Part I-Should Your Strategy Be A Destination Or A Journey?
Cambridge Healthcare Research CEO Chris Stevenson gives his industry insight…
As someone who has spent considerable amount of time in healthcare management consulting, I have heard many commercial leaders say that they can’t be successful without a clear strategy. This may indeed be the case. However, it raises an important question many people don’t think about; what kind of strategy you need to be successful.
The ubiquitous Henry Ford quote “You can have any color you like as long as it’s black” has for a long time applied to strategy development in Healthcare. The experience of most people in healthcare is to develop a Classical strategy, characterized by a relatively predictable environment over the medium term and a relatively low ability to influence the gross environment. This seems appropriate given that most healthcare markets are grossly predictable and often immutable. However, what should you do if your market suddenly changes, or evolves into one that is less predictable and is changing with speed. This could be due to a sudden change (such as a Coronavirus global pandemic) or more subtle change over time, perhaps driven by science or global government policy change. This challenge is becoming increasingly likely in healthcare as there are other forces at work such as the rapid development of similar treatments that launch at the same time creating sudden changes in markets. Look at CAR-T, FXIa, for example, along with various other areas where gene therapy has become available.
The implications for the way you develop strategy are undoubtedly profound. It is known that companies that match their strategy type to their market circumstances perform better than those that do not. Therefore, it is important for leaders in strategy to consider the most effective approach for their market. This requires some market study and results in significant changes to what one develops. For example, the Classical approach is characterized by fixed goals over time, whereas other strategy development approaches such as the Adaptive and Shaping approaches involve short or continual planning periods. In these two subsequent approaches, strategy is more volatile and less prediction is used (there’s no point in unpredictable situations) and activities in the market are viewed more as tests that must be measured than as long-term tactics. One can describe the Classical approach as driven by a fixed view of the future and a destination for the strategy, other approaches are based more upon the constant testing and refinement of various techniques and are thus not interested in a future destination; they are more focused on a continual refinement of the journey. (See image below)
To a Classical strategist, the destination and their description of what the future market will look like, as defined by hours of painstaking data gathering and assessment. The strategy then becomes, in a sense, a future reality. This seems fair in markets that are relatively predictable as a well-thought through prediction and is likely to be close to reality. However, the vision of the future market can become a source of comfort, providing a sense that one somehow knows what the future will hold and somehow has control over it.
The attraction of this to the human mind is obvious. In fact, it may be so attractive that the Classical strategist would rather not notice when markets are becoming unpredictable or changeable and stick with an approach that is no longer fully appropriate. They may apply scenario planning to address a few important uncertainties, and this may be enough to reinstate the level of certainty that they require. However, in healthcare today some markets have become fast moving and less predictable. Scenario planning may not be enough to address the growing uncertainties. Rather than struggle with a Classical approach that no longer works, strategists should look for the signs that their strategic approach is no longer appropriate; when scenario planning still leaves significant uncertainty. When strategy is being revisited and amended on a regular, 6 monthly basis or less time period or when competitors seem significantly more responsive to change or are seen to drive change (making it likely that they have an Adaptive or Shaping strategy that is working better in the market) or when it is noted that your organization is not structured or responding correctly, the time to adapt your strategy has come.
Be sure to catch the next article in the series coming soon...