CIO Unplugged – 10/1/08

The views and opinions expressed in this blog are mine personally, and are not necessarily representative of Texas Health Resources or its subsidiaries.

Brigades, Battalions, and Budgets
By Ed Marx

Ah Fall. The crisp air. A scenic array of dancing leaves. Squirrels foraging for groceries. And of course, football.

Oh yes, and budgets!

Each year at this time, corporate America undergoes a fandango abounding in ritual. We perform the dance of sworn improvements, promising to enhance processes and reduce pain. But at the end of the day, or should I say months, little has changed. The mist of illusion dissipates, and we find ourselves reinstating the customs of familiarity and comfort. Insanity, as some describe it—expecting change while doing things the same way.

Part of the corporate America ritual goes something like this. Create and submit a pork-filled budget. Mandates go out to make across-the-board cuts. We make the cuts, and inflated budgets become more realistic. Additional mandates call for further reductions and managers dutifully wince and deal. Dependent upon the financial outlook, the budgets find acceptance; nevertheless, the call goes out for another round of cuts. This forces managers to sub-optimize valuable programs and services, targeting areas that, as a rule, should remain untouched. Without counting the cost, they sacrifice so-called discretionary spending: travel, training, education, and entertainment.

Here’s my take on the ultimate solution. Avoid across-the-board budget reduction mandates altogether. Instead, target programs and services that have a wide swath across the organization’s traditional budget silos. Eliminate or delay a planned integrated initiative before you reduce associated expenses and end up with a sub-optimal outcome. “You can’t cut your way to prosperity,” as I learned from a former mentor, Tom Zenty (CEO, University Hospitals, Cleveland). Choose to heavily invest dollars in areas that will push top line revenue growth so as to create more opportunity for clinical advancement.

The unfortunate reality? This rarely happens in corporate America.

As an Army Combat Engineer Officer (Reserves), I lived out a similar budget cycle. We platoon leaders had to decide what to cut and how to avoid sub-optimizing services and product. While in this environment, I adopted an approach that I use today when confronting across-the-board-mandates. I’ll sum it up with a question: Would you rather carry 40 average soldiers into battle or lead 35 of the best trained, equipped, skilled, and talented?

As a junior officer preparing for a major military exercise, I tackled the following dilemma. Assessing my platoon of forty untrained soldiers, I looked for the champions: those with the solid attitude of a soldier; any man or woman who displayed leadership talent; and the ones eager to learn and improve. After sifting the wheat from the chaff, I invested in the promising soldiers, training and equipping each one. Judgment day arrived. During the exercise, we surpassed all production expectations. My 35 soldiers outperformed peer platoons that operated with full numbers but lacked the advantage of an empowering investment.

Although it may appear counterintuitive to some, I have since applied this principle throughout my healthcare career. The effort is worth it, and the end product speaks for itself. Leaders reap what they sow, as do corporations. When the budget reduction mandates come, and they invariably will, I’ll pursue the 35 trained, equipped, skilled, and talented.

Ed Marx is senior vice president and CIO at Texas Health Resources in Dallas-Fort Worth, TX. Ed encourages your interaction through this blog. (Use the “add a comment” function at the bottom of each post.) You can also connect with him directly through his profile pages on social networking sites LinkedIn and Facebook, and you can follow him via Twitter – User Name “marxists.”