What Can Leaders Learn? What Can Leaders Do?

Health Care Wasn’t Safe For Patients or Caregivers Before COVID-19

By:  Ken Segel, Value Capture Managing Director

For years before COVID-19, our industry accounted for the largest number of injuries and illnesses related to work of any in the United States.  The scale of COVID harm to our teams as well as our patients has been greater because of our pre-existing weaknesses when it comes to safety and improvement.

Now, in this extraordinary moment, the forces and inspiration for change have been unleashed.  Clinicians and other healthcare workers on the front lines have demanded their safety and responded urgently and cooperatively to figure out what works for patients, and how to keep themselves safe.  They have blown past awkward and unclear top-down edicts and institutional boundaries to share and seek learnings.  They have shown that what really matters is what happens at the point of care, between human beings.  Leaders with humility and strength can seize this moment to help shape much better futures for their institutions in a post-COVID world.

As the immediate threat of the first wave recedes in a community, leaders can help their organizations leap ahead if cultural healing is fed by a new determination and discipline toward the habits of excellence, anchored by safety. The tag I’ve been using on social media posts during this time – “Leadership for COVID-19, Leadership Past COVID-19” – tries to capture this sense.  Of course, there are not bright demarcations to a post-COVID period.  Change starts now.

Here are just a few learnings I see to start the conversation.  I offer them humbly as leaders and frontline workers alike face life-and-death risk and decisions every day during the present crisis.

Safety Matters the Most. Start There.

When people don’t feel safe, they can’t do their best work.  Not even close.  Literally every American now understands this truth in their bones.  Conversely, when people in healthcare workplaces feel safe, they will give all they can.  Workers who know that their leaders are demonstrably committed to their safety and their patients’ safety, as a precondition of any other work, and not a tradeoff with other goals, are empowered to perform at their highest level.

For these reasons, safety has always been an ideal focus for leaders in a complex high-risk industry to dig in deep and focus on at the deepest levels with every individual who works for them.  It can be the anchor of high performance.  But only if leaders model the way in making safety an unarguable goal, and demonstrate it every day.  The number of healthcare leaders who led that way when it comes to workplace safety pre-COVID, sadly, could be counted on one hand.

Coming out of COVID-19, what deeply reflective conversations can leaders and their entire workforces go through to generate an actionable mutual commitment to ensure that we will all work together every day to drive harm to zero?  What vulnerability can leaders show, admitting that we weren’t ready to protect our teams, and that we will learn how to do better alongside them, every day?  This conversation must happen, action must be taken, even when we feel less globally threatened, because otherwise, harm will still occur every day.  A pact anchored in the deepest human aspiration to be safe, and to create safety for others – is the bedrock for powerful relationships and powerful performance.

Transparency and Rapid Learning Cycles.  Make Them Real.   

Since the seminal 1999 Institute of Medicine Report, To Err is Human, there has been an explosion of rhetoric about the need to report and share transparently information about injuries to patients and workers, their causes and solutions, so others don’t have to fall prey to the same injuries for the same causes.  There has been an explosion of duplicative data collection and data collection organizations with the word “safety” in their names.  But there has been precious little effective learning, little information getting to or used by front line caregivers, even from within their own organizations.  We haven’t led from purpose on safety, and we let bureaucracy, in our own organizations and outside, take over.  The loop isn’t being closed, so there is little learning, and still less improvement.

Now, in this COVID moment, front line caregivers, desperate to discover things that might help their patients and especially to keep themselves safe, are sharing and seeking lessons learned “in real time” from others doing the same work, across their own organizations, across artificial institutional borders, even across national borders.  My doctor colleagues have learned a lot from physicians in their fields from across the globe.  They are pushing the stories forward into rapid experiments that will build in rigor as time goes on.  The New York Times recently captured learning that emerged in near real time, about repositioning COVID patients and delaying ventilation.  To drive these learning cycles from people actually doing the work, they have in many cases blown right past top-down directives from institutional leaders that were not based on data, or learning-based.

In doing so, they are echoing other moments where the principles of high-performing organizations have burst forward in memorable lessons accessible to the general public.  When the American top-down and wrongly chosen battle strategy to fight the Iraqi insurgency in the early 2000’s wasn’t working, the field lieutenants took matters into their own hands.  They created a real-time learning network, where every patrol was structured as a learning opportunity, and reports were filed immediately and transparently for all the troops on the ground to learn.  Soon enough, the lieutenant network’s lessons and the strategies that emerged became the strategy for the conflict, with rapid learning a core component.

Transparency and real-time learning about harm that is contributed to and learned from by everyone, every day, is an anchor system not only for making safety as a precondition possible, but feeding the culture of commitment and excellence that drives belief and high performance.

How can healthcare leaders reflect on COVID with their teams and decide to fundamentally strengthen how they share and learn from safety incidents, everyone, every day?

Will We Reinforce The Hero Complex, or Commit to Habitual Excellence?  

One characteristic that has always gotten in the way of creating true excellence in safety in healthcare is the concept of heroism.  Americans are happy to hold front line caregivers up as heroes, because they often are, as we are seeing every day during the COVID-19 crisis.  The trouble inside our institutions is that the hero mindset in individuals can lead to willing self-sacrifice that can excuse conditions that unnecessarily place the caregiver in harm’s way, like lack of PPE, or lack of a way to get help when a healthcare worker confronts an unsafe condition.  (Sadly and incredibly, many healthcare workers even face gag orders preventing them from discussing their COVID-related safety concerns with patients or the public).  It can also lead to a love of “workaround” instead of problem solving, and a “cowboy” mentality where critical habits for excellence, like working in disciplined experimentation in teams, are ignored.  The bottom line is the hero complex can let leaders off the hook for excellence, and, in normal times, healthcare workers, too.

What conversation can leaders have with their teams coming out of COVID that celebrates their true heroism, but then turns the power of that heroism to even deeper habits of excellence, driven by the caregivers themselves, not top-down edicts?  The extraordinary teamwork we are seeing every day on the news gives plenty of platform.  They know they can be excellent under even the worst circumstances.  Seize it for better circumstances as well.  

A Final Thought

Toyota’s revolution and the modern operational excellence movement were launched coming out of a devastating recession after World War II, when the company’s future was on the line.  A pact between leaders and staff resulted in what was equal parts cultural – who do we want to be together – and operational — a commitment to be excellent by a disciplined approach followed by everyone, every day.  Alcoa’s turnaround in 1987 came when a new leader made a similar pact with every worker in the entire organization.  By making safety a precondition of all other work, and everyone working every day in visible disciplined ways to make safety a precondition, we can not only survive as a company but become the best in the world at everything we do … a model of habitual excellence.

We lost that Alcoa leader on April 18, 2020.  Paul O’Neill was Value Capture’s non-executive chairman and constant source of inspiration and guidance.  But as he would be the first to remind, the leadership compact he forged, and Toyota’s, remains open to all of us.

Who are the healthcare leaders who will connect with their teams to create their own equivalent revolution coming out of this crisis? I hope it is you.

Our Founder (Paul O’Neill) and His Playbook for Habitual Excellence [Video]

Recently, I went for a brisk 50-minute walk on a sunny morning and my companion the voice of the late Paul O’Neill as I listened to the audio from a video I’m sharing here. Thanks to my colleague, Vickie Pisowicz, for sharing it with me.

I listened to it and you can watch it here.

He was sharing reflections on Alcoa’s journey, but it’s a playbook for CEOs to follow.

Elements of this include the CEO:

  • Making a commitment that nobody should get hurt at work (the same could be said about patients)
  • State that you want to be the safest company in the world (and the best at everything that you do)
  • Stopping the use of the word “accident” (which makes it sound inevitable or something God wanted) and use the word “incident” instead
  • Realizing that only they can create the environment and the culture that allows people to do great improvement work and taking action toward that end
  • Visiting sites and making this commitment to workers
  • Saying that you won’t make anybody budget for safety improvement — you’ll find a way to pay for it
  • Giving out your personal phone number and tell employees to CALL you if the safety commitment isn’t being met by local managers
  • When you get that first phone call, thanking the employee and follow up immediately with the plant manager (or hospital CEO)
  • Note: word will spread that you are following up on your words — this will be a big benefit to your culture change efforts
  • Setting goals at the “theoretical limit” (such as zero harm) but do not “bludgeon” people with that goal — use it as an inspirational and aspirational goal
  • Encouraging root-cause problem solving instead of papering over problems
  • Practicing extreme transparency with information across the organization, including reports about injuries that start with the worker’s name (to humanize the situation and keep it from being just numbers)
  • Publishing employee injury data publicly on the company website
  • Learning to “ask questions like a third grader” and to keep asking “why?”
  • Creating a more egalitarian culture (questioning why executives get perks like free coffee and danish that are not offered to factory workers)
  • Focusing on safety is something that everybody can commit to — it’s “unarguable.” You’ll end up on the path to habitual excellence related to everything the business does.

“An organization is either habitually excellent… or it is not. There is no partial habitual excellence.”

Paul H. O’Neill, Sr. (1935 – 2020)

There’s more to it, but those are the things that come to mind without having taken notes during the walk.

What other key points or quotes stand out to you? Leave a comment on the post.

Listening to Mr. O’Neill, I realize he’s describing a system that’s built on principles. If you don’t share the principles (such as “nobody should ever get hurt at work”) then I wouldn’t expect his method to work. If you try to copy just part of the system (getting a goal of zero), I also wouldn’t expect this approach to work.

What would your hypothesis or expectation be if your organization got a new CEO who followed this approach?

Could a CEO who had been at an organization for a while change their spots and start following this approach?

My suspicion or assumption is that you’d have to be an outsider and new to the organization, as was Mr. O’Neill (technically he had been a board member of Alcoa, but coming in as CEO was his first job as a true insider).

What other reflections or thoughts come to mind from this video?

I admire the clarity of purpose that Mr. O’Neill had. I appreciate his approach and his true respect for every employee (going beyond their physical safety). He wasn’t just about words… it was also about action and leadership.

And remember this chart that shows how safety improved along with the Alcoa stock price (click for a larger view):

And safety continued to improve after his departure — a sign that this approach was not just due to one charismatic leader. Mr. O’Neill emphasizes that the organization and the people did this. He played an important role as leader (and he says the same thing about Dr. Rick Shannon who introduced him before this speech six years at UVa.

Here is my podcast with Dr. Shannon, also from 2011, about the time of this video.

Dr. Shannon was, of course, deeply influenced by Mr. O’Neill during his time in Pittsburgh.

Like Dr. Shannon, all of us at Value Capture continue to be deeply influenced by the words and actions of Mr. O’Neill and we take seriously the responsibility to keep the charge.

A version of this was originally published at LeanBlog.org

Podcast Trailer: Habitual Excellence, presented by Value Capture

Episode Synopsis:

This trailer provides a preview of the types of voices and content that you’ll hear in our podcast. Appearing are Geoff Webster, Paul H. O’Neill, and Ken Segel. The host is Mark Graban. You’ll hear a preview of the key themes of the first few episodes, along with powerful leadership principles that are required to create a state of habitual excellence in your organization.

Scroll down to see how to subscribe and to read a transcript.

Click to visit the main Habitual Excellence podcast page.


Future Episodes:

In the first episodes, you’ll hear discussions such as:

  • Ken Segel, on Zero Harm and Theoretical Limits
  • Geoff Webster, on Habitual Excellence
  • Tony Millan, on Preoccupation with Failure (High Reliability Organizations)
  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)


To make sure you don’t miss an episode, be sure to subscribe today!

Listen on Google Play Music


Habitual Excellence Episode #3: Tony Milian on “Preoccupation with Failure”


Episode Synopsis:

Welcome to the third episode of Habitual Excellence, presented by Value Capture.

Today, Tony Milian, a senior advisor with Value Capture, talks about High Reliability Organizations. One important trait of HROs is a “preoccupation with failure” and Tony explores that theme in a conversation with Mark Graban. What are some examples of this trait and how can this help us in our journey to zero harm?

Here is the video that Tony mentions in the podcast:

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In future episodes, you’ll hear discussions such as:

  • Ken Segel, on Zero Harm and Theoretical Limits
  • Geoff Webster, on Habitual Excellence
  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)
  • Bill O’Rourke, retired Alcoa executive
  • More interviews and discussions


To make sure you don’t miss an episode, be sure to subscribe today!

Listen on Google Play Music

Automated Transcript (click anywhere to play):

Habitual Excellence Episode #2: Ken Segel on Leadership in the Covid-19 Era


Episode Synopsis:

Welcome to the second episode of Habitual Excellence, presented by Value Capture.

Today, Ken Segel, co-founder and managing director of Value Capture, reads a blog post that he recently published. It’s a thought-provoking examination of what’s needed from leadership if we’re going to create safety in healthcare organizations.

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In the next episodes, you’ll hear guests including:

  • Tony Millan, on Preoccupation with Failure (High Reliability Organizations)
  • Ken Segel, on Zero Harm and Theoretical Limits
  • Geoff Webster, on Habitual Excellence
  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)
  • More interviews and discussions


To make sure you don’t miss an episode, be sure to subscribe today!

Listen on Google Play Music

Automated Transcript: (Click Anywhere to Play Audio)

Habitual Excellence Episode #1: Paul H. O’Neill Sr.


Episode Synopsis:

Welcome to the first episode of Habitual Excellence, presented by Value Capture.

Today, we honor the memory (and the words and actions) of Paul O’Neill, Sr., the founder of our firm, Value Capture. Mr. O’Neill passed away April 18, 2020 at the age of 84.

This episode shares the full audio from a 2009 speech that Mr. O’Neill delivered titled “The Irreducible Components of Leadership Needed to Achieve Continuous Learning and Continuous Improvement.” He talks about the fundamental components of leadership that are necessary for an organization to achieve greatness. The speech is also available on YouTube.

The speech was delivered to healthcare CEOs at an event sponsored by the Tennessee Hospital Association and BlueCross Blue Shield of Tennessee. In the speech, Mr. O’Neill shares what he learned during his career, which included 13 years as CEO of Alcoa, and serving for two years as the Secretary of the Treasury for President George W. Bush. He later co-founded the Pittsburgh Regional Healthcare Initiative and was a tireless advocate for habitual excellence in healthcare through Value Capture and other organizations.

I think you’ll find his words, and the calls to action for CEOs (and other leaders) to be timeless and compelling to this day, and beyond.

Scroll down to see how to subscribe and to read a transcript.

Click to visit the main Habitual Excellence podcast page.

Upcoming Episodes:

In the first episodes, you’ll hear discussions such as:

  • Ken Segel, on Zero Harm and Theoretical Limits
  • Geoff Webster, on Habitual Excellence
  • Tony Millan, on Preoccupation with Failure (High Reliability Organizations)
  • John Collodora, on Sensitivity to Operations (HRO)
  • Paul H. O’Neill, on The Irreducible Components of Leadership (audio from a 2009 speech)


To make sure you don’t miss an episode, be sure to subscribe today!

Listen on Google Play Music

Automated Transcript (Click Anywhere to Play Audio):

Principles – The GPS of Pursuing Excellence

“Lean,” derived from the customer-focused, waste-busting Toyota Production System, is the performance improvement methodology Value Capture utilizes in working with clients. Without an explicit principles base, however, research and experience teach that improvements gained only from lean tools are neither sustainable nor systemic.

So what do we mean by “principles-based?” What does that look like, day in and day out?

Let’s start with what a principle is. A principle is a foundational rule, which produces inevitable consequences — whether we think it will or not. Gravity is an easy example. If we toss a ball into the air and we ignore gravity, the ball will fall and might hit us in the head. If we adhere to and act according to the principle of gravity, we will catch the ball and save ourselves a sore head.

Let’s change the example to the most fundamental principle of human interaction:  Respect for Every Individual. (This is also the foundation of the Shingo Guiding PrinciplesTM). Respect is a feeling, essentially, not something concrete. It is usually manifested in a physical way, i.e., a behavior. And the collective behaviors of an organization demonstrate its culture.

For example, if you see a person speaking loudly and pointing a finger at the face of another person, it’s possible Respect is not a core principle of this organization. If you are walking in the lobby and you see a person stop to pick up an apple core from the floor, or you see someone on the shop floor put the “wet floor” sign by a spill, does that demonstrate Respect for others? If you regularly observed these examples, would you think that organization has a culture of Respect, or not?

Principles not only help guide behaviors, they can help guide decision-making. When opportunities or difficulties arise, consider the path that most closely aligns with your principles. If Respect is a core principle, for example, and you need to decide whether to buy a new piece of equipment that produces at a higher rate, but has a higher risk of operator harm, Respect would indicate that you forego this purchase.

Key Questions – What are the core principles upon which your organization is built? Do behaviors you observe, the culture, manifest those principles? Is there a gap between the observed culture and core principles? If you’d like to share any thoughts with us, please email Melissa Moore, mmoore@valuecapturellc.com.

Shingo Principles and Workshop

Ready to dig in and gain a practical understanding of what the Guiding Principles look like in the workplace? Registration is now open for the foundational workshop, Discover Excellence, taking place October 22-23, 2020, in Pittsburgh, Pennsylvania. Learn how the Shingo Model and Guiding Principles provide a structure on which to anchor improvement work and with which to close gaps to work toward sustaining a culture of organizational excellence. Learn more here, or contact Melissa Moore, mmoore@valuecapturellc.com to register.




A Study in Principles That Drive Habitual Excellence

Geoff Webster published A Study in Principles That Drive Habitual Excellence, for the Shingo Institute, in which Geoff lends personal insights to the recent Johnson Institute for Responsible Leadership study of the leadership values of Paul O’Neill.  Geoff provides examples that demonstrate O’Neill’s principles in action.  For example, Geoff writes of the principle, “Respect Every Individual”:

“You may know that Paul used zero worker safety incidents as an anchor of Alcoa’s transformation.  You may not know that Paul specifically selected safety because it is a fundamental pre-condition for respect.  ‘Almost every organization has in its annual report the words ‘people are our most valuable asset,’ but looking at their safety data they have no evidence that it is true.’  By selecting the elimination of worker safety incidents as a pre-condition, and not as a priority to be traded against other values, Paul lives respect every day.”

Geoff concludes his post by saying, “It is a valuable read for any leader pursuing habitual excellence in his or her organization.  I hope this publication from the Johnson Center, and these informal lessons I’ve learned from working with Paul, will add value to your understanding of the Shingo Guiding Principles and to your journey toward habitual excellence.”

“We Have Gotten Too Far From Our People and the Core Processes They Perform Every Day”

Ken Segel relays insights learned by executives of a large academic health system when they went to the frontline to silently observe worker/patient interactions, in this post published on Mark Graban’s Lean Blog.

Insights from Davis Health CEO Vance Jackson on Leading Lean Transformation

Vance Jackson, President and CEO of Davis Health System, talked with Mark Graban in this LeanBlog podcast. Vance discusses how he and his leadership team learn by going to gemba mindfully and purposefully, how A3 problem solving really clicks as a key to developing people to deliver highest quality to patients, safety as an essential focus, the importance of standard work for leaders and staff, and the development of the Davis Way. Of the Davis Way, Vance notes, “It’s more than Lean tools, it’s a frame of mind, it’s a principle that we follow.”

Please listen to hear how this CEO and health system are leveraging principles to better understand their work, and how to continuously learn and improve their work, so Davis patients experience great care.

Shingo Principles + Gritty Resilience = Sustaining a Learning and Improvement Culture

“You have to be resilient and gritty in your pursuit of [safety]. It’s every event, every day, with people committed to understanding what happened and a commitment to make sure it doesn’t happen again,” said Dr. Richard Shannon, Executive Vice President of Health Affairs at the University of Virginia Health System, in his keynote address at the 2017 Bay Area Performance Improvement Network Executive Summit.

Value Capture Principal, Geoff Webster, published this article in the Shingo Institute Blog, describing the key role Dr. Shannon’s principle-based leadership plays in UVA’s achieving lower mortality, higher patient throughput, reduced waste, better supply management, safer patients and staff, as well as UVA’s best financial year ever (2016).

With CEO Turnover at Record Levels, the Traditional Playbook May Not Keep You on Top

At a time when the healthcare market is finally supposed to reward value, the vast majority of health system leaders are responding instead with moves from the traditional playbook. Across the country, we are seeing waves of morale-crushing layoffs, the addition of “facilities charges” to procedure charges without providing any additional value, and mergers and acquisitions intended to increase pricing leverage. At the vast majority of places, what Washington (and patients) have been hoping for – true care integration to improve outcomes and eliminate waste – remains a side show to the real strategy.

Is Anyone Surprised?

No keen market observer should be surprised. Policymakers may point to modest new financial incentives for doing better by patients, but most health care leaders are feeling only margin pressure. And when healthcare CEOs feel margin pressure, they go to what they know – cut costs and look for pricing leverage. That’s always been what shows your board you are making the tough financial decisions. Also, leverage based on scale works in local health care markets (a fact which the feds have consistently ignored), and cuts have been what moves the numbers toward black when they hit the financial statements (if we ignore the medium and long term consequences).

But will the tried and true be enough this time? Whether or not Washington “wakes up” and puts the real pressure on, the signal sent by record CEO turnover and other tea leaves suggests that if CEOs want to keep their seats, they should consider moving value-creation for the patient from side project to “the” strategy.

The Peril of the Traditional Playbook for CEOs

Here’s the evidence, followed by a single powerful step for CEOs and their teams to get refocused on “the right stuff.” See if you agree with my description of the peril for CEOs, and my suggested initial Rx.

First, if you’re not the biggest fish in your pond, you can’t win with cuts or leverage.

  • The big fish have more capital than you do, so you start with a deficit at the leverage game.
  • Because job cuts destroy value from the minute they are executed, by profoundly harming morale and leading employees to hide process problems and inefficiencies, they hurt you – not help you – over the medium and long run. You are eating your seed corn when you need to be generating increasing amounts of cash flow internally.
  • Consolidation is increasingly likely to cost you your job. New ACHE data show dramatic increases in CEO turnover in 2013, to the highest levels ever measured. Of course, it’s the smaller players who are moved out first.

Second, even if you are the big fish in a local market, the top-down leverage strategy is not the right thing to do, for anybody, and will leave you without the knowledge and depth you’ll need if payers really figure out how much rxprednisone waste is in the system.

  • Playing the leverage game distracts your team from the job of getting it right for patients.
  • It sends morally ambiguous signals that rob your staff and employees of a sense that they work for a place that does the right thing.
  • Exploiting your local market position may increase revenue for now, but it leaves payers, communities and individuals reeling under unsustainable costs and looking to change the status quo.
  • Job cuts damage your ability to sustain performance for the same reasons they hurt smaller players.
  • By relying on leverage and job cuts instead of process excellence, you are depriving yourself of the chance to build the knowledge and skill to survive when payers stop paying for even more of the waste in the system. Think about it. If the past couple of years’ 5% drop in revenue sent your institution into a crisis, will you know how to thrive when you have to increase value to patients by 20% to survive?

What’s Held Us Back?

Why haven’t more leaders bet on an all-out embrace of creating value for your customer as THE strategy already?

Most leadership teams have funded and cheered for improvement work, but never committed to the kind of deep personal involvement and leadership required to drive meaningful amounts of waste out of the system as a consequence of getting the process right for the patient. So “improvement” has never really moved the needle at most places, leaving leaders not knowledgeable or confident enough (ironically) to bet on that approach now.

A Single Step That Can Change Everything

To begin to overcome that legacy, here is a single step CEOs can take to start getting themselves focused on the playbook that should win in the long term:

Get out and silently observe one of your key business processes end to end, through the patient’s and then the staff’s eyes. You will see that at least 50% of the total time, materials and effort invested by your team does not add value to the patient, yet the staff will likely be very stressed by process problems that they don’t have support to fix. Unlocking that 50% opportunity is your largest business opportunity, and it can only happen by focusing your leadership and support squarely behind your people to do it. If you don’t know how to make your staff feel professionally safe while you observe in this way, or don’t know how to look for process problems and waste afflicting your teams’ ability to serve the patients, find an experienced coach with “eyes to see” to help you. Take just this one simple step to start, and then commit to the full journey suggested by what you learn, and there is hope you could be in the CEO seat, and feel good about it, for a long time.

What is Lean and what results can you produce with it?

Properly executed as a core of a complete business strategy, “Lean” or “Deep Lean” can produce a trifecta for a healthcare organization – dramatically improving quality, financial results and satisfaction among both patients and staff. However, most hospital “Lean” implementations fall far short of what is possible, and some work labeled “Lean” ignores key principles needed for success.

What is “Lean” and What Results Can We Produce With It?

“Lean” is the too-simple label applied to the ideas, principles, and operations tools developed first in post-war Japan by Toyota and then competitors that have spread across the globe and from industry to industry. When well executed, “Deep Lean” engages everyone in the organization around a set of principles that allow them to design and improve all processes to have the stability and structure to meet customer need without error, without waste, and with the least possible lead time (leading to greater throughput).

Is Lean a Quality Improvement Methodology or a Business Strategy?

Most early hospital efforts failed for predictable reasons – chiefly that leaders thought Lean was something to be implemented solely in operations, below leadership levels, as a series of quality improvement projects – all of which lead to limited and decaying impact. Lean inexorably reveals problems and waste and tensions the organization to work differently as a complete system to eliminate those conditions – if leaders aren’t keenly focused, managers are forced to “dumb down” and weaken Lean as a matter of self-preservation. Even worse, many leaders “deploy Lean” solely to achieve cost savings, without providing the staff involved with professional safety. This poisons the well for far-larger ongoing gains in quality and cost. Happily, in recent years, a few health systems have undertaken much more significant performance transformations, centered on Lean principles, with leaders “leading the learning” and anchoring it to their business case in all dimensions. Not surprisingly, they are achieving more significant and durable results.


Between 2003 and 2009, Thedacare in Appleton, Wisconsin improved its quality measures while moving its operating margins from 2.5% to 6%, increasing its bond rating from A2 to A1, and increasing cash on hand by $105 million. At Thedacare, Deep Lean is not a project, it is the way work is done. Denver Health, a public hospital system, reports improved quality, improved morale and $45 million in documented savings that have allowed it to avoid a single layoff during the current recession. At the Hospital of the University of Pennsylvania, work supported by Value Capture but driven by the nurses and physicians of the oncology units saved 28 lives and $2.2 million and was documented by CNN as a model for what “true health care reform” should be.

Where Should Lean Fit As Part of a Comprehensive Hospital Strategy?

Deep Lean is most powerful when it is deployed as part of a comprehensive plan to sharply increase the performance of a hospital or health system. Chances for success are increased dramatically when leaders build a foundation for Lean first, with such building blocks as values-centered goals to anchor the process for staff, transparency to create the right culture for problem solving and rapid knowledge transfer, and giving everyone “eyes to see” waste and problems in process design. (This leadership framework is the focus of a seminar for CEOs and those who wish to become CEOs offered by leaders from Thedacare, Value Capture and other proven peers and thought leaders.)

What Are a CEO’s Keys to Success With “Lean”?

1. Frame it in your mind as a whole-organization leadership system, not a set of quality-improvement projects and tools.

2. Be eager to “lead the learning.” Thedacare’s President Kathryn Correia says “How can I lead what I don’t know?” Being in front of the learning lets you be more confident about what to do next, and also models the core behavior you need from everyone.

3. Define the measures of success (quality/safety, cost and lead time/throughput) and maintain the focus on customers and business value on all those dimensions. Lean correctly focuses on radically improving the processes that produce the results, but the leader has to make sure people are paying attention to the results, through regular checks, reviews and consultations.

4. Go to “Gemba” say the Japanese – where the work is actually done. Lean will help you focus the whole institution on where the value is actually produced in the organization, the front line, but only if you consistently model getting there and seeing, asking, listening, learning and coaching.

5. Focus on maintaining a safe environment – emotional, professional and physical. Lean forces a lot of problems into the open that normally just “flow on by.” Each layer of management below you will be very threatened if you are not actively generating positive energy around the problems “surfacing” and modeling the energetic engagement with Lean principles-based problem solving.

6. Be deeply involved. Obviously, there is a lot of “doing” that others will lead, but no staff person should have cause to think you have “delegated” Lean. This is a critical mistake most hospital CEOs make. Paul O’Neill, our chairman, says “show me a company that brags about its equal opportunity office, and I will show you a company without equal opportunity.” The same is true for Lean – it needs to be “the way we are learning to run our business, starting with me.”

7. Coach, encourage and support – especially your direct reports (all of them need to be deeply involved). The feel in the executive suite should be of you putting your arm around each member of your team, saying “this is the way we are going. It’s not going to be easy, but we’re going to get there together. Now let’s have at it.”

8. Establish an incentive system – recognition first (and always maintained); and shared financial incentives once you can confidently base them on true value creation vs. gaming and sub-optimization.

9. Regular communication, usually with a concrete teaching and support focus.

10. Always work to draw more people and areas into the doing. And nurture the ideas of the doers!