Recently, a question was posted to the LinkedIn (https://www.linkedin.com) IHI Quality Innovators discussion group: “What is the ONE, most important top leadership quality to successfully drive the culture change?” At least 200 thoughtful comments have been posted, most citing leadership qualities we tend to idealize. There have been a few minor keyboard skirmishes between commenters arguing points, but for the most part it has been an enthusiastic and positive online discussion.  However, the posted question is worth examining from a different and more critical perspective. 

 First, the question suggests a commonly held and rarely questioned assumption that personal leadership qualities drive change in complex systems.  That is not unusual in discussions about leadership and culture since hundreds of leadership books have been written that reinforce this premise.   Second, asking for the “ONE” reminds me a little of the Billy Crystal movie City Slickers—does anyone remember what the "one thing" secret of life was?  The management guru Peter Drucker was once asked what all leaders he had met and studied had in common.  His simple reply--"they all had followers."  His view was that there is no singular leadership quality common to all leaders.  Third, the posted question does not provide any context for the type of culture change which might be desired.  Context is everything.

 When Jim Reinertsen, Maureen Bisognano and I wrote the Seven Leadership Leverage Points paper (available on www.IHI.org) based on our observations during the IHI/RWJ Pursuing Perfection (P2) project, we hypothesized that organizational transformation is driven by what senior execs do, what they say, what fills their calendars, what they appear to value, how they spend their time, etc.  We noted a number of leadership “leverage points” which appeared to accelerate the rate of change and improvement.  Our view was influenced by complex system theory that suggests simple rules drive complex organizational behavior and organizational culture.  The system of leadership in the organization defines and enforces these “simple rules” and therefore shapes the culture of the organization.  Consistent with Drucker’s observations, every senior executive we met in the P2 Project was different and there would likely have been great variation in any qualitative assessments of leadership style and qualities.  But in all cases, intentional changes that the senior executive and the senior leadership team made in their system of leadership appeared to accelerate the rate of transformation and drove desired changes in the organizational cultures.  

 It has been my experience that the senior executives leading an organizational transformation have a very clear and intuitive vision of the attributes of organizational culture required to support their personal vision of organizational success.  These executives clearly understand how to use their leadership systems to shape the organizational culture in very specific ways to support the achievement of specific organizational aims like reduced mortality, improved clinical results, increased market share, improved patient experience, financial results, etc.  Importantly, I believe that these leaders also intuitively understand that the desired organizational culture is shaped more by the consistency of their actions than by their personality or leadership style. 

 This is where I think the discussions about leadership qualities, leadership systems and culture change gets murky.  Are the designs of leadership systems divorced from leadership qualities and characteristics? No, they cannot be.  Leaders tend to build their system of leadership around their personal strengths and belief systems.  Really good leaders also figure out how to build their leadership systems to compensate for their leadership weaknesses.  As a result, the leader’s personal leadership style, qualities and values do influence the design of the leadership system.  Here is an example.  Let’s suppose a new CEO is hired who is known for her personal integrity.  That leadership quality might be translated into her personal behaviors and actions which others might describe as, “she always does the right thing.”  Using her influence, she convinces the senior leadership team that intentional and specific culture change is an important strategy that they need to pursue in order to achieve the board adopted organizational aims for harm reduction and patient satisfaction.  A new simple cultural rule is proposed and communicated—“we always do the right thing for the patient.” 

 But simply defining and broadly communicating the new simple rule is not enough.  Leadership actions determine whether the new rule shapes the culture or is simply ignored.  Imagine the different ways that the CEO and her management team in this example might respond to the occurrence of a serious patient safety event, like a wrong site surgery.  The management actions chosen will either validate and reinforce or negate the new simple rule in the eyes of the organization.  It is the leadership system—what the leaders do, not just what they say that has the most profound impact on changing organizational culture.   Individuals in the organization may be aware and admire the fact that the CEO is known for her individual integrity.  But unless that personal quality is intentionally translated into a clear new simple rule and then re-enforced by consistent management actions and behaviors, the fact that the leader is a person of high personal integrity will not do much to shape the culture.

Sometimes views and ideas from those “who do not understand how it really works“can lead to innovative ideas and approaches, but not always.  Yesterday, an E-mail from H&HN caught my eye with a tag line “How Hospitals Can Improve Margins without Raising Prices”, which turned out to be somewhat of a stretch.  I read the article twice and then read it aloud to my daughter who is about to complete her MBA in healthcare administration to make sure that I was not misreading or misunderstanding what the author intended.

The article by Sebastian Gay, Ph.D. is actually titled “Strategies to Increase Market Share and Build Brand Loyalty”  (http://www.hhnmag.com/hhnmag/HHNDaily/HHNDaily.dhtml) published online March 8, 2012.  Now, I am a big fan of building brand and customer loyalty in healthcare—by providing superior clinical and service performance—but that is not what this article is about.  The author's core premise is that hospitals can boost revenue and therefore operating margin by generating more use of the system from existing customers and provides six ideas on how to do that under the rubric of marketing and brand loyalty.  Rather than raise price, which the author suggests would hurt the brand (note that there is scant evidence that hospital care is price sensitive at the patient level), the author encourages hospitals to upsell and create more revenue per encounter.  Is this 1980 or what?

Dr. Gay’s ideas likely have merit when applied in an economic market where individuals pay directly for care and can make choices to spend more (or less) based on the value proposition.  That happens to be a healthcare market design that many advocate.  But, it is not the world hospitals currently live in nor is it the world envisioned by health reform and the Accountable Care Act—at least not at the hospital service level.

I could go through each of the six revenue growth ideas he listed and point out the blind spots in each, but two really jumped out at me.  First, I was particularly amused by his idea that physician "wages" be adjusted so that the physicians are incentivized to order more tests and produce more revenue. Congressman Pete Stark certainly did not like that idea much in the old fee-for-service world of independent physicians and physician ventures.  In the new world of employed physicians, clinical integration, population health, ACOs, bundled payments, fixed payments and capitation (yes, I know we are not supposed to call it that) the idea seems like a sure strategy for bankruptcy. Second, the author’s suggestion on improving physician-patient communication (and I quote)—“A way to solve this problem is to have coordinators simply explain step-by-step how the case of an individual is different and how the doctor and the hospital will better approach this case compared with other hospitals. A better-informed patient is a return customer!”,—strikes me as particularly vapid and clueless.  

Sometimes a view from the outside without the burden of understanding how things “really work” can lead to innovation. Unfortunately, I do not think that is a likely outcome this time.

Maybe, just maybe, one of the most important books for healthcare leaders since W. Edwards Deming’s  Out of the Crisis is Clayton Christensen’s The Innovators Prescription.   Powerful stuff—I have more sections highlighted in my copy than I have blank pages.

Christensen makes key observations about change and innovation in healthcare.  Some of those observations include:

• Innovation is driven by business model changes, not product or service enhancements.
• Hospital inefficiencies and resulting high costs are driven by competing business models attempting to operate “under one roof”. 
• The degree of knowledge and certainty around what actually works (evidence-based, repeatable, and precise) in medicine determines which business model will be the most successful for creating aligned incentives and delivering health care services in more innovative and efficient settings.  

We do not want to repeat the early 1990’s economic and healthcare organizational catastrophes wrought by capitation and our inability to create algined incentives and delivery systems.  Deming helped us learn to view the world and our jobs as leaders differently based on processes, variation and system thinking.  Christensen provides a new lens for healthcare leaders to think about how to succeed in the world of ACO’s and health care reform based on innovation theory and business models.