Bill Taylor's Practically Radical online column in Harvard Business Online on May 4 poses the provocative question: MBAs vs. Entrepreneurs: Who Has the Right Stuff for Tough Times? It made me wonder whether it matters for health care leaders. The answer, as I learned early in my own MBA classes is "it depends."
Taylor reports on the perspectives of Professor Saras Sarasvathy, whose research revealed important differences between how MBAs and entrepreneurs (presumably non-MBAs) reason. It turns out that MBAs most often use what she terms "causal" reasoning while rely on "effectual" reasoning in approaching opportunities, problems, and challenges. So what does this mean? As Bill Taylor reports:
Causal reasoning, she explains, "begins with a pre-determined goal and a given set of means, and seeks to identify the optimal -- fastest, cheapest, most efficient, etc. -- alternative to achieve that goal." This is the world of exhaustive business plans, microscopic ROI calculations, and portfolio diversification. Effectual reasoning, on the other hand, "does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with." This is the world of bootstrapping, rapid prototyping, and guerilla marketing.
I'm less interested in whether this division of reasoning styles is based on having and MBA or "seat of the pants" entrepreneurialism than about the question of which type reasoning is most effective and under what circumstances for health care leaders? We probably all know both types of physician and executive leaders. Those with the business plan on paper (whether or not they have MBAa) and those with the game plan and vision in their minds (whether or not they are true entrepreneurs). Mixing them in the right proportions can result in synergy and getting the wrong mix can lead to tension or paralysis.
Cutting leadership this way creates a discriminator that may be useful - and ignoring it could lead to disappointing results - when selecting and staffing key initiatives. Which type of reasoning (and leadership) should predominate on different initiatives: launching a new clinical service line, adopting new clinical or safety practices, entering new markets, opening new sites of care, recruiting faculty and staff, improving lackluster financial performance, or implementing an electronic health record? Is it the discipline of planning from known resources and estimating likely outcomes or the flexibility and creativity and confidence to garner available resources and fit them best to circumstances? This is NOT a no-brainer.
And, as Mr. Taylor reports, Professor Sarasvathy extends this thinking to suggest that the effectiveness of leaders to approach the future in uncertain times is impacted by this same reasoning style:
"Causal reasoning is based on the logic, to the extent that we can predict the future, we can control it," she writes. That's why MBAs and big companies spend so much time on focus groups, market research, and statistical models. "Effectual reasoning, however, is based on the logic, To the extent that we can control the future, we do not need to predict it."
Predicting the future in uncertain times is pretty tough - making an predictive algorithm attractive but potentially stymieing the MBA's business planning when things are truly unpredictable . On the other hand, by marshalling the resources they have and creating the best outcome possible from them, entrepreneurs seek to control the future by creating it themselves - through creativity and innovation. But is a quick mind and a "game plan" reliable enough to get you through a treacherous environment?
Health care leaders need to make this call on a regular basis. Professor Sarasvathy provides us with a framework to help us think it through.
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