Capstone Project

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Chapter 10 Communicating Strategy and Developing Action Plans

Why Communicating the Strategy and Developing Action Plans Are Important

As suggested in the quote above, strategic plans must be translated into specific actions that will move the organization toward achieving its strategic goals, ful- filling its mission, and achieving its vision. Thus, action plans are a clearer and more specific articulation of the broader strategies tailored to the functions of the individual organizational units or departments. Unit managers will need a thor- ough understanding of the broader organizational strategies. Once these broader strategies (directional, adaptive, market entry/exit, competitive, service delivery, and support strategies) have been clearly communicated to unit managers, they will have detailed maps of the unit tasks that need to be accomplished. In the implementation, organizational momentum will have been created.

“If well-communicated action plans do not translate into reality, all the efforts devoted to the strategic planning process will have been wasted.”

—PeTer GInTer, JAck DUncAn, LInDA SwAyne, AUThOrS AnD PrOfeSSOrS

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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402 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

Of course, action plans are still just plans. Plans have to be carried out and man- aged. It is a day-to-day process – it is the work of the organization. yet, these plans have to be managed with an eye on the mission and strategic goals, guided by the organization’s values, and inspired by the vision. Unit managers must be strategic thinkers too! Therefore, action plan managers must be careful not to let the action plans become ends in themselves, mindlessly performed without an understand- ing of the organization’s broader objectives and goals and how the action plans fit with the organization’s competitive and value-chain strategies.

Often there is an operational, logistical, or other types of issue unaccounted for in the action plan or perhaps implementation does not work out as intended. In these situations, learning takes place, for we often only learn what works by doing. As managers learn what works, the planners must listen to the doers and be ready to develop new plans. Still, managers must have a plan to start their journey and they must be ready to modify the plan as it is implemented.

Use the concepts in this chapter to develop action plans and be ready to learn by doing!

learning objectives

After completing the chapter you will be able to: 1. Describe the interrelationships among situational analysis, strategy formulation,

value-adding service delivery and support strategies, and action plans. 2. Discuss how strategies are translated into action plans. 3. List the components of an action plan and explain the function of each

component. 4. Cite some reasons that cause strategies to be difficult to implement in health

care organizations. 5. Suggest some effective ways to overcome barriers to the implementation of

strategies. 6. Explain the need for contingency planning in health care organizations. 7. Relate the map and compass metaphor to strategic thinking, strategic planning,

and managing the strategic momentum.

Strategic Management Competency After completing this chapter you will be able to translate service delivery and support plans into specific action plans for a health care organization.

Implementation Through Action Plans

The situational analysis discussed in chapters 2 through 5 culminates with a series of strategic goals that, along with the mission, vision, and values, are directional strategies that provide focus for the organization. Adaptive, market entry/exit,

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 403

and competitive strategies are designed to accomplish the strategic goals and move the organization in the desired direction. Value-adding service delivery and support strategies further shape the strategy, providing guidance and direction to managers who are responsible for implementing action plans.

The desired direction and organizational momentum have been discussed and consensus reached during the strategic planning process, yet no movement has occurred. for real progress to begin, action plans will have to be developed throughout the organization. As Peter Drucker stated, “[strategic] insights are ‘bled off’ and converted into tasks and work assignments.”1

Implementation strategies have been referred to by various terms. Some organi- zations refer to implementation strategies as “tactical plans,” although others may use “business plans,” and still others, many in health care, have adopted the term “action plans.” Action plan is the most descriptive term as it connotes the steps required to carry out strategies and meet objectives. In addition, the term “action plan” may be applied to the several different levels within organizations that must develop implementation strategies, and thus lessens confusion. More specifically, action plan may be defined as unit-based implementation activities that identify specific steps to accomplish the service delivery and support strategies.

The Level and Orientation of the Strategy

This chapter concerns communicating the overall strategy to those who must develop specific action plans to accomplish the strategy and providing managers with a consistent format for implementation. note, however, that the strategy is crafted, step-by-step, as managers at all levels commit resources to policies, pro- grams, people, and facilities.2 A large integrated health care system may develop strategy at a number of levels – a corporate level, divisional level, organizational level, and unit level. If the strategy has been developed at the corporate level, action plans will be for entire divisions. If the strategy has been developed at the divisional level, action plans will be for individual institutions or organiza- tions comprising the division, such as a hospital (within the hospital division) or a long-term care facility (within the long-term care division). If the strategy has been developed for an individual organization, such as a hospital, the action plans will be developed by functional units within the hospital (such as surgery or pharmacy). Because strategies may be developed for large, complex organiza- tions or small, well-focused units, action plans to implement the strategies will be developed at different levels as well. Trinity health, introduced in chapter 1 and illustrated in exhibit 1–5, portrays the organizational levels and the different orientations.

An effective action plan, regardless of level, consists of objectives that specify how the unit (division, hospital, pharmacy) is going to contribute to the strategy, what actions will be required to achieve the objectives and within what time period, who is responsible for the actions, the resources required to achieve the objectives, and how results will be measured. These elements are required whether the action plan is for entire divisions as part of a complex corporate- level strategic plan or for functional units contributing to the strategic plan of a

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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small organization. Identifying objectives, specifying the timelines and actions, determining who is responsible for accomplishing them, specifying the resources required, and defining how results will be measured is an approach that keeps the strategic plan straightforward and comprehensible. A simple understandable action plan is always preferable to a complex incomprehensible plan.

Decision Logic for Developing Action Plans As with all the previous strategies, there is a decision logic for the development of unit action plans as shown in exhibit 10–1. Specifically, unit action plans must accomplish the service delivery and support strategies as well as the competi- tive strategies. The strategic posture and position strategies may indirectly place demands on various units within the organization. certainly, a defender strategy requires that all units strive to keep entry barriers high through quality, efficiency, or differentiation. More directly, the value-chain implementation strategies require units within the organization to take specific supportive actions.

Action Plan Development Responsibilities every member of the organization cannot realistically be involved in the stra- tegic planning process. A few key players – senior staff, top management, or a leadership team – are needed to provide balanced and informed points of view. Therefore, the development of the initial plan is usually the product of a relatively small number of strategic thinkers. Margaret Meade challenged us to “never doubt that a small group of thoughtful, committed people can change the world; indeed, it’s the only thing that ever has!”3 A small group of thoughtful, committed people can reshape even the most rigid organization.

Because of its involvement in developing strategy, the strategic planning team determines the “broad strokes” of strategy. The team should shape the organiza- tion through: a review or revision of the organization’s mission, vision, values, and goals; development of strategy through service delivery and support strategies; and guidance for what needs to be accomplished. however, action plans should be left to the organizational units. Senior managers shape strategic direction less by deciding the specific strategic content than by framing the context – creating “a sense of purpose that not only provides an integrating framework for bottom-up strategic initiatives but also injects meaning into individual effort.”4 Others in the organization should use their resourcefulness to develop action plans and carry out the strategy. As George Patton once said, “never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.”

Communicating Strategy to Initiate Action Planning Because everyone cannot be directly involved, many employees within the organization do not know the underlying issues and assumptions that were used to develop the strategy, nor do they know the goals for which they will develop objectives. Therefore, successive layers of management must commu- nicate the overall strategy and provide “maintain or change” guidance for the various units that will need to be engaged if the strategy is to be achieved. for example, if management has determined that an expansion strategy is required,

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 405

EXHIBIT 10–1 Decision Logic for Developing Action Plans

Directional Strategies

Adaptive Strategies • Expansion of Scope • Reduction of Scope • Maintenance of Scope

Market Entry/Exit Strategies

• Purchase • Cooperation • Development • Market Exit

Competitive Strategies • Strategic Posture • Positioning

Unit Action Plans • Objectives • Timelines • Actions • Responsibilities • Resources • Results/Measures

Implementation Strategies • Service Delivery Strategies

Implementation Strategies • Support Strategies

Unit-level Strategies

Organization-level Strategies

Corporate- and Divisional-level Strategies

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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406 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

guidance is needed as to which parts of the organization have been identified for the expansion. Managers in the identified part or parts then determine the objectives to accomplish the expansion in that area. when different units have overlapping or integrated activities, multiple groups have to coordinate planning. communication from the top down and the bottom up – as well as across – is required to engage everyone to do his or her part. communication of the strategy and getting people who actually do the work to think critically about the strategy itself and its implementation and to express their concerns can help avoid classic communication problems (see essentials for a Strategic Thinker 10–1, “what Are the Abilene Paradox and Groupthink?”).

ESSEnTIALS fOR A STRATEgIC THInkER 10–1

What Are the Abilene Paradox and groupthink?

The Abilene Paradox is the inability to communi- cate honestly and manage agreement success- fully. The paradox can be recognized in a group decision-making context by its six symptoms: (1) organizational members agree on the nature of a problem or issue they are facing; (2) mem- bers agree on the steps that should be taken to address the problem; (3) members fail to reveal their true feelings regarding the problem or the steps involved in addressing it; (4) as a result decisions are made based on inaccurate infor- mation resulting from the lack of communica- tion; (5) counterproductive outcomes result and members become angry and frustrated; and (6) the group fails to resolve the lack of truthful com- munication and the cycle is repeated.1

The Abilene Paradox was popularized by Jerry B. Harvey, Professor Emeritus at George Washington University.2 Although Harvey intro- duced the idea with a somewhat homey experi- ence of how his family took a trip to Abilene, Texas when no one wanted to go, the phenom- enon is seen often in organizations and creates serious problems in the decision-making process.

Groupthink occurs when a collection of people makes faulty decisions because group

pressures lead to a deterioration of “mental efficiency, reality testing, and moral judg- ment.”3 The phenomenon of Groupthink was introduced by Irving Janis, a Yale psychologist, in his book Groupthink: Psychological Study of Foreign-Policy Decisions and Fiascoes.4 Similar to the Abilene Paradox, Groupthink can be recog- nized by its symptoms. These are: (1) illusion of invulnerability – extreme optimism in the group encourages taking extreme risks; (2) collective rationalization – members discount warnings and ignore reconsideration of assumptions; (3) belief in inherent morality – members believe in the rightness of their cause and ignore ethical consequences; (4) stereotyped views of others – outsiders as enemies; (5) direct pressure on dissenters – members are pressured not to present views that are counter to the prevail- ing group; (6) self-censorship – doubts and reservations are not expressed; (7) illusion of unanimity – majority views are assumed to be unanimous; and (8) self-appointed mindguards – members protect the group from information that is contradictory. Members of the group seek conformity and desire harmony even if it results in dysfunctional decisions.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 407

Specific milestones in the strategic planning process should include updates for all employees, periodic discussions regarding how the process is going, and explaining expected timelines for the strategy to be handed over to those who will be responsible for carrying it out. In addition, successes should be shared and celebrated, and challenges should be identified and monitored. for example, some organizations hold weekly, monthly, or quarterly staff meetings to provide open communications with all employees present and encourage their ongoing commitment to carrying out the organization’s strategy. Other organizations have team meetings. It is challenging in health care to have a meeting of all employees because of patient care requirements; however, it is also challenging to implement a strategy if the employees are not engaged. If top management determines that it is impossible to hold a meeting for all employees, the question should be asked: “why isn’t it possible?” Then, much thought should be given to the question of how management expects to accomplish any strategy if the first decision is: “we can’t do that.”

The Process of Developing Action Plans

Although implementation strategies may be carried out at various organizational levels, implementation plans should have common characteristics. These plans concern translating directional, adaptive, market entry/exit, and competitive

The Abilene Paradox and Groupthink share some things in common but also share some important differences. The most important similarity is that both result in dysfunctional and sometimes irrational decisions. They differ in the sense that in Groupthink indi- viduals are not acting against their conscious wishes and generally feel good about the decisions the group makes. By contrast, in the Abilene Paradox the individuals are acting counter to their own better judgment and are likely to have negative feelings about the deci- sion reached.5 It has also been argued that the decision-making group in the Abilene Paradox is in a state of “low energy” and experiences hesitation, carelessness, and passive attitudes. In Groupthink, the group is in a state of “high energy experiencing high cohesiveness, esprit de corps, and euphoria.”6

RefeRences

1. Jerry B. Harvey, Rosabeth Moss Kanter, and

Arthur Elliot Carlisle, “The Abilene Paradox: The

Management of Agreement,” Organizational

Dynamics 17, no. 1 (1988), pp. 16–44.

2. Jerry B. Harvey, The Abilene Paradox and Other

Meditations on Management (San Francisco, CA:

Jossey-Bass, 1996).

3. Irving L. Janis, Victims of Groupthink (New York:

Houghton Mifflin, 1972), p. 9.

4. Irving Janis, Victims of Groupthink:

Psychological Study of Foreign-Policy Decisions

and Fiascoes, 2nd edn (Boston, MA: Houghton

Mifflin, 1982).

5. “Groupthink and Abilene Paradox.” http://cor-

porateveganblog.worldpress.com/2016/08/18/

first-blog-post/.

6. Y. Kim, “A Comparative Study of the ‘Abilene

Paradox’ and ‘Groupthink,’” Public Administration

Quarterly 25, no. 2 (2005), pp. 168–189.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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408 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

strategies into tasks and work assignments (specific actions that accomplish the mission, vision, values, goals, strategies, and value-adding service delivery and support strategies). In addition, these actions must be the responsibility of indi- viduals within the organization and made an integral part of their jobs. each job should be structured to show how it contributes to the strategic plan. In general, there are seven steps involved in developing action plans (see exhibit 10–2).

EXHIBIT 10–2 Process for Developing Action Plans

Step 1 – Review the Broader Strategic Decisions

Step 2 – Set Unit Objectives

Step 3 – Identify Actions Required to Accomplish Unit Objectives

Step 4 – Set Timelines to Accomplish Each Action

Step 5 – Assign Responsibility to Accomplish Each Action

Step 6 – Determine Resources Requirements to Accomplish Each Action

Step 7 – Determine How Results will be Measured

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 409

Action plans initiate the strategy – start the work – and serve as a blueprint for managing the strategy.5 As indicated in previous chapters, managers must be ready to think strategically and learn as they carry out their implementation plans. Learning by doing may modify the implementation plan, the strategy itself, or assumptions underlying the strategy.

The Process of Developing Action Plans – Cardiac Rehab Example The middle section of the strategic management model (see chapter 1, exhibit 1–1) provides a step-by-step strategic thinking map to illustrate that strategic planning links situational analysis through strategy formulation and planning the imple- mentation. Action plans provide unit managers with a more detailed blueprint that links unit planning activities to the strategy.

To illustrate, think about the responsibility of the head of rehabilitation Medicine (rM) in the University Medical center (UMc), a state supported aca- demic health center. One of UMc’s flagship programs is cardiovascular services that provides a wide range of services including bypass surgery, angioplasty, radiofrequency ablation, stents, and other related procedures. A decision was made several years ago to focus on actual procedures and outsource rehabilita- tion services. recently a new hospital administrator was hired who initiated stra- tegic planning; one result of the strategic plan focused on developing centers of excellence as a way to differentiate UMc. The new administrator believed that if cardiovascular Services was to continue as a center of excellence, it had to offer a full line of services including cardiac rehab.

At the present time UMc has a division of rM but it does not include cardiac rehabilitation. The head of rM was asked to develop a plan for building, staff- ing, and equipping a cardiac rehab unit, and was allocated $500,000 to fund the start-up with the additional assignment of having the unit up and running in 12 months. The UMc administrator thought the unit could become self-supporting in a couple of years but understood it would take some time and resources to become operational. The first task was to develop an action plan to get the new unit in working order.

Step 1: Review the Broader Strategic Decisions As Peter Drucker asserted, “The statement, ‘This is what we are here for,’ must eventually become the statement, ‘This is how we do it. This is the time span in which we do it. This is who is accountable.’ This is, in other words, the work for which we are responsible.”6 A critically important responsibility of the health care organization’s leadership is to carefully articulate its strategy to the unit manag- ers by providing guidance or strategy statements regarding their responsibility to change or maintain the scope of their respective areas. These managers, in turn, are obligated to continue the communication by articulating the manner in which each unit is expected to contribute to service delivery or support services as well as adaptive, market entry/exit, and competitive strategies. Unit manager action plans, in aggregate, represent the implementation plan for the organization.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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410 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

Step 1: Review the Broader Strategic Decisions – Cardiac Rehab Lab

The vision for UMc’s cardiovascular services is to create and maintain a nation- ally recognized center of excellence. Its mission is to provide a wide range of high-quality services including bypass surgery, angioplasty, radio frequency abla- tion, stents, and other related procedures. The strategic goal is to offer a full line of cardiac services. The strategy for rM is expansion of scope through product development (add cardiac rehabilitation services) and then engage in an enhance- ment strategy to improve overall quality of services (develop synergies between cardiac rehab and the existing related services). The strategy is to be accomplished through internal development – implement a full-line service delivery strategy with the rehab unit providing after-service delivery.

Step 2: Set Unit Objectives More specific than strategic goals, unit objectives are measurable ends that achieve broader goals. Objectives should possess the following characteristics:

● Objectives should reinforce organizational strategic goals. Strategic goals relate to mission-critical activities. reinforcing objectives ensures that the various units contribute to the accomplishment of the organization’s mission.

● Objectives should be measurable. The objectives of the individual units are tools for the determination of unit effectiveness, and ultimately resource allo- cation, so the ability to measure and evaluate unit performance is essential.

● Objectives should identify the timeframe for accomplishment. ● Objectives should be challenging but attainable. Objectives that are easy

to accomplish do not require stretch. Stretch challenges the organization to move significantly toward its strategic goals and is accomplished through resource leveraging or systematically achieving more than is normally expected to be possible with available resources. Objectives that are impos- sible to attain are not motivational.

● Objectives should be easy to understand. Individual group members must accomplish the tasks that result in objective attainment. People work harder to achieve objectives they understand and believe are important.

● Objectives should be formulated with the assistance of the individuals who will be responsible for accomplishing the work. Just as strategic leaders should allow managers discretion in determining how strategies will be achieved, unit managers should allow employee input into the develop- ment of unit objectives.

Step 2: Set Unit Objectives – Cardiac Rehab Lab After a review of its broader strategies (mission, vision, product development/ enhancement strategy, and so on), the next task of the head of rM was to establish and communicate precisely the objective that would accomplish the new product development strategy by adding the new cardiac rehab unit for after-service care.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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CHAPter 10 CommuniCAting StrAtegy AnD DeveloPing ACtion PlAnS 411

In the action planning process, the head of rM scheduled a meeting of employ- ees and encouraged them to suggest the activities that were required to plan, staff, and equip a new cardiac rehabilitation unit. next, the objectives of the assign- ment were discussed. Although several objectives were actually developed by the group, only one objective and its associated activities is illustrated here. An example rM objective that fulfills the criteria for a good objective and contributes to the organization’s goal is:

rehabilitation Medicine Objective – To establish an operational cardiac reha- bilitation unit at a cost of no more than $500,000 by the end of the calendar year.

This increase in service would contribute significantly to the value-adding after-service strategy of cardiovascular Services. Accomplishing the objective with the allocated budget and within the defined time schedule will be a stretch for rM. The objective’s outcome is measurable and easy to understand by those who will be responsible for making things happen in the unit.

Step 3: Identify Actions Required to Accomplish Unit Objectives

when unit objectives have been formulated and agreed on, the next step is to identify the activities necessary to accomplish each objective. The determination of the necessary activities requires careful analysis of the individual actions/activ- ities that must logically be accomplished. This step requires logically thinking through each objective to determine what activities are required and the sequence in which these activities must occur.

Step 3: Identify Actions Required to Accomplish Unit Objectives – Cardiac Rehab Lab

The group developed a list of activities or outline of steps to accomplish the objectives. The list included:

● Acquire space. ● retrofit space, if necessary. ● Assure parking (some handicapped spaces). ● Advertise, interview, hire a director and two staff members. ● hire staff (sequentially: director, full-time staff rehab worker, part-time

rehab worker). ● Purchase rehab equipment. ● Opening “celebration.”

Step 4: Set Timelines to Accomplish Each Action A timeline should be established for achieving each activity to ensure that the schedule is maintained. Beginning and ending dates should be established for each activity. This process forces participants to think sequentially regarding the ordering of activities and reinforces a commitment for completion of the

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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412 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

individual activities as well as the overall objective. Thinking sequentially about the required activities essentially develops a process for achieving the objective, as some activities must be completed before others can begin. A process is a collection of activities that takes one or more kinds of inputs and creates an output that is of value.7 Therefore, participants should develop a flow chart or a diagram to pin- point the required activities. A process orientation helps participants to sequence activities and establish reasonable timing. further, establishing beginning and completion dates provides personal, unit, and organizational commitment.

Step 4: Set Timelines – Cardiac Rehab Lab The timeline was developed for the action plan to accomplish the start-up of the unit by the end of the calendar year. The plan’s layout is based on the timeline. As shown in exhibit 10–3, the timelines for the tasks in the unit action plan extend from January through December.

Step 5: Assign Responsibility to Accomplish Each Action A specific individual or group of individuals should be assigned the responsibil- ity for ensuring that each activity is accomplished. Assigning responsibility for the accomplishment of each activity in the proper sequence helps to build ownership. The assignment of responsibility also provides another important function – in the peri- odic updates of progress on the action plans, there is an identified spokesperson who can provide precise updates on each activity. In addition, if individuals know they will be called on to report at the update meetings, they are incentivized to stay on schedule.

Step 5: Assign Responsibility – Cardiac Rehab Lab The timeline identifies the person or department responsible for each activity and because it is a column within the timeline, it serves to remind the responsible person when the task needs to be completed for the successful accomplishment of establishing the cardiac rehab service. As mapped in exhibit 10–3, there are a vari- ety of personnel who must collaborate to ensure the project is completed on time and contributes to the success of the cardiovascular Services center of excellence.

Step 6: Determine Resources Requirements to Accomplish Each Action

The expected revenues as well as costs and other resources associated with achieving each activity must be determined to estimate any additional resources needed so they can be incorporated into the unit’s budget request. It is unrealistic to ensure accountability unless there is a commitment of resources to the accom- plishment of each activity. Therefore, resources should be committed to enable those who have accepted accountability to complete the task.

Step 6: Determine Resources Requirements – Cardiac Rehab Lab

The cost associated with accomplishing each activity is identified. This action plan projects net operating revenues consisting of the allocated budget and one

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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414 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

month operating revenue of $515,000 and start-up costs of $446,500. The head of rehabilitation Services believes she can implement the start-up at $49,500 under budget; however, after the first year, additional staff will have to be hired, but no further hiring is planned after that. The facilities remodeling will be complete and the introductory promotion expenditures will be reduced significantly to a maintenance level. Therefore, in year two and beyond, expectations are that space rental, equipment depreciation, and personnel costs will be approximately $600,000 per year. The operations of the rehab unit will require at least $50,000 of operating revenue per month (substantially more than the $15,000 during the one month of operations in the first year). As the information regarding the avail- ability of cardiac rehabilitation is disseminated, expectations are that the revenues will be sufficient to cover the costs plus setting some resources aside to cover equipment replacement, unexpected personnel turnover, and so on.

Step 7: Determine How Results will be Measured Generally, managing action plans involves agreeing to objectives, measuring per- formance, evaluating performance against the objectives, and taking corrective action when necessary. Together these processes are a matter of controlling the strategy. More specifically, strategic control is the process of determining whether the strategies are successful and taking corrective action if necessary. In addition, part of strategic control is ensuring that all organizational units act in concert so that the level of actual performance comes as close as possible to a set of desired performance specifications. One method of performance evaluation used in health care organizations is LeAn Six Sigma (see essentials for a Strategic Thinker 10–2, “what Is LeAn Six Sigma?”).

ESSEnTIALS fOR A STRATEgIC THInkER 10–2

What is leAn Six Sigma?

LEAN Six Sigma is a five step process (Define– Measure–Analyze–Improve–Control or DMAIC) that aims to improve processes.1 LEAN Six Sigma is a variation of the original tenets of Six Sigma – a method of statistical analysis designed to manage manufacturing quality control processes. LEAN Six Sigma combines the concepts of “LEAN Thinking” or simply “LEAN” – re-thinking processes to iden- tify value-adding and non-value-adding activities and to eliminate the non-value-adding activities using Six Sigma tools for measuring and control- ling variances in process outcomes.2,3,4,5

LEAN Six Sigma is implemented through projects sponsored at the highest levels in an organization. A project is “a chronic problem scheduled for solution.”6 Projects are classified as either “quick wins” or “advanced.” The re- thinking processes of LEAN are best suited for quick wins with an emphasis on best practices and standardized solutions. LEAN Six Sigma out- comes include improvements in process speed, lead times, and reductions in inventories. The data-based analytics of Six Sigma are best suited for advanced projects – those with complex

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 415

processes and many opportunities for data collection and analysis.7

LEAN Six Sigma applications in health care have been more successful in mid-sized hospi- tals from 250–300 beds than in large academic medical centers primarily because it is “difficult to turn” larger organizations. However, the more successful implementations of LEAN Six Sigma can lead to a 20–50 percent return on invest- ment. Streamlining processes that lead to reduc- tions in central line infections, for example, can “have a huge effect on the bottom line.”8

The Johns Hopkins University’s Armstrong Institute for Patient Safety and Quality was one of the first organizations to apply LEAN Six Sigma in the health care system. Over the past decade it has experienced a number of suc- cesses. Some of the more important include: (1) reduction of the 30-day readmission rate of heart failure patients from 24 percent to 15.5 percent; (2) 50 percent reduction in the rate at which red blood cells had to be discarded result- ing in an $800,000 saving in the first four years; (3) reduced total time for Botox administration from 42 minutes to 24 minutes in the outpatient neurology clinic; and (4) realized an additional $50,000 a month for charges related to supplies in an interventional radiology service.9

RefeRences

1. American Society for Quality. www.asq.org/

healthcaresixsigma/.

2. H. Koning, J. P. Verver, J. Heuvel, S. Bisgaard,

and R. J. Does, “LEAN Six Sigma in Healthcare,”

Journal for Healthcare Quality 28, no. 2 (2006),

pp. 4–11.

3. Joseph M. Juran, Juran on Leadership for Quality

(New York: Simon and Schuster, 2003).

4. Joseph M. Juran, Juran on Planning for Quality

(New York: Free Press, 1988).

5. Joseph M. Juran, and A. B. Godfrey, Quality

Handbook (Chicago, IL: Republished by

McGraw-Hill, 1999).

6. Juran, Juran on Leadership, p. 35.

7. H. Koning et al. “LEAN Six Sigma in Healthcare,”

pp. 4–11.

8. Sherree Geyer, “LEAN Six Sigma Changing

Healthcare as More Providers Adopt

Methods,” Healthcare Finance www.

healthcarefinancenews.com/news/lean-six-

sigma-changing-healthcare-more-providers-

adopt-methods/.

9. Johns Hopkins Medicine, Armstrong

Institute for Patient Safety and Quality. www.

hopkinsmedicine.org/armstorng_institute/

training-services/workshops/lean-six-sigma.

Step 7: Determine How Results will be Measured – Cardiac Rehab Lab

results will be measured by the opening date for cardiac rehab being prior to December 31st and the cardiac rehab unit cost to open being $500,000 or less, as illustrated in exhibit 10–3. A final column is provided in the unit action plan for comments, should clarification be needed regarding an activity, timeline, budget, or responsibility assignment.

Managing the Strategic Momentum

Managing the strategy provides managers with a means of determining whether the organization is performing satisfactorily; it is an explicit process for controlling – refining or completely altering – the strategy. Therefore, strategic

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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focusing on Strategy through Implementation: A Balanced Scorecard Approach

The action plan is one of several widely used approaches to assist in the imple- mentation of strategies. Another tool for focusing on implementation as strategy is the Balanced Scorecard that links the organization’s overall strategy to short-term actions including a financial perspective, customer perspective, internal perspec- tive, and a learning/growth perspective.8 The Balanced Scorecard is especially useful in encouraging decision makers to focus on more than financial measures based on past performance. As suggested in essentials for a Strategic Thinker 10–3, “what Is the Balanced Scorecard?” and illustrated in exhibit 10–5, the Balanced Scorecard is compatible with, and complementary to, the value chain approach discussed in this text.

The primary benefit of the Balanced Scorecard approach is to focus the health care organization on those aspects of its operations that most directly impact the accomplishment of its strategies. By identifying those factors that most directly influence successful outcomes and concentrating on accomplishing and improving them, resources of the organization can be used most effectively and efficiently.

EXHIBIT 10–4 Strategic Thinking Map for Evaluating the Action Plans

1. Has the organization’s overall strategy been well communicated to all members of the organizational units?

2. Do the organizational units have the financial resources required for successful imple- mentation of the strategy?

3. Is there a high level of commitment to the strategy within the organizational units? 4. Has the organizational unit developed action plans, including realistic objectives, time-

lines, responsibilities, and budgets? 5. Are the unit objectives consistent and compatible with the strategy? 6. Do the organizational units have the managerial and employee capabilities required for

successfully implementing the organization’s strategy? 7. Do the combined action plans accomplish the overall goals of the organization?

managers must monitor, evaluate, and adjust the action plans. exhibit 10–4 provides some questions to initiate strategic thinking for assessing the appro- priateness and effectiveness of the action plans. These questions may generate information for revising the strategies or action plans.

416 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 417

ESSEnTIALS fOR A STRATEgIC THInkER 10–3

What is the Balanced Scorecard?

Robert S. Kaplan and David P. Norton observed that the traditional view of corporate perfor- mance was developed by, and for, industrial-age companies – a view that is no longer appro- priate in an age of information and services. Manufacturers create value by managing tangi- ble assets, whereas modern knowledge-based organizations create value by deploying intangi- ble assets such as customer relations, innovative services, high-quality and responsive operations, information technology, databases, and employee competencies. Originally the Balanced Scorecard was concerned with measurement and control. Kaplan and Norton now believe it is a tool for implementing strategy – for dealing with the numerous cases where strategies fail because they are not implemented appropriately.

The Balanced Scorecard approach links the organization’s strategy to short-term actions. As the concept evolved, four perspectives were identified for transforming the Balanced Scorecard into a strategic management imple- mentation system: the financial perspective, the customer perspective, the internal perspective, and the learning/growth perspective. The use- fulness of the Balanced Scorecard in health care has been evaluated in a number of provider sec- tors and numerous international settings.

First, if the Balanced Scorecard is to be an effective strategic management system it should be useful in translating the vision into an inte- grated set of objectives that, when accomplished, contribute to long-term success. Second, suc- cessful implementation relies on effective com- munication with, and linking to, the units that comprise the larger organization. Third, action plans allow the integration of strategic and finan- cial plans. And finally, feedback and learning are developed and nurtured such that consistent

decisions are made throughout the organization and resources are allocated in a logical manner.

Additionally, understanding of the cause-and- effect relationships among all the performance indicators is important. Performance indicators are generally divided into two major categories. These are “performance drivers/leading indicators” and “outcome measures/lagging indicators.” The former are drivers of future financial performance whereas the latter are the result of earlier actions.

Depending on the type of organization, per- formance excellence may be defined in differ- ent ways. In the for-profit sector, for example, earnings and financial achievements are cen- tral to success. In a public mental health set- ting, excellence is more likely to be defined in non-financial terms. In this sector excellence might be “fully meeting the needs of those who require the services most, at the lowest cost to the organization, within the limits and directives set by higher authorities.”

Regardless of the sector, health care or busi- ness, for-profit or not-for-profit, the vision and goals of an organization must be translated into tangible strategic objectives that relate to critical success factors. Action plans describe the speci- fications and steps to be taken to achieve the targets or goals. These plans drive actions strate- gically to attain the vision and deliver excellence at all levels of the organization. Actions have to be linked to each Balanced Scorecard indicator.

Balanced Scorecards are one way to define what is important in an organization, develop ways to measure important goals, and thereby assist in focusing the organization on its stra- tegic direction. Other tools are available; how- ever, the Balanced Scorecard has become an increasingly important element in the strategic manager’s toolbox.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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RefeRences

Robert S. Kaplan and David P. Norton, “The

Balanced Scorecard – Measures that Drive

Performance,” Harvard Business Review 72, no. 1

(1993), pp. 71–79.

Robert S. Kaplan and David P. Norton, “Using the

Balanced Scorecard as a Strategic Management

System,” Harvard Business Review 85, no. 7/8

(2007), pp. 150–161.

Stefan Schmidt, Ian Bateman, Jochen Breinlinger-

O’Reilly, and Peter Smith, “A Management

Approach that Drives Actions Strategically:

Balanced Scorecard in a Mental Health Trust Case

Study,” International Journal of Health Care Quality

Assurance 19, no. 2 (2006), pp. 119–126.

Lars-Göran Aidemark, “Cooperation and

Competition: Balanced Scorecard and Hospital

Privatization.” International Journal of Health Care

Quality Assurance 23, no. 8 (2010), pp. 730–737.

The humber river hospital (hrh) is a large canadian acute care hospital with 656 beds that employs over 700 physicians and 3,000 staff. Affiliated with the University of Toronto and Queen’s University, hrh was the first digital hospital in Ontario and is known as an innovative and technologically advanced health care organization.9

hrh developed a Balanced Scorecard to measure its activities relative to its mission, vision, and values. following established custom, it divided its scorecard into four quadrants to ensure it had a balanced approach to its operations. The four quadrants were stakeholders (patients and their families, physicians, staff, and volunteers), learning and growth, financial performance and accountability, and internal processes (delivering safe care).

key performance indicators (kPIs) were developed for each quadrant to ensure progress was made in all four areas. Leadership used the acronym SMArT (objectives should be specific, measurable, achievable, realistic, and timely) as the guideline for developing kPIs and to ensure that kPIs provided meaningful measures of progress.

To illustrate, with regard to stakeholders, hrh measured the overall rating of medical, surgical, and emergency operations; employee and physician engage- ment; and community consultation. In the area of learning/growth, items such as leader retention rate, grievances received and resolved prior to arbitration, vacancy rates, and so on were measured. financial and accountability meas- ures included total overtime as a percent of productive hours, absenteeism rate, and emergency room wait time. finally, examples of internal process measures included publicly reported infection prevention and control measures, percent compliance with hand hygiene, hospital standardized mortality rates, and rate of patient falls.

The goal of hrh, as with most organizations using the Balanced Scorecard, is to achieve a “balanced approach” to its operations that emphasize both financial and non-financial factors, enabling the organization to operate efficiently while simultaneously acknowledging the unique aspects of health care that require attention to other factors such as high-quality services that are safely delivered.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 419

EXHIBIT 10–5 Health Care Provider Balanced Scorecard Strategy Map

Productivity

Revenue Growth Strategy: To increase revenues by aggressively increasing market share.

Productivity Strategy: To improve operating efficiency through staff competency and technology.

Growth

Profit

Pre-Service – Awareness

Reputation and Image Creation

Point-of-Service – Prompt Service

Continuum of Care Courteous Providers

After-Service –

Service D elivery

Su pp

or t A

ct iv

iti es

Financial

Patient

Internal

Learning and Growth

Marketing Theme

Quality Theme

Efficiency Theme

Strategic Thinking

Technological Infrastructure

Workforce Development

Organization Culture – Caring

Organizational Structure – Matrix, Flexible

Strategic Resources – Attractive Facilities, State-of-the-Art Technology

Follow-Up Billing Follow-On

Source: Adapted from Robert S. Kaplan and David P. Norton, “Having Trouble with Your Strategy? Then Map It,” Harvard Business Review 78, no. 5 (2000), pp. 168–169.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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The Balanced Scorecard, as a performance measurement tool, provides an important linkage between strategy implementation and control. The Balanced Scorecard has been adapted to more and more sectors, such as not-for-profit, gov- ernmental, and educational sectors, and has experienced potential improvements in the metrics employed in evaluating performance.10

Implementation Challenges

Although many organizational resources are devoted to strategy formulation, strategies are often not implemented for a variety of reasons including a lack of understanding of the strategy, a diversion to more urgent demands for action, or a lack of appreciation for the difficulty of actually making strategy happen. Understanding the many likely conflicting attributes, ironies, or contradictions that occur in attempting to manage the future is a good start toward better com- prehending strategy and implementation difficulties.

Typically, more attention has been given to strategy formulation and its link to organizational performance than to the intervening process of strategy imple- mentation. In addition, the organization’s culture and hierarchical structure may have been ignored and those responsible for implementation may know little about the thinking that provided the basis for the strategy. research in hospitals has confirmed that consensus around strategic decisions builds commitment to the strategy and commitment leads to successful implementation, although it sometimes progresses at a slow pace.11

Seven deadly sins have been identified that doom effective strategy implementation: 1. Apathy: The strategy is lacking in terms of rigor, insight, vision, ambition,

or practicality. If the strategy is simply more of the same, comfortable, and incremental, it will not create the excitement needed for successful implementation.

2. Uncertainty: People are not sure how the strategy is to be implemented. Leaders are too impatient and are focused on results to make the strategy happen; therefore, communicating details about how implementation is to proceed is thought of as time-consuming indecisiveness.

3. Mystery: The strategy is communicated on a “need-to-know” basis rather than freely throughout the organization.

4. neglect: no one is responsible for every aspect of strategy implementation. failure to carefully see to all aspects of implementation results in oversights and confusion.

5. fragmentation: Leaders send mixed signals by dropping out of sight when implementation begins. The absence of leadership implies that implementa- tion is not worthy of their attention and, therefore, unimportant.

6. hindrance: Unforeseen obstacles to implementation will inevitably occur. The responsible people should therefore be prepared for these barriers and be encouraged to overcome them in creative and innovative ways.

7. evasion: Strategy becomes all-consuming and details of day-to-day opera- tions are lost or neglected. Strategy is important, but so are operations.12

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 421

effective strategy implementation requires the same determination and effort that is devoted to situational analysis and strategy formulation. If the barriers to effective implementation are to be eliminated or overcome, a number of actions will be required. everyone in the organization has to be a partner in implementa- tion. Strategies are organization-wide and require inter-unit and cross-functional cooperation. Successful strategies require a willingness to seek the good of the entire organization over any single part. Unit managers have to broaden their view and the organization’s leadership has to evaluate success based on contribu- tion to the whole rather than to a single unit.13

Strategic managers are responsible for turning their vision into a compelling strategy for the future. A compelling vision elevates unclear strategies and con- flicting priorities into a consistent pathway to success. The message from visible and engaged leadership is clear – strategy implementation is important.

when strategy is important, it will be a part of the budgeting, performance evaluation, and reward system of the health care organization. A primary reason strategies are not implemented is because, in many health care organizations, effective or ineffective implementation makes little or no difference in resource allocation or reward distribution. People, therefore, concentrate on what they perceive as the important things – those things that actually affect their budgets and their paychecks.14

Contingency Planning

Contingency planning is the development of alternative plans that may be put into effect if strategic assumptions change quickly or dramatically, or if organizational performance is lagging. This type of planning may be incorporated into the nor- mal strategic management process at any level and is a part of managing the stra- tegic momentum. contingency planning is really about resourcefulness. Strategic thinkers ready themselves for alternative routes.15 Therefore, alternative plans are the result of strategic thinking and provide leadership with a different course of action until further analysis can be undertaken and a different strategy – more appropriate for the changed strategic assumptions – adopted.

The more turbulent, discontinuous, and unpredictable the external conditions, the more likely it is that unexpected or dramatic shifts will occur and the greater the need for contingency planning. In these situations the better developed the contingency plans are, the more likely the organization will achieve its strategic goals.16 Incorporating contingency planning requires top management to have some very specific contingency plan triggers that are understood by everyone and significant enough to require a change.

Strategic plans are based on the events and trends that management views to be the most likely (the strategic assumptions). however, these events may not occur, or trends may weaken, or accelerate far faster than strategic manag- ers anticipated. Therefore, contingency plans are normally tied to key issues or events occurring or not occurring. for instance, if strategic thinkers have based the strategy on an expanding economy but are presented with clear evidence that the economy is slipping into a recession, contingency plans may be activated. Similarly, the announcement that a major competitor is leaving the market may

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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present an opportunity that initiates contingency plans for market development. Such contingency planning forces strategic managers to think in terms of possible outcomes of the strategy.

As illustrated in essentials for a Strategic Thinker 10–4, “what Is continuity of Operations Planning?” one type of contingency planning that has gained impor- tance in recent years is continuity of operations planning (cOOP). Continuity of operations plans are internal preparations that ensure primary essential functions are ongoing despite a wide range of emergencies.17 These plans are designed to ensure the essential functions of organizations are continued in the event of the most unpredictable disasters – hurricanes, tornados, floods, pandemics, and so on.18

ESSEnTIALS fOR A STRATEgIC THInkER 10–4

What is Continuity of operations Planning?

Survival is the most basic instinct of all living things and the fundamental goal of organiza- tions. Today’s world is a dangerous place as man-made and natural disasters have become increasingly prevalent, making organizational survival more challenging and disrupting the lives and functioning of employees, suppliers, customers, and organizational infrastructure. In the 21st century, the Federal Emergency Management Agency (FEMA) has issued 2,021 major disaster declarations, an increase of more than 90 percent for a comparable period at the end of the 20th century.1 Increasingly, one of the most important contingency plans is the conti- nuity of operations plan or COOP.

FEMA states: “Continuity planning is simply the good business practice of ensuring the exe- cution of essential functions and a fundamental duty of public and private entities responsible to their stakeholders.”2

There are a number of reasons why health care organizations do not have continuity of operations plans. Some of the more important include the temptation to deny the possibility of low-probability events, the upfront cost of planning, the possibility of little or no payback,

and the pressing nature of current problems. Moreover, guidance for what should be a rela- tively simple process is typically so complex that many organizations choose to take their chances rather than devote the time and resources nec- essary to prepare a comprehensive and compli- cated plan for a low-probability event.

Continuity of operations planning does not have to be complicated and bureaucratic. In fact, the major benefits of this type of planning may be obtained by going through a relatively simple process that requires carefully answer- ing four important questions and establishing a method for ensuring the plan is practiced and perfected. The four critical questions are:3

1. What are the Essential Functions of the Business? Essential functions are defined as those organizational functions and activities that must be continued under any and all circumstances (FEMA, 2004). It should be noted that COOP is greatly facilitated by the existence of a carefully formulated strategic plan. If the organi- zation has a well-understood mission statement, the essential functions should

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 423

flow logically from this statement. Critical success factors in a particular industry are those activities that a firm must accom- plish to compete successfully. Essential functions is a similar concept although critical success factors apply to all firms in a particular industry or industry segment, whereas essential functions only apply to a single organization.

Essential functions are those things that cannot be interrupted for an extended period of time under any circumstance if the organization is to continue to accomplish its purpose. Thus, a list of these functions must result from seri- ous examination by the individuals who best understand the business. Moreover, the individuals involved in identifying essential functions must be able to “step outside their silos” and think about the organization as a whole.

2. What is the Order of Leadership Succession? Survival of disasters requires leadership. Once the list of essential func- tions is generated and agreed on, individ- uals must be identified who will be held accountable for ensuring each essential function is accomplished.

3. Who Will Be in Charge? An incident com- mand structure (ICS) must be established and communicated in advance of any dis- astrous event. An effective ICS begins with a continuity coordinator. Every organi- zation that is seriously considering the development of a COOP should designate a continuity coordinator. This individual should have a thorough knowledge of the business, the industry, and the human and non-human resources of the organi- zation. This individual will activate the event response on orders from the CEO and will assume operational responsibility

for the implementation of the plan. The ICS should be closely aligned with the order of succession and clear decision- making authority should be defined.

4. What Resources Will Be Required by Designated Leaders? Leaders accountable for accomplishing essential functions can- not succeed without resources. Five types of resource are essential for ensuring conti- nuity of operations – facilities, communica- tion, records and databases, supplies, and human resources. Finally, COOP requires testing. Developing a plan is not enough.

For a plan to be effective it has to be exer- cised and tested. Exercising the plan forces everyone to continually think about survival, risks, and making the plan a living document that is regularly updated. Verification means trying out the plan under simulated conditions. Testing and re-testing is the only way to be sure that when the emergency occurs your plan will swing into action. Activation will occur only if everyone is familiar with the plan, committed to his/her role in making the plan a reality, and aware of their responsibilities and how their responsibilities relate to plan effectiveness.

RefeRences

1. Federal Emergency Management Agency,

Disaster Declarations by Year, retrieved from:

www.fema.gov/disasters/grid/year June 29,

2017.

2. Federal Emergency Management Agency,

Continuity of Operations: An Overview, retrieved

from: www.fema.gov/pdf/about/org/ncp/

coop_brochure.pdf, June 29, 2017, p. 2.

3. W. J. Duncan, V. A. Yeager, A. C. Rucks, and P.

M. Ginter, “Surviving Organizational Disasters,”

Business Horizons 54, no. 2 (2011), pp. 135–142.

Source: Andrew C. Rucks, PhD, Professor, School of Public Health,

University of Alabama at Birmingham.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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424 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

To provide strategic control for organizations, effective contingency planning involves a seven-step process: 1. Identify both favorable and unfavorable events that could possibly derail

the strategy or strategies. 2. Specify trigger points. calculate a likely timetable for contingent events to

occur. 3. Assess the impact of each contingent event by estimating the potential

benefit or harm. 4. Develop contingency plans. Be sure that contingency plans are compatible

with current strategies and are economically feasible. 5. Assess the counter-impact of each contingency plan. estimate how much

each contingency plan will capitalize on or cancel out its associated contin- gent event. Doing so will quantify the potential value of each contingency plan.

6. Determine early warning signals for key contingent events. Monitor the early warning signals.

7. for contingent events with reliable early warning signals, develop advance- action plans to take advantage of the available lead time.19

Strategic Momentum: A new Beginning

The model of strategic management introduced in chapter 1 presented managing strategic momentum as the last stage of the model. however, managing the stra- tegic momentum is an inherent part of all the strategic management processes. Once plans are developed, they must be actively managed, implemented, and controlled to maintain the momentum of the strategy. Strategic managers are con- trolling the strategic momentum as – simultaneously – they consider the reasons for strategic change. Strategic managers must continually balance control and change. Perhaps the best explanation is that strategic management is circular and all of its processes are continuous. for instance, strategic thinking and situational analysis are not halted so that strategy formulation may begin. All are continuous and affect one another (review in chapter 1: essentials for a Strategic Thinker 1–4, “what is Management control?”).

nevertheless, the act of managing provides the momentum for change, and change is a fundamental part of survival. As health care leaders manage momen- tum and change their organizations, they chart new courses into the future. In effect, they create new beginnings, new chances for success, new challenges for employees, and new hopes for patients. Therefore, it is imperative that health care managers understand the changes taking place; they should not simply be responsive to them, but strive to create the future. health care leaders must see into the future and create new visions for success. Organizations that fail to change, ultimately will fail (see essentials for a Strategic Thinker 10–5, “what Is the Icarus Paradox?”).

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 425

The Map and Compass

chapter 1 introduced the concept of the map and the compass. recall that maps provide explicit directions and start the organization on its journey. Sometimes, as organizations progress, however, the landscape or landmarks have changed, or in other cases the organization is not really sure exactly where it should be

ESSEnTIALS fOR A STRATEgIC THInkER 10–5

What is the icarus Paradox?

The Icarus Paradox is a description of what happens when the factors that create exceptional success are the same factors that lead to subse- quent failure. The concept resulted from a study of 200 companies by Danny Miller and reported in his book, The Icarus Paradox: How Exceptional Companies Bring about Their Own Downfall.1

Icarus was a character in Greek mythology whose wax wings allowed him to fly so well that, despite warnings that the wings would melt, he flew too close to the sun where, indeed, the wax melted and Icarus fell to his death in the sea. The same thing can happen to organizations that blindly follow successful patterns or trajectories despite clearly changing conditions.

Unfortunately, sometimes organizations become comfortable with success and over- confident in their operations. When conditions change, managers avoid modifying their previ- ous strategies because of their past extraor- dinary successes. They fail to see the new demands of change and fail to adapt their strategies, policies, and processes accordingly. These failures often open the door to their less successful competitors that are willing to adapt to a new formula for success.

Organizations intuitively focus on the things that make them successful – quality of services

or products, customer service, technological sophistication – and, for a time, this focus serves them well. The focus, however, is often at the expense of other products, services, and pro- cesses. When things change, the highly success- ful organizations are frequently the last ones to recognize the changes taking place and com- petitors respond better and faster to changing conditions. The highly successful organization is left behind in the competitive race precisely because it is so good at the products or pro- cesses being displaced.

Thinking about the Icarus Paradox helps us understand why health care organizations must be cautious when enjoying their competitive advantage in a particular marketplace. If the advantage leads to complacency, the organiza- tion and its leaders may be in danger of being overcome by competitors that are more per- ceptive to external changes and more likely to seek the advantages created by emerging opportunities.

RefeRence

1. Danny Miller, The Icarus Paradox: How

Exceptional Companies Bring About Their Own

Downfall (New York: Harper Collins, 1990).

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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426 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

headed. In these instances, the compass is more valuable to chart the course. Through strategic planning, organizations create plans (maps) for the future but must be willing to abandon the plan as the situation changes, new opportunities emerge, or managers find out what really works. This requires strategic thinking and leadership – leaders who recognize discontinuities and the need for change before others and commit to managing for the new realities.

each chapter in this text has presented a strategic thinking map (rational model) for accomplishing strategic management. These maps provide guidelines for strategic management, including the general environment, health care system, service area competitor analysis, internal analysis, and so on. The maps keep leaders from being overwhelmed and provide some perspective to chart where they are going and what they want to accomplish. In addition, the maps initiate action toward renewing the organization. without a map it is difficult to start the journey; however, similar to an organization’s plans, these rational models cannot anticipate everything – nor can they be universally applied. They will not be a per- fect fit for every organization, yet they can provide the initial logical direction for exploring and learning. They may be used to spark creative thinking. Therefore, the organization must reinvent the processes and learn as it goes. True creativity – the kind that is responsible for breakthrough innovations in our society – always changes the rules.

Do not work for the map; allow the map to work for you. when the strategic thinking map no longer provides direction and insight, management must dare to innovate and recreate the process – use a compass. The vision for the organization and its future should be used to determine what to do today to make it happen.

finally, strategic management requires concentrated effort and takes practice. Lasting change will be made only through a lifelong commitment to a continuing discipline. Lasting organizational change (renewal) comes from thinking strategi- cally and adopting sound management principles that are practiced on a continu- ing basis. There are no quick fixes. Using strategic thinking, strategic planning, and managing the strategic momentum to go forward enables the organization to change itself, and potentially the world.

Chapter Summary

Successful implementation relies on communicating the strategic plan and devel- oping action plans – the translation of organizational strategies into actions. Otherwise, strategy remains little more than wishful thinking. Action plans make strategy happen, yet strategy cannot happen if people do not understand their roles in accomplishing the strategies of the organization.

The interrelationships among situational analysis, strategy formulation, and action plans are critical for managers and employees to comprehend because, unless understanding is achieved, action plans are unlikely to reflect organiza- tional priorities.

Action plans should contain clear objectives that, when accomplished, will achieve the strategies of the organization. These objectives should be

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 427

measurable, easy to understand, contain timeframes, and involve the individuals responsible for accomplishing them in their formulation. If they are to be effec- tive guides to behavior, unit objectives – whether the unit is a division, a single entity, or a department – must be understood and agreed on by the members of that unit who are responsible for accomplishing the tasks necessary to achieve the objectives.

Action plans are important tools to accomplish the strategies of health care organizations. They outline the activities required for the accomplishment of each unit objective, along with an estimate of resources generated and expended in the accomplishment of each unit objective. In addition, action plans specify the time requirements for the accomplishment of each action and the individual or group responsible for ensuring the action is completed on time. Action planning is an effective aid in the formulation of unit budget requests and when rewards are based on action plan accomplishments every- one recognizes their importance. finally, the Balanced Scorecard is discussed as a mechanism for effectively managing strategy implementation as it has evolved from a comprehensive performance measurement tool to a strategy implementation tool.

The strategic management planning process often “falls apart” at implemen- tation. Less attention is given to implementation in most strategic management texts because it is so difficult to provide the specifics (there is no generic imple- mentation strategy but, rather, a series of requirements: objectives, timelines, responsibilities, resources, and results measures). Implementation is specific to an organization, a strategy, a service area, and a culture.

Because strategic assumptions may change, contingency planning is essential to enable an organization to quickly change direction in a fast-paced environment. The map is a useful guide for known destinations whereas the compass aids in times of greater uncertainty.

Practical Lessons for Health Care Strategic Thinkers

1. Too many strategic plans are not implemented and when implementation is neglected, valuable time and resources are wasted.

2. Action plans are integral parts of the strategic planning process. These plans are the guideposts for making the strategy come alive.

3. Action planning is a valuable tool in communicating the organizational strategy to the individuals responsible for implementing the plan.

4. continuity planning is important because having a backup for the primary plan is a good practice in light of changing external and internal factors.

5. critical in maintaining strategic momentum is strategy evaluation and con- trol. Through strategy evaluation and control, managers regulate, guide, and direct the strategy and within that process, emergent learning takes place and strategic thinking is re-initiated.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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428 StrAtegiC mAnAgement of HeAltH CAre orgAnizAtionS

notes

Questions for Class Discussion

1. explain the relationship between situational analysis and action plans.

2. List the important components of action plans. which component do you think is the most important? The least important? explain your response.

3. how are the action plans for a division (for example, hospital division) similar to action plans for a department (such as housekeeping)? how are they different?

4. how do action plans assist in the allocation of organizational resources in line with strategies?

5. Are the costs associated with accomplishing the unit objectives the only ones that should be included in budget requests? why or why not?

6. what are the primary characteristics of unit objectives? Are these characteristics descriptive of good organizational strategic goals? why or why not?

7. what is a Balanced Scorecard? In what ways is it a means of focusing attention on strategy implementation?

8. what are some of the primary barriers to the effective implementation of strategies in health care organizations? how can each be overcome or removed?

9. Should every organization formulate contingency plans? why or why not?

10. explain how strategic momentum and strategic control may lead to a new beginning.

11. explain how vision, mission, values, goals as well as the adaptive, market entry/exit, competitive, and implementation strategies are a part of strategic control.

12. explain whether a map or a compass is better for your career path in health care.

1. Peter f. Drucker, Managing for Results (new york: harper & row Publishers, 1964), p. 95.

2. Joseph L. Bower and clark G. Gilbert, “how Managers’ everyday Decisions create or Destroy your company’s

Strategy,” Harvard Business Review 85, no. 2 (february 2007), p. 74.

3. Quoted in katie Sosnowchik, “A fierce Momentum,” green@work (March/April 2002), p. 6.

THE LAnguAgE of STRATEgiC MAnAgEMEnT: KEy TERMS AnD ConCEPTS

Action Plan Balanced Scorecard Best Practices

contingency Planning continuity of Operations Plans LeAn Six Sigma

Objectives Process Strategic control

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Chapter 10 CommuniCating Strategy and developing aCtion planS 429

4. christopher A. Bartlett and Sumantra Ghoshal, “Building competitive Advantage Through People,” MIT Sloan Management Review 42, no. 1 (winter 2002), p. 36.

5. Lesley Scobble, “Goal Setting and Action Planning in the rehabilitation Setting: Development of a Theoretically Informed Practice framework,” Clinical Rehabilitation 25, no. 5 (2011), pp. 468–482.

6. Peter f. Drucker, Managing the Nonprofit Organization: Principles and Practices (new york: harper-collins Publishers, 1990), p. 142. See also raef A. Lawson, william O. Stratton, and Toby hatch, “Scorecarding in the Public Sector: fad or Tool of choice?” Government Finance Review 23, no. 3 (2007), pp. 48–53.

7. Michael hammer and James champy, Reengineering the Corporation: A Manifesto for Business Revolution (new york: harpercollins Publishers, 1993), p. 35; Michael hammer, carole J. haney, Anders wester, rick ciccone, and Paul Gaffney, “The 7 Deadly Sins of Performance Measurement and how to Avoid Them,” MIT Sloan Management Review 48, no. 3 (2007), pp. 19–30; and Lauren D’Innocenzo, Margaret M. Luciano, John Mathieu, M. Travis Maynard, and Gilad chen, “empowered to Perform: A Multilevel Investigation of the Influence of empowerment on Performance in hospital Units,” Academy of Management Journal 59, no. 4 (2016), pp. 1290–1307.

8. robert S. kaplan and David P. norton, The Balanced Scorecard: Translating Strategy into Action (Boston, MA: harvard Business review Press, 1996).

9. yee-ching and Lilian chan. “how Strategy Map works for Ontario’s health System,” International Journal of Public Sector Management 22, no. 4 (2009), pp. 349–363. Information on humber river hospital obtained from www.hrh.ca/about.

10. e. Grigoroudia, e. Orfanoudaki, and c. Zopounidis, “Strategic Performance Measurement in a healthcare Organization,” Omega 40, no. 1 (2012), pp. 104–114; Isabella cattinelli, elena Bolzoni, carlo Barbieri, and flavo Mari, “Use of Self-Organizing Maps for Balanced Scorecard Analysis to Monitor the Performance of Dialysis clinic chains,” Health Management Science 15, no. 1 (2012), pp. 79–90; Pietro Giorgio Lovagllo and Giorgia Vittadini, “The Balanced Scorecard in health care: A Multilevel Latent Variable Approach,” Journal of Modeling in Management 7, no. 1 (2012), pp. 38–45; Deryl northcott and Tuivaiti Maamora Taulapapa, “Using the Balanced Scorecard to Manage Performance in Public Sector Organizations: Issues and challenges,”

Journal of Public Sector Management 25, no. 3 (2012), pp. 166–172.

11. robert S. Dooley, Gerald e. fryxell, and william Q. Judge, “Belaboring the not-So-Obvious: consensus, commitment, and Strategy Implementation Speed and Success,” Journal of Management 26, no. 6 (2000), pp. 1237–1258 and David Lei and charles r. Greer, “The empathetic Organization,” Organizational Dynamics 32, no. 2 (2003), pp. 142–164.

12. Martin corboy and Diarmurd O’corribui, “The Seven Deadly Sins of Strategy,” Management Accounting 77, no. 10 (1999), pp. 29–30. See also Benson honig and Thomas karlsson, “Institutional forces and the written Business Plan,” Journal of Management 30, no. 1 (2004), pp. 29–48.

13. Michael Beer and russell eisenstat, “The Silent killers of Strategy Implementation and Learning,” Sloan Management Review 41, no. 4 (2000), pp. 29–40. Much of this section was adapted from this source. See also JoAnn neely, “new reality: Make the Move to Pragmatic,” Getting Paid in Behavioral Healthcare 8, no. 5 (2003), pp. 1–5.

14. william S. Birnbaum, If Your Strategy Is So Terrific, How Come It Doesn’t Work? (new york: AMAcOM, 1990), p. 72.

15. kathleen k. reardon, “courage as a Skill,” Harvard Business Review 85, no. 1 (2007), p. 63.

16. Ibid. See also, Dean f. Sitting, Daniel Gonzalez, and hardeep Sing, “contingency Planning for electronic health record-Based care continuity: A Survey of recommended Practices,” International Journal of Health Informatics 83, no. 11 (2014), pp. 797–804.

17. John Lindström, Sören Samuelsson, and Ann hagerfors, “Business continuity Planning Methodology,” Disaster Prevention and Management 19, no. 2 (2010), pp. 243–255.

18. James Paturas, Deborah Smith, Stewart Smith, and Joseph Albanese, “collective responses to Public health emergencies and Large-Scale Disasters: Putting hospitals at the core of community resilience,” Journal of Business Continuity and Emergency Planning 4, no. 3 (2010), pp. 286–295. See also, Angela Devien, “how to Build a comprehensive Business continuity Program for a healthcare Organization,” Journal of Business Continuity and Emergency Planning 4, no. 1 (2009/2010), pp. 457–461.

19. robert Linneman and rajan chandran, “contingency Planning: A key to Swift Managerial Action in the Uncertain Tomorrow,” Managerial Planning 29, no. 4 (January–february 1981), pp. 23–27.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-26 00:06:56.

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