Aligning High-Performance Health Care Organizations

BRIAN R. GOLDEN, PhD

Sandra Rotman Chaired Professor in Health Sector Strategy atThe University of Toronto and The University Health NetworkExecutive Director, Collaborative for Health Sector Strategy

Joseph L. Rotman School of Managementand

Faculty of MedicineUniversity of Toronto

bgolden@rotman.utoronto.ca

Economics

Sociology Social Psychology

Behaviour

Multiple Perspectives

Strategy Hierarchy

Corporate Strategy• Investment priorities• Integration of programs

Program Strategy• Competitive positioning• Configuration/Coordination

Functional Strategy

• Core Activities

“My job is not to go to Louisville to pick out loose handles or compressors for refrigerators. My job is people, resources, and ideas.”

Jack Welch on the Role of the Leader

“This business game is all about winning. The team that wins is the team with the best players. Your job is to field the best players”

Promoting Cultural Change at GE

Self-Confidence

Speed

Simplicity

The Process of Change at GE

Strategy• #1 or #2• Divest/invest aroundcore businesses

Structure• 13 global businesses• Small corporate staff

Systems• Crotonville• Star-based incentives

Organizational Culture• Driven by the top• Work-Out!• Speed, Simplicity, Self-Confidence• Best practices• Boundary-less company• Six Sigma

The Process of Change at GE

Strategy• #1 or #2• Divest/invest aroundcore businesses

Structure(Anatomy)

Systems(Physiology)

Culture

(Psychology)

Structure

People/HRM- selection & “destaffing”- train/teach- $1/2b Six - Sigma-$45m capital (Crotonville) - serious perf. appraisal- career maps

Informationand Decision

Making- delayered- downsized- decentralized- greater span of control- less formal (e.g. service council)- cross-business integration

-speed, simple, confident- externally oriented- shared-no “not invented here”

Rewards- performance based (signif. variable pay)- idea seeking/sharing (not just creation)- business outcomes- values based- extra for “stretch”

- unique, spirited, entrep., most profitable, diversified, quality - #1, 2, fix or sell?

Culture (values/symbols)

Vision Strategy

G.E.’s Re-Alignment

Structure

People/HRM- selection- training & development- performance appraisal- feedback & coaching- rotation through company

Informationand Decision

Support- dept, division, cross-org’l- team based- interdependence- (de)centralization- formalization- span of control

- performance data- subjective vs objective- reliability- timeliness- cost of obtaining- accessibility

Rewards- intrinsic/extrinsic- amount- base vs. variable- individual, group, organization based- risk

- what “businesses”? - how we compete? - what do staff do?

Culture & Values

Strategy & Tasks

Organizational Alignment & Culture

The Difference between Management and Leadership

MANAGEMENT: Ensuring Efficiency

• Planning & Budgeting• Organizing & Staffing• Controlling & Problem Solving

LEADERSHIP: Creating Change

• Setting a Direction• Aligning People• Motivating & Inspiring

Source: John Kotter, Harvard Business School

MANAGING LEADING ENGAGING

Plan

Setting targets or goals for the future (typically for the next month or year)Establishing detailed steps for achieving targetsAllocating resources to accomplish plans 

Vision

Setting a direction – developing a vision for the futureClarifying purposeCommunicating the vision to all potential stakeholders 

Values

Articulating and living the values that are consistent with the vision and give meaning to work 

Organize

Creating an organizational structure and set of jobs for accomplishing plan requirementsCommunicating a plan, delegating responsibility and devising systems to monitor implementation to those involved

Alignment

Creates and empowers coalitions who are committed to visionEnsuring a significant group of people believe in the vision and are prepared to take action

Direction

Providing clear, specific, and compelling goals that bring clarity to the visionEstablishing the boundaries for action

Control

Monitoring results and reports to ensure consistency with the goals Identifying deviations from the plan and organizing to solve problems in a timely way 

Motivation

Appealing to the basic but often untapped human needs, values, and emotionsStirring a sense of belonging and self-esteem in the fulfillment of the visionEnsuring people see the payoff from achieving the vision

Involvement

Ensuring people have an opportunity to put their own creativity and initiative into bringing the vision to life

Source: Jim Fisher, Rotman School of Management

GE - Update

• Under 20 years of Welch, GE sales increased from $27.2B to $129B (474%) in 2000

• Net profits from $1.6B to $12.7B (793%)• In March 2000, GE’s market value passed $525B (it

was $3B when Welch took over) … $522B of value creation

• GE is now the 9th largest and 2nd most profitable company in the world

GE versus the Dow Jones

GE - Update

• Jack Welch retired, August 2001. [Now charges $250,000 per speech on how he did it!]

• Replaced by Jeffrey Immelt, 44, of GE Medical Systems

• Two “runners-up” in 6 year search:– Bob Nardelli as CEO of Home Depot ($94 billion

market cap.)– Jim McNerny as CEO of 3M ($44 billion market cap.)

GE - Update

• GE went into recession mode in mid-2000, aggressively cutting costs in preparation of leaner times

• At its low point (Sept. 21, 2001), the stock had dropped 50% from a high of $56.19 to $28.50; as early as January 2002 it was $41

“I was chairman for two days, and then I had jets with my engines hit a building I insured, which was covered by a network I owned, and we still grew earnings by 11 percent”– CEO Jeffrey Immelt of Sept. 11, 2001

• Despite $400 million of World Trade Center-related insurance losses, Immelt announced GE would still deliver double-digit earnings growth in 2002.

“If you want to to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea”

- Antoine de St. Exupery

Classical Leading