As soon as I saw the title of the May 25 Business Week's cover story (How the Mighty Fall: A Primer on the Warning Signs) I knew I'd found my mark for today's post. I didn't even realize at the time that this was an excerpt from Jim Collins' (Good to Great and Built to Last) new book that turns his prior work literally upside down. As the title implies, it's the quick guide to how high performing companies lose their edge and end up in the toilet.
And while it's about companies, it's also implicitly also about leaders. Perhaps even more about the leaders than the companies. And while it's not about health care, it's all about health care. Having worked for at least one of those "great to ashes" leaders myself, I can vouch for the soundness of the analysis and its relevance to health care leaders. Read the excerpt and when it is published, read the book.
Collins has done a great somersault here. And perhaps avoided the fate he writes about. Having made his name identifying success factors, rather than take another step down that road he now analyzes corporate failure. According to the Business Week excerpt, Collins studied over 6,000 years of combined corporate history to try to make sense of what makes the mighty fall. And, notching another success himself, he came up with a useful framework of five stages of decline that could be a "how (not) to guide" for leaders. Here's a quick summary:
Stage 1: Hubris Born of Success: In Collins' words, the beginning of the end occurs: "When the rhetoric of success...replaces penetrating understanding and insight." Call it overconfidence, hubris, pride, arrogance, or whatever. Once leaders cease to seek the hidden drivers of success, cease trying to improve on their own best thinking, and begin assuming that success results from their own "visible hand" on the tiller, altitude starts to fall.
Whether it's the surgeon whose proven technique can't be questioned or improved, the academic Chair whose seminal research remains the foundation of the trainee experience, the COO who creates staffing efficiencies in this hospital exactly the way he in the last successful operational redesign, the CFO who does this turnaround by cutting costs just like last time, or the CEO who has "learned" that success "always" comes from making the big decisions herself. According to Collins: "The best leaders we've studied never presume they've reached ultimate understanding of all the factors that brought them success." Beware when each success, failure, and challenge ceases to be a unique learning experience - the leadership death spiral has begun.
Stage 2: Undisciplined Pursuit of More: It's natural for success to generate more success, innovations to a product or service, or growth in market or reputation. If this takes place in a planned, measured, or even opportunistic fashion with wise leadership at the helm, no problem. But when companies (or leaders) advance to Collins's Stage 2, they "...stray from the disciplined creativity that led them to greatness in the first place, making undisciplined leaps into areas where they cannot be great or growing faster than they can achieve with excellence--or both."
Filled with the hubris of Stage 1, leaders who progress to Stage 2 can hunger for more scale, more profit, more recognition - permitting the "more" rather than a value building strategy to be the driver. This could be the surgeon whose ambition for recognition or financial reward, fueled by the assumption of repeated success, leads him to do more and riskier cases. Or the clinical investigator whose drive to publish and advance leader her to conduct studies that are not rigorous, to loosen accrual criteria, to overextend satellite sites, or to play loose with the data. Or the health system CEO whose zeal for scale leads too rapidly to acquisitions that can't be sufficiently well managed with existing resources. Collins summarizes the risks in a way familiar to many of us:
"Discontinuous leaps into areas in which you have no burning passion is undisciplined. Taking action inconsistent with your core values is undisciplined. Investing heavily in new arenas where you cannot attain distinctive capability, better than your competitors, is undisciplined. Launching headlong into activities that do not fit with your economic or resource engine is undisciplined. Addiction to scale is undisciplined. To neglect your core business while you leap after exciting new adventures is undisciplined. To use the organization primarily as a vehicle to increase your own personal success--more wealth, more fame, more power--at the expense of its long-term success is undisciplined. To compromise your values or lose sight of your core purpose in pursuit of growth and expansion is undisciplined."
Stage 3: Denial of Risk and Peril: The handwriting begins to appear on the wall in Stage 3. Some early warnings are perceptible in performance data. However:
"Those in power start to blame external factors for setbacks rather than accept responsibility. The vigorous, fact-based dialogue that characterizes high-performance teams dwindles or disappears altogether."
You've seen these. The emerging poor surgical or procedural outcomes that are attributed to random variation or patient selection or unforeseen circumstances. The rising morbidity, infection, or complication rates that have "not yet achieved significance." The blips in patient satisfaction, market share, financial performance, or productivity metrics that are minimized rather than scrutinized. The medical or surgical "near misses." If the near misses don't get leadership attention they will be experienced as real disasters next.
Stage 4: Grasping for Salvation: Collins warns that even if recognized as ominous, Stage 3 observations call upon leaders to make a critical choice:
" How does...leadership respond? By lurching for a quick salvation or by getting back to the disciplines that brought about greatness in the first place? Those who grasp for salvation have fallen into Stage 4. Common "saviors" include a charismatic visionary leader, a bold but untested strategy, a radical transformation, a dramatic cultural revolution, a hoped-for blockbuster product, a "game-changing" acquisition, or any number of other silver-bullet solutions. Initial results from taking dramatic action may appear positive, but they do not last."
How many "saviors" have you seen in health care organizations? The "big name" surgeon who will reverse market share trends. The new physical facility that will make reverse operational inefficiencies. The service line reconfiguration of clinical care that will eliminate dropped handoffs. The electronic health record that will reverse rising medication error rates. While each of these can be part of a strategic solution, health care leaders who lack the core discipline to understand and commit to solutions that involve hard decisions and an engaged work force are likely to find themselves squarely in Stage 4 and headed for the bottom.
Stage 5: Capitulation to Irrelevance or Death: This is the endgame. Companies fail by running out of cash, selling out before they are forced to shut down, or drastically pruning activities, facilities, and/or workforce to the point where it may take years to recapture reasonable health. Leaders fail by stepping down or out voluntarily, being shown the door by their Boards or CEOs, making deals that amount to life support for the organization, or digging their heels in as the organization declines and ultimately fails or loses significance in the market.
The point of all of this, of course, is not to emerge with some interesting post mortem observations and a pithy framework. But to enshrine a framework of "don'ts" in the collective leadership consciousness of organizations. These apply to health care leaders and their organizations just as well as they do to corporate leaders and companies. I hope you read the article and the book. I can't wait to read Collins' book to get my head into the examples that were merely touched upon in this excerpt.
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