Culture vs. Strategy vs. Infrastructure ? Which Wins in Health Care?

Thursday, November 30, 2017 | Larry Sobal

Culture vs. Strategy vs. Infrastructure ? Which Wins in Health Care?

 One of the great honors and thrills of my career was giving a presentation following Dr. Brent James. I have been a longtime admirer of him and his work at Intermountain Healthcare, and being able to meet him in person was a special moment for me. And yes, he is not only brilliant, but humble and classy. His message that day was about wishing he were just starting his career, as he is more excited than ever about health care and the opportunity to drive better quality through data and reducing unnecessary variation. Amen to that!

To give credit where credit is due, the topic of this week’s blog post came from a video and NEJM Catalyst article where Dr. James speaks about Infrastructure Eats Culture for Lunch. That spurred the idea to write about what organizations should be focused on now when many are conducting their 2018 planning. Do you focus on Culture, Strategy or Infrastructure? And which is most important to your future success? We’ll explore the options.

Let’s start with culture. “Culture eats strategy for breakfast.” These words, often attributed to Peter Drucker, are frequently quoted by people who see culture at the heart of all great companies. They often cite examples of Southwest Airlines, Nordstrom, Starbucks and Zappos, whose leaders emphasize that their companies’ cultures are the secret of their success.

I suspect Drucker was alluding to the fact that strategy formulation and planning are essentially straightforward processes or tasks that can be described, documented and completed. When executing strategies, however, the implementation often morphs into something significantly more challenging and complex, usually because of culture. Indeed, I have found that strategy execution efforts that most often fail to deliver expected benefits do so not because the Policy Deployment, Strategy Maps and Balanced Scorecards are poorly designed (although many are), but more likely due to a failure to adequately plan for, and then overcome, the multitude of cultural barriers that line the strategy implementation highway.

If culture is so significant, why don’t more organizations create successful cultures? It may be because culture is hard to get your arms around, let alone improve. An organizational culture can best be described as a learned set of behaviors that employees recognize as those that are expected and rewarded. These behaviors are based on values, which provide guidelines for decision making by defining what the organization praises and condemns. Values and behaviors are often built over many years, are deeply ingrained and become “just the way we work around here.”

If culture is so significant, why don’t more organizations create successful cultures?

 

Therefore it’s possible that not enough effort goes into improving the culture. As Harvard Business School professor Rosabeth Moss Kanter said in her book Change Masters, “Cultures will need to change over time as the tasks change, as the organization grows, or as people change. Much trouble in organizations comes from the attempt to go on doing things as they used to be done, from a reluctance to change the culture when it needs to be changed.” However, changing cultures proves to be very elusive for most companies, and therefore they stick to preparing strategy and infrastructure, which are more tangible.

 Yet if one believes that culture eats strategy for breakfast, is strategy irrelevant? And, if so, why do so many companies go through the annual exercise of creating a strategy? Well, it turns out that strategy does have tremendous value, but only to the degree you successfully execute. Duh!

Consider the data stated in the recent Harvard Business Review article, “How the most successful teams bridge the strategy execution gap.” The research found that:

  • High-performing teams spend nearly 20% more time (compared to low-performing teams) defining strategy (i.e., translating a high-level vision into clear, actionable goals).

  • They spend 12% more time aligning the organization around that strategy through frequent internal communications and driving a consistent message downward into the organization.

  • They spend over 25% more time focusing the enterprise than their lower-performing peers. That time is spent establishing financial and operational metrics, aligning goals with overarching strategy, allocating resources, and reviewing key metrics.

  • High-performing teams spend 14% more time checking their progress against strategic goals by reviewing key metrics and shifting resources accordingly.

  • High-performing teams spend 28% more time engaging the organization in ongoing dialogue about cultural enablers and barriers to execution. This includes forums for employees to voice concerns via surveys (e.g., employee engagement) and actual dialogue.

  • Those same teams invest almost one-third more time in optimizing talent capabilities by reviewing development plans, ensuring that succession plans are in place, and evaluating compensation plans to be competitive.

This confirms the obvious: simply developing a strategy has a much lower chance for success vs. really working hard on implementation, including addressing the cultural implications, and making strategy a living breathing process throughout the year. If you do that, you stand a good chance your strategic work was worthwhile and will produce results.

Finally, what about Infrastructure? To be honest, prior to watching Dr. James’ video and reading the article, I tended to view infrastructure as a byproduct of strategy. Form follows function if you know what I mean. But what he insightfully points out is that infrastructure goes beyond its typical meaning of organizational structure and functional capabilities (finance, marketing, etc.) and includes workflow, clinical processes, transparency of interactions with patients and information technology.

As Dr. James notes, infrastructure’s role, or to restate it “Leadership’s role” is to “make it easy to do the right thing” and to build the processes, systems, workflows and information availability for that to happen as a constant and routine part of daily work. I would also infuse Governance as part of infrastructure, and often see strong governance as a differentiating factor between those health care organizations, such as physician practices and service lines, that are successful vs. those that are not.

Given all that, which is most important? I look at it this way. Your strategy must be rooted in the cultural strengths you have and the cultural needs of your business. If culture is hard to change, which it is, then strategy is too. Both take years to successfully build; both take years to change. Fating strategy to be just a morning meal for culture does injustice to both. Confining culture to the narrow role of “enabling” strategy prevents it from strengthening strategy by being part of it. It also weakens the power of strategy to turn your company’s cultural strengths into a source of enduring and differentiating advantage. Don’t let culture eat strategy for breakfast, or infrastructure eat culture for lunch. Have them feed each other.

As for infrastructure, I also see it as closely linked to culture and strategy and might go so far as to suggest they are a three-legged stool on which your company stands. If you want to change your culture, part of that comes from what infrastructure you develop and what you support and invest in related to the daily workflows and processes your physicians and caregivers are encountering. This appears to have many linkages to the idea of the Quadruple Aim and making sure that the clinician experience is optimized in order to provide better outcomes at a lower cost with an improved patient experience.

However, to close, I’m going to somewhat override all of what I just wrote about and suggest the following. Despite the critical importance of culture, strategy and infrastructure, what eats them all starts with whether or not you have a “healthy organization.” If you want to understand what I mean by healthy organization, watch the following short video of Patrick Lencioni, author of some of my favorite leadership books including The Advantage. Do you agree that the things cited as characteristics of organizational health will outweigh culture, strategy and infrastructure? I do, and I see it all the time in some of the leadership of organizations that I work with. If your organization isn’t healthy, and particularly if your leadership team is not a healthy unit, nothing else may matter.

I am interested in what you think. Reply to this blog and tell me who or what is eating your breakfast or lunch today!

 

llustration: Lee Sauer


 

Larry SobalLarry Sobal is Executive Vice President and a Senior Consultant at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and health insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems. His weekly blog post comes out on Thursdays and can be accessed at www.medaxiom.com.

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About the Author
Larry Sobal

Larry Sobal, MBA, MHA, is CEO of a yet-to-be-named cardiology practice which is transitioning from employment to an independent physician group effective January 1, 2019. He has a 37-year background as a senior executive in physician practices, consulting, medical group leadership, hospital leadership and health insurance.

To contact, email: larry.sobal@gmail.com



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