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?

Who is your role model? Or, more importantly, who are your role models in these uncertain times?

Wow, just think back to the good old days (the roaring 90s) when all we had to do was pick up another book about Jack Welch and apply “the GE way” to all of our problems.

Who now? Who can we use when things are so uncertain?

How about great explorers? Try Roald Amundsen. He was the Norwegian explorer who was the first to reach the South Pole on December 14, 1911. There was a lot of uncertainty about the terrain and the conditions he and his team would face. So he focused on some things that remained true and important no matter what – weight and warmth. For example, while waiting for the “good” weather he spent time shaving down the sleds and wooden boxes to get them as light as possible. He also spent time tending the sled dogs who would carry him to the pole. Think about your business. What DO you know during these uncertain times? You obviously know you have to keep costs under control. Do you also know that you will need new and better talent? Should you get rid of people to reduce costs or should you take this “downtime” to improve the capabilities of your team? Think like an explorer.

How about great detectives from our fictional past, the heroes of our who-done-its. We’ve all read about Sherlock Holmes but I prefer to think a bit more recent and consider the fictional Nero Wolfe. No action hero here – he’s big and fat. But he certainly sees the clues that others miss and comes up with unique ways to solve the crime. What are the clues that you need to connect to make some sense out of uncertainty? What scenarios could you construct and put into mental competition as you plan for the future. Think like a detective.

How about great scientists? Thomas Edison had great drive and a willingness to experiment and, most importantly, to use failures to rebuild and rerun experiments. He failed in the quest for a light bulb thousands of times as he dealt with uncertain properties of materials and how they would react with electric current. He also thought BIG – the light bulb was part of the electric system he had conceived. Scientists take it for granted that experimentation and failure are part of their daily life. Too many business people hold off until they are sure something is going to work. Maybe you should think like a scientist?

So, here are some of my role models during uncertain times. Who do you look to for guidance and inspiration?

Our friend Brad Shorr (Brad Shorr) came up with an interesting idea a couple of weeks ago. Let three bloggers riff on the same topic for a while and see what happens. We picked a topic near and dear to all of your hearts (and wallets) – BUSINESS UNCERTAINTY.

Kay Plantes knows a LOT about business model innovation. How does she see uncertainty?

Fred Schlegel has a marketing mindset. What opportunities does he see in uncertainty?

Finally, I spend a lot of client time thinking about the skills of emerging leaders. Why might uncertainty be good for them?

Assumption:Knowledge Ratio

I recently read an article in Sloan Management Review that had a very interesting ratio to consider — the ratio of assumptions to knowledge. In other words, how much are we assuming about our business compared to how much do we know about our business. Fractions are good; whole numbers are bad.

My guess is that during the 1990s the ratio was certainly smaller than today. There’s no way to know what it was for your leadership team, but suffice it to say that the ratio is larger today. During times of uncertainty we know less and assume more. And therein lies the problem. So many of today’s leaders spent their formative years in relatively benign times. But now they have to make their most important decisions in times of relatively higher uncertainty. What should they do?

Robustness

They (and you) should spend some time thinking about the concept of “robustness” and how it applies to leadership style.

Any system (like business) is said to be robust if it is capable of coping well with variations in its operating environment with minimal loss of functionality. So, be honest and ask yourself if the coming months and years are going to have more or less variation in sales trends, supplier demands, customer demands, regulations, interest rates, etc., etc.

My conclusion is that we will need more robust businesses in the coming few years and leadership that understands how to build and maintain these businesses.

Not sure what to do or to recommend? Go back to your grammar school English class and recall the explanatory power of antonyms (opposites). What are the antonyms of “robust?” Try “flabby, frail, soft, or weak.” These are descriptors you do NOT want.

So what makes your business more robust? Here are some ideas. Please add to my list.

• (Really) empower your team. They get stronger when they make decisions.
• Resist downsizing to the point of fragility. Accept a bit of inefficiency as a shock absorber.
• Increase training and development activities rather than cut the training budget. You want the best talent possible, not the most demoralized.
• Let go of your ego and listen to your suppliers’ ideas. You want them as a real partner, not one in name only.

Leadership in uncertain times is different. Face the brutal fact that you need your team’s help every bit as much as they need you. Try something dramatic – ask for it.

My friend Brad Shorr (Brad Shorr) came up with an interesting idea a couple of weeks ago. Let three bloggers riff on the same topic for a while and see what happens. We picked a topic near and dear to all of your hearts (and wallets) – BUSINESS UNCERTAINTY.

Kay Plantes knows a LOT about business model innovation. How does she see uncertainty?

Fred Schlegel has a marketing mindset. What opportunities does he see in uncertainty?

Finally, I spend a lot of client time thinking about the skills of emerging leaders. Why might uncertainty be good for them?

Times are uncertain – what a great time to be a leader!

OK, the economy is in the dumper. Healthcare is up for grabs. Chinese manufacturers are taking over your industry. And your bank is cutting  your line of credit.

Bad?  Maybe.

Brutal facts? Absolutely!

So now what do you do? Well, dear friends, you do what leaders throughout time have done. You spend some time and think about some “no regrets” moves.  You spend some time and think about options you might “buy.” And you think about some possibilities of bold moves. The bottom line is that during uncertain times you stop acting out of habit and take the time to THINK! I have eight skills for you to develop to improve your leadership thinking skills. Here are four; the other four will come in a few days.

THINK about observing : You can clearly see the problems facing your organization; can you see the opportunities that comes along with the problems? If you and all of your competitors are facing the same decline in sales, can you see a new value promise? What clues are on the horizon that inform your thinking about the structure of your business model?

THINK about imagining: The heart of strategy is to “do things differently or to do different things” for competitive advantage. The key word is “different” and the key skill is imagining. All of us had great imaginations as a small child (remember how you could use a big cardboard box to make a “fort”?) but many of us have neglected that skill while we searched for the perfect answer. It’s time to get back in touch with that little kid in the back of your mind.

THINK about challenging: Does uncertainty seem especially frightening because some of your assumptions are failing? Maybe it’s time to challenge all of your strategic assumptions. What assumptions are you holding about customer loyalty? What assumptions are you holding about your profit model? Your competitors will challenge all of your assumptions – shouldn’t you?

THINK about reflecting: Do you take the time to sit back and consider you marketing message and business model during these uncertain times? Or are you too darn busy doing “something” because activity feels good. (Be honest, does thinking look like work in your organization? If you’re like many others, you opt to “look busy” rather than get caught in quiet contemplation.)

Four more leadership thinking skills to come in the next post. In the meantime, tell me how you see leaders using uncertainty to get ahead. Louis Pasteur, the famous French biologist, was once accused of being lucky. His response was that he was lucky – but he was prepared for it. Are you?

I named my business Adaptive Strategies in the early 1990s in response to an economic downturn. As they say, what’s old becomes new again. That said, the reality of our world is that we have always had to adapt. The problem is that too many people are waiting for “normal” to return. It never will.

Adapting is not an option; it separates the winners from the losers. Just think about past inflection points and those who did and did not adapt.

• Electronics in the 1950s — from vacuum tubes to transisters
• Aircraft in the 1960s — from turboprop to jets
• Autos in the 1980 — from quality vs. price to quality at every price
• Internet in the 1990s — from bricks and mortar to bricks and clicks

Think this “adaptation thing” only applies to businesses? I was a darn good Fortran programmer in the 1970s. Anybody want to hire me today?

Look at your career and your business. To what do you have to adapt? Are you adapting fast enough?

We are in times of deep uncertainty and people wonder about how to do planning during uncertain times. All you know for sure is that your strategy needs to adapt. What to do? Maybe it would help to do a bit of role playing. I’ll add a new white paper to my website by mid-week, but here’s a few role-playing tips to consider while you wait.

• Play the general and conduct war games with your best people. What do you want to accomplish and how will the terrain (economy) and the enemy (competition) react to your moves? What can you do to react to their moves?
• Play the coach and watch game films. Study your entire industry and see what they are doing. What can you learn from their successes and mistakes.
• Play the project planner and consider the elements of risk you are facing and what mitigating moves you can make and what contingengy plans you need to put in place.

I have nine more tips for you and will have them posted on my “publications” tab by mid-week. Download them if you want them (free — no e-mail address required).

But here’s the question for you. Who do you role play when you think about dealing with uncertain times?

I’m working on a new book project that is based on applying Louis Pasteur’s quote of “chance favors the prepared mind” to the realm of hospitals and other healthcare providers. And one of the stumbling blocks has been answering the general question of how does anyone prepare for an unknown future. So I sat down and wrote whatever came into my mind.

Here is my initial list. I’d appreciate additions that you might make to this draft. “We prepare for the future when we …..”

• go to school
• learn something new
• practice
• watch game films
• play war games
• build scenarios
• focus on goals
• do contingency planning
• conduct rick assessment
• ask questions
• send probes into the unknown
• “get in shape”
• experiment
• study failures

What would to add to my list? I REALLY want to know! (It will help me break a writers-block that’s driving me nuts!)

I was prepping for a speech I’m giving next week and I came across a wonderful HBR article from 1997. (“Strategy Under Uncertainty,” HBR, Nov/Dec, 1997) It’s apretty long article and I’m not going to review all of it here, but I do want to comment on a way to think about adapting during these tough times.

Take the time to consider your organization’s future and the degrees of uncertainty you are facing. Then consider your options for action.

• You could do nothing and wait for the storm to pass.  (not recommended)
• You could take some “no-regrets” actions like improving communications and relationships with customers and employees. (highly recommneded)
• You could put some  low-cost options in place (like basic business education for the workforce) and prepare for the inevitable uptick in business. (highly recommended)
• If your organization is healthy you could place some “big bets” like buying a competitor and take advangtage of weaker competitors’ troubles. (depends on your real business health).

Here’s the bottom line. Sure, times are tough; but this is NOT the time to hide in a corner and whimper. Do what you can to keep your organization prepared for the future. It’s in your hands.