By Jodie Lesh, consulting managing director, Deloitte Consulting, LLP
The health care sector seems to be undergoing a large-scale and often disruptive transformation. Deloitte envisions a Future of HealthTM that will likely be driven by greater data connectivity, secure and interoperable platforms, and empowered consumers. Health system CEOs, health plan executives, and anyone who occupies a place in the C-suite is likely navigating the path to this new future, often while addressing near-term financial, growth, and operational challenges. Responding to industry transformation might require new capabilities, relationships, and competencies. Each day can be a reminder of how quickly the industry is changing (see Tina Wheeler’s 2023 Outlook for health care). For many health care organizations, this transformation will likely take place through a series of incremental changes, often couched in the daily uncertainty about where the business and the industry may be heading (see Addressing health care's talent emergency).
As the former chief transformation officer for a large multi-state health system, I can attest that time generally is not on the side of health care executives. Failing to chart a path forward could be a self-fulfilling prophecy marked by declining relevance, decelerated growth, and possible obsolescence. But how can executives build the proverbial plane while flying it? In the midst of industry-wide disruption, health care leaders might need to strike a balance between meeting short-term demands of the organization and executing a long-term vision for the future.
Can health care executives make incremental changes and still successfully transform their businesses? The not so simple answer is ‘yes.’ But for incrementalism to succeed in transformation, health care organizations will likely need to possess the following:
- A clear and unifying vision: Leaders across the organization should understand how their efforts contribute to the larger vision. This generally requires leadership to provide clear and compelling communication within the organization. They should also help ensure that teams understand their role in moving the organization toward a future that is likely to diverge from the status quo. Without the entire leadership team onboard, and an effective communication cascade, incrementalism could devolve into pet projects and may derail transformation efforts. Consider Stephen Covey’s Habit 2 of Highly Effective People: “Begin with the end in mind.”1 Without clarity about the role an organization will play in the future of health, leaders risk initiatives that lack connection to a broader strategic purpose. Those that do not contribute to the vision could drain the organization of precious resources and could risk diluting critical focus. A clear ambition can provide a litmus test to determine whether projects and investments are likely to move the organization closer to its transformation ambition. A future of health roadmap should contemplate the relationship between initiatives while being cognizant of what must come first and how the combined effects could accelerate progress.
- Investments in foundational capabilities: A focus on scalability, extensibility, and the ability to participate in more complex ecosystems and emerging business models, can help ensure the durability of evolving strategies. Foundational investments in data architecture and analytic platforms is one such example. Leaders should try to identify legacy systems that need to be modernized or replaced. For example, core legacy systems could be connected to emerging technologies through artificial intelligence (AI)-powered middleware solutions and refreshed user interfaces that harness the power of data. The key here is flexibility and agility that allows for an incremental approach to connect and extend technology. Equally important is the capability and capacity of the technology workforce to innovate in a more fluid environment. In Deloitte’s Tech Trends 2023 report, leaders are advised to “consider an abundance strategy, wherein technology talent can be curated, created, and cultivated.” In other words, consider creating instead of competing.
- A purpose-built tapestry that supports transformation goals: Leaders should work to curate a portfolio of investments and initiatives that could propel the organization forward toward its future vision. Managing a well-crafted portfolio of initiatives can help the organization move incrementally toward its transformation vision. Initiatives that have shorter-term returns might be used to fund longer-term, more ambitious undertakings. Disciplined evaluation and measurement can result in a dynamic environment where critical decisions are made to advance some initiatives and discontinue others. New funding and governance models might be needed to ensure a continuous flow of work that is connected by shared ambitions and goals. Fits and starts could fracture the transformation journey and negatively impact the transformation.
- Robust sensing capabilities: In designing and executing a well-crafted roadmap of incremental moves, the organization should build in continuous market-sensing activities. Market trends can warrant acceleration and reprioritization. Changing market signals can also warrant course-corrections, which could impact the incremental initiatives. A change in direction, however, should not be taken lightly. Constant shifts in strategy could dilute focus, waste resources, and frustrate those who are leading change. External sensing could make it easier for leaders to identify opportunities to accelerate transformation, possibly through partnerships, alliances, and other relationships.
- An ability to dedicate resources: Labor shortages, supply chain disruptions, and other day-to-day challenges can distract efforts to transform an organization (see Inflation’s impact on health care). Yet, developing the organization’s future of health roadmap, managing a diverse set of transformation-focused initiatives, scanning the environment, and pursuing partnerships and alliances should be a priority and resourced appropriately. Nurturing and supporting innovation can be important for achieving an organization’s transformation ambition. Leveraging the organization’s collective wisdom, motivation, and capacity can require a dedicated focus and a skilled workforce whose charge is to drive change. Building this capacity can be a foundational investment and should not be overlooked. While incrementalism in transformation can be a sound approach, it can become convoluted if not actively managed.
- Purpose-built organization model and governance: New decision making and funding models may be required to execute the transformation portfolio. Enhancements to organization structures may be needed to support a dedicated focus on the transformation initiatives. Change management efforts may be required to help ensure that efforts to pursue novel strategies are not thwarted by cultural or political headwinds.
As the health care industry transforms, some leaders could experience increased tension between managing short-term challenges and executing a transformation roadmap that might require new capabilities, relationships, and competencies. How can these leaders make meaningful incremental moves that help position their organizations for long-term success amid accelerating disruptive innovation and industry transformation?
There may be an opportunity to plot a course with a series of thoughtful, inter connected, and reinforcing investments and initiatives that are anchored to a clear future of health vision. Incrementalism should not be viewed as a haphazard seeding of new ideas proliferated across the enterprise. For incrementalism to help produce transformation, senior leadership should be at the helm, orchestrating initiatives with purpose and precision. Certain foundational investments, such as technology that supports an evolving ecosystem, should rise to the top early. While incrementalism in transformation is both possible and practical, achieving results will likely require dedicated focus and management.
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1 Stephen Covey: 10 quotes that can change your life, Forbes, July 16, 2012; The 7 Habits of Highly Effective People, Stephen R. Covey
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