HIT pros need good strategy, ability to avoid cognitive traps

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Good strategy starts from the future and works backwards, said Jim Austin, director of life sciences for Decision Strategies International Inc. He led a session called “Strategic Planning for Healthcare IT Professionals” yesterday, the opening day of the Healthcare Information Management Systems Society (HIMSS) meeting in San Diego.

“Uncertainty is increasing across every one of your indicators,” he said. “Variance is getting wider.” The challenge for HIT professionals is finding a way to embrace uncertainty. “Increasing uncertainty needs a new approach.” He suggested that healthcare IT professionals ask themselves and their organizations the following questions:

  1. How do we envision the future?
  2. What do we need to be successful?
  3. How will we develop our priorities?

Spending time addressing these questions is more important than ever, he said. Austin cited the fact that 1 percent of hospitals in the United States, which amounts to about 50, close every year.

In the past, great organizations have failed for the following reasons:

  • Corporate arrogance and hubris
  • Insufficient attention to weak signals
  • Lack of vision and risk taking
  • Trapped in yesterday’s business models
  • Biases of internal decision processes
  • Wrong incentives: short term and risk averse

Austin said there are three cognitive traps we need to avoid to succeed strategically:

  1. Limiting frames. Austin discussed the framework GM was operating under in 1968. The company was in the business of making money, not cars; its success was the result of rapid adaptation, not technological leadership; cars are primarily status symbols and people want to upgrade; the U.S. car market is isolated from the rest of the world; fuel will remain cheap and abundant; the government and unions the enemy.
  2. Overconfidence. If you aren’t open to, preparing for, and anticipating change, market changes could significantly impact your business. strategic thinking challenges managers who might be overconfident, said Austin.
  3. Distorted information. We often don’t know what we don’t know, Austin said.  

You can address these cognitive traps by asking the following key intelligence questions:

  • What don’t we know that we should and can?
  • Where might we be overconfident or anchored?
  • Is some of our information slanted or biased?
  • What are the major unknowables in this situation?
  • Should we use range estimates or develop scenarios?

A good strategy also takes into account trends, uncertainties and core competencies, Austin said. Trends are things everyone can agree are happening or will happen, such as an aging population, customized medicine, a need for education and training, and outsourcing of research and development. Trends cut across all scenarios. Uncertainties are things that are debatable as to whether they will happen. Austin suggested picking out major uncertainties that you really want to know, that could significantly impact your business.

Core competencies are things you can’t purchase and that cut across your organization and permeate the culture. They have applications across markets and products, they are advantages you have over competitors, they are hard to replicate, and they have value to customers. Core competencies exist broadly across employees, are sustainable and durable over time. 

To create a good strategy, you need to think about what you have today not what you want, Austin said.

But success also means a good strategy plus execution. Several conditions must be met for change to be sustained:

  • A clear, shared vision
  • Capacity for change
  • Pressure for change
  • Actionable first steps

Austin said he finds that healthcare organizations usually fail with the first step or the last step.