Focusing your people: the power of entrepreneurial thinking.

Strategy cycles are shrinking, costs continue to rise, shortages are threatening quality care and business as usual is not helping us find a way out of the mess we are in. Yet typical hierarchical bureaucracies unwittingly preserve the status quo through their traditional rules and regulations, policies, approval mechanisms, communication systems, strategic planning, and capital budgeting processes. (1)

Faced with today's challenges, where will you as a physician leader search for new answers?

Let's take a look at literature and case examples to uncover exciting possibilities for revitalizing health care organizations committed to higher levels of performance. Entrepreneurial focus is the key ingredient that may mean the difference between surviving and thriving as an organization.

Entrepreneurs are people in both small organizations and large systems who create something of value from practically nothing. Their thinking and behaving are highly focused on sensing opportunities, marshaling resources, taking calculated risks and pushing ideas through to reality. (2)

Why would you, as a health care executive, be interested in focused entrepreneurial thinking? Payoffs include community contribution, satisfaction, challenge, pride and remuneration. At the national level, most countries with high levels of entrepreneurial activity also benefit from above average economic growth.

More than 95 percent of the wealth in the United States has been created since 1980 as a direct result of entrepreneurial thinking. (3) As Fortune 500 organizations shrank by five million jobs during the 1980s and 1990s, the entrepreneurs of our country created the over 30 million new positions that fueled our economic expansion.

As recently as 1980, the Fortune 500 employed one in five members of our workforce. By the late 1990s, the number was just 1 in 14. (3) Not only have entrepreneurs created jobs for others, but they have also created significant wealth for themselves and their organizations. For example, more than 80 percent of the millionaires in the United States have accumulated their wealth in one generation as entrepreneurs. (4)

Community contribution and financial success, however, are not the only payoffs that flow from focused entrepreneurial thinking. Entrepreneurs report the highest level of professional satisfaction and pride in our society. (3)

To the degree that you wish to experience these emotional rewards, generate these economic outcomes, and make significant contributions to your community, opening doors to organizational success through focused entrepreneurial thinking may provide a viable path to the future.

What is possible in your environment?

How can focused entrepreneurial thinking help in your environment, where old revenue sources are declining and costs are often not covered by payer compensation?

For example, for many physicians, income grew less than inflation during the 1990s. Old revenue sources declined, expenses were up and a lowly 10 percent of care was paid for out of discretionary funds by patients. (5)

As revenues declined, many physicians continued to rely on insurance and government payments in return for variations of their traditional services, often offered at cut-rate fees. By not competing effectively for disposable income, health care organizations are practicing a version of business as usual.

Has focused entrepreneurial thinking helped others under such apparently less-than-promising conditions? Numerous examples suggest that the answer is, "yes."

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For example, between 1988 and 2000, dentists also faced declining revenue sources as payments were constricted and successful long-term preventive measures reduced the opportunity to charge for as many fillings and root canals. (5)

However, as traditional revenue sources declined, many dentists became entrepreneurial by providing additional elective procedures that patients want versus need and are willing to pay for from disposable income such as whitening or veneer. They focused on sensing and pursuing entrepreneurial opportunities and competed successfully for disposable income to the point where they now receive over 40 percent of their revenue in direct payments from patients. (5)

During this period, dentist incomes have more than doubled, growing from an average of less than $80,000 per year to a level now comparable to or above that typically earned by family practice and internal medicine physicians.

Community colleges also face constraining economic conditions that, for many, do not look promising. Yet Kirkwood Community College in Cedar Rapids, Iowa, prospered under these conditions by choosing an entrepreneurial path.

Rather than simply continuing to tighten their belts, they have focused on their mission of inventing, developing and delivering learning solutions for the 21st century. And instead of simply selling educational degrees, they have concentrated on identifying what is needed in their community and then created economically viable solutions through joint ventures with other interested parties to provide a variety of new services such as an equestrian center, office/education building (in an economically challenged section of their community), insurance company crisis/education center, culinary institute, truck-driving training facility. (6)

Dentists as a profession and Kirkwood Community College as a distinctive institution stepped beyond business as usual and demonstrated the focus on outcomes critical to entrepreneurial success. Each of these examples reflects the critical entrepreneurial practices described in Table 1. (2)

Do these entrepreneurial practices exist in your health care organization? Are you focused on identifying areas of opportunity that might be valuable to you in generating needed economic outcomes while contributing to your community?

Practice 1

Common vision that is consistently:

* Judged to be worthwhile, idealistic, simple and understandable

* Zealously pursued by every member of the organization

In response to the striking evidence supporting the long-term potential of values and vision presented in Built to Last, (7) many health care leaders devoted retreat time to extensive visioning processes.

In our experience, however, people throughout health care organizations often do not judge the results of such visioning processes to be idealistic, understandable or worthy of zealous pursuit. What is it that entrepreneurs do differently that focuses and excites their people?

Bill Gates has indicated that the most important element in Microsoft's success was its original focus on a vision. (8) In recent years, the Albany VA Medical Center presented a living example of this entrepreneurial practice in action. Faced with big budget cuts, senior leadership demonstrated an unwavering commitment to deliver high quality patient care.

While living within their tight budget, they did not focus their people on its restrictions. Rather than concentrating on what is not possible, leaders developed the passionate focus required to lead the U. S. VA in 2004 in many preventive indices as well as patient satisfaction, outcomes that are intrinsically valuable to their people. One of the key indicators that their vision focused on is the renewed physician participation in hospital committees. (9)

Baptist Health Care in Pensacola Florida provides a well-known turnaround example that also built its vision on the passion of its people. Patient and employee satisfaction had plummeted to regional lows and turnover soared above 25 percent. Senior leaders decided to compete by delivering world-class service.

However, recognizing that it was impossible to consistently provide this level of service without the total commitment of their people, they engaged employees in meaningful work by first aligning their organization's values with the values of their people. This provided an opportunity for employees to fulfill the dream that drew them to the health care industry in the first place.

Results included an expanding market share, top patient satisfaction rankings, being selected one of the best places to work in the United States in Fortune surveys during recent years, and cutting millions from operations based on employees' ideas. (10)

Are practices like these in place in your organization?

Practice 2

Bold goals that:

* Require the whole organization to stretch beyond what many people believe is possible

* Align with what employees consider most meaningful and valuable

The evidence is not new. It has long been known that people who accept specific, measurable, stretch/hard goals consistently outperform those who are trying to "do their best." (11)

However, many individuals and organizations try to play it safe in the short run by avoiding such commitments. They often claim that the environment is too complex and uncertain to set specific, measurable goals, and use this as justification for avoiding the risk of not measuring up by remaining hazy in their general statements regarding intended future performance.

For entrepreneurial thinkers, the proven payoffs from the focus produced by accepted goals are too powerfully practical to pass up. Forsyth Medical Group in Winston-Salem, North Carolina, stands out as a positive example of the power of shared goals in a health system-owned group practice.

After specific meaningful stretch goals were agreed to between system and group practice leadership, physician leaders were given autonomy in managing operations toward these mutually desired outcomes. In the resulting environment of focus and trust, the typical red ink of a hospital-owned group practice has turned to black, patient, physician, and staff satisfaction has gone up and clinical indicators have improved. (12)

While such outcomes might seem unlikely to occur in a health system-owned group practice, they make perfect sense in an environment where entrepreneurial thinking has unleashed the power of focused, goal-directed behavior toward meaningful outcomes.

As a physician leader, have you taken the actions required to ensure that such practices are present in your health care organization?

Practice 3

Substantial rewards for:

* Risk-taking and accountability

* Outstanding performance that is consistent with fundamental values

Entrepreneurial thinking recognizes that substantial rewards for measurable, outstanding performance are important to encouraging more of that behavior in the future, especially when those rewards are consistent with and reinforce people's intrinsic values.

For example, Dupont Hospital, a physician-Triad Hospitals for-profit joint venture in Fort Wayne, Indiana, achieved exceptional results since it was established in 2001. Dupont's patient/guest satisfaction scores reached the top of the Triad system due to an innovative, collaborative culture of outrageous customer service, an idea inherently appealing to those involved.

In the first three years of operation, the hospital doubled its budget and the stock split. Physicians recouped their original investments and significant physician interest existed in the purchase of shares during a later offer. (13) These extrinsic rewards simply mirror people's internal commitments and appear to be encouraging the desired behaviors and outcomes.

As a physician executive, have you encouraged taking the steps required to ensure that your rewards support your people's commitment to quality, safety, and contribution?

Practice 4

Commitment to outcomes/results over process and effort by:

* Minimizing red tape, documentation, and bureaucratic approval processes

* Investing in multi-discipline, multi-skilled leaders who believe in the cause

Practice 5

Widely dispersed personal leadership:

* No permissible "it's not my job" disclaimers or turf battles

* Autonomy to pursue intrinsically valued commitments

Entrepreneurial thinking encourages the experience of ownership. Owners act on behalf of customers, producing outcomes that fulfill their organization's vision and goals. They exhibit personal leadership rather than throwing problems over functional walls, making excuses or saying, "It's not my job." (14)

The exceptional performance of people at Goshen Health System in Goshen, Indiana, demonstrates these ownership practices in action. Their mission is to improve the health of their community by providing innovative, outstanding care and services through exceptional people doing exceptional work.

Guided by this mission, associates took the ownership actions required to achieve remarkable outcomes. Patient satisfaction, job satisfaction, and team satisfaction are as good as any in their state. Turnover dropped from double digits to single digits, and no layoffs occurred in nine years.

The health system has no nursing, pharmacist or tech shortages and recently achieved magnet status. Not to be overlooked is the solid bottom-line performance of the health system, achieved through the millions of dollars of results-oriented ideas provided by their people. (15)

Did this really happen through the commitment and personal leadership of the people at Goshen Health System? "Yes," says their entrepreneurial leader, "my people did it. I just drive my car to work." (15)

With this kind of acknowledgment and support, is it any wonder that these people keep providing the personal leadership required for exceptional performance? In the famous entrepreneurial words of Akio Morita, one of the founders of Sony, "a company will get nowhere if all the thinking is left to management."

Have you or your leadership team taken the actions required to ensure that your people are fully engaged in fulfilling the well-articulated mission of your health care organization?

These five entrepreneurial practices will allow you to develop the focus required to capitalize on new opportunities. You may well argue that because your people are already highly focused, these entrepreneurial practices are not relevant to your organization.

However, are your people currently focused on producing the innovative new ideas required for competitive advantage, or are they stuck in working hard to ever more efficiently operate within traditional ways of doing things? Do your systems and structures communicate your commitment to innovative services and products, or are your people constrained by excessive controls that impede innovative performance?

A common thread runs through the lessons from the case examples we reviewed: Entrepreneurial leaders develop the focus necessary for success first and foremost through tapping the energy that has its source deep within their people's sense of values and commitment.

Traditional leadership approaches to establishing a vision, goal setting, reward allocation and employee participation have the potential to take your organization to new levels of success if you tap that source of focused energy.

The entrepreneurial passion in your people can be further nurtured by focusing on what you want more of, such as improved community health status, increased mobility, rather than what you want less of, such as complication rates, infection rates. Focus on what your competition does right rather than wrong, so that you can use that information as a blueprint for change. (16)

Entrepreneurial focus derives its power from the passionate commitments of your people. Honing that focus in your organization is essential for you to leverage and gain the maximum level of benefit from your leadership efforts.

Edward J. O'Connor, PhD, is principal with the Implementation Institute, a professor of management and health administration at the University of Colorado at Denver and Health Sciences Center and a member of the faculty of the American College of Physician Executives. He can be reached by calling [phone] or by e-mail at [e-mail].

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C. Marlene Fiol, PhD, is a professor of strategy and health administration at the University of Colorado at Denver and Health Sciences Center. She can be reached by phone at [phone] or by e-mail at [e-mail].

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References

1. Hamel, G. Leading the Revolution. Boston, Mass: Harvard Business School Press, 2000.

2. O'Connor, EJ & Fiol, CM Reclaiming Your Future: Entrepreneurial Thinking In Health Care. Tampa, Fla: American College of Physician Executives, 2002.

3. Timmons, JA and Spinelli, S. New Venture Creation: Entrepreneurship of the 21st-century (6th Edition). Boston, M.A.: Irwin McGraw-Hill, 2004.

4. Stanley, T J and Danko, WD. "The millionaire next door." Success Magazine, March, 1997.

5. Maremont, M. Tale of two docs: Why dentists are earning more. Wall Street Journal, January 10, 2005, A1, A9.

6. Cook, S. 1/31/05. Personal communication.

7. Collins, JC and JI Porras. Built To Last: Successful Habits Of Visionary Companies. New York: Harper Business, 1994.

8. Gates, B. Learning from the leaders. Entrepreneurial Edge Magazine, Fall, 1996.

9. Bates, B. 1/26/05. Personal communication.

10. Sandrik, K. Putting the emphasis on employees. Trustee, January, 6-10, 2003.

11. Locke, EA and Latham, GP. Building a practically useful theory of goal setting and task motivation. American Psychologist, September, 2002; Robbins, S. The Truth About Managing People ... and Nothing But The Truth. Upper Saddle River, NJ: FT Prentice Hall, 2003.

12. Spare, S. 1/28/05. Personal communication.

13. Springer, K. 1/29/05. Personal communication.

14. Freiberg, K and Freiberg, J. Guts: Companies That Blow The Doors Off Business-As-Usual. Currency Doubleday, New York, 2004.

15. Dague, J. 1/25/05. Personal communication.

16. Campbell, G. Innovation of irrelevance: Six steps to move forward. HealthLeaders EXTRA! HealthLeaders Community & Rural Hospital Leadership Series, January 7, 2005, online.

By Edward J. O'Connor, PhD and C. Marlena Fiol, PhD

Table 1 Entrepreneurial Practices Leading to Focus

Common vision that is consistently:
* Judged to be worthwhile, idealistic, simple, and understandable
* Zealously pursued by every member of the organization

Bold goals that:
* Require the whole organization to stretch beyond what most people
  believe is possible
* Align with what employees consider most meaningful and valuable

Substantial rewards for:
* Risk-taking and accountability
* Outstanding performance that is consistent with fundamental values

Commitment to outcomes/results over process and effort by:
* Minimizing red tape, documentation, and bureaucratic approval
  processes
* Investing in multi-discipline, multi-skilled leaders who believe in
  the cause

Widely-dispersed personal leadership:
* No permissible "it's not my job" disclaimers or turf battles
* Autonomy to pursue intrinsically valued commitments

Adapted from O'Connor & Fiol, 2002