Learning Corner with Jeffrey Pfeffer: Big Results Often Come From Small Actions
19 maart 2021
Companies today confront omnipresent business challenges ranging from unanticipated pandemics to economic dislocations to climate challenges to an ever-increasing pace of technological change and foreign competition. At the core of all of these challenges is a demand for adaptability and change.
In response, companies often hire consulting firms and pay huge fees for what they expect will be transformative advice. However, I’ve found that the biggest business transformations, those that meet change and adaptability head on, are often generated by consistently implementing small—but important—actions. While they might seem minor, here are three tips to consider that could help drive change in your organization.
1. Prioritize What Matters Most
Gary Loveman became COO of Harrah’s Entertainment (later to become Caesar’s) in 1998 and CEO in 2003. When he joined in 1998, Loveman had no prior management experience, but his tenure was a huge success precisely because he focused on the little things. By the time the company went private in 2007, its stock price had soared from the mid-teens when he entered, to the buyout price of $90 a share.
One of Loveman’s fundamental management principles is that efforts focused on a small number of priorities in areas that are fundamentally important can drive exceptional returns. So when he arrived as COO, he reduced the scope of what most of his top team was responsible for, having them focus solely on the initiatives that were most critical to company success.
With his top team laser focused on those areas, Loveman also set his sights on a specific area of the business: growing revenue from those who visited Harrah’s, but didn’t gamble there. Taking the goal of increasing visits by one, with the eventual goal of turning into paying customers, he directed his larger team to focus simply on delighting customers with exceptional, cohesive customer service.
In order to provide that service, Loveman knew he had to reduce employee turnover, which he did through more realistic job previews, more rigorous, evidence-based selection, and making sure employees received their schedules with enough notice so that they could arrange to cover other obligations. Instead of doing many things at once, Loveman focused on one subset of customers and dug to the root of how to make them beneficial to the business. A number of small tweaks built up to a larger, tangible success for Caesar’s.
2. Find a Mantra To Ladder Up To
When Amir Dan Rubin became CEO of Stanford Hospital (later renamed Stanford Healthcare), he held a management meeting with his senior team. He was asked the "strategy question": What was his strategy to improve performance at a hospital that was barely breaking even, had an emergency department operating at the fifth percentile, and was seeing low patient satisfaction scores?
Rubin’s answer? Improve the patient experience. That was it? Yes, he repeated. Rubin also used a simple, endlessly repeated mission statement: "Healing humanity, through science and compassion, one patient at a time." Improving the patient experience was the tip of the spear that drove all sorts of improvements in operations.
In a health care system, the patient experience is the result of interactions with the people patients come into contact with. Therefore, Rubin placed a high priority on people operations, including providing training in systems to onboard employees more effectively, best practices for hiring the best people who would fit the organizational culture and values, and well-designed procedures for rewarding people in the organization.
Rubin, like Loveman, liked to measure the incremental changes. An advocate of total quality principles, he had each department at Stanford Healthcare figure out meaningful measures to reach their goals—for instance, the time required to answer the phone or the time patients had to wait to for appointments—and then ensured that these measures were displayed in charts and graphs to make them salient for employees on the ground. Coupled with the "one patient at a time" mantra, these visualizations helped keep employees engaged and on track.
3. Match Your Physical (or Virtual) Presence to Where Value is Created
Many companies overemphasize headquarters and direct insufficient attention to people who actually perform the main business services, in the locales where that work occurs. Total Renal Care (now called DaVita) was on the verge of bankruptcy when Kent Thiry became CEO in 1999. One of the first things Thiry did was to move focus and resources from corporate headquarters to the dialysis centers.
Even though the company was strapped financially, he invested heavily in front-line training for both dialysis center managers and front-line employees. Over the ensuing years, the stock price has soared and the company has consistently outperformed industry benchmarks for the quality of patient care.
By actively deciding where the heart of your organization will be—and naming it—employees are granted access. Rubin, for example, insisted that leaders in all of the Stanford Hospital functions, including non-patient facing ones such as finance and purchasing, made rounds through the hospital (the headquarters) twice a month to talk to patients and front line staff—and that included him. As he noted, everybody thinks they know what is going on—but unless they are physically present and available, they are too distant to understand the day-to-day details that make all the difference.
As work evolves into a fully remote or hybrid model, finding ways to forge connections (even if virtual) between company headquarters and service location centers is a small but important priority that can help bolster all employees’ understanding of the business and encourage work toward a given goal.
Bigger Doesn’t Always Mean Better
None of these examples are "rocket science." But if these tips are so simple, why aren’t more companies taking advantage of them? I asked Rubin why doing what seemed like common sense was so uncommon.
His answer: None of this is that difficult, but it requires management discipline and attention, consistently applied.
Leaders, he commented, were more interested in the "big ideas" that could presumably make quick changes than in the small but important details that actually profoundly affected organizational performance.
So the next time you are intrigued by the promise of some magic solution, try to remember that the biggest and most economically significant changes often come from the simplest, but most important, actions.