Spending the week with a wide swath of health and human service leaders at The 2017 OPEN MINDS Executive Leadership Retreat has left me with many new insights. As usual, I picked up a lot of new market intelligence and market perspectives from our attendees and speakers.
These are some of the themes I’m taking away from this week: There is broad agreement among health plan, care management organization, and provider organization executives that the current fee-for-service (FFS) reimbursement system isn’t a sustainable system. Bundled rates appear to be here to stay (although as we learned through different sessions, the term “bundled rates” can mean vastly different things to different people). Managed care models and value-based reimbursement will have a growing impact on long-term support services (LTSS) and human services. Primary care capacity in the United States is much more consolidated than I previously thought; that consolidation will continue to have a pronounced effect on the specialty services market and reimbursement.
What to do with this information? That is the role of leadership – and the focus of my remarks yesterday in the retreat’s closing keynote, Leading Your Strategy Development & Your Team – In Uncertain Times. Making a seismic shift in strategy that parallels the seismic shift in the field is a major challenge, and many executive teams seem “stuck” in the execution of their planned organizational transformations. I’ve come to think that part of the challenge is because there has been a more fundamental (but less visible) change in the health and human service field. The field has shifted from complicated to complex – moving from a highly regulated field with structured compensation, to a field that is still highly regulated, but is now competitive. And the shift is creating the need for new leadership skills.
The difference is subtle but important. Complicated systems may have many parts but when the parts interact they do not change each other. In complex systems, on the other hand, when things interact, they change one another in unexpected and irreversible ways. The key here is that complicated systems and complex systems demand different leadership skills. (I really found the article, Complexity Leadership: Enabling People And Organizations For Adaptability, by Mary Uhl-Bien, Ph.D. and Michael Arena useful in describing these difference. In particular, I like their example. “… a jumbo jet is complicated but mayonnaise is complex. When you add arts to a jumbo jet they make a bigger entity but the original components do not change–a wheel is still a wheel, a window is a window, and steel always remains steel. When you mix the ingredients in mayonnaise (eggs,oil, lemon), however, the ingredients are fundamentally changed, and you can never get the original elements back. In complexity terms, the system is not decomposable back to its original parts…”)
The model needed to lead in complex systems creates a structure that allows the organization to adapt to the market – by balancing operational leadership responsible for managing the organization’s current services with the entrepreneurial leadership of the organization responsible for innovation and new service line development. Enabling leaders in complex environments to accept managing conflict as a key part of their role, broker new ideas across the organization, drive change using organizational pressure, and create the “rules of the road” for balancing structure and innovation.
So who are these enabling leaders – the leaders in a time of complexity? They are executives comfortable with uncertainty, able to foster innovation, willing to take risk, and comfortable with tension, conflict, and lack of consensus. And, they have (to quote Peter Drucker) to bring an “organizational perspective” (see Peter F. Drucker: Delivering Value to Customers).
The strategic challenge for the health and human service organizations is two-fold. First, the current pool of seasoned executives in health and human services weren’t necessarily selected for their ability to manage complexity – rather, they were selected and promoted for being fabulous transactional leaders and who are excellent at managing the complicated. Second, the pool of up-and-coming managers in health and human services are not focused on complexity leadership either – they are managers who are being groomed (and incentivized) for operational process excellence and fidelity to evidence-based practices.
So where to find the additions to executive teams with these new leadership skills? Discussion with my colleagues in the past few days landed on a two-step process: interviewing/testing for these basic characteristics when adding new people to the executive team and grooming those characteristics through purposeful leadership development. The goal of executive teams and non-profit boards should be to bring in leaders who are able to enable innovation and lead new service line development activities, develop new business models, and assess future sustainability – all while still being able to balance transactional, transformational, and meta-leadership skills. A tall challenge indeed.
If you’re unfamiliar with complexity leadership, check out, Complexity Leadership: Enabling People And Organizations For Adaptability. And for even more on leadership and strategy issues, join us at The 2017 OPEN MINDS Technology and Informatics Institute for the session, “The Leader’s Challenge: Leading The Technology Imperative In A Provider Organization,” led by OPEN MINDS Senior Associate Jim Gargiulo.