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Aligning High-Performance Health Care Organizations

Aligning High-Performance Health Care Organizations. BRIAN R. GOLDEN, PhD Sandra Rotman Chaired Professor in Health Sector Strategy at The University of Toronto and The University Health Network Executive Director, Collaborative for Health Sector Strategy

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Aligning High-Performance Health Care Organizations

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  1. Aligning High-Performance Health Care Organizations BRIAN R. GOLDEN, PhD Sandra Rotman Chaired Professor in Health Sector Strategy at The University of Toronto and The University Health Network Executive Director, Collaborative for Health Sector Strategy Joseph L. Rotman School of Management and Faculty of Medicine University of Toronto bgolden@rotman.utoronto.ca

  2. Multiple Perspectives Economics Behaviour Social Psychology Sociology

  3. Functional Strategy • Core Activities Strategy Hierarchy Corporate Strategy • Investment priorities • Integration of programs Program Strategy • Competitive positioning • Configuration/Coordination

  4. Jack Welch on the Role of the Leader “My job is not to go to Louisville to pick out loose handles or compressors for refrigerators. My job is people, resources, and ideas.” “This business game is all about winning. The team that wins is the team with the best players. Your job is to field the best players”

  5. Promoting Cultural Change at GE Speed Simplicity Self-Confidence

  6. The Process of Change at GE • Strategy • #1 or #2 • Divest/invest aroundcore businesses • Structure • 13 global businesses • Small corporate staff • Systems • Crotonville • Star-based incentives • Organizational Culture • Driven by the top • Work-Out! • Speed, Simplicity, Self-Confidence • Best practices • Boundary-less company • Six Sigma

  7. The Process of Change at GE • Strategy • #1 or #2 • Divest/invest aroundcore businesses Structure (Anatomy) Systems (Physiology) • Culture • (Psychology)

  8. G.E.’s Re-Alignment Vision Strategy - unique, spirited, entrep., most profitable, diversified, quality - #1, 2, fix or sell? Information and Decision Making Structure - delayered - downsized - decentralized - greater span of control - less formal (e.g. service council) - cross-business integration -speed, simple, confident - externally oriented - shared -no “not invented here” Culture (values/symbols) People/HRM - selection & “destaffing” - train/teach - $1/2b Six - Sigma -$45m capital (Crotonville) - serious perf. appraisal - career maps Rewards - performance based (signif. variable pay) - idea seeking/sharing (not just creation) - business outcomes - values based - extra for “stretch”

  9. Organizational Alignment & Culture Strategy & Tasks - what “businesses”? - how we compete? - what do staff do? Information and Decision Support Structure - dept, division, cross-org’l - team based - interdependence - (de)centralization - formalization - span of control Culture & Values - performance data - subjective vs objective - reliability - timeliness - cost of obtaining - accessibility People/HRM - selection - training & development - performance appraisal - feedback & coaching - rotation through company Rewards - intrinsic/extrinsic - amount - base vs. variable - individual, group, organization based - risk

  10. MANAGEMENT: Ensuring Efficiency Planning & Budgeting Organizing & Staffing Controlling & Problem Solving LEADERSHIP: Creating Change Setting a Direction Aligning People Motivating & Inspiring The Difference between Management and Leadership Source: John Kotter, Harvard Business School

  11. Source: Jim Fisher, Rotman School of Management

  12. GE - Update • Under 20 years of Welch, GE sales increased from $27.2B to $129B (474%) in 2000 • Net profits from $1.6B to $12.7B (793%) • In March 2000, GE’s market value passed $525B (it was $3B when Welch took over) … $522B of value creation • GE is now the 9th largest and 2nd most profitable company in the world

  13. GE versus the Dow Jones

  14. GE - Update • Jack Welch retired, August 2001. [Now charges $250,000 per speech on how he did it!] • Replaced by Jeffrey Immelt, 44, of GE Medical Systems • Two “runners-up” in 6 year search: • Bob Nardelli as CEO of Home Depot ($94 billion market cap.) • Jim McNerny as CEO of 3M ($44 billion market cap.)

  15. GE - Update • GE went into recession mode in mid-2000, aggressively cutting costs in preparation of leaner times • At its low point (Sept. 21, 2001), the stock had dropped 50% from a high of $56.19 to $28.50; as early as January 2002 it was $41 “I was chairman for two days, and then I had jets with my engines hit a building I insured, which was covered by a network I owned, and we still grew earnings by 11 percent” • CEO Jeffrey Immelt of Sept. 11, 2001 • Despite $400 million of World Trade Center-related insurance losses, Immelt announced GE would still deliver double-digit earnings growth in 2002.

  16. Classical Leading “If you want to to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea” - Antoine de St. Exupery

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