A SYSTEMS APPROACH TO BUSINESS STRATEGY “Cheshire Puss”, she began rather timidly, “would you tell me, please, which way / ought to go from here?” “That depends a great deal on where you want to get to ”, said the cat. “I don ’t much care where... ’’said Alice. “Then it doesn’t matter which way you g o ”, said the cat. Lewis Carroll Who are your clients? What are their needs? D oes your work succeed in doing what it should do? D o you set objectives for your departments or practices? D o you ever reach those objectives? D o you have a vision for the future or are you like Alice bumbling along not caring much about where you are going? If you are then you are going to be in trouble in the future. Or do you give time and effort working out where your practice or organisation should be heading in one, five, perhaps even ten years ahead? Are you expecting change and recognising that it may take many forms and accepting that as a real challenge? To deal with that challenge a leader needs a fair amount of vision, creativity and flexibility. Physiotherapy services nowadays come in a bewildering variety of sizes and shapes, some are large state institutions and some are small practices. Some are concerned with dis­ abled children, others with the elderly. However, they are all social structures which have been created by individuals to support specified goals which in the broadest sense could be said to be deliverance of health care using physiotherapy techniques. PHYSIOTHERAPY PRACTICE AS AN OPEN SYSTEM Physiotherapy can be seen as a subsystem o f the greater suprasystem of health care. From an open system point of view there is a close connection between the condition o f the' environment and the characteristics of the systems within it. Indeed the survival of the system would not be possible with­ out continuous inflow, transformation, and outflow from and to the environment. Thus the physiotherapy organisation will receive inputs (resources) from the external environment in the form of qualified staff, skills, information, equipment, professional education, money, space: it transforms these into outputs of service to its clients and staff satisfaction in suffi­ ciently large rewards to maintain their continued participa­ tion. (Figure 1). The environment is seen to be the ultimate source of materials, resources and information, all of which are vital to the continuation of the system. If you cannot attract new staff or cannot afford new equipment or never read a physiother­ apy journal or attend lectures, it is likely your system will dry up or become a closed system. Undoubtedly there are such practices in South Africa. Robinson8 sees strategy as the process of matching the Figure 1: TH E O R G A N IS A T IO N A S A S Y S T E M organisation’s or practice’s • resources and skills (abilities, strengths and weaknesses) • w ith th e environment (opp ortun ities, threats and changes) • in the face of competitive action in such a way that the organisation’s objectives and mission are achieved. Thus the definition by Robinson must be seen against the background of physiotherapy practice as an open system, ie transforming inputs to outputs. This is shown diagrammati- cally in Figure 2. IN P U T S O U T P U T S Fig u re 2 : S O U R C E : P R EK EL. T: U N IS A S C H O O L O F B U S IN E S S L E A D E R S H IP Thus a strategy begins with a concept of how to use the resources of the practice effectively in a changing environ­ ment. FIVE REASONS FOR CARRYING OUT STRATEGY PLANNING 1 To aid in the formulation o f organisational goals and ob­ jectives. Physiotherapy, May 1990, vol 46 no 2 Page 7 R ep ro du ce d by S ab in et G at ew ay u nd er li ce nc e gr an te d by th e P ub lis he r (d at ed 2 01 3. ) 2 To identify major problems and strategic issues. 3 To assist in the allocation o f scarce strategic resources (people, skills, space, equipment). 4 To guide and integrate the administrative and operating activities of the organisation. 5 To assist in the development and training o f staff in new skills including those o f management and planning. The late Steven Rose9 asked how physiotherapists could be distinguished from other health care practitioners and what the distinguishing characteristics of our practice are: • do we complement others or do we compete? • do we infringe on the practice o f others or complement? Added to these questions the following could also be asked: • What services (skills, knowledge, information) will you offer to potential clients (patients, students, co l­ leagues)? • How will you promote these? • How will you consistently manage your department, your practice or organisation to deliver a high quality service and be better than anyone else? • What level of skills should you invest in or concentrate on? • Which clients will you choose to serve and which skills to offer? • How are you going to adjust your practice to the chang­ ing situation in the environment? In order to answer these questions you must define the business you are in. Unfortunately it is extremely rare to find managers of practices or departments consciously and expli­ citly defining their business. Generally speaking this just hap­ pens by chance depending on experience and talents of staff, the skills available or the type of patient referred. DEFINING THE BUSINESS To define one’s business requires a creative skill and a lot of honest self-appraisal. It is especially applicable for those in private practice but could completely revolutionise a n d give new direction to those in hospital practice if carried out in a positive and responsible manner. Defining the business forms the first step in strategic market planning. Because defining the business is such a creative decision it can affect the whole strength of the practice. For example all practicing physiotherapists are in the health care business, however that would be same as saying all factories are in the manufacturing business. If you are working in private prac­ tice, are you in the back care business, the rugby business, the middle class business, the old age business, the soft tissue injuries business, floppy baby business? If you are hospital employed what is your business? If you are'employed by a school for disabled children what is your business? Are you in the education business, paediatric business, rehabilitation business or perhaps some other business? A business or practice may be defined both by the market it serves and in terms of the service it provides; these together encompass three dimensions: • client group or WHO is being served • client function or WHAT need is being satisfied • technological dimension or HOW client function is being satisfied. Abell conceptualised these three dimensions using a three dimensional display (Figure 3). Figure 3: DEFINING THE BUSINESS S E R V IC E S (W h a t n e e d s ) Q uality Control Insurance C om m ercial Advertising P rofess iona l Planning and D evelopm ent P rofessional A d vic e P rofess iona l Ed ucation Public Relations Financing L eg al A d vice c l co w E _ ■5 m2 c.2 o <0 ®a> .2 0 a “ A 1 ° " M eetings r Sem inars r Courses ’ W o rksho ps r Journals Publications ' Fund Raising Lobbying Recruitm ent C U S T O M E R /C L IE N T (W h o ) T E C H N O L O G IE S (H o w ) Figure 4: DEFINING THE BUSINESS NATIONAL EXECUTIVE COMM ITTEE SASP The National Executive Committee of the SASP defined its business in the above way (Figure 4). Thus the Executive Committee sees itself as serving a broad cross-section of clients. As a physiotherapist you could ask “What needs do I as a professional have and how are those served? What needs do the general public have in relation to a professional body and how are these satisfied?” From Figure 4 it would appear that the Executive Com­ mittee is in the information and planning business. If this is so then it would be imperative that the Executive Committee familiarise itself and become expert with efficient and effec­ tive information and planning systems. The business definition is relatively large and diverse. As a model it requires further subsystems with more specific definition. In a complex and unpredictable environment it will be difficult to implement new strategy and control it. Bladsy 8 Fisioterapie, Mei 1990, dee146 no 2 R ep ro du ce d by S ab in et G at ew ay u nd er li ce nc e gr an te d by th e P ub lis he r (d at ed 2 01 3. ) A small clinic for children in an urban area defined its business thus: SERVICES (W hat needs) Planning and Administration Information Referral Training Consultation Assessment Rehabilitation £ o © <5E EO Oo x ? ' Physiotherapy Techniques ' Teaching Skills 2 So wH V)3O Communication r Management ' Pubiic Relations ' Fund Raising TECHNOLOGIES (How) Figure 5: DEFINING THE BUSINESS URBAN CLINIC FOR HANDICAPPED CHILDREN practice a business definition it is important to project it into the future and ascertain that it is at least going to serve part of the needs of the future. Technological conditions are changing rapidly; population, major cultural and social changes are under way and the acceleration of change in our time will have considerable personal, psychological and so­ ciological consequences on our scope of practice. (Figure 6). A proactive approach to such change involves environ­ mental scanning and analysis to determine those forces in society that will be most important to the physiotherapy pro­ fession. Figure 6 shows what impact the environment could make on the physiotherapy profession as a whole. This study was carried out in August 1989, (perhaps already this is out of date) demonstrating just how turbulent our environment really is. The challenge for leaders is the complexity of the deci­ sion-making process for adjusting to environmental uncer­ tainty and change and aligning oneself to these external forces, eg the function of teaching hospitals has changed in the last decade in so much that medical education is threat­ ened Coetzee3' Another example is hospital practice which used to be the main source of employment for physiothera­ pists, whereas the swing is now towards private practice11,12. From this business definition the clinic would appear to be in the child rehabilitation business. This clinic serves a narrow group o f clients with a few services but utilises a number of technologies. New strategies can easily be im­ plemented and controlled. It is an ideal model in a complex and unpredictable environment. From the ‘business’ definition an organisation can ask: • are there other clients we could serve and are there some we could drop who would be served better elsewhere? • are the services correct for the clients - are new services required and obsolete ones dropped? • are we up to date with our technologies - should some be relinquished? • are we in the correct business? S O C IO /C U L T U R A L • Growing population • Unemploym ent • Poor sanitation • Traditional cultural values disrupted • Poor m edical facilities • Overcrow ding • Cultural values • Community infrastructures EC O N O M IC • Low economic area • A vailability of o v e rs e a s funding 'S o c ia l a w a re n e s s in large businesses • High unemployment P O L IT IC O /L E G A L • Fragm entation of health services • Unrest • Conflict over e x p e c ta tio n s and law s of country • P rofessional ethics • H ealth Act T E C H N IC A L • Limited professional resources: o S p ac e ° M anpow er ° Equ ipm ent. • Availability of community skills Figure 7: ENVIR ONMENTAL ANALYSIS : URBAN CLINIC FOR HANDICAPPED CHILDREN ENVIRONMENTAL ANALYSIS Due to the rapidly changing environments new markets are developing and old ones falling away. When giving your PO LITIC O/LEGA L • Health Act • M edical and Dental Supplem entary H ealth Act • Advertising • Professional Code of Ethics •G roup Areas Act • Fragm ented Health Services • W H O • International pressures • Sanctions S O C IO /C U LTU R A L • Changing needs of clients • Demographic changes • Disparity in education • G re ate r health c a re exp ec ta tio n s • W ellness programmes • Increased sport participation • Professional demands increasing • Fem ale w o rkfo rc e increasing ECONOM IC • D e c re a s e d budget for health care • Increased unemployment • Increased cos t of services • Disparity in salaries • Increase in people with M edical Aids • Increasing demand tor private health care • Crisis within S tate Health Services TECHNOLOGICAL •Em phasis on specialisation • Increasing pressures on training institutions • Improved information systems • Sophisticated communication systems • Improved p o s t-gradua te education Fig u re 6 : T H E E X T E R N A L EN VIRO N M EN T : IT S E F F E C T ON S A S P Figure 7 shows an environmental analysis for a small clinic for children. In turbulent times this small clinic will survive and adjust far more easily than the teaching hospital which is dependent on vast resources from the environment in terms of equipment, information, staff etc., whereas the clinic receives its inputs from the local community and is likely to thrive in times of conflict or complexity. This has an important message: that in times of stability and growth the large sophisticated hospitals are likely to flourish as clients demand high-tech whereas in times of conflict, crisis and depression, the small urban or rural clinics will flourish as local communities rally round and develop their own organisations. Thus when setting up strategy planning it is necessary to project your plans into the future using different scena­ rios from the environment. Practices in many Western countries may not vary much from year to year, a technique may be added and a more focused approach adopted. In South Africa the situation is different with a future that is very uncertain. Growth is likely to be anything but “tradi­ tional” Drucker13. Traditional planning starts out with the Physiotherapy, May 1990, vol 46 no 2 Page 9 R ep ro du ce d by S ab in et G at ew ay u nd er li ce nc e gr an te d by th e P ub lis he r (d at ed 2 01 3. ) trends of the past which are projected into the future. This probably will not work for South Africa. In turbulent times fundamentals have to be managed well. These can deteriorate rapidly unless managed carefully and consistently. In terms of health care these fundamentals can be seen as: • quality care • cost effectiveness of service • cost of future service SWOT ANALYSIS What are the key physical resources in a teaching hospi­ tal?; in the South African Society of Physiotherapy?; in a small urban clinic?; in a private practice? A resource profile requires an assessment of the internal strengths and weaknesses of an organisation or practice. Pri­ marily the internal analysis of resources should indicate what the practice is capable of doing. This might be different from what it is actually doing, what it might do or what it wishes to do. An assessment of the external environment leads to a search for opportunities and threats. It is vital to consider the pervasive influence of the environment on the organisation or practice and decide how well you are dealing with this set of forces, even though they may be beyond your control (Figure 8). W E A K N E S S E S In turbulent times, growth shifts to different areas. The small clinics and physiotherapy organisations, the SASP, teaching hospitals and private practices will have to think through their strengths and shift to those areas which provide opportunity. We must develop strategies for the future that anticipate the areas in which the greatest change is likely to occur. We must think strategically about what the various physiotherapy “businesses” are doing and what they should be doing. • What do our clients pay for? • What is “value” for our clients? • What are our strengths? • Are they the right strengths for the specific “business”? • Are they adequate? In service organisations “market leadership” is generally seen in terms of quality rather than quantity. What are our measuring sticks for this quality? How can this be termed a strength in a teaching hospital, SASP and urban clinic? Drucker13 has pointed out that professionals by defini­ tion are people who see themselves as possessors of a distinct organised knowledge and are primarily accountable to it. However, society is now demanding that we think through what we should be accountable for and that we take respon­ sibility for our contribution to the deliverance o f health care. To the public this quality health care is an expensive com­ modity, therefore it is essential that the service delivered is one that satisfies the needs of the community it is serving. S T R E N G T H S • G o o d c o m m u n ic a tio n n e tw o rk • Fund ra is in g p ro g ra m m e • E n th u s ia stic m e m b e rs • E d u c a tio n a l pro g ra m m e s • E x p e r tis e in m an y fie ld s • P ro fe s s io n h a s im p ro v e d pu blic im a g e • G o od rela tio n s w ith o th e r a s s o c ia tio n s • U n s o p h is tic a te d in fo rm a tio n d is s e m in a tio n • P o o r c a s h flo w • N o t 1 0 0 % m em b e rs h ip • P o o r m a rk e tin g skills • P oo r long te rm planning • L o w r e s e a r c h ou tp u t O P P O R T U N IT IE S T H R E A T S • N e w m e m b e rs • Im p ro v e d c o m m u n ic a tio n skills • Im p ro v e d in fo rm a tio n te c h n o lo g y • C hanging n e e d s o f clients • C o m p e tito rs • T r a d e Unions • A lte rn a tiv e s o c ie ty • F r a g m e n ta tio n o f s o c ie ty • In te r n a tio n a l p re s s u re • In c r e a s e d c o s t of living F igure 8: S W O T A N A L Y S IS : S A S P E X E C U T IV E C O M M IT T EE In highly turbulent times the need to manage the pro­ ductivity of physiotherapists who are highly qualified people but most expensive means that they must be assigned to tasks where their full potential, skills and knowledge will be utilised to produce results. This means they must be assigned to opportunities which will result in a need for continuous learn­ ing. Service industries are not WANT orientated, they are concerned with contributions rather than returns and results. Whilst carrying out a SWOT analysis do we think through the changed circumstances in which we work or areas in which we are weak and have no growth? Are there some areas in which we can stop struggling and in which we are failing? Sometimes we need to rid ourselves of services which absorb very scarce resources and which have become almost obsolete or out of our scope. But abandonment of our weak areas or failures in service organisations is extremely difficult. We feel a “moral duty” to carry on whereas industry would have allowed a buy-out or dropped the product. MISSION AND OBJECTIVES Many large organisations define the basic reason for their existence in terms of a mission statement. When it is carefully defined it provides an image of what the organisation stands for - its purpose and character. Part of the mission statement is the definition of the business itself - thus the mission statement of the SASP is as follows: 1 It does not discriminate on grounds of race, colour, creed, national origins, social status or sex in the practice of physiotherapy or in the administration of its organisation. 2 It strives to ensure the quality of physiotherapy services to all peoples throughout South Africa together with the Professional Board for Physiotherapy. 3 It safeguards the welfare of it members and makes repre­ sentations against discrimination against any of its members. 4 It supports unequivocably the provision of a unitary health service and encourages the progress which has already been made in the integration of health services. 5 It defines itself as an information and planning & devel­ opment resource to its members, to other health pro­ fessionals, to Government and Local Authorities and to the general public. McCarthy14 believes that although it is not always stated, a mission reflects the organisational intention to secure its survival through sustained growth. An organisation can grow in many ways and if it is not able to do so then it will be incapable of satisfying its clients’ needs. Unfortunately Bladsy 10 Fisioterapie, Mei 1990, deel 46 no 2 R ep ro du ce d by S ab in et G at ew ay u nd er li ce nc e gr an te d by th e P ub lis he r (d at ed 2 01 3. ) growth and survival is such an assumed goal it is usually neglected as the primary reason for strategic decision making. Strategic objectives show what the practice wishes to achieve and to become. They therefore flow from the mission statement. A practice may pursue a variety of different objec­ tives, some examples could include increased collection of funds, efficiency (cutting costs), staff satisfaction and devel­ opment, quality of service. Why are objectives necessary? Jauch and Glueck15 sug­ gest four reasons: 1 Objectives help define the organisation in its environ­ ment. 2 Objectives help in co-ordinating decisions and decision makers. 3 Objectives provide standards for assessing organisational performance. 4 Objectives are more tangible targets than mission state­ ments. Thus the formulation of the mission and objective is a complex process which involves: • an analysis of the gaps between desired and expected goal attainment; • the realities of the external environment; • the realities of the practice’s resources; • the value systems and goals of the leaders or managers; • the past strategy and development of the organisation or practice. This may be seen in Figure 9. or manager. The manner in which the practice can manage, organise and implement these ideas to the full advantage of its resour­ ces in a creative and innovative fashion will be discussed in a future issue. “Arnold Toynbee once described the rise and fall o f nations in terms o f challenge and response. A young nation, he said, is confronted with a chal­ lenge for which it finds a successful response. It then prospers and grows. But as time passes, the nature of the challenge changes. And if a nation continues to make the same once successful re­ sponse to a new challenge, it inevitably suffers a decline and eventual failure.” William S Anderson Chairman NCR Corporation As we begin the last decade of the 20th century, South Africa faces such a challenge. REFERENCES 8 Robinson G. Strategic Management Techniques. Durban: Butterworths, 1986. 9 Rose SJ. Physical Therapy diagnosis: role and function. Phys Ther 1989;69(7). 10 Abell DF. Defining the Business. Prentice Hall Inc, 1980. 11 Magistro CM. Clinical Decision Making in Physical Therapy. Phys Ther 1989;69(7). 12 Jull G et al. A survey of work profiles and histories of physiotherapy graduates from the University o f Queensland. Australian Journal o f Physiotherapy 1989;35(4). 13 Drucker RF. Managing in Turbulent Times. London: Heinemann, 1980. 14 McCarthy DJ et al. Business Policy and Strategy. Illinois: Richard D Irwin Inc, 1983. 15 Jauch LR and Glueck. Business Policy and Strategic Management 5th ed. McGraw Hill International, 1988. ACKNOWLEDGEMENT To all the physiotherapists who attended the strategic management workshops led by the author. Their participation and contributions made these articles possible. ♦ Figure S: FACTORS INFLUENCING THE FORMULATION OF OBJECTIVES AND MISSION Development of clear objectives is crucial to the effec­ tive development for the rest of the strategic planning process. CONCLUSION This article has introduced the concepts involved in the first steps of strategic management - that of a thorough business analysis. The whole thrust of the analysis has focused on the issues involved in growing and surviving in the very turbulent South African environment. Thus an organisation must integrate many ideas: that of business definition; the services, functions and technologies it performs; the environ­ mental situation and distinctive competencies of the practice; the current mission, values, goals and objectives of the leader PHYSIOTHERAPISTS WORK IN THE UNITED STATES We handle all Licensure and Visa paperwork. Minimum commitment of one year required. Write or phone collect: THERAPY RESOURCE NETWORK P O Box 5430 355 N Main Street Plymouth, Ml 48170, USA 091 (313) 455-6660 Physiotherapy, May 1990, vol 46 no 2 Page 11 R ep ro du ce d by S ab in et G at ew ay u nd er li ce nc e gr an te d by th e P ub lis he r (d at ed 2 01 3. )