Published on 12/17/2012
December 17, 2012 – One of the six reasons why strategic plans fail is lack of focus. Executives typically pile on more strategic planning objectives than are manageable, which requires an ever-increasing number of strategies and tactics to achieve. Management teams are crushed by the weight of all their objectives.
It a recent survey of 150 hospital executives, 25% reported having from 11 to 20 strategic planning objectives and 27% admitted to having 21 or more.
Twenty-one or more objectives? You’ve got to be kidding? What organization has the resources to chase 21 strategic planning objectives? (Strategic planning objectives, by the way, are defined as a quantifiable, measurable target, e.g. net income, patient satisfaction, core measure compliance, etc.)
Top Strategic Planning Objectives
I am often asked what is the right number of strategic planning objectives. The answer? You should be able to count all of your strategic planning objectives on one hand. How many organizations achieve this level of focus. Not many. In the aforementioned survey, only 7% of organizations had five or fewer strategic planning objectives.
Recently, I was hosting a national strategic planning webinar for the Society for Healthcare Strategy & Market Development. Afterward, a participant asked me for my list of five strategic planning objectives (as if there were some doubt that such a list existed). Thus, I give them to you as I gave them to her, conveniently organized into pillars for those hospitals that have adopted such a strategy development sample:
- Safety: Decrease the number of AHRQ “never events” to zero
- Quality: Decrease inpatient mortality to zero
- Satisfaction: Increase patient satisfaction to 99th percentile
- People: Decrease turnover rate to zero
- Finance: Increase net margin to 20%
No doubt, you are shaking your head in wonderment and disbelief. So, let me defend my strategic planning objectives.
First, studies have shown that organizations that establish theoretically possible strategic planning objectives achieve more than those that don’t. For instance, take two similar hospitals, each with a mortality rate of 3%. One hospital establishes a mortality rate objective of 2%, and the other sets the theoretically possible 0% as its target. Five years later, which hospital do you think will have the better mortality rate? Toyota learned years ago that setting its sites on perfection led to far greater advances and breakthroughs than merely seeking incremental improvement. Healthcare can learn a thing or two from this global automotive leader and how it approaches strategic management and planning.
Second, a few years ago, the Institute for Healthcare Improvement advanced the concept of little dots and big dots. The little dots were all the objectives that need to be accomplished on an ongoing basis, usually at the departmental level. They are important, but not the most important things in the organization. Big dots are just that — big, critical, the equivalent of organizational life support. A patient’s length of stay is a little dot. The patient going home alive is a big dot. Strategic planning objectives should focus on the big dots, not the little dots. The five strategic planning objectives I listed above are really, really big dots.
Now imagine the hospital that adopts my list of five strategic planning objectives as its own. What happens? First, communications are simplified, as the five objectives are so clear and so compelling as to defy confusion. Second, a powerful vision is created that will serve as a rallying point for the entire organization — if not community. Third, the organization is afforded tremendous flexibility in changing the strategies and tactics each year to achieve the objectives (for instance, this year’ mortality strategy could be around core measure compliance, while next year’s focuses is on the IHI bundles). Fourth, everybody in the organization will easily know how what they do every day helps achieves the objectives. And fifth, the consistency in objectives from year to year will drive the organization to unparalleled gains, as the relentless pursuit of perfection becomes immersed in the organizational culture. In short, execution management is enhanced.
Spend ample time on strategic planning preparation, and you will be better prepared to hold off those on your team who want to pile on objectives after objectives.