Leaders grapple with constant change. Evolving societal needs, tastes and expectations, developments in science and technology, new and revised legislation, and pressure from government, all place constant demands on leaders to adapt and transform their organizations, improve quality, manage costs, and increase efficiency and profits, to maintain a competitive advantage.
In common with leaders in almost every other industry, leaders in health care also face the ever constant challenge of change. They need to respond to continual developments medical practice and health care needs, rapid expansion in scientific knowledge and greater scrutiny from government, patients and society.
As part of an ongoing research collaboration between the University of Medicine and Dentistry of New Jersey (the largest academic health center in the U.S.), and enderung Consulting (a change management consultancy), we addressed the question of why some change management initiatives were substantive, successful, and lasting, whilst others were met with resistance, were never fully embedded, and became unsustainable.
We interviewed many leaders in medicine and medical education responsible for delivering change, often at the highest levels. These included leaders of large and leading organizations and bodies, medical schools and university teaching hospitals from across the U.S. We identified one key variable that distinguished truly successful leaders.
Our findings revealed that these leaders are "institutionally aware," that is, they have an explicit recognition of the acute importance of the institutional framework in which their organization is located, and in which they operate.
These leaders know that they do not operate in an organizationally independent, closed system. It is this knowledge that gives these leaders their edge, and is fundamental to their ability successfully to lead and manage change.
Institutional Awareness and Medicine
What does it mean to be institutionally aware? It means to be aware of the institutional matrix in which an organization is located. This institutional matrix is typically composed of a multitude of agencies, bodies, groups and associations that ultimately shape the environment in which organizations operate.
Medicine is one of the most complex institutional arrangements in the country. The institution of medicine is composed of insurance companies, pharmaceutical companies, Health Maintenance Organizations, the hospital sector, and medical schools.
It also encompasses a large range of government agencies, including the Institute of Medicine and the National Institutes of Health, professional associations, examination and licensing boards, and a myriad of related bodies.
This institutional matrix is large, powerful and dynamic. Not only does it determine the shape of the system of U.S. health care, it also ultimately influences its leaders' ability to effect change. This is because it is at the institutional level that the "rules of game" are devised.
By "rules of the game" we mean the terms by which the system operates. These rules shape and dictate the parameters in which organizations are framed, and in which their leaders maneuver. Thus, it is only through understanding of institutions and the "rules of the game," that leaders can be truly successful and effect substantive change within their individual organizations.
To show the importance of institutions in effective change management, we contrast two different leadership styles - the traditional approach to leadership with that of the "institutionally aware" leader. In doing so, we illustrate how an understanding of institutions gives leaders the edge they need to effect successful transformation of their organization.
The Traditional Approach to Leadership
Most leaders understand the need for change management of their organizations in response to an altering operating environment. They attempt to lead and manage change by drawing upon an array of skills typically associated with good leadership and devise strategies, policies, and systems to meet the challenges they face.
While they may be able to effect valuable and useful change, the transformation process is often ultimately constrained and limited. They mainly focus on effecting change at the level of their own organization, and neglect the importance of the wider institutional framework in which their organization is located and in which it operates.
Consequently, the process of change often meets resistance as it does not necessarily accord or align with the agendas, intentions and priorities of the bodies and agencies within the institutional matrix. One example of where change has met institutional resistance is in the area of "defensive medicine."
This is the practice by which doctors routinely over-test patients to avoid or minimize the risk of litigation on the grounds of a missed diagnosis. As a result, many doctors argue that they are compelled to practice defensive medicine, and conduct sometimes excessive and even unnecessary diagnostic tests and medical procedures.
Since there is no real need for these interventions on medical grounds, and the practice adds significantly to the costs of health care, many leaders in health care have sought to change policy towards defensive medicine within their individual organizations.
However, they have experienced significant difficulties in trying to do so, and have been unable to effect substantive and lasting change. This is because the policy of defensive medicine is determined not at the organizational level, but at the institutional level.
Consequently, proposed changes to this policy have run into opposition and proven short-lived, ineffective, and difficult to sustain. This approach to change has been against, rather than with the "rules of the game" of the system of medicine.
The Institutionally Aware Approach to Leadership
In contrast, institutionally aware leaders know that they do not operate in an autarky, or an organizationally independent, closed system. They recognize that the traditional attributes, skills and qualities of good leadership, while important, are just a starting point. To this basic leadership skill set, they add institutional awareness.
This gives them insight into how the institutional matrix has an impact on what they do, and influences their ability to make lasting change.Institutionally aware leaders know that these institutional agencies operate to their own agendas and determine the "rules of the game," and that these in turn shape the business environment and their individual organizations.
Moreover, these leaders are able to ascertain what the rules are, and then use this knowledge to effect change in their organization that becomes truly embedded and effective. Thus, their efforts at change management are not focused narrowly on the organization per se, but seek to alter their organization so that its priorities align with the institutional matrix. By working with the system and aligning with its rules, they are less likely to encounter resistance to change.
Transitioning from Traditional to Institutionally Aware Leadership
The importance of institutionally aware leadership in effecting positive change can be demonstrated through recent initiatives to make medical practice more responsive to growing demands from patients, society and medical leaders that physicians be assessed not just on scientific knowledge, but on a broader range of competencies including communication and interpersonal skills so that they listen more, be more empathic and better communicate with patients.
In response, some medical leaders made attempts to integrate this broader array of competencies into the medical curriculum. Since their efforts were focused primarily at the level of their organization, these changes often came up against resistance and met with little success. This is the approach taken by traditional leaders.
Their changes were not successful primarily because there was no change at the institutional level: the new competencies they introduced are not adequately assessed in the licensing examinations, which continued largely to test for basic science knowledge and clinical skills.
Consequently, students did not have an incentive to develop this wider range of competencies, nor did faculty have much incentive to teach these skills. To remedy this deficiency and better meet the demands of patients, change needed to take place at the level of the medical examination system that is, at the institutional level.
This is the cognitive shift from organization to institution that these institutionally aware leaders in medicine knew that they needed to make. Recognizing the central importance of the institution of medicine, they focused their change management efforts at this level.
They formed the Committee to Evaluate the United States Medical Licensing Examination Program (CEUP), and entered into a process of engagement with the main agencies responsible for licensing examinations. This committee then proposed fundamental changes to the national medical examination system, that would give greater recognition to, and testing of, this broader range of competencies.
They developed a series of recommendations for change that were received and endorsed by the U.S. medical licensing examination bodies (the National Board of Medical Examiners, the Federation of State Medical Boards, and the United States Medical Licensing Examination Composite Committee).
These institutionally aware leaders were acutely aware that for substantive change to occur, change needed first to take place at the institutional level - an approach that contrasts sharply with that of traditional leaders yet to transition to institutional awareness.
The traditional values of good leadership are all well and good, but they are far from the whole story. The truly successful leader is "institutionally aware," and has developed a recognition of the acute importance of the wider institutional framework in which their organization is located, and in which they operate.
They know that they do not operate in an autarky that is, in an organizationally independent, closed system. As medicine represents one of the most complex institutional arrangements in the country, it provides important lessons for leaders in all sectors and industries.
Our findings are therefore generalizable, extending beyond medicine and medical education, and are of relevance to all leaders, whatever their background. Furthermore, the approach to change taken by these institutionally aware leaders accords with a substantive body of work highlighting the centrality of institutions in our understanding of markets and economic systems.
Indeed, of the Nobel laureate prize winners for Economics since the 1970s, eight have addressed the importance of institutions. These include Friedrich Hayek and Gunnar Myrdal (1974), Herbert Simon (1978), James Buchanan (1986), Ronald Coase (1991), Douglass North (1993) and most recently, Oliver Williamson and Elinor Ostrom (2009).
The importance of institutional awareness is universal. It is fundamental to leading and managing truly successful change. All leaders, in whatever industry they operate, need to understand how the institutional matrix shapes and determines their ability to affect substantive and lasting change.
About the Authors
Dr. Salinder Supri Director and Chief Economist Enderung Consulting New York, NY.and
Prof. Karen Malone University of Medicine and Dentistry of New Jersey Newark, NJ.
The authors have worked at senior and executive levels in the U.S., the United Kingdom and New Zealand, leading major change management initiatives and developing strategy and policy in Healthcare, Medicine, Education and Economic Development. They have published together, and separately, on a variety of areas including Healthcare Policy, Institutional and Organizational Strategy, Economics, and Education Reform. Corresponding Author Prof. Karen Malone University of Medicine and Dentistry of New Jersey 65 Bergen St., Rm. 160 Newark, NJ 07107-1709 U.S.A. email: email@example.com