Adaptive Strategies Blog

I’ve been away from this for a while but have decided to return in a more focused manner. My intent is to issue a weekly thinking exercise to help anyone interested in improving their critical and strategic thinking skills. I hope you find these comments and exercises helpful.

Assumptions Gone Bad:  Assumptions are the foundation of personal and business strategy. Sears assumed they understood the  needs and wants of middle-class America. True for about a century; wrong for the past fifteen years or so. Martgage and financial service companies assumed that the price of a house would always go up. Right for fifty years — bad assumption starting around 2007.  Kodak assumed that film would gradually decline and that they had time to shift to a digital world. Oops.

Look at the assumptions you have been using in your personal and professional life. Are any of them “going soft” on you? Do you have a big decision coming up? Document your assumptions, vet them with people you trust, and review them every six months or so. Watch for “assumption erosion.” It’s a killer.

It’s the end of the year and the decade and I’m facinated with all of the “top ten” lists coming at me. I now know the top ten medical stories, the top ten vacation spots, the top ten movies, the top ten songs, and on and on and on.

I’d like to compile a list of the top ten individual or collective lapses in good thinking from the past decade. Here are a couple of my nominees.

• What were the mortgage companies thinking when they gave NINJA (no income, no job, no asset) loans for mega-houses?
• What was Merck thinking when it kept Vioxx on the market after it’s own studies showed it to increase risk of heart failure?
• What was management at Pontiac thinking when they introduced the Aztek? (See if that doesn’t bring a smile to your face?)

Please add to the list. What were they thinking?

Yes, I was MIA for while (but you probably didn’t notice). Time really is a scare commodity.

Anyway, I’ve been thinking about all the men and women who “get it done” in most businesses – the “middle” managers.

Picture this, it’s a holiday party and you and all the guests are eagerly awaiting the dinner bell. You strike up a conversation with your cousin TJ, the Director of Operations for a large firm. TJ has enjoyed a fairly successful 20+ year career with this employer since starting in the management training program. TJ is smart and hard-working and has moved up the ranks, gaining greater responsibility and recognition, surviving the “right sizing” of the early 21^st century and currently holds a very visible, high-pressure role. It has always been interesting to hear about TJ’s career journey because it sounds so exciting and rewarding.

But this year things are a bit different. TJ seems less enthusiastic, distracted, and even appears exhausted. You notice that TJ’s career adventure has become simply a job. “It’s just not like it used to be,” TJ explained. “Business is changing so much and it seems to me as if the rules of the game are changing. The pressures are mounting and my job is harder than ever before.”

The Rules are Changing

TJ’s situation is not that unusual for many middle managers. The rules of the game are changing and those changes come from all around us: expanded responsibilities because of globalization and a virtual workforce, advancements in technology and the use of the internet resulting in a 24×7 reality, mobility of the workforce, changing employee expectations as Boomers exit and Gen Y enters the workforce, expanding consumer power because of excess global capacity, and the constant pressure to maintain costs and improve profitability for our shareholders.

Each of these changes or trends has resulted in a marketplace that looks very different from what the previous generation of middle managers saw. The situation is further complicated by the reality that these changes are all happening concurrently.

What are your TJ’s experiencing and what can you do about it? I have some ideas and will comment later.

The healthcare system is fascinating because it will touch EVERYONE at one time or another. You may work in the system, or supply the system, or use the system – but it will touch you, one way or another, over the course of your life. I have friends who never fly and, therefore, don’t care about the airline industry. I have friends without cars who don’t care about the car industry. But I don’t have any friends who have never been sick or never needed medical help.  Healthcare is one of a few systems that touch all of us. So we had better think about its future.

Many people have written about healthcare as a “broken system.” I think of it as a rapidly evolving system that that is affected by a lot of strong forces, from technology to demographics to political posturing. In other words, the future of our healthcare system is uncertain.

How did we get here?  Well, the system that serves us today is the result of the predominant targets of the healthcare system in the past. Consider the role of doctors, nurses, and other healthcare professionals as they responded to the following:

• 1850 to 1900: Epidemics are prevalent. Food, water, sanitation and other aspects of city life cause health problems for masses of people.
• 1900 to World War I: Individual trauma (wounds) and infections are the focus
• World War I to World War II: tuberculosis, malaria, pneumonia, venereal disease and industrial hygiene are big issues to be resolved in the United States.
• World War II to 1980: We are living the “good life” and heart disease, cancer, and strokes are on the rise.
• 1980 to Present: Chronic diseases, emotional and behavioral conditions, terror, war, and genetic inheritances come to the fore.

Now think about the next age of healthcare and consider the forces that will hit the system in the coming years: more and more people are uninsured or underinsured at exactly the same time as families have become smaller and more dispersed. The massive Boomer generation is aging. There are fewer people moving into healthcare. More and more healthcare has become a “for profit” business. The bottom line is that the system and its participants will be stressed in ways we have never precisely encountered before.

That said, this system has evolved in the past and is not a stranger to new ways.

The overriding challenge is for people affected by the system to think about its future and take appropriate actions. Doctor, administrator, nurse, patient, taxpayer – ALL have a stake in the future of this sytem.

The future of the healthcare system

Esteemed doctors, academics, economists, and consultants have written a great deal about their view of and prescription for healthcare and healthcare providers. However, much of it is built on a particular point of view and, when taken in total, a contradictory picture arises. Some see the future of healthcare providers operating in the context of a “consumer- driven” system. Some see the future of providers in the context of information-empowered “personalized medicine.” And others see the entire industry changing as we move (in their view) to a single-payer system. GE Healthcare sees a fundamental shift in the nature of the healthcare provider as the system moves from “late disease” to “early health.” Because all of these points view are about the future, all we know for sure is that no one is right and no one is wrong – yet. We are uncertain.

Healthcare is filled with smart and well-educated people. And that single fact is a cause for hope and concern as we face the future of this vital industry. Because we have so many smart people, we hope that we will be able to “figure it out” as the system changes. However, because we have so many well-educated people, we may be trapped into the viewing the evolving system through mental models that may no longer be appropriate.

As you reflect on the position you want to take in the current “debate” about the future of a system that affects all of us, I suggest that you might want to consider one or more of five ways of thinking.

• Think about the speed of industry evolution. Our hospitals and providers have to keep up with the speed of evolution (on a global basis) or risk becoming irrelevant.
• Think about the larger system. Our hospitals are part of a larger system and the answer to the question “Why is my hospital changing?” is always found in the larger systems of healthcare and economy.  
• If you work in healthcare, think about your business model. Whether you are a solo practitioner or a team leader or the CEO of a hospital you have customers and they will the ultimate arbiters of your value.
• Think critically. The world is loaded with people who have opinions. Are your opinions well founded on accepted principals of good thinking? Or, heaven forbid, are you simply repeating someone else’s opinions as “fact.”
• Think across time. The past can inform actions we take in the present. All present day decisions have a “futurity,” both good and bad. And thinking about the future forms the visions we create for our organizations today.

When you think about OUR healthcare system do you throw your hands up in the air and say it’s too confusing? Don’t – your health depends on it.

You may not have noticed, but I took a week off. OK, maybe more. Went to the UK, rewrote my portion of a forthcoming book (I think you’ll like it). And I was just too tired to think. Been there? But I’m back.

I was browsing the books at my local Border’s shop and came across an interesting title, so I took my coffee and treated Border’s like a library. Anyway, the book (Inside the Mind of the Turtles) was written by Curtis Faith a former stock trader and he was writing about the mind of those people who make big bets every day. Interesting stuff.

I came across a section about managing risk and uncertainty – NOW he got my attention. His list of seven actions was nice advice and one of them (“take reasoned risks”) really caught my attention. How do you reason about uncertainty? I mean, it’s uncertain. Right? But the more I thought about it, the more I realized that instead of throwing our hands up in despair, we really do need to reason about risk during uncertain times. In fact, we need to do this more than ever.

Here are a few ways I think we might go about taking reasoned risks. I’d appreciate it if you would add to the list.

• Think in terms of ranges instead of point estimates. (I’m a small business owner, revenue for 2010 won’t be as high as 2008, but it won’t be zero. I think it’s reasonable to assume a budget built on falling into a 60 -80% of 2008 revenue. Now I can go by some equipment rather than wait for “the recovery.”)
• Learn from others. How are my competitors handling this uncertainty? What about companies in other industries? What about historical analogs?
• Focus on the future, not the past. My sales in 2008 are an interesting, but historical, data point. Who will need my services in 2010? What changes will my clients be dealing with? What trends will continue and what trends cannot continue? (Side Note: It seems to me that in 2007 and 2008 the entire building and mortgage industry assumed that housing values would escalate FOREVER. Didn’t you just know that trend had to abate?)
• Study the pressures for change affecting your industry and your customers’ industry. Which pressures might bring gentle change? Which pressures might trigger breakpoints?

By the way, I’ll tell you the other six actions if someone asks me. That way I’ll know that at least one person read this post.

Bye for now. Don’t forget to add to my list. How do you go about taking “reasoned” risks?