Mindful over mindless: learning to think like an entrepreneur - Innovation

Physician Executive, July-August, 2002 by Edward J. O'Connor, C. Marlene Fiol

YOU LIVED THROUGH diagnosis-related groups and resource-based relative value systems. You watched the longterm decline of your inpatient base. You witnessed the rise and fall of health care giants like Columbia and PhyCor. You made and abandoned commitments to management tools like total quality management, continuous quality improvement and re-engineering.

So what's next?

Brace yourself. Much greater changes are on the horizon.

Costs are rising again. Purchasers are more discriminating. Quality is no longer accepted as a given. And bad service is increasingly not tolerated.

Customers have greater access to information. Complementary medicine continues to expand. Pressures are mounting for improved, documented, high-quality, cost-effective access to services. Customers want it all.

Hospitals and physicians are no longer among the most trusted members of our society. Patients are frustrated with a lack of personal contact with providers. The number of uninsured continues to expand. And results from genetic, pharmaceutical and technological research suggest an uncertain future.

Are these expectations and pressures reasonable?

Some are and some aren't, but they do exist.

Things are not like they used to be and there's no end in sight. The future looks bleak or the future looks like a time of unsurpassed opportunity. It depends upon your perspective. Are you a traditional health care leader or an opportunistic entrepreneur?

Faced with the same environmental circumstances, some leaders see threat while others see opportunity.

For example, during the late 1980s and early 1990s traditional mainframe and minicomputer makers logged $20 billion in operating losses. (1) None of these companies was able to adapt effectively to the personal computer world. Instead they tightened the thumbscrews on existing processes, attacked costs through mergers and layoffs, and withered away.

Personal computer innovators such as Intel, Sun, Microsoft and Dell created extraordinary value during the same time.

The airline industry provides another dramatic example.

After the 9/11 tragedy, Southwest Airlines continued to fly its full schedule and reported positive quarterly profits. Other major airlines resorted to major cutbacks and posted major losses.

What leads to these vast differences in behaviors and outcomes under highly similar circumstances? Clearly, in each of these cases, leaders within the same industry held different assumptions, perceived different possibilities and took actions that led to vastly different outcomes.

Tough decisions

As a senior decision maker at your hospital, you are faced with many challenges.

Housing prices in your community have tripled. The people who supported your community hospital for 80 years are moving on as factories in your area are closing. Newcomers moving into your community seem willing to drive 10 or even 30 miles to receive care from one of your multiple competitors.

Surveys of local residents suggest that many respondents believe your medical staff is lacking, your facilities are shabby and your parking is inadequate.

As your census numbers, revenues and limited reserves continue to drop, you are faced with the need to make some major choices. (2)

As a physician leader, what will you do to address these challenges?

Answers to such questions in health care during recent decades included selling/merging your hospital or attempting to shrink your way to success by closing services/facilities. However, research shows the futility of downsizing as a path to success. (3) And merger mania has proven as unsuccessful in health care as other industries. (4)

Following the health care herd clearly doesn't lead to the desired outcomes. But what other alternatives exist?

At Griffin Hospital in Connecticut where they wrestled with the situation described above, leaders assessed the community's need and desire for distinctive maternity services, redesigned their offerings to meet those needs and made the investment necessary to reap the positive benefits from their experiment.

Building on the success of this first venture, they then moved on to additional service areas. Results from this ongoing series of experiments include financial success combined with regular recognition as one of Fortune magazine's top places to work in the United States. (5)

By what process did these leaders make such distinctive entrepreneurial choices? How might you, as a physician leader, follow a similar path to long-term success for your organization? Where will you search for the new answers to address the challenges facing your health care organization?

Working harder at doing what you've already done the way you've already done it seems unlikely to effectively address these issues.

Entrepreneurial thinking

Successful entrepreneurs are people who create something of value from practically nothing.

They are people who sense opportunities, marshal resources, take calculated risks and push ideas through to reality. Typically driven by a commitment to a common vision and bold goals, they reward results and have little tolerance for those who worship process and effort. (6)