Communication In The Planning Process

Communication In The Planning Process

Explore the functions of communication in the strategic and program planning processes for a health care organization. Consider the topics discussed thus far and clearly integrate at least five key concepts related to an effective and efficient strategic plan for organizational communication dissemination. Identify three challenges with organization-wide strategic plan communication dissemination and recommend communication strategies to ameliorate these challenges. Your paper must be three to five double-spaced pages (excluding title and reference pages) and formatted according to APA style as outlined in the Ashford Writing Center. Utilize a minimum of two scholarly sources that were published within the last five years. One source must be obtained from the Ashford University Library. All sources must be documented in APA style as outlined in the Ashford Writing Center.  Communication In The Planning Process

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Creating Strategic Alternatives

Learning Objectives

After reading this chapter, you should be able to:

• Develop strategic issues from having performed a full situational analysis.

• Communicate the different types of strategic alternatives.

• Explain why the key strategic issues and strategic intent should match.

Chapter 6 CaiaImage/SuperStock

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CHAPTER 6Section 6.1 Identifying Key Strategic Issues

This chapter shows how to develop a set of key strategic issues that summarize the most critical elements of the entire situation analysis and from such issues create a small num- ber of viable strategic alternatives for the HSO to seriously consider. Refer to Figure 1.1 to review those steps that pave the way for the organization to choose the best strategy.

6.1 Identifying Key Strategic Issues Identifying key strategic issues is an act of synthesis. The HSO leaders take what they know about an organization and its changing environment (the situation analysis) and distill the critical questions and issues the organization must address in its strategic plan. Strategic issues derive from both external and internal sources. The former includes the healthcare industry, regulatory requirements, competitors, consumers, suppliers, oppor- tunities and threats, and other environmental forces. The latter includes key organiza- tional resources, culture, technology, or strategic decisions that the HSO must address. Consider the situation of MedCath Corp. described in a Chapter 5 case study. Starting in 2003, the organization faced several key external strategic issues, including changes in regulations affecting physician ownership of hospitals and lowering of reimbursement for cardiac procedures. At the same time, the company began to experience some key internal strategic issues, which included a lack of financial reserves and a business culture that was slow to diversify into noncardiac services Communication In The Planning Process.

Candid Deliberations

All HSOs face key external and internal issues. Together, these strategic issues form the basis for generating the strategic alternatives. Too often, alternatives are generated from only a subset of these categories, which means leaving out a lot of infor- mation that is probably known and should be considered. For instance, MedCath changed its business model from building hospitals to partnering with existing hospitals in response to regulatory changes, but it failed to adequately respond to other key stra- tegic issues.

The strategy development process is not a time to pull punches or shy away from the truth. As Dennis Rheault, Motorola’s former vice presi- dent of corporate strategy and devel- opment, wrote, “The purpose of an effective strategy development pro- cess is not to avoid but to confront uncertainty: to pose the really tough questions that you do not have the answers to—the issues and opportunities that can make or break the business” (Rheault, 2003, p. 33). This is not a time to parrot what the CEO wants

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The strategy development process is a time to pose tough questions, unearthing the real issues that the organization must confront.

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CHAPTER 6Section 6.1 Identifying Key Strategic Issues

Case Study: Magnolia Hospital’s Strategic Issues

Magnolia Hospital is a 50-bed publicly funded district hospital located approximately 40 miles from a metropolitan area with several hospitals. Following the hospital’s bankruptcy in 2001, the citi- zens in the county voted to purchase the hospital and keep it open with county tax support. At the time ownership was transferred to the public, the hospital was debt free with 17.5 days of cash in the bank. The new leadership was focused on survival and having enough money to make payroll each week. Through the hard work of managers and physicians in the community, the hospital was eventually able to turn around financially. Its reputation as a quality provider slowly improved among the county residents, although many people still traveled to the metropolitan hospitals to receive care.

After the CEO retired in 2009, the new CEO, Jack Sullivan, began to discuss various market share growth options with managers, local physicians, and representatives from health-related commu- nity services. During these discussions, Sullivan assessed the climate and the willingness of hospital staff and physicians to be more supportive of directing patients to Magnolia Hospital.

(continued)

to hear. Unless strategic issues are real and phrased in plain terms, the resulting strategic alternatives will likely not be in the HSO’s best interest. Having strategic conversations with colleagues or outside experts over the course of a year will help to unearth the real issues that the organization must confront. As has been emphasized earlier, this process is most fruitful if it is undertaken on an ongoing basis rather than as an annual exercise. Communication In The Planning Process

Even after identifying a strategic issue, determining whether it is really critical is still dif- ficult. It is useful to think of a critical issue as something that keeps the CEO up at night. Andy Grove, former chairman and CEO of Intel, describes himself as quite a worrier in his book Only the Paranoid Survive. While he served as Intel’s CEO, Grove says, various uncertainties kept him up at night, ranging from problems with chip manufacturing to threats from competitors to the company’s inability to attract and retain talented employ- ees. He believed strongly in the value of paranoia (Grove, 1999). Use this imagery as a way of pruning from the list of alternatives those that do not merit such obsessive atten- tion. Try also looking at a particular strategic issue in relation to others on the list; is it as important or less important? Ultimately, the final decision is subjective; what one person might consider critical, another might cross off the list. More to the point, a CEO or top manager should rely on gut instincts when creating the list of strategic issues: What are the real issues, problems, or dilemmas facing the firm (Roberto, 2009)?

An organization’s list of strategic issues may be either too limiting or too broad. To inform the strategy effectively, the issues must be thoughtfully generated and edited. Case Study: Magnolia Hospital’s Strategic Issues summarizes how a recently hired hospital CEO and top management team wrestled with strategic issues facing a small district hospital in the southeastern United States. The identity of both the hospital and the individuals has been masked.

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CHAPTER 6Section 6.1 Identifying Key Strategic Issues

Case Study: Magnolia Hospital’s Strategic Issues (continued)

Because the organization had been facing financial difficulties for so many years, there was an underlying culture of “survival of the fittest” among individuals, departments, and physi- cian groups. The CEO realized that the past focus on blaming others and putting out “fires” had to change.

He was also struck by the seeming lack of awareness about the potential for Magnolia Hospital to become the provider of choice for people in the community. For the most part, the previous CEO and board members had jointly set the hospital’s strategy, with managers and physicians excluded from these discussions. Among managers and physicians, there was a general sense of inevitability that Magnolia Hospital would never be able to attract business away from urban hospitals.

Sullivan felt strongly that the hospital and its physicians could jointly build organizational capacity where excellence is the way of doing things. This would translate into more business for every- one as fewer people in the community would feel the need to travel out of the county for their healthcare needs. To realize this goal, the CEO would need to change entrenched attitudes among hospital employees and physicians.

Key strategic issues identified during the situational analysis conducted with management and key physicians in the community included the following.

Should Magnolia Hospital

• seek to be the state’s leading rural hospital? • stay the same size or grow through joint ventures with urban hospitals? • convert some inpatient beds to skilled nursing beds? • sell the facility to a larger health system? • go to the county voters with a bond issue to build a new facility with expanded

outpatient services? • invest more in our human resources

through expansion of education and growth opportunities?

• hire hospitalists to care for inpatients? • add video telemedicine capabilities? • contract with urban specialists to travel

to our community once a week to see patients?

By involving physicians and hospital management in discussions of key strategic issues, Sullivan began to break down the tensions that had existed for years between these two groups. Although it didn’t hap- pen overnight, managers and physicians learned that collaboration rather than confrontation was the best way to advance everyone’s agenda. Communication In The Planning Process

(continued)

© Peter Spiro/iStock/Thinkstock

Creating a hospital environment where excellence is the way of doing things is sometimes a matter of changing entrenched attitudes.

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CHAPTER 6Section 6.1 Identifying Key Strategic Issues

Strategic Conversations

A strategic conversation is a free-ranging discussion on a topic of strategic interest to an organization. Because of its characteristic “no-holds-barred” freedom to say whatever needs to be said, it invariably produces ideas and thinking that are ultimately useful for creating strategies that might not be captured in any formal process.

All major strategy formulation, according to Peter Schwartz, cofounder of the Global Busi- ness Network, does not, in fact, take place during the planning process (Abraham, 2003). What goes on in a formal process is almost always a ratification of what has already hap- pened. A strategic conversation often takes place entirely informally. Schwartz’s colleagues at Bell South used to call it the HERs process—hallways, elevators, and restrooms—because that is where the most interesting conversations take place. While real decisions were made,

real issues were confronted, and real knowledge was developed, almost all of it took place in this conversational mode. And that is how real learning also takes place. If an HSO is to have successful strategies, it involves good learning—learning about new reali- ties, new facts, new competition, new opportunities, new directions—and challenging old knowledge. It is point- less to simply list a set of new objec- tives for the coming year as if nothing has changed. The problem is that if everything has changed, the decision makers who must come up with a plan must understand those changes.© Rick Gomez/Solus/Corbis

Often, many of the most important decisions are made during informal conversations that take place in hallways, elevators, and restrooms.

Case Study: Magnolia Hospital’s Strategic Issues (continued)

Questions for Critical Thinking and Engagement

1. When you consider the history of Magnolia Hospital, do you believe Sullivan’s initial assessment was appropriate? Why or why not?

2. Based on your reading and analysis of this brief case, was the list of key strategic issues thorough enough? Was anything left off the list that should have been there?

3. The case study ends on a note of success, but what “fallout” might you expect based on the background you were given? Be as specific as possible.

4. Comment on Sullivan’s practice of including hospital managers and physicians in the strategic discussions. Based on your reading of this chapter and your own experience, did he do the right thing? Why or why not? Communication In The Planning Process

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CHAPTER 6Section 6.1 Identifying Key Strategic Issues

Schwartz maintains that the only way people learn together is through conversations (Abraham, 2003). Whether formal or informal, a strategic conversation is the learning vehicle through which the group adjusts to a new worldview to enable strategic plans to be developed and implemented. The steps in the process often follow this sequence: shared conversations, shared learning, change in one’s mental models, then development of better strategic plans. Tony Manning echoes Schwartz in endorsing the value of infor- mal dialogue:

Strategic conversation is far more than just an occasional practice that can be adopted or abandoned at will: it is without doubt the central and most important executive tool. . . . What senior managers talk about—clearly, passionately, and consistently—tells me what they pay attention to and how sure they are of what they must do. (Manning, 2002, pp. 35–36)

The viewpoint of most strategic analyses is assumed to be that of the CEO or leader of the organization and may include the top-management team. When the list of strategic issues is examined from the viewpoint of a board of directors, other variables could be added, such as whether to seek partnerships with other HSOs, and even whether it is time to replace the CEO.

There is one final check on whether the HSO is dealing with the proper set of strategic issues. Because they constitute the critical questions and issues the HSO should address, all strategic issues should be taken into account explicitly when forming strategic alterna- tives. In the event that the alternatives fail to take into account one of the strategic issues, it could mean that either (a) the strategic alternatives have not been properly formulated and should be further modified to take it into account, or (b) the issue in question is not as important as was initially assumed and thus could be deleted.

While it is possible that an HSO could have any number of strategic issues at a given point, the larger the number of issues proposed, the higher the chances are that some of them are not as critical as others. Long lists of more than 12 items should be pruned down, eliminating those that are not so critical or combining some of them. The Delphi method, described in Chapter 3, is a good tool to use for this purpose. If the list cannot be reduced at this stage, there will be another chance to do this after the strategic alternatives have been created and it is found that every issue has not been taken into account.

The recommended form for stating a strategic issue is as a question: for example, “Should the organization build a second clinic?” By posing a question, the leaders may find that the answer is known with certainty: “Yes, the organization should build a second clinic.” When everyone agrees on the answer, then the issue is not a strategic issue—it is a deci- sion the HSO has already made. No decisions have yet been made for strategic issues. It is not sufficient, however, that one simply pose a question on a matter of strategic concern. Consider the following:

• Should the organization try to lower its costs? • How can the organization lower its costs?

The strategic issue is not whether to lower costs; the answer is that of course it should. Rather, the strategic issue might be “How can the organization lower its costs?” because that answer may be uncertain, so it could be included as a bona fide strategic issue.

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CHAPTER 6Section 6.2 Overcoming Obstacles

Discussion Questions

1. Having done a thorough situation analysis—both external and internal—do you agree that it makes sense to synthesize the results? Explain your answer.

2. In your view, would the external analysis previously done be more useful in scenario plan- ning than in forming strategic issues? Why or why not?

3. Some people suggest that managers are not involved in the process of coming up with stra- tegic issues because it involves phrasing questions to which the answers are unclear. Could there be any truth to such a view?

4. Suggest ways of shortening a list of 20 strategic issues to a more manageable number of about 12.

Thus, one criterion for a strategic issue is that the answer to the issue is uncertain. The way in which that uncertainty is resolved is through the design of strategic alternatives and choosing a preferred one. Given a strategic issue, “Should the hospital broaden its service line?” one alternative could be, “Broaden it” and another, “Leave it out altogether as an alternative” (not broaden it). When deciding which alternative is preferred, the one that is chosen automatically “resolves” the uncertainty inherent in the issue.

6.2 Overcoming Obstacles An ordinary alternative is one of several means by which a goal is attained or a problem solved. A strategic alternative is one of several ways by which an HSO might compete in a marketplace, achieve its vision, or, if no vision has been articulated, decide where it might go and what it might achieve. Notice two things about the definition: (a) The designation “strategic” is necessary because alternatives are fashioned in a competitive environment, where the actions of competitors must be taken into account, and (b) the alternatives are created at the level of the whole organization and not any one of its func- tions or units. In addition, strategic alternatives provide choices about marketplace strat- egy or about configuring the organization, address issues of central importance to the organization, have uncertain outcomes, and require resources to develop before action can be taken (Lyles, 1994)Communication In The Planning Process.

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