How Nancy Schlichting unites 23,000 people at Henry Ford Health System Featured

8:01pm EDT July 31, 2011
Nancy Schlichting Nancy Schlichting

Fundamentals. Vision. Strategy.

Nancy Schlichting knows they’re all business buzzwords. You execute on fundamentals, you strive for your vision, and you focus on your strategy. You teach your team about it, you reinforce it to them all the time. After some time, just hearing those words is enough to make your eyes glaze over.

But before you dismiss them as a few others in a long list of business clichés, Schlichting thinks you should reconsider. Every business needs guidelines, beliefs and practices that provide a template for how management and employees should operate on a day-to-day basis.

Without some kind of outline, a business has no direction. Which is why Schlichting structured her strategy and vision around the fundamentals that she wants to promote at Henry Ford Health System, the $4 billion health care network where she serves as president and CEO.

“We always start with our fundamentals,” Schlichting says. “We have seven pillars of performance that are really constant for us. Every year, we have to focus on our people, patient safety, service, growth strategies, our academic mission with research and medical education, a strong focus on the community and a strong focus on continuing to be stable financially. Those pillars really form our base. If we don’t perform well on those, there isn’t going to be money to make new investments and new strategic changes for the better.”

To allow everyone at Henry Ford Health System to execute on those pillars, Schlichting needs to put them at the center of all of her strategic planning, her vision for the future, and make them evident throughout her day-to-day interactions with her executive staff, physicians, nurses and other staff members throughout the 23,000-employee system.

What follows are some of the ways in which Schlichting promotes the system’s vision and strategy through all the avenues available to her, and some of the lessons she has learned along the way.

Get strategic

Though she runs a medical system, the way Schlichting and her leadership team form a strategic plan isn’t much different than the way a retailer or manufacturer might. Schlichting’s team identifies areas of competitive advantage, and tries to leverage as many ways as possible to accentuate those areas.

“When we focus on those areas of excellence, we try to take advantage of what we think are our areas of competitive advantage,” she says. “Frankly, it’s what any organization does — create a competitive advantage by trying to design and execute on strategies that others can’t copy easily. Then we try to take advantage of that model continually, always trying to figure out new ways to meet consumer needs, employer needs and community needs. It really gives us a great platform on which to build.”

For Schlichting and her staff, the market differentiators include the system’s medical group and insurance structure. Schlichting says Henry Ford is unique among area health systems in that it employs a salaried group of physicians in addition to private practice physicians under the organizational umbrella. The system also owns a health insurance plan with about half a million members, which gives Schlichting’s team an avenue to get closer to customers, major employers and community entities on the plan.

All of the information that the leadership team receives from the front lines helps the entire health system continue to identify and pursue the differentiators that will continue to ensure Henry Ford’s place as a leader in the regional health care field.

It’s a universal lesson that any business leader needs to learn when it comes to strategic planning: Stay in tune with what the market wants, and figure out new ways to give the consumers of your products and services what they need. That is how you turn customers into repeat customers.

“It’s isn’t just looking at the environment, it’s really looking at what is needed in the industry, looking at quality issues, service issues and access to the product,” Schlichting says. “It’s trying to focus on being comprehensive in your approach to business. That allows you to hopefully be proactive, as opposed to reactive, to the environment around you.

“You have to ask yourself what is specifically unique about your business, what you can create with the assets you have, what you can really try to achieve that is right for your organization. You have to have a vision for what has to be accomplished. If you have that vision, you can start to get creative around the strategies you need to form in order to get there. From my perspective, that is what we do here. We try to take full advantage of our organizational assets.”

Create a vision

Before you can plan to get somewhere, you have to know where you want to go. In that sense, a well-defined vision is the single foundational key to executing on fundamental principles.

The vision needs to outline goals that are ambitious yet attainable, and needs to be something that can link back to each person in the organization, so that everyone under your umbrella can feel a connection to it, and feel like their job contributes to the overall goal of realizing the vision.

Schlichting says corporate visions also need to have staying power. You can’t scrap a long-term vision for your company and reinvent the wheel every few months. Major crises, like the recession of the past few years, might force you to alter your goals. But unless your hand is forced to an extreme degree, you should strive to keep your vision consistent.

“The vision is hopefully something you can stay with for a period of time,” Schlichting says. “That’s because it has to be both inspirational and aspirational. The vision is typically not something you’ve already achieved. It’s something you’re working toward.”

At Henry Ford, Schlichting makes her vision personal for each employee by doing something very basic in concept, yet large in scale: She relates the customer experience to each employee.

“We’ve had a vision here for 10 years, and that vision is to provide the same quality of care and comfort that we want for ourselves and our family members,” she says. “What that has allowed us to do over the past 10 years was to really have a personal connection to a vision of excellence for every single person in the health system. There is not one individual working here at Henry Ford who doesn’t understand what it’s like to be a patient, or be a family member of a patient. It has allowed our housekeepers and dietary workers, our nurses and doctors, to all connect around that vision. It has been a highly motivating vision for us.”

Stay opportunistic

As foundational as your long-term vision might be, there will be opportunities to take an alternate path and explore a new opportunity. You can’t get so locked in on your goals that you can’t see an opportunity. The key is to know when to make a detour and when to stay the course.

Schlichting says the opportunities you act upon should ultimately help you realize your goals, though maybe via a slightly different route.

“You have to have perseverance and commitment to what your strategy is, but you also have to have some agility,” she says. “There are things we’ve done over the past 10 years that have been strategic — what we wanted to do is what we did — and other things that were more opportunistic, such as the acquisitions of Henry Ford Macomb Hospital and Henry Ford Medical Center – Cottage. Those were things that emerged as opportunities, and based on us having our antenna up, and us being agile and flexible in terms of things we thought would help the organization.”

Your ability to remain opportunistic is largely reliant on having an open mind and, within reason, an open wallet. If you want to have the latitude to make an opportunistic move, you need to save enough in other areas to develop a financial reserve.

“You have to be open to those types of opportunities, and some leaders are often not as able to be open like that,” Schlichting says. “So you do need to have a financial position that gives you some latitude to be able to finance these opportunities as they come along. The financial structure and the leadership position both need to have strategic and opportunistic elements, and afford you the ability to react and move quickly as the opportunity arises. You need the frame of mind along with the financial resources that are available.”

Learn to say yes

It’s one thing to have fundamentals. It’s one thing to develop core values, a vision and a strategic plan. It’s one thing to say you’re going to execute on all of it. But it’s entirely another to get all of your employees to buy in and work alongside you.

“Engagement” is another business buzzword that you’ve likely heard countless times before, but no matter the terminology you want to use, the need to have employees on board and moving in the same direction with you is a universal need in business. If you don’t have your employees with you, you won’t be successful.

You get your employees on board by enabling them to have a hand in helping your organization to realize your vision. And there is a three-letter Swiss Army knife of a word that you can use to empower employees in a variety of situations.

“I always tell our leadership that the most important word in my vocabulary is ‘yes,’” Schlichting says. “You don’t want to create a culture that is supposed to embrace innovation, or a culture that allows you to take advantage of important opportunities, unless you have that kind of view of the world. Because people don’t come to you twice. If they come to you with their exciting new idea that they thought through and are committed to and you say no enough times, people aren’t going to come forward anymore. You’re also not going to have people in the outside community think that you’re an organization that is open to new ideas and opportunities. It’s those kinds of messages that are important.”

That doesn’t mean you let everyone run free with their ideas. You still need your people to innovate in the same general direction. “No” is still an option, but one you should use only when the idea or suggestion does not fit. And if you tell someone ‘no,’ show them why you can’t use the suggestion.

“At the same time, you need to have discipline around the operating metrics, around performance strategies. You still need to have that fundamental discipline, but it’s also helpful to have an attitude that says ‘yes’ more than ‘no,’” Schlichting says.

How to reach: Henry Ford Health System, (800) 436-7936 or www.henryford.com

The Schlichting file

Education: Bachelor’s degree in public policy studies, Duke University; MBA in hospital administration and accounting, Cornell University

Schlichting on having a positive attitude: We all wake up in the morning with either an attitude of optimism or pessimism. I think it has to come from within. As an individual, you really have to be a positive person. And there are days when I act a bit more, come in on stage and perhaps acting more than I believe it. But you have to do that some days. Not to be unbelievable, but to be encouraging to others. We all have those points when things don’t go well, and those are the true tests for leadership. Because how leaders handle those tough times frankly are your defining moments. People watch us.

Schlichting on building a leadership team: It is probably the most important job of a leader, making sure they have the right team around them. And with the right team, it can make your life a lot easier, it can make things go very well and smooth. But with a team that is not engaged in that way, it can be very challenging. I think it starts with the values of the individuals. When I interview people for my leadership team, one of the first questions I ask them is ‘What do you stand for as a leader?’ Sometimes they look at me like I’m a little nuts, like they’ve never thought of it that way, and that tells me something.

Schlichting on internal communication: The direct manager is the most important person from a communication standpoint. We create tool kits and cascading information in the organization, and we have a communications team that I meet with every month. So we strategize about the messaging, about how we’re helping managers, supporting them, doing often with videos and tools that help them communicate effectively.