What business can learn from medicine

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Medicine increasingly seems to take its cues from the business world; hospital executives worship at the altar of operational efficiency, pepper their language with "revenue management," "workflow optimization," and "best practices."

Yet, before we give ourselves over entirely to management consultants, it may be prudent to consider an alternative line of inquiry: can business learn from medicine?

When you think about it, large businesses face an enormous challenge: how to sustain and improve their health, and increase their profitability. The key tools they have are incentives -- salary structures keyed to the delivery of specific tasks, or to performance along various predetermined parameters. A business development function, for example, might be evaluated by the number of deals they review, the number of transactions they execute, or their performance rating in an industry survey.

The problem is, most metrics used by businesses, like many biomarkers or surrogate endpoints, are necessarily indirect, and have an implied but not usually demonstrated relationship to company performance. A high score on an industry survey, for example, may bump an executive's compensation without actually increasing a company's profitability.

While most business leaders would acknowledge their performance metrics aren't perfect, most assume these indicators are at least directionally correct; it stands to reason, for example, that a well-perceived business development group would be a good thing for a company. Yet, the experience of medicine would suggest more caution.

Consider the treatment of patients who suffer heart attacks, and are at increased risk of sudden death in the future. To mitigate this concern, patients use to be routinely placed on antiarrhythmic medications after a heart attack -- until the CAST study, published in the early 1990s, unexpectedly revealed that the medication actually put patients at increased risk of death.

Similarly, bone marrow transplant was routinely used in the treatment of breast cancer patients, before a careful study revealed it offered no survival benefit, and considerable morbidity. In the last two years, the AIM-HIGH study, and subsequently the THRIVE study, unexpectedly cast doubt on the utility of niacin in the treatment of at-risk patients already on statin therapy.

In each of these cases, it seemed intuitively obvious (at least to many) that the therapy in question should have worked; even conducting several of these studies was viewed as ethically questionable, likely to deprive vulnerable patients of a likely benefit.

While it's not exactly news that intuition can be faulty, businesses may be especially vulnerable. For starters, while businesses routinely seek to employ "best practices," the evidence base for many of these is far less robust than many medical interventions. Companies are successful, they also do X, hence X is often tagged as a key success factor or a best practice that others should follow. Entering the corporate world after training in biomedical science, it's difficult not to be stunned by the power of dogma, and appalled by the comparative scarcity of critical analysis - even as I recognize the often-prohibitive challenges of performing relevant real-world studies.

The impact of untested assumptions is exponentially worse in large corporations, which typically try to align incentives so that all employees are working as efficiently as possible to achieve specific corporate goals, as evaluated by pre-specified metrics, and tracked centrally using "dashboards" or "scorecards."

In this context, consider the harm of a faulty metric, which can be rapidly reified, and established as an essential benchmark. Suddenly, thousands of employees can be focused on executing against a goal that may seem utterly logical, yet in practice turns out to be counterproductive, just like the routine administration of antiarrhythmics to prevent sudden death after heart attacks. In this context, as Nassim Taleb highlights in Antifragile, the tight interlocking connections large companies use to drive efficiency can also lead to catastrophic harm, and few companies build sufficient slack in the system to account for the possibility that they may be steering in precisely the wrong direction.

It seems especially important to be sure that business-inspired efficiency initiatives improve, and not degrade, the practice of medicine. I worry about this particularly in the context of clinical protocol standardization, intended to protect patients from bad care, and ensure each patient benefits from medical "best practices." In our enthusiasm to eliminate bad care, we must not resort to rigid standardization for its own sake, especially when the evidence for individual best practices can be so variable, and often based on little more than expert consensus.

Instead, let us embrace the via negativa strategy advocated by Taleb, and aggressively eliminate established bad practices, but not assume we know enough, in most circumstances, to tell physicians exactly what to do, especially when the data are lacking.

It's a lesson in humility many corporate executives would do well to learn.

 

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David
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