by Jason Girzadas, Principal, National Managing Director, Life Sciences & Health Care, Deloitte Consulting LLP
Professor and economist Irving Fischer once stated, “Stock prices have reached what looks like a permanently high plateau.” While on the surface this phrase might seem fairly trivial, it has actually been burnt into many history books. Why? Because it was 1929 and Professor Fischer said this just before the stock market crashed and the country plummeted into the Great Depression.
In my travels and conversations with our life sciences and health care clients, I hear a multitude of future strategies – frequently aimed at the 2020 timeframe – from leaders who are trying to predict the future of health care. Some prominent examples of these “future visions” include:
- The empowered consumer: Consumers will be “empowered” and carry high-deductible insurance plans; they will be personally responsible for navigating the world of health care equipped with enabling tools and information
- The perfectly managed (and paid for) population: Our health system will be defined by large and, mostly virtually integrated, care systems/teams that are paid (accountable) for actively managing the health of a population
- The big data panacea: The future world will be transformed by massive databases compiled from all sources that will be curated and analyzed to unlock insights that create breakthrough innovations that will improve costs, improve quality and safety
- The seamless and unending technological network: The future will be defined by ubiquitous mobile and social technologies that allow for the virtualization of care and massive changes (improvements) in service levels and personalization
- The iron fist of government: Regulatory pressures by federal and state bodies will continue to build, and more control will be wrestled away from the private sector
- The weakened fist of government: Heightened budget pressures will limit the ability of government to sustain its current roles in health care overall. As such, we will see governments increasingly backing away from health care funding and providing care
- The personalized medicine scenario: Life sciences and med-tech organizations will lead the transformation of the industry to one where personalized medicine is a widespread reality
- The status quo scenario: Change occurs on the fringes, costs meander and the system only makes incremental improvements with the current industry stakeholders generally holding their positions
Do you recognize these visions of the future? While on the surface these predictions may not seem too far-fetched, I often think back to Professor Fischer and am reminded that no one can accurately predict the future.
So why try to do so now?
The trap that I see many leaders and organizations fall into is that they too frequently attempt to define a single, cohesive future vision despite the proliferation of trends and industry dynamics. The predictions are often linear – based on a single world view – and can create a false goal for a company and waste the time of management teams and boards of directors.
So what’s the alternative? Executives should develop a future strategy centered on scenario planning. In a world of increasing complexity and rapid change, the goal should be to identify several plausible scenarios (alternative future worlds) and identify the strategies that are core across all of them—no matter which world view plays out and turns into reality. It’s not about debating which one future vision is best or more likely.
Scenario planning also allows management teams and boards to identify important elements of a strategy that are contingent on a particular world view or vision materializing. This separation of “core” and “contingent” elements of a strategy can bring tremendous clarity, focus and alignment, as well as improve the efficiency of leadership teams who often get bogged down in strategy development initiatives.
Instead of endless debates using precious time to settle on a single world view, leaders can take an alternative approach, defining the plausible future worlds – which can and likely will include favorable and unfavorable scenarios – like the ones mentioned above.
Once organizations define the array of plausible future visions, then they can go about the important – and demanding – work of determining where they will compete and how they will win across a multitude of these scenarios.
In case you’re wondering, things did not turn out well for Professor Fischer. Economic experts say he lost his credibility after the great crash of ’29. Lesson learned? As life sciences and health care companies look to 2020, they should consider preparing for alternative plausible futures and align around those strategies that will be critical no matter how the future plays out. It might work better than trying to define and predict the future – and ending up in the history books.
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Jason Girzadas uses his nearly 20 years of experience to help many of the nation’s top health care organizations navigate challenges including industry reform, implementing the latest technology, creating operating efficiencies and improving performance.