Management Wisdom Debunked: What Are Health Care Leaders to Believe

The April 2018 issue of Harvard Business Review arrived this weekend and I devoured it on the plane yesterday. There were so many provocative pieces for healthcare leaders that I decided to bundle several of the short ones into this commentary. They all happen to take contrarian views to “common management wisdom” – on such “no-brainers” as the value of employee satisfaction, the wisdom of following the path set by “best of breed” organizations, and the degree to which organizations gain replicable competency from the alliances they create. If the conventional wisdom found in the management literature is actually wrong, how are we to learn leadership skills and techniques from those who came before us?

Here are references to the selected short articles and my brief comments on each to focus on the angles for healthcare leaders:

Are “Great” Companies Just Lucky? by Michael E. Raynor, Mumtaz Ahmed, and Andrew D. Henderson

The authors (two are consultants at Deloitte Consulting while the third author is from University of Texas at Austin) summarize the provocative results of their 1966-2006 study of over 280 high performing businesses and 230,000 company-years of data (download the full monograph via this link). In the study, they sought to determine if the best companies achieve their results by intention or by chance. And guess what they found?

You can read the methodology and judge for yourself but the authors found that only half of the touted “best of breed” companies used as an example of best management practices produced results that were not explicable by chance alone. As scientists and managers, healthcare leaders we rightly look for “evidence-based best practices” to guide clinical, service, and business initiatives. The authors recommend a critical examination of the take-home lessons from the methods and experience of organizations who seem to have produced exemplary results. They counsel us to adopt their insights but not necessarily clone their approach and methods. In their words: “No one reads The Tortoise and the Hare and, faced with a chance to bet on such a race, chooses the tortoise.”

Employee Happiness Isn’t Enough to Satisfy Customers by Rosa Chun and Gary Davies of the Manchester Business School

The authors of this short piece surveyed 49 business units within 13 British service organizations and found only one firm that demonstrated a positive correlation between employee satisfaction – and two that showed a negative correlation (e.g. happy customers correlated with unhappy employees!).

The take home here involves how we use metrics and incentives. In my consulting work, I find that increasingly healthcare increases are measuring important parameters of success – often in a balanced scorecard or other multidimensional frameworks. But almost as frequently, the metrics – and therefore the messages that are given about their importance and how to achieve them – exist in isolation from strategy, training, and spirit. There’s lots of push to “make the numbers” but not always to connect the dots. It’s rare for me to see balanced scorecards, for instance, that are derived from strategy maps.

So while I wouldn’t want to take these to the bank by recommending we actively make nurses miserable as a strategy for enhancing patient and family satisfaction, the authors do advise that we should: “engage employees by giving them both reasons and ways to please customers; then acknowledge and reward appropriate behavior. Simply being served by a satisfied employee isn’t enough to win customers’ loyalty.” Link the metrics to a context of excellence and satisfaction that completes the loop from employee to patient.

Superstition Undermines Alliances by Koen Heimeriks of the Rotterdam School of Management

This author reports his own study of over 200 firms and 3,400 alliances which found – contrary to other studies – that the more experience firms had with making alliances, fared worse in meeting the goals of those alliances than companies with less experience.

Read this short piece for the details, but briefly, Heimericks attributes his finding to institutionalizing mechanisms which are over-relied upon by some repeat alliance-makers. This refers to the experience-born standardized templates and processes used by veteran deal-making firms to do their “next alliance.” They may be quick and easy but are often insufficiently flexible to accommodate unique aspects of organizations with whom alliances are sought – and may fail to reach goals as a result.

Heimericks recommends that while institutionalizing mechanisms are important, firms should increase the use of integrating mechanisms which he describes as those which “… encourage employees to share experiences from previous alliances and engage in group problem solving, nurturing a collaborative mindset and willingness to improvise. This fosters experimentation and allows companies to adopt practices to new contexts–processes that promote truly effective practices and continual improvement.” Firms which balance these two approaches are more likely (71% v. 50%) to reach alliance goals.

While perhaps counterintuitive, this is not contrary to some of our experience in health care. Think about health systems that incorporate physician practices, or make a critical market or competitive alliances with service partners. I can’t tell you how many times I’ve heard health care leaders say: “We know how to get this done” and proceed to template it out rather than critically and openly review the results of the last experience. Often they simply proceed to develop alliances using models and/or tactics which alienate the partner party and result in suboptimal outcomes. A healthy sprinkle of integrating mechanisms up front might not be a bad idea.