Strategic Planning and Execution

1. Strategic Planning and Execution Barry Arbuckle, PhD President and Chief Executive Officer MemorialCare Health System Becker’s Hospital Review May 16, 2014

2. “It’s interesting how many organizations do strategic planning and yet how little value is considered to be delivered as a result. ” • Does the process produce a plan that's "real?" • Does the plan really work for the organization? • How to know if the plan was deployed…well?

3. Automotive IndustryEnvironment Effects on Sales • 2000-10 Decade • Employee wages/benefits/pensions • Emission Standards • Oil Prices • 2006 - $62.36 • 2008 - $91.35 • Hummer Sales • 2006 - 71,524 • 2008 - 9,046

4. In Process UC Irvine Health Partnership

5. Seven Deadly Sins Corboy, O’Corribui, 1999

7. Strategic Planning • Both inward and outward focused • Longer-term, then reel back in • 3 - 5 years ---> 1 • Involves evaluating and prioritizing among opportunities to: • Create superior value for customers • Differentiating the organization from competitors • Enhancing the organization’s ability to anticipate and proactively adapt to pending environmental change • Purposeful resource allocation

8. MemorialCare’s Standard Work

9. Strategic Planning Cycle 1 2 5 4 3 • Financial performance targets • Operational performance targets (quality, satisfaction, efficiency) • Facility, equipment, staffing needs • Identify a Vision: Share It • Environmental Assessment Scenario Analysis • SWOT • Set a Course of Action • Leadership Retreat • Outcomes • Implementation Plan Mission Values Culture Goals Objectives Strategies • Update Strategies and Tactics as Necessary • Financial projections • Capital formation plan • Medical staff plan • Facility master plan update • Foundation plan Balanced Scorecard Resource Allocation • Corrective action and contingency plans • Updated financial projections • Measure and Monitor Results • Implement • Operations Enhancement • Leadership Training • Physician Alignment • Accountability • Communication Plan • Performance Reporting: • Financial • Operational (outcomes, quality, etc.) • Organizational learning • External customers (satisfaction)

10. 8 Keys to Success • Building a timeline that allows for advanced education and study • Creating a system-wide prioritization process • Developing cascading entity planning (Lean Management System) • Linking to the 10-year Financial plan and budgeting process • Incorporation of Kata principles for detailed initiative planning • Use of “90-day cycle thinking” to communicate system-wide on key progress and next steps • Deep Dives for “gnarly issues” and consensus building • Creating linkages into system-wide strategic marketing for our patients, physicians and staff

11. 1. Building a Timeline • Standard Schedule • Published, no surprises • Example: MemorialCare • MHS BOD Strategy Retreat - Nov • Sr. Executive Group Retreat -Jan • Strategy Committee - Jan • High level initiatives reviewed & endorsed • To full Board for approval in January • Feb-Mar • Staff development of initiative detail • Syncing to financial and capital plans • Campus retreats/development of aligned local plans • Apr • Final version/detail for full Board approval – Strategy Committee, MHS Board, campus Boards • May-Jun • Finance plan for full Board approval • Strategic Plan disseminated • Jul  • Tracking initiated for each initiative • Quarterly Strategy Close

12. MHS Strategy RetreatsHistory of Action

13. 2. Creating System-Wide Prioritization • SWOT

14. 2. Creating System-Wide Prioritization • SWOT • Retreat Flow/Culture • Learning/study/fun! • Starting Pyramid discussion • Clarifying and narrowing • World Café • Top 5 • Multi-voting, debrief • Red Dot discussion • Re-draft, review

15. The Rules of Dots • Can’t get more • No begging, borrowing or otherwise coercing • Yours to use or not use • Colors • Green – have to do in next year • Yellow – good to do but multi-year or later • Red – advise against (or don’t understand)

16. 3. Developing the Cascading Plan • Standard Framework - Pyramids

17. Definition of Our Terms • Strategic 5-Year Vision • A vivid mental image of our future state (years out) • 3-Year Strategy • A systematic plan of action that will result in steady movement toward our desired future state • Fiscal Year (FY) Initiative • An act which originates or begins movement toward the desired future state • FY Activity • A very specific action aimed at achieving specific and measurable “what by when” goals and defining related capital and operating requirements • System-Wide • Initiative that is intended to be deployed across the system, generally initiated by distributed function leader / executive • Entity • Initiative that is intended to be deployed at a campus or other entity according to their own specific needs

18. Result

19. Cascade Example

20. Putting In the Detail

21. 4. Linking to 10-Year Finance Plan • 10-Year Plan & Budgeting Process • Bounding Measures (EBIDA, Operating Margin, cash) • Detailed Strategic Plan Tracker, answers: • What Success looks like? • Who is Accountable? • Which are the key supporting Activities • What is the Timeline, Measure, Financial Plan linkage?

22. 5. Incorporating Kata • Coaching Kata – behavior or pattern • What is the target condition? • What is the actual condition now? • What obstacles are preventing you from reaching the target condition? • And which are you addressing now? • What is your next step? • When can we go and see what we have learned from taking that step?

23. Making Sure We Stay on Track • Monitoring • Ongoing assessment – status, on-track or address • Bi-weekly Strategy Cabinet (Council), monthly Exec • Quarterly system-wide roll-up, campus also • Quarterly – Deep Dives (topical) • Board receives semi-annual report at mid-year, end of year, as well as key reports on initiatives and tactics • Our Strategy Committee of the Board reviews quarterly • Their charter calls for anything > $5M, strategic risk vs benefit, or “just cause we want their input” • Visibility Board

24. 6. Use of 90-Day Cycles

25. Sample Report

26. Ex: FY’14 2FQ Close ReviewMarket Diff and Growth

27. 7. Deep Dives, Gnarly Issues • Consideration of strategic need • Taking a time out - shorter retreat • Focused topic – ex. Population Health roadmap, shared PHO contracting strategy, employing specialists, Proton Beam… • Focused invitees • Focused agenda • Report out linked back in to overarching plan

28. 8. Linking to the Plan • Communicating 7 times, 7 ways • System-wide webcasts, videos and publications • Manager and staff evaluations • Long term comp objectives • Staff User-Friendly plan • Available on intranet

29. Designing aStrategic Planning Framework +  • What makes this work? • Plans key implementation steps • Accountability clear • Monitoring progress • It’s… Standard Work

30. 8 Keys to Success • Building a timeline that allows for advanced education and study • Creating a system-wide prioritization process • Developing cascading entity planning (Lean Management System) • Linking to the 10-year Financial plan and budgeting process • Incorporation of Kata principles for detailed initiative planning • Use of “90-day cycle thinking” to communicate system-wide on key progress and next steps • Deep Dives for “gnarly issues” and consensus building • Creating linkages into system-wide strategic marketing for our patients, physicians and staff

31. Encouraging CreativityInnovation is a GOOD thing!