The Other Machiavelli: Finding lessons for leaders in a lesser-known work by the Florentine political philosopher

However cynical it may seem, Machiavelli’s The Prince has long been recognized as a source of insights for anyone trying run a business or gain power in one. A ferocious little treatise of under 100 pages, The Prince was aimed at Lorenzo de’ Medici, the iron-handed Florentine ruler, by an author hoping to regain the proximity to power that he formerly enjoyed.

But modern corporations aren’t principalities ruled by autocrats. They are, in fact, more like republics, their leaders dependent on the support of directors, employees, customers, investors, and one another. That is why, in turning to Machiavelli for management wisdom, we would be well served to leave aside The Prince in favor of another of his works, one that is less known but perhaps more to the point. Don’t be fooled by the academic-sounding title; Discourses on Livy has a great deal to teach us about leadership in any organization resembling a republic. Chances are, that includes your business.

Published posthumously in 1531, Discourses draws on the ancient Roman historian (among others) to analyze the nature of power in public life. Like The Prince, this is not a handbook for saints. But the author was a brilliant student of human nature, and not one to underestimate the potential of a determined individual. In Discourses, he firmly asserts the importance of an individual founder in establishing or renovating a republic—and by extension, for our purposes, a business. A prudent founder, he writes, “must strive to assume sole authority.”

Yet a single person cannot sustain an enterprise in the long run. That is only possible if the founder’s vision and talents result in an institution supported by stakeholders who can carry the venture into the future. “Kingdoms which depend only upon the exceptional ability of a single man are not long enduring,” Machiavelli writes, “because such talent disappears with the life of the man, and rarely does it happen to be restored in his successor.”

Besides, princes have no monopoly on wisdom. Despite the notorious unpredictability of the mob, the author acknowledged the wisdom of crowds when he asserted that “the multitude is wiser and more constant than a prince.” Machiavelli was also insightful about succession: “After an excellent prince, a weak prince can maintain himself,” he observed with admirable economy in one chapter’s epigraph, “but after a weak prince, no kingdom can be maintained with another weak one.”

Many of the epigraphs are bull’s-eyes of this kind. Take this one, for example: “Whoever wishes to reform a long-established state in a free city should retain at least the appearance of its ancient ways.” This is worth doing even if you make massive changes, because, Machiavelli notes, “men in general live as much by appearances as by realities; indeed, they are often moved more by things as they appear than by things as they really are.”

Honesty may be the best policy, but that is not a maxim ever attributed to Machiavelli. In keeping with the notion that people attend largely to appearances, he says leaders compelled to do something by necessity should consider pretending their course of action was undertaken out of generosity. In another chapter, he argues, “Cunning and deceit will serve a man better than force to rise from a base condition to great fortune.”

Machiavelli, of course, took a hard-headed view of humanity, believing that people act largely out of self-interest, whether to gratify their egos or sate their desire for material wealth, and that, for better or worse, actions tend to be judged by their consequences. Indeed, he was very much what philosophers call a consequentialist, arguing that, in some contexts, bad things must be done to achieve good ends achievable in no other way. This is not to say that law-breaking or other unethical acts are justified—even some of Machiavelli’s contemporaries considered such advice controversial—but every business leader knows that hard decisions must be made, be it the closing of a venerable division or taking a company in a risky new direction, for the long-term good of the enterprise.

Even when advocating something like mercy, Machiavelli did so with consequences in mind. He argued, for example, that failure should not be harshly punished, especially if it arises from ignorance rather than malice. Roman generals, he notes, had difficult and dangerous jobs, and Rome understood that if military leaders had to worry about “examples of Roman commanders who had been crucified or otherwise put to death when they had lost a day’s battles, it would be impossible for that commander, beset by so many suspicions, to make courageous decisions.”

If punishment should not be meted out lightly, neither should rewards be delayed. If you don’t cultivate loyalty and support from others in good times through open-handedness, Machiavelli says, those people certainly won’t have your back when things get rough. Doling out rewards only in the face of tough competition or harsh circumstances will lead subordinates to believe “that they gained this favour not from you but from your adversaries, and since they must fear that after the danger has passed you will take back from them what you have been forced to give them, they will feel no obligation to you whatsoever.”

Republics, in his view, have no choice but to grow, for “it is impossible for a republic to succeed in standing still.” Companies are the same. But acquisitions—whether in battle or by purchase—must be carried out with care, for “conquests made by republics which are not well organized, and which do not proceed according to Roman standards of excellence, bring about their ruin rather than their glorification.”

Finally, Machiavelli was well aware of the risks of advice-giving, so much so that he gave one chapter the title “Of the danger of being prominent in counselling any enterprise, and how that danger increases with the importance of such enterprise.” Consultants, take note. Just don’t let the clients catch you reading Machiavelli.

Hospitals need ‘transformational changes’ to stem margin erosion

https://www.healthcaredive.com/news/Fitch-ratings-nonprofit-hospital-changes/627662/

Dive Brief:

  • Nonprofit hospitals are reporting thinner margins this year, stretched by rising labor, supply and capital costs, and will be pressed to make big changes to their business models or risk negative rating actions, Fitch Ratings said in a report out Tuesday.
  • Warning that it could take years for provider margins to recover to pre-pandemic levels, Fitch outlined a series of steps necessary to manage the inflationary pressures. Those moves include steeper rate increases in the short term and “relentless, ongoing cost-cutting and productivity improvements” over the medium term, the ratings agency said.
  • Further out on the horizon, “improvement in operating margins from reduced levels will require hospitals to make transformational changes to the business model,” Fitch cautioned.

Dive Insight:

It has been a rough year so far for U.S. hospitals, which are navigating labor shortages, rising operating costs and a rebound in healthcare utilization that has followed the suppressed demand of the early pandemic. 

The strain on operations has resulted in five straight months of negative margins for health systems, according to Kaufman Hall’s latest hospital performance report.

Fitch said the majority of the hospitals it follows have strong balance sheets that will provide a cushion for a period of time. But with cost inflation at levels not seen since the late 1970s and early 1980s, and the potential for additional coronavirus surges this fall and winter, more substantial changes to hospitals’ business models could be necessary to avoid negative rating actions, the agency said.

Providers will look to secure much higher rate increases from commercial payers. However, insurers are under similar pressures as hospitals and will push back, using leverage gained through the sector’s consolidation, the report said.

As a result, commercial insurers’ rate increases are likely to exceed those of recent years, but remain below the rate of inflation in the short term, Fitch said. Further, federal budget deficits make Medicare or Medicaid rate adjustments to offset inflation unlikely.

An early look at state regulatory filings this summer suggests insurers who offer plans on the Affordable Care Act exchanges will seek substantial premium hikes in 2023, according to an analysis from the Kaiser Family Foundation. The median rate increase requested by 72 ACA insurers was 10% in the KFF study.

Inflation is pushing more providers to consider mergers and acquisitions to create economies of scale, Fitch said. But regulators are scrutinizing deals more strenuously due to concerns that consolidation will push prices even higher. With increased capital costs, rising interest rates and ongoing supply chain disruptions, hospitals’ plans for expansion or renovations will cost more or may be postponed, the report said.

Acknowledging the losses that come with a new strategy

https://mailchi.mp/30feb0b31ba0/the-weekly-gist-july-15-2022?e=d1e747d2d8

Embarking on a new strategy requires myriad organizational changes—which will inevitably come with losses. Some parts of the business, people, roles, processes, and traditions will inevitably be deemphasized, or even eliminated from the organization. A recent article in the Harvard Business Review identifies how leaders launching new strategies typically spend a significant amount of time trying to plan for the unpredictable future, while overlooking one of the most predictable parts of any change in strategy: what will be lost when something else is gained.

The Gist: It is critical to identify, acknowledge, and plan for these losses in adopting any new strategy, as the unexpressed fear of loss is a key driver of organizational inertia and resistance to change.

With health systems deep in strategy development for the post-COVID marketleaders must take into account the wide range of challenges their organizations will face when it comes to reconfiguring investment, growth, competencies, and people, in addition to focusing on new areas of opportunity revealed by the pandemic. 

Failing to confront these tradeoffs head-on may sacrifice any strategic gains resulting from new initiatives.

From Amazon to New Balance, consumer brand execs bring ‘outsider’ perspective to healthcare

boardroom with woman leading team meeting

Massachusetts-based health system Wellforce recently appointed its first ever chief consumer officer, tapping an executive from a well-known sneaker brand.

Christine Madigan joined the health system to lead marketing and consumer engagement, Wellforce announced in January. She comes from New Balance Athletics, where she led the global marketing and brand management organization. Madigan was attracted to what she termed the “challenger brand” because of its nimble innovation strategy and its mission to help people live healthier. “I can’t imagine a more purpose-driven culture than that,” she told Fierce Healthcare. 

“As a marketing veteran from consumer products, Christine understands the importance of envisioning and building services around consumer needs. She will be a great asset in improving and modernizing the way consumers engage with the health care industry,” David Storto, Wellforce’s executive vice president and chief strategy and growth officer, said in the announcement. 

The move comes amid a rising trend in healthcare: executives sourced from outside the industry, and in particular from consumer brands, to lead innovation strategies. Fierce Healthcare spoke to several, some of whom have been in their roles for years. They agree that while there are many transferrable skills, there is also an advantage to being an outsider. 

To Madigan, the core challenge remains the same business to business—understanding who the consumer is and the different ways they engage with one’s brand. 

Aaron Martin, chief digital officer at Providence St. Joseph Health, who joined the health system from Amazon in 2016, echoed Madigan. “Bringing the patient focus—what we called at Amazon ‘customer obsession’—to Providence was key,” he told Fierce Healthcare.

Society is bombarded by healthcare marketing messages, Madigan noted. She wants to “drive some simplicity into the process.” While the system is built to provide reactive, acute care, Madigan sees preventive care as just as important. And a crucial part of facilitating that is establishing not only awareness of but trust in a provider. “Every detail matters in what you communicate in an experience,” she said.

And for organizations that don’t innovate, “somebody else is going to disrupt us,” Martin said.

To drive innovation at scale, Martin sees a disciplined strategy as key. At Amazon, that looked like picking an area to impact and measuring the value of closing that gap. Applying that to Providence, Martin worked with the clinical team to discover patients in need of low-acuity care were going to other providers instead of to Providence. So Providence launched ExpressCare, offering virtual appointments to recapture those patients and establish continuity of care.

Like Madigan, Novant’s chief digital and transformation officer Angela Yochem, who has held chief information officer roles at Rent-A-Center and BDP International, believes passive care is not enough to eradicate health inequities. “We’ve optimized for fixing things,” she said of the healthcare system. “I’d like to see the healthcare industry become more engaged continually. We need to understand our patients beyond what their last condition is,” she added, referring to social determinants of health.

“In retail, we used to say that customers shouldn’t have to shop our merchandising organizational chart,” said Prat Vemana, Kaiser Permanente’s chief digital officer, who transitioned in 2019 from chief product and experience officer at The Home Depot. To streamline how patients navigate an already highly fragmented healthcare system, Kaiser starts with the patient and works backward when developing digital experiences. 

A challenge in healthcare, Vemana acknowledged, is the lag in data around health outcomes. Whereas in retail, results are immediately visible, healthcare is less straightforward. “We have to develop workarounds to get directional information while waiting to see the results,” he said. 

The transformation of the sector won’t happen without diversity of thought and experience, Yochem said. It’s less about hiring from a particular sector and more about hiring from all over. Those people will have seen the potential for consumer engagement and will be able to “apply what we know to be possible,” Yochem said. Without those outsider insights in the insular sector, “you create an echo chamber, because you respond to problems in the same way.”