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Health Care Management Review:
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Strategy as Simple Rules: Understanding Success in a Rural Clinic

Lemak, Christy Harris; Goodrick, Elizabeth

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Abstract

Drawing on chaos and complexity theories, we apply the concept of "strategy as simple rules" to analyze the success of one rural health clinic. We document how such rules may emerge as success is viewed retrospectively. We describe four simple rules that emerged in this setting and explicate how our case analysis may assist other rural providers.

Strategic management was embraced by health care organizations in the 1980s as hospitals began to cope with a changing and less munificent environment. Originally developed in the context of business organizations, the basic idea behind strategic management is that organizations can make choices so as to improve their ability to prosper in their environment. The assumption underlying this paradigm is that the future is controllable and thus organizations should anticipate, plan, and act in a rational manner so as to benefit. And, indeed, there are a number of studies that suggest that health care organizations, including rural hospitals, that engage in strategic planning have better performance.1-4

Still, there are several different schools of thought that call into question some of the fundamental tenets of a strategic planning approach. Weick, for example, coined the term retrospective sensemaking to refer to the tendency of organizations to construct rational accounts of actions after they occurred.5 Mintzberg6 first discussed the notion of emergent strategy in 1972 to explain how organizations that do not plan before they act still succeed. Counter to decades of strategic management teaching, such organizations do not control and plan but rather make sense of what they have done and retrospectively adapt.7 Thus strategy emerges from a stream of action instead of being deliberately determined a priori. While these ideas have been developed in other industries, their application to health care organizations is extremely limited.8

An even more serious challenge to the traditional foundation of strategic management has come from the current application of chaos and complexity theories.9,10 Reacting to the intense, high-velocity change characterizing many industries, some have argued that the assumption of linearity underpinning traditional approaches to strategic management is outdated. Instead of predictability, turbulent environments have resulted in complex adaptive systems operating at the edge of chaos.9 To guide them through the chaos, successful organizations have recognized the need for "a few key strategic processes and a few simple rules."11(p.108) While illustrated mainly by arguments from the computing industry, the concept of strategy as simple rules makes sense for "all kinds of companies in fast-moving markets."11(p.108) Ashmos, Duchon, and McDaniel12 used the notion of simple rules to explain why hospitals that included physicians in strategic planning and decision making had higher performance than those that did not. In the recent Institute of Medicine Report, Crossing the Quality Chasm, Plesk and others call for the development of a few simple rules to guide the development of the twenty-first century health care system.13,14

This article applies the concept of strategy as simple rules to a successful rural health care clinic and then suggests how lessons learned at the clinic may inform other rural clinic managers. While there is a body of health care management research on specific rural hospital strategies as related to closure, conversion, and similar decisions,1,15,16 we could find no previous studies of strategic management activities in rural health clinics. Topping and Calloway17(p.2) found that small, rural mental health providers had "few opportunities for proactive or strategic planning." Conventional wisdom and anecdotal evidence suggest that small, rural health clinics tend not to engage in elaborate strategic planning processes, making these organizations an ideal setting to explore the idea that strategy can be embedded in simple rules.

© 2003 Lippincott Williams & Wilkins, Inc.

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