By Joe Flower

2012 and 2013 present an opportunity for health care executives to produce significant change. If we hope to be, as Buckminister Fuller said, “Architects of the future, not its victims,” we have to change the way we think in specific ways.

How do you learn to “Think Different” as Steve Jobs’ famous ads put it?

Let’s think about the structure of thought for a moment. The great experimental psychologist Daniel Kahneman, in his recent book Thinking, Fast and Slow, shows how much of our thinking and decision making is driven by illusions and assumptions, such as the “illusion of validity” (the false belief in the reliability of our own judgment), the “availability bias” (a biased judgment based on memories that are more easily available or more vivid) and the “endowment effect” (the tendency to value something more highly when we own it than when someone else owns it).

This makes sense. Kahneman’s analysis resonates strongly with my experience working with executive health care teams, including providers, health plans and suppliers, and with governments in North America, Europe and China over several decades. Smart, seasoned executives can make seriously poor judgments, especially when the environment changes.

Curiously, these illusions and biases and assumptions are driven by our experiences. So being more experienced does not necessarily exempt us from illusion, unless something in our process constantly and directly tests the results of our judgments (as, say, a robust retail market does on price setting). Even if the judgments are correct, they are based on an environment: in the jungle or the savannah, in a controlled market or a retail market, in a risk-bearing business arrangement or an endowed business arrangement. When our environment shifts, the illusions and biases and assumptions persist, even though they may be dangerously out of date.

We are in a rapidly shifting environment. Over the next several years, all health care leaders will be called on to make numerous strategic decisions and tactical choices that will be fundamentally different from decisions they are used to making. But they will be making those decisions with a mental apparatus formed in the old environment.

A Thought Exercise

How do we rethink our assumptions? How do we approach the unfolding situation with a continually fresh mind?

Here is a basic and enormously useful thought exercise. Take some time to write down a number of basic facts and beliefs about your organization, anything from facts such as “We own XYZ Homecare” to opinions such as “Tom’s a lousy communicator.” Then take one of these “truths” and find several ways to form an opposite of it.

An opposite of “We own XYZ Homecare,” could be “We don’t own XYZ Homecare,” “Our crosstown rivals own XYZ Homecare,” “XYZ Homecare owns us,” or “We keep XYZ Homecare’s assets but farm out the management,” or even “The business we now think of as ‘homecare’ disappears and becomes something else,” for instance.

The opposite of the opinion, “Tom’s a lousy communicator” could be “Tom’s a great communicator,” “I’m a lousy listener to Tom,” or “There’s really no need for Tom to be a great communicator.”

Entertain one or another of these opposite assumptions for a while. Treat it as if it were true. Assume that in some way, it

This is not a test of your original assumption, but a way to ferret out different assumptions and give them room to play in your judgment. Your original assumption may be correct, or it may be correct for now, or it may be as correct as some of its opposites. Maybe Tom really is a lousy communicator, but you’re also not so good at hearing what Tom is on about, and in Tom’s job it’s not so important that he be a good communicator. In making your assumptions explicit and overturning them, you can find other truths — and in a deeply shifting strategic environment, we will need to find lots of new truths.

Overturn Assumptions

In this year of thinking dangerously, here are some assumptions to entertain that may be counter to the way you are thinking now. Try them on for your organization and your environment. See if the act of taking them, experimentally, as true turns up other thoughts that might add to the power of your judgment in the changing environment.

Assume brevity. Assume that your current product lines, business models, revenue streams and business structures have a short half-life, that they are not permanent but will disappear. Many businesses (such as consumer electronics) have this assumption built into their DNA. In health care, we make the opposite assumption: If we have a cancer program, if we make our margin on the employer side, if the sleep center is a good revenue stream, we assume permanence until proven otherwise. Assume brevity — actively search for, create and incubate alternatives.

Assume common ground. Assume that your business adversaries and rivals can be allies. The health plans, your crosstown rivals, the city government may be making life difficult for you now. But under different business assumptions, for particular product lines, revenue streams or business structures, your strongest rivals may be your natural affiliates.

Assume all form is classical. If you are thinking of some new business direction, something that seems radically new to you, assume that somebody somewhere is already doing things this new way, is doing it well, and has learned something about how to do it. Assume that, rather than start from scratch, you can beg, borrow, pirate, buy or copy their expertise and experience — and then improve on it.

Assume new capacities. Assume that your organization does not have the capacities that it will need in its evolving environment.

Assume new abilities. Assume that your organization has latent abilities to learn, change and create that you have never tapped; that it is possible to tap them; and that you could learn how from other organizations.

Assume heterodoxy. Assume that there is no one right way to do health care, even for you to do health care in your market with your organization, but many partially right ways.

Assume exotic provenance. Assume that the answers are not all in health care. As the business environment changes, we will increasingly find that we can learn things from other industries, that other industries represent a “target rich environment” for new business ideas, revenue streams and risk structures that we can use in our organizations.

Assume the fruitfulness of challenge. Assume that a leader’s most important task is to pose the unanswerable questions, the true challenges, to subordinates. Any question that actually has an answer is a technical question, not a leadership question. Leadership deals with the unanswerable, with where we could be and where we might go. Being the smartest person in the room and having the right answer is the smallest part of the job — and can actually get in the way of finding the best answer and the greatest intelligence the organization can manifest.

Assume curiosity. Curiosity is much more valuable than answers. Questions are far more useful than fixed opinions. Foster curiosity in your subordinates, in your customers, in your allies and potential allies. An organization displays and feeds curiosity by starting pilot programs, fostering new product lines, seeking out new allies and relationships, then seeing what works and pruning the rest.

Assume ruthlessness. Don’t fall in love with what you create. It’s a new environment. You have to try new things — and you have to kill off what does not work.

Assume competition. Assume that in a changing business environment, if an opportunity shows up, someone will take it. It could be you or it could be a competitor. The opportunity could be something not invented yet in your market, or it could be something you already do that someone else finds a way to do better, faster or cheaper.

Assume the bottom of the pyramid. Assume that there are opportunities on the low end, that there are ways to find margin even serving the least well-insured and the least well-employed. The reason is simple: The changes in the health care business environment are likely to increase, rather than decrease, your exposure to the low end of the market, and to decrease the ways that you can offset losses in serving it. You have to find margin, and you will not find it if you assume it is not there.

Assume ignorance. Assume that you do not know enough about your own organization and its environment to make the best decisions: how much particular processes cost you, which of those costs are flexible, which are even unnecessary, where your revenue streams actually come from, who are the true decision makers both in incurring costs and in becoming customers. “Big data,” the ability to drill down into the masses of information your organization produces and come up with answers to such questions, could be your friend.

Assume decision-making from ignorance. Assume that you will never really know enough, and you will have to make big decisions anyway.

Assume that it’s always a decision. Assume that to make no decision, or to delay a decision, is itself a decision.

These are a few examples of the ways we must continually overturn and test our thinking, expose our illusions and bring a fresh mind to our strategic judgments. No matter how smart or how experienced, the mind whose expertise was formed in business models of the past decades is ill-equipped to make judgments in the Next Healthcare as it forms and re-forms over the coming several years. When the mind of the leader learns to change first, then the organization can learn and change.

With nearly 30 years’ experience, Joe Flower has emerged as a premier observer on the deep forces changing healthcare in the United States and around the world. His new book, Healthcare Beyond Reform: Doing It Right for Half the Cost, will be published in May 2012 by Productivity Press.

This article first appeared in Hospitals and Health Networks Daily.