Walker College of Business

Speaker Name: Harry A. Nurkin
Speaker Title: Ph.D., President and CEO
Speaker Company: Carolinas Healthcare System
Carolinas Healthcare Website

I am honored to be here today and to participate in the Harlan E. Boyles Distinguished CEO Lecture Series. Thank you, Dean Peacock, for the invitation and for your hospitality. I continue to be impressed by the John A. Walker College of Business and the outstanding students and graduates of the College and Appalachian State University.

It is special for me to participate in a lecture series honoring Harlan Boyles. Those of us who do business in North Carolina owe much to Harlan Boyles who, in my estimation, is a living legend. Thank you, Harlan, for the high standards you have set.

On the day Dean Peacock's office called to ask for the title of my presentation, I was a bit lost because not only did I not have a title, I had not even written this presentation. At the time of the call, I was participating in a meeting of the senior executive team of the Carolinas HealthCare System. Surrounding me were very skilled colleagues from a variety of backgrounds. It was then that I had what we call a BGO (a blinding glimpse of the obvious).

In the room were individuals trained in architecture, accounting, medicine, law, and several technical health-related professions, in addition to generalists, like myself, trained in management. This potpourri of people, with a wide variety of educational and experiential backgrounds, were participating in a critical executive function, planning the growth and development of our organization.

So, it occurred to me that I could share some thoughts with you on lessons I have learned from individuals from a variety of backgrounds, and how a variety of people with different experiences can coalesce into a fast, flexible, and fluid management team. Further, I can explain how these lessons have been instrumental in the success of the Carolinas HealthCare System. Thus, the title, "On the Training of Quarterbacks, Pilots, Surgeons and CEOs, and Other Important Lessons I Have Learned."

Over the course of my career, I have had the good fortune of knowing, and working for, very successful people who come from a variety of backgrounds. Any success I have achieved is, in great measure, a tribute to these mentors who allowed me to learn from their lives and their careers, from their successes and their failures.

Two of my points of emphasis today are that learning is a life-long experience, and no matter what kind of organization one affiliates with, there are valuable lessons and skills to be learned from mentors and from colleagues. Also, I believe that formal education, at either the undergraduate or graduate level, is preparatory for meaningful learning that comes from practical experience.

It is my contention that the role of a CEO, in business, is not mysterious or unique. In fact, I believe that successful CEOs are developed in ways similar to the development of quarterbacks, pilots, and surgeons.

Unfortunately, developing successful CEOs has not been the subject of much scholarly research. Consequently, few didactic courses examine the process of becoming a chief executive. Thus, for the most part, we are left with pop culture books on the personalities, personal characteristics and habits of successful executives. But, in my judgment, these popular, self-help books offer little insight for those who aspire to lead organizations.

Although to many, what I do seems complex, it is not. Simply stated, my job, as a CEO, is to find ways of combining knowledge, experience, and practice in preparation for the use of judgment. I submit to you that the appropriate use of judgment, based on the right mixture of knowledge, experience, and practice, is the basis for success in any human endeavor, any team, or any business organization.

I came to this formula for success through long years of observing, and conversations with, successful people in a number of diverse human activities.

Surgeons are physicians who attempt to solve disease processes and to correct injury problems by surgically altering the body's anatomy, physiology, and chemistry. The education of surgeons begins with the same basic knowledge transfer process as that of non-surgeons. Specific scientific and technical knowledge is obtained in medical school. At this point, surgeons gain valuable experience through four years of practice or residency, under the tutelage of an experienced senior surgeon or mentor. The well-trained surgeon continues to practice and develop the use of skills and judgment over and over again, usually specializing in a particular brand of surgery.

Quarterbacks travel a road to expertise that has similar mileposts, knowledge, experience and practice. Considered to be the "on-field leader" of a football team, a quarterback is considered skilled if he exercises good judgment in the execution of his team's game plan.

And all of us, periodically, place our lives in the hands of pilots of commercial aircraft. What gives passengers comfort that an airplane ride will be safe and effective? The belief that the pilots have the right combination of knowledge, experience, and practice to be able to exercise the right skills and judgments when flying our airplane.

Let me tell you about several people from whom I have learned the importance of life-long learning, the necessity for dedication and focus, the establishment of a value system, and the thrill of participating as a member of a team.

I have a friend named Bart Starr. Some in this room will recognize that name. Bart was a football player of modest accomplishment at the University of Alabama, but he became the epitome of professional quarterbacks with the first Super Bowl champions, the Green Bay Packers. Today, Bart is the chief executive officer of a company that builds and develops medical office buildings. If Bart were here today, he would talk about what he learned from his mentors, Bear Bryant and Vince Lombardi. He learned the values of teamwork, leadership, the need to practice, practice, practice, and the use of good judgment.

Albert Ueltschi is a man I admire. He was the child of a poor family in Kentucky. In the early 1950s, he became a staff pilot with Pan American Airlines. Fortuitously, he had the chance to talk, one evening, with Juan Tripp, the chief executive officer of Pan American. Tripp told Ueltschi that the biggest problem in the airline industry was that there was no way to consistently train pilots to prepare them for what actions to take if they experienced potentially disastrous equipment failures. Tripp also was concerned that there was no consistent or practical way to update pilots when new equipment came on line.

Ueltschi began to tinker with these thoughts from his mentor, Juan Tripp. Ultimately, Al Ueltschi developed the first computerized flight simulator to train pilots on how to deal with problems they might encounter in flight. Ueltschi's company, Flight Safety International, was purchased two weeks ago for almost $1 billion in cash and stock by Warren Buffett and Berkshire Hathaway. Not only did pilot Al Ueltschi build an effective Fortune 500 company, but, also, he contributed greatly to the safety and security of millions of airline passengers by creating a simulated way to train pilots--in other words, to prepare them for when and how key judgments should be made.

Francis Robicsek was a young Hungarian army officer and a surgeon at a hospital in Budapest. He fled Hungary in 1954, when the Russians invaded his country. Francis Robicsek came to America to practice surgery, but he was forced to repeat a surgical residency to meet American accreditation standards, even though he had successfully practiced in Hungary. To his great fortune, Robicsek was taken under the wing of Dr. Paul Sanger, a thoracic surgeon in Charlotte.

Sanger encouraged his protégé to participate in as many surgical procedures as possible to enhance his skills. He also encouraged Robicsek to begin experimentation, in a make-shift laboratory, on a relatively new procedure called coronary artery by-pass surgery. Under the guidance of his mentor, Robicsek was instrumental in developing one of the first heart by-pass machines and fine tuning the other technology necessary to begin open heart surgery in North Carolina.

Today, Dr. Francis Robicsek is the chief executive officer of the Sanger Clinic, which is the largest diagnostic and therapeutic heart practice in the Southeastern United States. He is, also, the head of the Carolinas Heart Institute and president of the Heineman Medical Research Center with offices in Charlotte, Germany and Israel.

I share these vignettes with you for a specific reason. Over the course of my career, I have observed the widely diverse paths successful people have followed to their roles as quarterbacks, pilots, surgeons and CEOs.

None of these unique individuals followed a traditional path. Each discovered, or was discovered by, a mentor, who would take the time to coach, counsel, challenge, stimulate and encourage.

Each had the courage to accept the role of student, learner, or protégé, rather than seeking immediate status, power, and prestige in the professional world.

Each of these heros of mine understands that one's education does not end at a graduation ceremony. They know that learning is a life-long process, that experience is the best teacher, and that practice always makes better--never perfect--better. They also learned the value of team effort.

What I have learned from observing how quarterbacks, pilots, and surgeons are trained is a series of simple truths.

• no one functions alone, no matter how talented intellectually or physically.
• the combined, collaborative effort of individuals or groups creates a unit or team that is stronger than the sum of its individual parts.
• an effective team is a group of independent people who agree on a goal, and, more importantly, agree that the best way to achieve the goal is to work together.
• an effective team effort fosters an effective environment that makes work more enjoyable for everyone.

Taken separately, one may not find relevance in comparing and contrasting the training of quarterbacks, pilots, surgeons, and CEOs. But, Bart Starr, Al Ueltschi, and Francis Robicsek, among others, have taught me lessons in team effort that have improved my productivity as a CEO.

There are a number of critical success factors that address the vertical and horizontal integration of a healthcare delivery system. First and foremost is an identification of the value system of the core organization. The Carolinas HealthCare System has identified what we stand for and what we hope to add in the way of value through an integrated system of delivery of care to people in need of our services.

A second critical success factor is understanding that one can no longer "go it alone." Most of us were raised in this business to believe that individually managed hospitals could survive, as could individual practices of medicine, and that hospitals and physicians were lashed together only by a common interest in the patient. In that fragmented system in which we lived for decades, there was very little in the way of loyalty, similarity of value systems, consistency of planning, or teamwork effort among all of the participants in the healthcare delivery system.

A third critical success factor is identifying individual and corporate partners who have similar value systems with the core organization and have the pragmatism to understand that the fragmented and separate system of the past simply will not work in the future.

A fourth critical success factor is the ability of the core organization to be able to deal with potential and existing partners in a straightforward way and to share the innovation and revolutionary ideas that can create the flexible, fully integrated systems of the future.

When we looked at truly integrated healthcare systems, we discovered that the best organizations also took the time to select from a larger universe--the sub-set of physicians, payor groups, and institutional partners for whom collegiality and values were higher priorities than autonomy, status, profit, or the ability to buy expensive toys. Those successful systems refused to "grit their corporate teeth" and do business with incompatible partners just to benefit the bottom line or gain market share.

This led us to a renewed understanding that identification is the most important factor in any individual's association with another human being, or an organization. Being a member of something good, something that aligns favorably with one's own values, can greatly influence one's self-concept and attitudes, as well as serve as a motivational force to improve performance.

If any integrated healthcare system, or partnership, is to achieve what Abraham Mazlow called "self-actualization"--the realization of full potential, creativity, and development--it must allow all participants in the effort to first gain self-esteem or the use of one's skills, achievement, confidence, independence, recognition and appreciation from others.

Therefore, as we crafted a plan for rapid and significant growth, we determined that our first duty was to establish what we stood for as an organization, and to not allow the merger and acquisition "feeding frenzy," and big numbers, to deter us from these values.

After we redefined, with our board, the values we wanted our system to stand for, we went about searching for those potential partners, physicians, payors, and institutions that had similar goals, values, and needs. The opportunities for collegial, value-based partnerships are plentiful. We believe partnering simply to increase revenue, or prevent loss of revenue, doesn't work. Just as marriages of necessity usually don't meet the test of time.

The process has worked to the extent that from a singular hospital with a revenue budget of $77 million, the Carolinas HealthCare System has grown to encompass over 75 different patient-related businesses and a revenue budget of $1.5 billion.

This philosophy has invigorated the people in our organization and is a rallying credo that sets us apart from others. We, also, have observed the magnet effect, where we are now being approached by other organizations that want to be a part of our system. Our system functions without walls. It is diverse, geographically. It may, in fact, meet the new definition of a virtual organization.

We also understand that this is not a one-act play. We will mature both in relationships, structures, and products as time goes on. Patience and a tolerance for ambiguity, aligning similar values, and collegiality are crucial in these relationships, if they are to last. We know that, like human beings, no organizational structure is perfectly designed. So, we are accepting of imperfection.

Our system is designed to foster clinical and fiscal efficiency, because it is the right thing to do, and it makes good sense--not because we are paid to do it.

Looking back on our efforts, I can tell you it is easier to manage relationships based on shared values and collegiality than it is to manage relationships based on fear of financial loss or desire for financial gain.

It is easier to implement behavioral change among colleagues than among adversaries. It takes less time, it costs less, and it works much better when two organizations work together, rather than when one takes over or buys out the other's interests.

Aligning values is far more productive than trying to change behaviors through the purchase of assets or dangling financial incentives in front of employees.

Our ventures into new organizational forms have taught us that only a handful of organizations have really begun to tap into their primary resource, their workers, much less given them the means to do what they are capable of doing. Far too often, when organizations consider "marrying up," they forget about loyalty to workers, by pruning or laying off workers rather than nurturing, and by focusing, almost exclusively, on the bottom line.

The result of a concentration on mergers and acquisitions for profit is what The New York Times has described as "a generation of ruthless management." Ruthlessly managed organizations may succeed for a while, but, I am convinced that only those organizations that value people more than the bottom line, will succeed over time.

In his book, Thriving on Chaos, author Tom Peters writes that organizations that succeed, over time, will have certain characteristics in common.

• a flatter, less hierarchical structure.
• more autonomous work units.
• an orientation toward value-added products and services.
• quality controls.
• service controls.
• responsiveness.
• innovative speed.
• flexibility.
• highly trained and skilled workers who are allowed to use their minds instead of just their hands.
• leaders at all levels, rather than managers.
• a team approach to organization.

As we transformed our organization from a singular hospital to a horizontally and vertically integrated healthcare system, we learned a few lessons.

When attempting to put two organizations together, no matter what the size and scope of function, the tasks of leaders must change from concentrating on profits to concentrating on creating an environment that fosters and perpetuates meaningful human relationships.

While some view organizations as large, impersonal, inanimate entities, and the merger of two organizations as a complex legal and financial activity, we see things differently. Like a marriage, organizational mergers can occur without heartache and pain, so long as the key participants enter the relationship with trust and confidence in the values and commitment of both parties.

To that end, we prefer to not hold negotiations with potential partners. We get to know each other by a comparison of value systems. We do not allow lawyers and accountants to set the tone for the relationship, and the intimate conversations are between key individuals rather than large numbers of transition or due diligence teams. We engage in relationships, not on a trial basis with pre-nuptial or un-wind provisions, but rather, as in marriage, we always assume that the union is going to be a permanent one.

The leaders of organizations, desiring to merge, can establish a more meaningful relationship by working together to do the following things:

• defining the combined organization's mission, so as to frame its activities and inform its combined work force.
• creating a flexible corporate environment that values the employees of both entities, encourages them to develop their full potential, and treats employees as equal partners rather than potentially expendable subordinates.
• reshaping the corporate culture so that creativity, autonomy, and continuous learning replace conformity, obedience, and rote behavior. Long-term growth, not short-term profit, is the goal.
• transforming the two organizations from rigid pyramidal structures to a fluid circle or an ever-evolving network of antonymous work units.
• encouraging innovation, experimentation and risk-taking.
• demonstrating a strong belief in people and teamwork.
• eliminating fear and anxiety in the workforce by committing to the enhancement of jobs rather than by laying off employees.
• identifying and responding to new and unprecedented needs of the workforce.
• being proactive rather than reactive.
• becoming comfortable with ambiguity and uncertainty.

Essentially, we believe that organizational linkages, like human relationships, cannot be perfectly designed. Each union is new and unique. No previous relationship can or should be used as a template or "cookie cutter."

Marriages work because the parties decide that each brings value to the relationship and each should be valued for individuality rather than be required to conform to one set of values or principles. We have found that organizational mergers work when both parties recognize that each brings value to the new entity, and the character and individuality of each is respected by the other.

Our organization has grown with success because we believe in a "win/win" philosophy. Win/win, according to management theorist Stephen Covey, is a turn of mind and heart that constantly seeks mutual benefits in all human and business transactions.

Win/win means that agreements or solutions are mutually beneficial and mutually satisfying. With a win/win solution, all parties feel good about the decision and feel committed to the action plan. Win/win sees life as a cooperative, not a competitive, arena, where most people tend to think in terms of dichotomies: strong or weak, hardball or softball, win or lose.

When I evaluate our growth, and partnerships with other organizations, both large and small, I come to the conclusion that we have succeeded most times. But, also, we have failed a few times.

Where we succeeded, we initiated the relationship with an attitude of trust and respect. Where we failed, these emotions were not present.

Where we succeeded, we quickly identified a compatibility of values, alive and operating in the two entities. Where we failed, we concentrated primarily on the enhancement of business through growth in market share and profit.

Where we succeeded, we eliminated the issue of "who controls whom" and forged a mutually beneficial vision for all employees in the enterprise, not just a few at the top.

Where we failed, we created a highly detailed plan and a tight operating structure that failed to provide for innovation and risk taking. Developing a highly structured, very detailed conversion plan always takes more time, energy, and cost.

Jeff Goldsmith has written: "The current generation of healthcare executives and physician leaders are caught in a transition from atomized entrepreneurship to an organized collegial culture. It is the cultural transition, not creating new corporate entities, that is the heart of the management challenge in creating an integrated healthcare organization."

I agree. And, although healthcare is undergoing massive changes, I do not fear the future. There are still many challenging opportunities for physicians and healthcare managers to influence not only the structure of healthcare, but, more importantly, better relationships and greater satisfaction among providers, payors, physicians, patients and personnel through high quality healthcare services at controlled costs. The key is how the partners in the enterprise relate to one another.

That well-known philosopher, Yogi Berra, said, "the future just ain't what it used to be." He is right. And, in human or organizational relationships, the future is always the best part.

I wish you "God's speed and good luck" in the development of your careers as executives through relationships based on knowledge, experience, and dedicated practice in the use of good judgment.

Thank you.