The Heart Of Transformation

Last week we looked at the concept of working backwards. If you want to experience the joys and heartaches of organizational life – not to mention the joys and heartaches of life itself – spend time at one of the fifteen hundred kidney dialysis centers operated by DaVita Inc., a fast growing company that treats nearly one-third of all the dialysis patients in the medically challenged United States of America. A visit to Zappos headquarters leaves you infused with a sense of youthful vigor. A visit to Umpqua Bank leaves you entertained and caffeinated. A visit to DaVita leaves you touched and humbled about what it means to do something under exceptionally difficult conditions. It truly represents the heart of transformation. The purpose. 

Lots of leaders tell themselves that their work feels tough because they work in such tough fields, with aggressive competitors, hard to please customers, and little room for error. But few fields come close to dialysis in terms of the pressures on the companies that provide the treatment, the demands on the employees who interact with patients, and the life or death stakes of the service itself. This is one of the most daunting environments imaginable in which to build a high performance organization and create long-lasting economic value – a field in which you must be the most of something, because being pretty good at everything is a surefire prescription for failure. 

In a country that has repelled ‘Obamacare’, dialysis does what damage kidneys cannot – clean the blood of water, minerals and built up toxins that would be fatal without the process. A single treatment lasts up to four hours, and treatments must take place three times a week, fifty-two weeks a year, every year for the rest of your life (or until you are fortunate enough to get a kidney transplant).

In other words, as explained in the Wall Street Journal, dialysis “is one of the great life-extending treatments of all time.”As tough as dialysis is on the heartstrings, it’s just as tough on the purse strings. DaVita and other treatment providers must navigate the treacherous crosscurrents of medical advances, government mandates, insurance-industry practices and never-ending demands to lower expenses and improve outcomes. 

Obamacare would have provided full cover yet The New York Times has called dialysis “the closest thing the United States has to nationalized health care.”So companies have to keep a tight rein on expenses, generate extra revenue by administering medication and providing add-on services, and stay in the good graces of (better-paying) private insurers, which covers a minority of patients for a limited time.

Still, through it all, DaVita has thrived. Kent J. Thiry, its hard-charging CEO, took command when the company was on the verge of bankruptcy. Since then DaVita basically started from scratch and started something big. Here’s how a Stanford Business School case summarized DaVita’s performance six years after Thiry arrived: “The company’s market capitalization had grown from $200 million to more than $5 billion, the clinical outcomes had become the best in the industry, the company’s organic growth was the highest in the industry, and employee retention had improved dramatically with a 50% reduction in turnover.”

All of which, from the perspective of achieving exceptional results under exceptionally difficult conditions, raises two questions: If the dialysis process is so demanding, how do DaVita centres manage to feel so spirited and full of life? And if the economics are so punishing, how has DaVita been such a success in terms of growth, profitability, and shareholder value? The answers speak to the power of designing a one-of-a-kind business around a unique (and extreme) set of ideas – and to the virtues of building an organization around a sense of personal engagement and emotional attachment that goes beyond the dollars and cents logic of business itself.

Bill Shannon, who spent several years as DaVita’s chief wisdom officer (his actual title), offered some unconventional wisdom about what makes the organization tick. “We are different on purpose,”he explains. “We are a community first and company second. We want people to feel and behave like citizens of a village, the DaVita Village and to embrace the rights and responsibilities that come with citizenship. The goal isn’t financial performance. The goal is for people to be part of something they are proud of, a sustainable community that becomes an example to others. That means giving people a voice, giving them a vote, giving them skills, not just to be better managers and business leaders, but better people and citizen leaders.”

Life at DaVita is filled with symbols, rituals, and traditions that bear little resemblance to life inside conventional organisations. When Thiry took over, the company was called Total Renal Care, not exactly the warmest identity. After generating a bunch of alternative names, the company put the final choices up to a vote of eight hundred members of the workforce, chosen to express the will of their colleagues in a form of representative democracy. The name DaVita (inspired, it is said, by an Italian phrase that means “gives life”) won in a landslide.

There’s an official company song (“On DaVita”) and an unofficial company movie (The Man in the Iron Mask, in which the Three Musketeers come out of retirement to save France from King Lois XIV). Thiry looks for any and every opportunity to don his Musketeer uniform, brandish his sword, and rally colleagues to conquer a goal or slay a problem.

So the way to deliver outsized business results in a field with huge problems is to promote a strong culture, right? That’s not the whole story, argues Thiry: “There’s a Buddhist phrase I use a lot, ‘One cannot pour from an empty cup.’ Dialysis is a grueling job. You can’t make a mistake, or the patient dies. About 17% of our patients die each year anyway, despite all we do. So we have to make the experience of working here a little easier, a little more fulfilling. If we didn’t create an environment where people feel free to sing songs, to laugh, to come to work in funny outfits, all the business strategies and HR practices in the world wouldn’t make a difference.”

But we don’t work this way because of the business we’re in or the people we care for,”he continues. “When I explain our ideas, I never play the patient card. I believe this is how every organization should work. And I stay away from ‘linkage’ between how we treat each other and how the business performs. We don’t do return-on-investment calculations for this stuff; that’s like calculating ROI for having a nicer family. We have flipped the means and the ends. Having an adequately profitable business is the means. Building a real community of human beings is the end.”

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