Monday, April 18, 2011

Process/Steps of Successful Strategy Execution

This week’s two readings, “From Strategy to Implementation: Seeking Alignment” and “The Secrets to Successful Strategy Execution,” provide unique perspectives on strategy execution and implementation. The first article puts emphasis on alignment of 6 elements – people, incentive, supportive activities, organizational structure, culture and leadership, while the second article focuses on two levers for strategy execution – decision rights and information flows. Both articles took a similar approach to extract critical elements of successful implementation – looking back and evaluating the past strategic execution from current understanding. Therefore, my focus on this blog is to apply the concepts from the articles to effective strategy execution in the past and analyze the process, not a snapshot, of implementation. I use Intermountain Health System as an example of an organization which implemented strategies effectively.

Intermountain Health Care (IHC) is a nonprofit system of fifteen hospitals in the state of Utah. IHC is one of the first healthcare systems which applied a comprehensive clinical management model, an innovative business model in the healthcare provider industry. The organization “replaced the previous piecemeal approach to improvement in the health care delivery” with the model and regarded as a national leader in clinical quality improvement among delivery systems. In the following, I analyzed with the concepts the steps IHC took to transform itself into a clinically-centered organization.

· Leadership: The strategy on quality improvement started from one of the executive’s leadership. Inspired by Dr. W. Edward Deming’s idea that “higher quality could lead to lower cost,” Brent James, executive director of Intermountain Health Care’s Institute for Health Care Delivery Research, initiated numerous changes to improve quality of cares within the system.

· Culture and People: James initiated workshop series where he presented a concept in his mind to the top managers and senior physician leadership. With the efforts, he created the right culture for the upcoming strategic execution and “people with right attitudes that support the strategy.”

· Supportive Activities: Facing the failure of two pilot projects, IHC learned to establish effective supportive activities. IHC spent several million dollars without any significant changes because IHC provided the wrong data – financial data – to have physicians manage quality. Learning “the key to engaging physicians in clinical management was to make it meaningful by aligning data collection to work process,” IHC established the clinical data collection system. This illustrates the concept presented in the article “The Secrets to Successful Strategy Execution.”

Organizational Structure and Incentives: Interestingly, organizational structure and incentive are the last pieces of IHC’s strategy execution. IHC maintained the parallel structure between the existing line management and a new clinical management structure until the members experienced the redundancy and initiated “merge of their own accord.” Then, IHC changed the senior management’s incentive system to reflect the new priorities.

Examining the successful change of an organization as an example, what I found very interesting are:

  • · In contrary to the conventional notion on implementation, IHC started its strategic execution from soft elements of the 7S framework – shared values, style, skill, and staff – and moving to hard elements.
  • · Supportive activities, especially information systems, were portrayed as the key elements that make or break strategic execution. IHC used information systems as a tracking system of implementation as well as data collection tools for evidence-based management.

  • · IHC used structural change and incentives as a tool to “seal” the ongoing changes, instead of the main activities for implementation.

Questions:

  • · Can we generalize that it is best practice to start from the soft elements of the 7S framework? Or is it specific to IHC case?
  • · Should we start our implementation from one area and take a step-by-step approach? Or should we start execution from multiple areas simultaneously?

REFERENCES:

  1. From Strategy to Implementation: Seeking Alignment (Excerpted from: Strategy: Create and Implement the Best Strategy for Your Business (HBS Press), 2006)
  2. The Secrets to Successful Strategy Execution (Neilson, Martin, and Powers, Harvard Business Review, June 2008)
  3. Intermountain Health Care (Bohmer, Edmondson, Harvard Business Case, 9-603-066, June 2006)

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