Can a dancing elephant help the NHS?

Can a dancing elephant help the NHS?
 
In May 2013 Sir David Nicholson, the head of NHS England, announced his resignation. Nicholson was an insider's insider and his in-depth knowledge of the organisation served well his political masters, but he was unable to bring about much needed transformative change.   
 
Escalating costs, changing technology, the growth and spread of diseases and an ageing population all conspire to present the NHS with its biggest challenge since it was created in 1948.
 
Will the new leader be another insider appointed to continue the political chess game with our national health? Or, will the new CEO seize the opportunity presented by lessons from outside the NHS and lead the transformative change that the NHS sorely needs?
 
Lessons from outside the NHS
Twenty years ago IBM, once the most profitable company ever, faced a similar challenge to that confronting the NHS today. In 1993, IBM was on the brink of bankruptcy and considered by various commentators as, "a dinosaur and a wreck". IBM appointed Lou Gerstner, a business leader, to transform the Company. Nine years later, IBM had become one of the world's most admired companies. Gerstner described how he achieved the transformation in a book, Who Says Elephants Can't Dance?
  
What are the similarities between IBM and the NHS?
What lessons can the NHS learn from IBM?

Inward looking organisation resistant to change
By the early 1990s, IBM had become an inward looking mainframe manufacturer driven by internal systems rather than customer needs. The PC revolution gave IBM the equivalent of a severe heart attack and put computers in the hands of millions and shifted power and purchasing decisions to individuals.  
 
By 1993, IBM's annual net losses reached a record US$8 billion and it was on the verge of bankruptcy. Before the arrival of Gerstner the Company's reaction to its crisis was to deploy resources more effectively, improve outcomes, control costs, split its divisions into separate independent businesses and attempt to sell some of them.
 
Parallels with the NHS
The NHS is an inward looking public monoploly, funded by the UK taxpayers to the tune of £110 billion a year, high bound with its own standards and procedures.
 
Like the old IBM, the NHS is less sensitive to its rapidly changing external environment, which includes rising patient expectations, expensive new drugs, the impact of an ageing population and the escalation of chronic non communicable diseases.
 
The response of the NHS to its current challenges is similar to IBM's initial response before the arrival of Lou Gerstner. It is focused on cost savings, streamlining its services and privatising specific functions. Such a strategy did not turnaround IBM and will not turnaround the NHS. This is understood by both the National Audit Office and the Parliamentary Select Committee on Health, which have called for the NHS to engage in "transformative change".
 
Stepping through a time warp
Transformative change for IBM began in 1993 with the appointment of Lou Gerstner as CEO at a time when IBM, similar to the NHS today, was bloated with excess costs and bureaucracy and its people demoralised.
  
Interestingly, Gerstner was neither an insider nor an industry expert, but was recruited from Nabisco, an American biscuit manufacturer and had had previous experience at American Express and the consultancy firm McKinsey & Co. Gerstner likened his arrival at IBM to stepping through a time warp. The world had moved on while IBM stood still. This resulted in a significant mismatch between market needs and IBM's offerings. 
 
When Gerstner took the reins at IBM, the conventional wisdom, both from industry pundits and IBM insiders, was that the only solution for saving IBM from eventual disaster was to cut costs, increase efficiency, divisionalise and sell-off parts. 

Complete integrated solutions
Gerstner was determined to keep IBM together and convinced that the only way to do so was to change its culture: away from an inward looking bureaucracy to a responsive service company in-tune with customers' needs. Gerstner recognized that IBM's enduring strength was its core competency to provide integrated solutions for customers with complex problems. This, Gerstner judged to be the unique IBM advantage.
 
Gerstner's approach was to drive the Company from the customer view and, "turn IBM into a market-driven rather than internally focussed process-driven enterprise". And it worked. According to Gerstner, keeping IBM together and changing its culture, "was the first strategic decision and, I believe, the most important decision I ever made, not just at IBM, but in my entire business career".
 
Will the new leader of the NHS have Gerstner's strategic clarity, rottweiler focus and determination to execute?
 
Importance of culture
During his customer focused transformation, Gerstner learnt not to be fooled by bogus measurements and data associated with customer satisfaction and targets. "People", Gerstner said, "do what you inspect, not what you expect".

 
Gerstner's most important and proudest accomplishment was cultural change that brought IBM closer to its customers by inspiring employees to drive toward customer defined success.
 
"Until I came to IBM, I probably would have told you that culture was just one among several important elements in any organization's makeup and success; along with vision, strategy, marketing, financials, and the like I came to see, in my time at IBM, that culture isn't just one aspect of the game, it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value".
 
Lessons for the NHS
In, Who Says Elephants Can't Dance? Gerstner describes three important insights, which helped transform IBM and could help the NHS:  
 
1. A service intergrator controls every major aspect of an industry

2. Every major industry in today's network-centric world is built around open standards
3. It is important to abandon proprietary development, "embrace software standards" and "actively license technology".  
 
In 1993, many people criticized IBM for their selection of Gerstner because he was neither an insider nor a technologist. You can hear something similar were the NHS to appoint a CEO from outside the healthcare industry.  Based on IBM's transformation and the insights described in Who Says Elephants Can't Dance? Gerstner was the right person for the job.