Complexity problems, and what healthcare leaders can do about them

Healthcare is a difficult sector. This isn’t news. But what may not be well understood is the kind of leadership that could be crucial for success.

 By Cathy Boeckmann and Jennifer Lachance

Starting in the fall of 2017, we surveyed and interviewed 15 Bay Area healthcare professionals representing a range of organizations in this sector (see sidebar). They were quite eloquent about the strategic issues their companies face. Across all organizations, the complexity of the sector and the challenge of staying ahead of change were the top strategic imperatives to combat in order to deliver on the organizational mission and stay competitive.

As we dug into the responses to questions about strategic challenges, we realized that those we interviewed were actually describing two warning signs, indicators that business complexity had reached a level where it needed to be addressed.

All in all, our interviewees were well aligned in a conviction that leadership, in response, needed to deploy a set of behaviors that they believe work best for mitigating the effects of complexity.

Below, we summarize:

  • The two warning signs we heard professionals describe.
  • The leadership behaviors interviewees identified as necessary to help organizations thrive through the complexity.

These signs and responses are likely relevant to leaders across other sectors. At the very least, they are worth giving some thought to.

 

WARNING: YOU MAY HAVE A COMPLEXITY PROBLEM

Everyone we spoke to agreed that the healthcare sector is complex and changing rapidly. But the specific warning signs they noted fell into two categories. The first was more common for healthcare providers; the second was more common for pharmaceutical, medical device, biotech, and health tech companies.

Sign number 1: Feeling mired in no-win trade-offs

It’s tough to work in an organization that needs to make fundamental trade-offs. Those working at care delivery organizations cited the difficulty of attempting to control rising costs while also providing top quality care; this felt paradoxical given the presumed dependencies between the two.

“It’s about balancing growth and innovation with the economics of keeping a hospital running… The system has gotten bigger and the economics of what we do have gotten tighter; this is a tough shift for many of our long-time employees.”

“The battle with keeping costs down while trying to achieve continual improvements is not working well; it can be defeating.”

We also heard comments about the difficulty of providing a high-quality experience for patients in a market with rapidly shifting patient expectations, while also managing workload and burnout.

“Patient expectations are changing. They pay more for their healthcare now [and] they have access to information. [They] will push back if they don’t like the care plan.”

“Patients are demanding more. Especially with phone and email consultation; since that time doesn’t get reimbursed, it can lead to physician burnout.”

“The increasing pressure on costs can lead to staff feeling overworked… Cost issues impact staff at the front line.”

When leaders feel concerned about finding balance between the needs of important stakeholders that seem to point in opposite directions, we view that as a warning sign that complexity is at a critical point.

Sign number 2: Feeling besieged by transformational threats

In our discussions, those working at pharmaceutical, medical device, bio tech, and health tech companies primarily looked outward to the market. They cited challenges at the system level. Specifically, the rapid pace of change in the sector and dynamics in the competitive landscape are making products and strategies less competitive at an unprecedented pace.

“We didn’t historically have competitors in many of our markets. Now we do, and we need to really ‘sell,’ and it requires different skill sets. It also requires institutional infrastructure changes.”

“It’s easy to lead a company that has exclusivity you can protect; it’s much harder to crack the code on what research and development will pay off.”

At the same time, the threat of new competition from potential disruptors with technological or scale advantages leads to a worry about being able to innovate quickly enough to compete with them.

“The major strategic challenge is about the market, and where the market is going…. There are new companies in the space that are changing the nature of the expectations and the demand.”

“We don’t know how to compete with non-traditional competitors from the tech world and their cash; everyone up to the CEO is worried about what the future looks like. How do you change an organization that has always had one culture, so it can take on competitors that are disruptive?”

When leaders must match the pace of new and different competitors, we see a warning sign that the organization may need to transform as well, particularly at the level of culture.

 

WHAT LEADERS CAN DO

When asked what was needed to thrive despite these challenges, we heard a clear message: those who rated their culture as supportive and intentional also believed that their organization could move quickly enough when needed.

We asked interviewees whether their organization’s culture could support the moves needed to ensure future competitiveness; in making this assessment, interviewees across the board independently noted the presence or absence of two leadership behaviors: strong engagement and setting intentional cultural expectations. These seem to be the leadership behaviors that matter.

Behavior 1: Listening and engaging at all levels

When asked what makes a good leader in their organization, interviewees focused on vision and integrity. But beyond that, they evaluated interpersonal qualities like inspiring and supporting others, particularly the extent to which leaders and managers actively solicit and value input from all levels of the organization.

What are the main contributions of the most effective leaders in your organization?
(Top 5 responses; multiple responses per respondent)

In our interviews, some professionals pointed to a clear gap.

“Leadership is focused on collaboration and delivering top care. But they’re not addressing the tensions or the stressors at lower levels created by competing priorities and financial pressures.”

“Leaders look at the bottom line and don’t always understand the implications of the choices they make for the patient; they need to be on the front line talking to people.”

Listening well and engaging successfully with patients and with people at all levels of the organization, according to those we spoke to, can help address difficult trade-offs. Leaders can better gauge when trade-offs are out of balance; they can use front-line insights to identify creative ways to avoid zero sum games, and they can demonstrate that they understand that balance is the goal. Expanding the types of questions leaders ask also might benefit the organization. Open-ended questions that span across the balanced scorecard could help move from narrow to broader inquiry.

Behavior 2: Fostering a culture that can move fast

Interviewees also focused on the extent to which their organizational culture fostered a rapid pace of innovation, rather than leaving teams stymied by factors that slow innovation, like silos, risk aversion, and sacred cows.

“Culturally we are slow and take years to innovate, but a handful of people can get things done and that saves us.”

“The organization is recognizing that there are significant silos between functions. We’re trying to find ways to cross-fertilize activities and how we approach customers.”

“We have a ‘nice’ culture… People don’t get out of their comfort zone enough to take risks, come up with innovations or new ideas. We come up with innovations that are to our capability rather than things that really break new barriers.”

“We have a very consensus-driven culture; this slows us down.”

Having an up-to-date, supportive, intentional culture, according to those we spoke to, is a requirement for addressing the pace of change and disruptive competitors. When leaders address the mis-match between cultural norms and market pressures, they can help increase the pace of innovation intentionally, rather than letting the legacy culture dominate.

As one interviewee remarked with some concern, “Our organic organizational culture gets in the way; it’s not a documented culture… It’s not inclusive.”

In contrast, another interviewee praised efforts to get out ahead of the issue: “Our organization is undergoing a cultural shift to be open to new ways to do things; being open to multiple ways to accomplish a goal instead of just THE way. This came from employee feedback.” Only leaders can inspire this kind of shift, first by asking for the input and then by leading the changes that follow. Tactically, this might look like launching pilots, clarifying what success looks like in new initiatives, and focusing on learning to apply lessons to future initiatives.

The bottom line: our respondents pointed to two warning signs that increasing complexity was becoming unworkable, and to two steps leaders should be taking to get out of the trap.

  • Interested in why listening at all levels can help you make better decisions as a leader? Read this.
  • Interested in understanding the strengths and challenges of your organizational culture, as a foundational step for being able to move more quickly? Read this.

The next article sharing insights from the Kenning Bay Area Healthcare study will focus on what we heard about fostering team-level performance.