Enough is enough

Every once in awhile, I'll reach my saturation point with the media. Whether it's business writing or news reportage, the content can become too much of the same and I find I can no longer absorb any more. I reached that point today. One too many articles detailing the sad shape of these times, with too many recycled business axioms. Perhaps we're meant to take comfort in hearing familiar themes, and to feel reassured that we will be just fine if we follow a few simple rules or make a few small changes. Well, I beg to differ. I don't need to be lulled by oft-told tales. Is it nap time?

I think what most businesses and citizens need is quite the opposite: not to be lulled but rather jolted by the urgency of clear analysis and a call to action. In an opinion piece in yesterday's NY Times, Gordon Stewart wrote of the speech President Jimmy Carter gave 30 years ago addressing the urgent need for a forward-thinking energy policy.

On July 15 — 30 years ago today — at 10 p.m., President Carter and 100 million people finally faced each other across that familiar Oval Office desk. What they saw and heard was unlike any moment they had experienced from their 39th president. Speaking with rare force, with inflections flowing from meanings he felt deeply, Jimmy Carter called for the “most massive peacetime commitment” in our history to develop alternative fuels.

Although highly popular with the nation's citizens at the time, the speech was characterized by the media as 'The Malaise Speech' - too much of a downer. Despite the fact that the speech did not contain the word 'malaise,' the word has been associated so closely with this speech that collective memory now insists he used the word. Thirty years later, however, Carter seems amazingly prescient.

We actually had all the facts we needed 30 years ago to know what we had to do: the need for a change in policy was stunningly clear to anyone who waited in those long lines that summer hoping to fill up the family car's gas tank. But more than a policy change was needed. We needed to change. Some sacrifice was necessary: we could not reasonably continue to consume mindlessly without peril. Few could doubt Carter's credibility on factual data, analysis, and his personal integrity: the opinion-makers could therefore not complain that he was dim, didn't have a command of the facts, or that he was lying. Instead, they chose to marginalize his speech and therefore ignore his call to action, based solely on their assertions of how the speech supposedly made people feel. And the country did ignore him, to disastrous consequences, all of which were predictable.

When President Obama took office this year, he repeated the point he had made in his campaign that the country didn't have the luxury of working on only one problem: we have at least five major crises to address simultaneously: Iraq & Afghanistan, the economy, health care, education, the environment. None of these will tolerate incremental improvement: real change is needed that requires radically different policies.

In any business, the same is true on a smaller scale. There is no one thing to fix, and incremental improvement can only end in failure. But to achieve more than incremental gains, you must choose fundamentally to ignore the familiar and embrace the discomfort of challenging assumptions and your own leadership. There's something in the mind that doesn't want to go there, unless the status quo is just too painful to bear.

Here's a thought: Make it new. It will be fun.

Of widgets and patients

Several recent articles about health-care reform have piqued my process improvement interests. In Sunday's NYTimes, Paul O'Neill pointed out the savings to be had in improving the quality of hospital care. This really boils down to a simple lean principle: eliminating rework and waste reduces costs. But, it's somehow more meaningful if you visualize rework looking like patients suffering deadly infections (rather than imagining malformed widgets rolling off the assembly line). In principle they're the same; we just care less about amorphous widgets. So yes, there is opportunity to improve quality and reduce costs, and both would be immensely meaningful particularly in health-care. This can be no surprise to the health-care industry: lots of smart people work in health-care, and their resources dwarf just about every other industry. So why hasn't it happened?

This morning, I was enlightened by Andy Kessler's article today in Technology Review, which explains why "the medical industry has a vested interest in inefficiency." No other industry remains entrenched with paper-based processes, and willfully denies itself the cost-savings and market-expansion potential inherent in capturing process data in real-time and mining that data for intelligence. I find it chilling that I have more real-time production data and analytical reporting on our warehouse picking operations than is available to hospitals about their patient treatments and outcomes. I have, at my fingertips, a complete audit trail of a sofa as it moves through the company and to the consumer. The medical profession cannot track the similar movement of a patient through his or her treatments, even within a single hospital. How can that be? Kessler explains:

The reason lies neither with cost nor with inadequate technology. Rather, the health-care industry's reluctance to digitize its records is rooted in a desire to keep medicine's lucrative business model hidden. Dangling $19 billion in front of a $2.4 trillion industry is not nearly enough to get it to reveal the financial secrets that electronic health records are likely to uncover--and upon which its huge profits depend. In those medical records lie the ugly truth about the business of medicine: sickness is profitable. The greater the number of treatments, procedures, and hospital stays, the larger the profit. There is little incentive for doctors and hospitals to identify or reduce wasteful spending in medicine.

What we do follows from the outcomes we seek. Health-care's current targeted outcome is profiting from sickness. If the industry's targeted outcome was health, it could be a robust industry fearless of competition either private or public. This change in objectives would align the industry with its consumers and all of its partners, including the federal government.

Contributing to the fear about oncoming changes to the industry must be the perception of value along the entire channel. The threat of single-payer is essentially no different from the threat of disintermediation which was precipitated in the 90's by the powerful Dell direct-selling model. Experience should have taught us that the close evaluation of a value stream does not necessarily lead to disintermediation; rather, it should force the intermediary players to bring unique value to the channel. In supply chain, this has caused wholesalers and retailers to do more than aggregate product and increase margin, which in turn has resulted in these intermediary players bringing value that the manufacturer cannot provide and for which the consumer is willing to pay. Health-care, feeling threatened, should take note: the marketplace is willing to pay for the value you create and no longer willing to pay you to take profit from our illness.

Update: 24 July 2009- Updated link to Kessler article; the original had elapsed. See TR's July/Aug issue for the article. It's a great magazine and worth picking up.