Hospitals Can’t Afford an Ambidextrous Strategy

“If you weren’t already doing this, would you start now?” When I ask healthcare clients that question, it prompts stunned silence followed swiftly by mild irritation (open hostility tends to emerge a few minutes later). Several minutes into the conversation, a leader might mention a particularly troubling employee. At that time, I ask, “If that person weren’t already working here, would you hire him/her?” The reaction to that question usually appears eerily like the original stunned silence.

Why do these leaders have a astonished reaction to these questions? Simply put, they had never thought of either question, much less either answer. They feel confused and more than a little embarrassed because they don’t know how to answer the questions, and that frequently leads to annoyance. When channeled effectively, these negative feelings give way to a brainchild. But just as physical children don’t spring forth fully formed before they have finished their gestation, neither do intellectual offspring. They too need oxygen—the “airing” of ideas that breathes life into them. From these breakthroughs come invention, creativity, and discovery.

Having a competitive strategy means being different. It means deliberately, not capriciously, choosing a different set of activities to deliver a unique mix of value. This disciplined approach to choosing the hospital’s direction helps to avoid what I call organizational ambidexterity. We know that ambidextrous people—those who can use their left and right hands equally well—comprise about 1% of the general population. While this trait distinguishes this group for a specific skill that we consider positive in a person, we can’t say the same about organizations.

Ambidextrous hospitals too often attempt to respond to the external environment with a confused strategy. They keep doing what they’ve always done and attempt to go a different direction at the same time—adding to the complexity of deciding which tradeoffs to force and which sacred cows to kill.

In his book The Strategy Paradox, author Michael Raynor pointed out that an organization cannot drive its costs down while simultaneously incorporating leading-edge, and hence highly expensive, components to achieve high levels of performance. Therefore, minimizing cost means accepting a lower level of performance on at least some dimension.                     

Hospitals with this kind of ambidextrous strategy unwittingly create two areas of vulnerability. Consequently, competitors with a pure strategy can launch an attack on either flank when they discern a ambidextrous strategy. When leaders of a hospital pursuing a pure strategy face a choice, they know how to respond. They have a clear sense of their organization’s strategic force, so they can coerce the trade-off decisions and avoid strategy paradoxes.

Even though toy manufacturers and health care providers may not have obvious characteristics in common, they share the same pure strategic force: they exist to respond to a specific demographic and the needs of that group. The needs change over time, but the driving force does not. The driving force of the hospital should always be to respond to patients’ needs. A successful pediatric hospital, therefore, will never develop cutting-edge geriatric services to capture a new demographic. They might, however, put in a swimming pool so they can offer outpatient therapy for children.

If leaders fail to identify the strategic force and to leverage it, they miss opportunities to grow and improve They also do these things:

• Confuse potential patients
• Confuse employees
• Engage in non-productive activities

Tough calls related to strategy demand an answer to the question, “If we weren’t already doing this, would we start?” Begin to answer that question by defining your ideal future state. That ideal perfect state probably involves improving relationships with current patients, referral sources, and the community. Research tells us that hospitals lose 80% of “sales” not to the competition but to the status quo. Too many leaders overwhelm would-be patients with too much information about what they offer instead of gathering information about how they can help. In these situations, decision-makers resist change and create a business prevention formula that no one finds ideal. On the other hand, hospital leaders who educate and teach create both a new culture and right-minded strategy.