce costs and increase profitability.  http://online.wsj.com/articles/procter-gamble-posts-higher-profit-on-cost-cutting-1406892304
That’s the key. If a business (service line) isn’t profitable it goes because these are for-profit companies that answer to investors of one sort or another.
Taken together, making a choice, saying no, and having options, are very compelling but difficult if not impossible for most healthcare organizations to abide by. Let me qualify that: Very difficult for non-profit healthcare organizations; I don’t think Tenet and the other for-profit healthcare organizations have the same difficulty.

The majority of healthcare organizations are, on purpose, everything for everyone. It’s how we grew in the last fifty years before the Great Recession and healthcare reform. We kept on adding more and more services as they became available. Most of you advertise yourself as the place go to instead of the big academic centers because you offer ‘everything you need close to home’. Saying no was the last thing you wanted to do.

And as a result many healthcare organizations have no options to meet the demands of the new era of healthcare reform aside from affiliating with another healthcare organization. I doubt many have an option to reduce services. That will come with a merger and the local board and leadership cede authority but it’s hard to imagine a local board voluntarily looking to reduce the scope of care they provide. They’re probably looking to keep their full service offering intact.

The StratEx Crossroad is seeing some difficult times ahead even for the organizations that have already merged and affiliated. As systems become bigger more and more decisions will be made by the parent, which will be removed from local influences. They will have to look hard at everything and they won’t have a problem making choices, saying no, and putting options in place whether they are non-profit or for-profit.

November 5, 2014

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