In my experience, organizing disruptive transformational efforts is very difficult. I learned this first-hand at IBM with efforts like the Internet initiative in 1996 and the Linux initiative in 2000. Given that the organizational complexities go way, way up with the size and scope of the initiative, I am not surprised how incredibly difficult it has been to try to bring about the badly needed transformation of healthcare across the whole country.
A transformational initiative is subject to very different organizational dynamics from more incremental ones. With incremental initiatives, you are looking to improve something that already exists in the marketplace - e.g., better products and services, higher customer satisfaction, increased overall efficiency. Because you are improving something with a history, there is lots of information that can be analyzed to estimate the impact of the improvements on the business. You can make a case for the improvements based on quantitative, fact-based, rational arguments.
Not so for initiatives based on disruptive technologies or ideas. Disruptive transformations are, indeed, disruptive. They are a break from the past, either because past approaches no longer work and are getting us into deep trouble; because a new technology or idea now offers us much better opportunities; or both. But, while the changes might be absolutely essential, it is important to keep in mind that you are asking people to move from something that, while imperfect and flawed, they are familiar with, into unknown, most likely uncharted territory.
Change is very difficult, even painful for many people. They worry what the impact of the change will be in their work and life. They have lots and lots of questions, but you cannot give them good answers, because you don’t really know what lies ahead. You have ideas, hopes and expectations, but because the changes are disruptive in nature, it is hard to predict what will really happen with any reasonable degree of certainty. You are essentially asking people to come on a journey with you, and trust that you will learn as you go and change course as appropriate.
It is thus far more difficult to promote and defend change than to exploit people’s uncertainties and fears to oppose and make the case against it. Many will oppose change because they have vested interests in the way things are now, even if we might be heading for trouble or worse down the line. Let’s not forget how tribal and competitive we humans can be. Those people and organizations with strong vested interests will fight the changes tooth and nail. Those that have the most to lose as a result of the transformation will come up with whatever arguments they can muster to try to kill the new initiative.For example, when we launched the IBM Linux initiative, some of the companies for whom Linux was a competitive threat went on a ferocious attack. One famous CEO described Linux as akin to communism, as well as a cancer. The attacks against Linux and the companies that embraced it continued for years. There have been lawsuits against IBM and other supporters of Linux. Any business embarking on a transformative initiative can expect similar irrational, death panel-like attacks from those willing to do just about anything to kill the initiative.
Then there is friendly fire. Not every one in your own organization will support the disruptive innovation. This often happens because the new initiative will likely draw funds and attention that they would rather have for their own projects. In addition, it is possible that the new initiative may actually compete against, and eventually cause the demise of their own project. Needless to say, anyone feeling so threatened is not likely to be among the early supporters of the new initiative.
I often get asked if a business needs to go through a major crisis in order to successfully reinvent itself. In particular, would IBM have embraced the Internet, Linux and other major disruptive, market innovations if it had not gone through a near-death experience in the early 1990s?Few companies survive the kind of crisis IBM went through. Fewer still not only survive, but are able to transform their culture and re-invent themselves to the degree IBM has. In a period of roughly five to ten years, IBM went from being the very model of an inward-looking, secretive company that pretty much built everything by itself, to become a leader in open, collaborative market initiatives. Its new culture was almost diametrically opposite to its previous one.
Such a relatively fast cultural transformation was only possible because the whole organization was able to pull together in one direction. While not impossible, it is hard to imagine that any organization would do so unless its survival instincts trumped all the other traits that cause organizations to fight change. Staring at the abyss tends to sharpen your survival instincts. As Samuel Johnson famously observed, Nothing focuses the mind like an impending hanging.
In many ways, IBM was lucky that its change of fortunes was so sharp and dramatic that it had no choice but to face the painful realities of reinventing itself or dying. Companies like General Motors, whose decline has taken place over a long period of time, were able to pretend that things were OK and thus continued to postpone the painful actions they needed to take.
GM’s share of the US market was over 50% at its height in the early 1960s, and has been steadily but slowly declining ever since. With its US market share under 20% last year, and a major automotive industry crisis underway, GM was finally forced to implement the long overdue restructuring of its business. GM will likely survive, but it remains to be seen if the company is able to return to its former position of leadership.
Which brings us to back to healthcare reform. Just about everyone with no political ax to grind who has looked at the state of healthcare in the US has concluded that its practices remain frozen in decades-old models that no longer work. Despite health expenditures that are significantly higher than those of other industrialized countries, the US performance has been steadily declining when compared to these countries on key indicators of health outcomes, including quality, access, efficiency and equity. Because the decline has been slow, steady and spread out over decades, the country has been able to postpone the actions it inevitably must take to avoid a massive crisis.
But not for much longer. Something must be done. The US cannot continue to fall further behind other industrialized countries in healthcare performance without it eventually having a serious impact on economic competitiveness and job creation. A decline in global competitiveness will eventually turn into a serious national security issue.
There is pretty much a consensus among experts that we must develop a more holistic, information-based healthcare system, adopting the kind of systems approaches that other countries have already started to embrace and that have enabled other industries to significantly improve their productivity and quality. This will take time, and must happen in an evolutionary way because of the complexities involved. But it will never happen with our present, fragmented healthcare industry.Healthcare reform is an absolutely necessary first step to get the evolution going. It is the equivalent of finally getting your products to market, learning from experience, and continually improving your offerings. These first steps are often the most difficult, when the new initiatives are in their most fragile, vulnerable stage. But without them, the steady, slow decline will continue, eventually reaching the stage when the crisis can no longer be ignored.
Given the acrimonious nature of our healthcare debates, it would appear that a significant fraction of the country and of its political leadership is not convinced that a crisis is looming and change is needed. They feel that there is enough runway left before we hit the abyss, and are perhaps hoping that by then they will be gone and it will be somebody else’s problem. For the sake of those future generations that will inherit whatever we do or not do today, let’s all hope that we can finally get going with healthcare reform, so we can begin to move in the right direction. Disruptive transformation is hard for people – but systemic collapse will be a lot harder on us all.