As health systems enter a period of relative stabilization following the pandemic and its inflationary aftermath, many leaders are rethinking their organization’s enterprise strategy. These strategic resets can help leaders determine where their organization stands relative to its competition and take steps to differentiate it accordingly through growth and transformation.
While the CEO is traditionally the owner of the organization’s strategic vision, they need support from a team dedicated to thinking about its long-term strategic trajectory. This team can help determine what the organization needs to do to strengthen its competitive position across the immediate, short-term, and long-term trajectory also known as the “Now, Near, and Far.”
A high-performing Corporate Strategy function should support the careful consideration of material shifts to business—and related initiatives—that strengthen the organization’s strategic, financial, and competitive position. The Chief Strategy Officer is tasked with leading the function to develop a long-term vision and marshaling resources to pursue its strategic aspirations.
Currently, many organizations either do not have a corporate strategy function in place or cut back on resources to deal with the existential threats of the last few years. And without a corporate strategy function, effectively designing and executing new strategic initiatives is an immensely challenging task.
While there is no one “right way” of executing corporate strategy, we are observing that high-performing strategy functions share several key characteristics:
- The strategy function knows which executives are the decision-makers—and supports these individuals by ensuring the few, yet impactful, choices that need to be made are informed by robust information, thinking, and context. In turn, these decision-makers effectively delegate to key strategy personnel, enabling appropriate support for important decisions.
- The strategy function strikes a temporal balance by avoiding operating too heavily in either the "Now,” or the day-to-day or month-to-month operations of the enterprise, or the "Far,” by over-valuing time spent on theoretical long-term operations without a clear return on investment.
- The strategy function clearly understands the difference between "strategy" and "planning.” As we see it, a strategy requires an organization to make choices about the nature of its future state, while a strategic plan sequences initiatives and tactics to support these choices over time.
- There is a clear relationship matrix to other corporate functions, including technology, marketing/communications, finance, and operations, just to name a few—and a clear delegation of where strategy leads, follows, or iterates with these functions.
Closing thoughts
After several challenging years, most organizations recognize that they cannot simply cut their way to long-term viability. We are observing that many leading-edge health systems are making significant re-investments in strategy in 2024 as market conditions stabilize, with a specific focus on growth and other transformative efforts.
Unlike other corporate functions, the role and responsibilities of a strategy function are often ill-defined and can actually impede an organization's ability to make informed decisions. In the worst-case scenario, a poorly designed strategy function can even raise the risk tolerance of the organization to the point where its competitive fitness erodes over time.
In our view, establishing clarity around strategy functions and activities and interconnectivity between other corporate services and processes is of paramount importance. At a moment when the healthcare system is rapidly evolving—and the previous business model is no longer sustainable—an effective, well-designed corporate strategy function will be critical to future success.
