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CEOs love talking about culture. Here's why they shouldn't.

Attributing organizational success to culture doesn't help anyone, because no one knows what culture is.

Ask CEOs in any industry their secret to success, if their answer isn't "the people," $100 says it includes the word "culture." In one edition of Wall Street Journal's "The Experts" column on the five biggest priorities for CEOs, culture is mentioned 15 times!

But what the heck is "culture"?

Apparently, academics have some 164 definitions of culture. Don't worry though, you don't have to read them, let me summarize: Culture is the implicit and explicit patterns of behavior, structures, beliefs, values, symbols, customs, etc., that are shared by a group or society.

So I'm a CEO of an institution that's struggling. We aren't making our numbers, morale is low and there are service or product errors.

I seek out the help of other CEOs. They tell me I must improve the culture.

That doesn't really help me.

"Everybody says it's the culture, but what is the culture?" asks John Kenagy, MD, founder of Kenagy & Associates and a former practicing physician who has studied change management for more than two decades. "Culture is such a meaningless term; it really dodges the issue. Nobody's talking about what it is."

What is 'culture'?
According to Dr. Kenagy, culture, for all practical purposes, can be approached as the sum of four things: mindsets, methods, strategies and structures (which he's dubbed 'M2S2' for short).

That is to say, the M2S2 of your organization are tangible elements of the culture, that when taken together make up the culture — an idea that is a lot less tangible take by itself.

Let's return to my example of the struggling CEO. While he or she can't do a lot with "it's culture," he or she can certainly implement or adapt the M2S2 of like, successful organizations into his or her own.

So, what mindsets, methods, strategies and structures should successful in healthcare organizations develop?

According to Dr. Kenagy, the most successful organizations — those able to weather rapid change and market disruptors — are those that have adaptive cultures. Therefore, organizations should seek to implement M2S2 that support and create structures and processes to foster a culture that adapts quickly to change.

Cultures must support adaptive change
Why is adapting to change so important? To understand this, it's helpful to explore the theory of Disruptive Innovation, the popular change management theory advanced by Harvard Business School's Clay Christensen, who Dr. Kenagy studied with as a visiting scholar from 1998 to 2002. Under the theory, organizations that don't introduce innovation will be disrupted by it.

However, Dr. Kenagy has advanced his own theory, 'Adaptive Design' that argues against the 'disrupt or die' mentality. Instead, he believes organizations can adapt, successfully, to disruptive innovations from competitors or other market entrants.

"Disruption gives you this kind of view of 'boom!' and it's actually not," he says. "Innovation is going to happen, and it will either be disruptive or adaptive to your organization. It's your choice as a leader to be disruptive or adaptive. It's more about what the change is doing to you."

Organizations can succeed in the face of disruption if they adapt quickly — which requires leaders with savvy change-management skills.

Adaptive change doesn't sound revolutionary, but it sort of is
To become an adaptive organization, leaders must support instituting the structure and processes (that is, M2S2) that foster active adaptive change, which is characterized by the ability to change your organization's processes or procedures quickly and appropriately in the face external market forces.

The problem is, most organizations are ridiculously bad a responding quickly to business changes. Why this is involves a quick history lesson. During the Industrial Revolution, businesses that succeeded were the ones that were best able to organize workers and their responsibilities through a hierarchical structure. Managers directed work, and the front-lines carried it out. Management decides, measures, analyzes, improves and controls front-line work. Bigger problems move higher up in the organization.

But, what worked in the Industrial Revolution, doesn't work today. Organizations have so much data that management can't move quickly enough. "Moving data up is just too slow of a process and too inflexible," Dr. Kenagy says.

Instead, organizations must implement M2S2 that enable and empower front-line workers to make and implement decisions on how to improve their work, and to do so in a way that creates a new "value" for the organization.

Essentially, the organization moves away from traditional management (where decision making is sent up the chain) to one where decisions are made and data is analyzed on the front line, by those that are doing the work and know it most intimately. There are no managerial pow-wows to first assess the potential impacts of change or prioritize which have the biggest ROI potential. The ability to change the organization shifts from a top-down approach to a bottom-up one.

5 characteristics of adaptive leaders
Leadership, though, still has an important role. It must design, align and coordinate rapid front-line decision-making by its employees. To achieve this, leaders must exhibit five characteristics, which Dr. Kenagy has seen over and over again in the most successful adaptive leaders.

1. Set clear, consistent, meaningful direction. Set a clear vision or purpose to guide adaptive change by front-line employees. For healthcare organizations, Dr. Kenagy suggests using the concept of "ideal patient care" — essentially a short-hand version of the triple aim of lower cost, higher quality and better population health.

"Humans need meaning in life and a purpose to believe in," says Dr. Kenagy. "That's where 'Ideal Patient Care' comes from; you don't implement 'Ideal Patient Care;' Instead, you respond and improve when care is not Ideal. That's much more powerful just a target [metric] or a goal to align the organization."

2. Develop people as the number one resource. "Organizations do not adapt. People adapt," says Dr. Kenagy. "It's the organization's ability to increase the adaptive capacity of the people and aligning those behaviors to a common purpose that leads to success."

3. Build trust and optimism. As the first few brave employees begin to make small, adaptive changes in the organization, embrace both those that result in care or efficiency improvement and those that fail as learning opportunities. When employees know the organization is a safe place to test ideas, they develop trust and optimism.

Dr. Kenagy also suggests beginning efforts in areas that are most meaningful to the organization. For example, if rolling out Adaptive Design techniques by department, start with areas that directly touch patients, such as surgery or diagnostics. Process improvement work in areas like supply chain, operations and finance is essential in moving toward Ideal Patient Care, but isn't as meaningful to the entire system — something that's critical in the early days of the cultural change to build support.

4. Problem-solve what does not work. Never accept bad processes or error as inevitable. "'Almost impossible' means some things are still possible," says Dr. Kenagy. Develop skills in your employees to change, test and deploy process changes that will move the organization toward Ideal Patient Care.

5. Grow opportunistically and relentlessly be challenge the status quo. "Good managers marshal their forces when the organization stalls. Great managers opportunistically and relentlessly challenge the status quo," says Dr. Kenagy. Avoid labeling adaptive design as just "process improvement." Instead, see it as it's intended to be: a real-time management development system embedded into every day work.

 

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