A Celebration of Michael E. Porter’s Life and Career
Dear Colleagues:
I would imagine most of you have heard of Harvard Business School Prof. Michael E. Porter in the context of his Life’s work creating the concept of “Value-Based Healthcare”, as well as his work on competition and strategy. This past week I was privileged to spend a day at HBS celebrating the life and career of Michael Porter with many others who knew him. He retired last year.
Prof. Porter joined the faculty of Harvard Business School on July 1, 1973. In the draft of what will become a case study on his life and contributions, the following is written: “During the following half-century, he reshaped the field of business strategy and influenced scholarship and practice in business, economic development, healthcare and philanthropy.”
In the winter of 2012, I was fortunate to participate in his annual Value-Based Healthcare (VBHC) Program (where I also met Robert Kaplan and Mary Witkowski), and subsequently I was lucky to have him advise me on my career and even mentor me as I pivoted to a commitment to VBHC. His accomplishments and contributions over the course of his life and career truly earn him status as an ICON (“Defined as a person widely admired especially for having a great influence or significance in a particular sphere.”)
It's my pleasure to share some impressions of my day at HBS honoring Michael E. Porter.
His early career included remarkable accomplishments such as selection to the 1968 NCAA All-American golf team and graduating as Valedictorian at Princeton University with dual majors in Aerospace and Mechanical Engineering.
In 1973, at the age of 26 and after completing his MBA and PhD at Harvard, he became an Assistant Professor at Harvard Business School. In 2000 he became a University Professor at Harvard, and in 2001 he became head of the Institute for Strategy and Competitiveness (ISC) based in Ludcke House at HBS. This later (1990s) also became the home of the Center for Value-Based Healthcare.
Prof. Porter’s work at HBS, including his “Five Forces” concept of competition. (HBR, 1979: “How Competitive Forces Shape Strategy.”), reshaped competitive strategy. He advised several political leaders across the world, including Ronald Reagan, on competitiveness.
His 2006 book (co-authored with Elizabeth Teisberg) entitled Redefining Healthcare: Creating Value-Based Competition on Results is widely regarded as the Bible of Value-Based Healthcare. Prof. Porter invited Professor Robert Kaplan to join him on the VBHC team to help assess cost of care from the patient perspective. At that time, costs of healthcare were not being properly measured. Now, Prof. Kaplan’s “time-determined activity-based costing analysis” (TDABC) is a key concept in accurate cost measurement in healthcare. Prof. Porter was joined by many partners in VBHC including Mary Witkowski and Derek Haas (Avant-Garde Health), and he influenced key leaders including Drs. Toby Cosgrove, former CEO of Cleveland Clinic and Kevin Bozic, Chair of Surgery at Dell Medical School.
I was inspired by my experience at HBS to create the Boston Shoulder Institute as a patient portal emphasizing the importance of measurement and transparency and patient education about shoulder care. I also created the Codman Shoulder Society to apply principles of value-based care to my specialty of shoulder care. In addition, we created a Value-Based Healthcare research group in collaboration with Avant-Garde Health.
It is my pleasure to share with you a few images and notes of the Celebration of Michael E. Porter’s life and career:
The Program (See enclosed):
My notes of ME Porter’s Case Study:
Habits:
o Preparation.
o Time Management.
o Energy & Brilliance.
o Focused on Priorities.
o Concern for the World.
Approach:
o Rewrite-rewrite-rewrite.
o Portable framework.
o Clarity of thought.
o Saw the world as a bunch of Rubric Cubes.
o Saw things as an engineer.
o Saw systems problems.
o Curiosity -----Details of the problem.
Lessons from Others:
o Build your personal strategy (makes you unique) = differentiation.
o Build your connections (network).
o Take on tough problems.
o Recognize when conventional wisdom fails (i.e. healthcare problems that are systemic).
o Key is preparation.
o Listen to everyone.
o Respect everyone.
o “There is no finish line” (in life).
o Use analytics ----where to go in the future.
o Bring others along with you.
o A firm has a competitive advantage if it has a higher return on assets than competitors.
Notes on being a CEO (insights into leadership reality):
An All-consuming job: Average Workday = 13 hours; work on weekends; work on most vacations; Personal time = average of 25%
Many meetings: Meeting time = 72% vs 28% of alone time
Content of work:
Strategy = 21%
Organization and culture = 16%
Functional and Business Reviews = 25%
People and Relationships = 25%
M&A = 4%
Operating plans = 4%
Professional development = 3%
Crisis Management = 1%
The CEO’s Scarcest Resource:
Sheer magnitude of managerial work to do.
The most constituencies to deal with.
Impossible to spend time with everyone or be involved with every decision…
Yet accountable for everything.
Can expand resources (staff, money) but time is fixed.
How a CEO allocates time is complex and important to success.
Notes:
EXISTING HEALTH CARE COST SYSTEMS HAD SEVERAL PROBLEMS:
Hospital and Clinic expenses allocated to patient care based on charges, not based on resources (personnel, equipment, space) used to treat a patient.
Costs not assigned to unbilled or unreimbursed processes and procedures; these are invisible to the costing system.
Costs measured for discrete individual procedures and events, not for all the processes performed over a patient’s full care cycle.
Fee-For-Service…results in HIGH-COST LOW VALUE INEQUITABLE HEALTHCARE:
Emphasizes volume of services
Fragmented care
Resists change.
Cost inefficiency
Lack of Transparency
No accountability for results
In conclusion, few of us will have the opportunity to associate with iconic individuals such as Michael E. Porter. Anyone who is interested in business, and in particular, the business of healthcare, should read his book and his many articles in HBS, JAMA, NEJM, and other key journals. He was a great inspiration for me.
Best Regards,
Jon “J.P.” Warner MD
Co-Chief, The MGH Shoulder Service
Vice-Chair for Quality and Safety in Orthopedics
Professor of Orthopedic Surgery at Harvard Medical School
Founder, The Boston Shoulder Institute
Founder, The Codman Shoulder Society
Past President, The American Shoulder and Elbow Surgeons
HBS/Executive Ed. PLD-27 Program (2019)
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