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My guest for Episode #536 of the Lean Blog Interviews Podcast is Carlos Scholz, the new CEO of Catalysis. Carlos brings a wealth of experience from both manufacturing and healthcare, having led Lean transformations at New York City Health and Hospitals and the Permanente Medical Group before stepping into this new role.
In our conversation, Carlos shares how his Lean journey began in manufacturing and evolved into a deep sense of purpose in healthcare. He reflects on the importance of moving beyond tools and events to a true Lean management system–one built on humility, leadership behaviors, and engaging people at every level. From early days of one-piece flow in apparel factories to executive coaching in healthcare, Carlos has seen firsthand how Lean creates sustainable change.
We also discuss his recent article, Leading Through Disruption: How Healthcare Leaders Can Respond, which highlights the challenges facing healthcare and the leadership mindsets needed to thrive. Carlos explains why humility and psychological safety are essential traits, especially in times of disruption. He shares how leaders can unlearn command-and-control habits, create environments where people feel safe to speak up, and embrace feedback as an opportunity to grow.
Whether you work in healthcare or another industry, you'll find practical takeaways about developing people, aligning purpose and strategy, and building resilient organizations that thrive even in uncertain times. Carlos also highlights success stories from Catalysis partners–including UMass Memorial, Ohio Health, and Zuckerberg San Francisco General–that show what's possible when leaders truly commit to continuous improvement.
Questions, Notes, and Highlights:
- What's your Lean origin story? How did you first get introduced to Lean?
- How did your early experiences in manufacturing shape your view of Lean?
- What drew you to Lean in healthcare, and how did that transition happen?
- What did you learn from your time at New York City Health and Hospitals?
- How did your work at Kaiser Permanente help shift from tools to leadership behaviors?
- What led you to write your article, Leading Through Disruption?
- How can Lean leadership help healthcare organizations respond to disruption?
- Why are humility and vulnerability so important for leaders today?
- How do you define psychological safety, and how can leaders build it?
- What does Leader Standard Work look like at the executive level?
- What organizations stand out today as strong Lean exemplars?
- What gives you hope for the future of Lean in healthcare and beyond?
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Key Quotes
“If you are robbing people of the opportunity to grow, you're not really a learning organization.”
“Everything you learned that made you a leader, you now have to unlearn — and that's not easy.”
“Leaders realized their role was not to give people the answers, but to create the conditions for people to solve their own problems.”
“Psychological safety isn't about being comfortable — it's about knowing you can speak up without fear of blame or punishment.”
“The real secret of Lean isn't tools, it's the principles, behaviors, and habits that make improvement sustainable.”
Automated Transcript (Not Guaranteed to be Defect Free)
Of course. Here is the cleaned-up version of the transcript. I've corrected spelling, punctuation, names, and other minor transcription errors for clarity and accuracy.
Mark Graban: Hi, welcome to the podcast. I'm your host, Mark Graban. Our guest today is Carlos Scholz. I've known Carlos for a long time now. He is an experienced lean practitioner with a rich background in both manufacturing and healthcare. He is currently–this is a recent new role for Carlos–joining Catalysis as their CEO. Before that, he led impactful lean transformations at the New York City Health and Hospitals and The Permanente Medical Group. So he brings a real commitment to systems thinking, leadership, and continuous improvement. So Carlos, welcome to the podcast. How are you?
Carlos Scholz: Thank you. Thank you very much, Mark. Thank you for having me.
Mark Graban: Yeah, and congratulations on your new role. And as a Catalysis faculty member, I'll say, welcome to the Catalysis Circle here. You've been involved in different ways for a while, right?
Carlos Scholz: Yeah. Yeah. I have been involved with Catalysis for a really long time. One of the areas in which I got involved was when I first got into healthcare back in 2011. I got the opportunity to meet John Toussaint and Kim Barnas directly because we had just become a member of the network that they had created back in 2008. And we were part of the second cohort. We had organized a visit to New York, and I made it a point to introduce myself to John. And from there, we developed a really good relationship. Yeah.
Mark Graban: Yeah. We'll come back and there's a lot to talk about with healthcare and what's to come with Catalysis and the Healthcare Value Network and other things going on. But as I mentioned in the intro, like me, you started in manufacturing and as I like to ask people here on the podcast, what was your lean origin story? When and where and how you got introduced to this?
Carlos Scholz: Yeah. Yeah, it's a really interesting one as well. I've heard other people's stories. I've heard, for example, Josh Howell's story from the Lean Enterprise Institute, how he started at Starbucks. Mine started in branded apparel. And the interesting part about branded apparel manufacturing is that the company that I started working at the time was Sara Lee Branded Apparel. Sara Lee as in the cakes, the exact same company. That company had a branded apparel division. And when I graduated from school, I studied industrial engineering in Mexico, where I'm from. I just graduated from school. About three months later, I land this position as an industrial engineer. Just, that was the name of the position. “You're an industrial engineer.”
From day one, I remember very vividly what I was told is, “You are going to be responsible or one of the people involved in this project that we have to turn the entire manufacturing facility from bulk to one-piece flow over the next two years. That's what we're going to do.” So I had the opportunity, really, from day one, to have an extremely good project to work on. I was afforded and I was privileged with the opportunity to learn about lean from day one on the job. Talk about being lucky in that capacity.
So from day one, I was learning about putting the machines that were distributed among the entire facility–and moving pieces, moving entire bolts of 60 pieces in bags from one machine to the other–and reorganizing the entire floor into manufacturing cells. We did takt time studies. We balanced the line around that takt time. We organized the layout in the right way, put the right number of people per operation. We implemented TPM and SMED and 5S. Anything, just the entire book, Lean Thinking, just applied pretty much, which was again a blessing. And over the course of several years, I had the opportunity to help in bigger roles throughout the organization.
And eventually, I found another role in a lean transformation at another company called D'Addario. And that's a family-owned business in Long Island that the owners knew, “We really need to do this if we're going to survive doing manufacturing here in the United States.” Think about all places, Long Island being a place where manufacturing still occurs. And that's actually the case. The family has done a really good job bringing production that they had overseas in other countries into Long Island.
Mark Graban: Oh, wow.
Carlos Scholz: And they–all of a result of their lean transformation. And they have grown tremendously over the years. If you don't know what product they make: guitar strings and drum heads and other musical accessories.
Mark Graban: I know the company because coincidentally enough, the CEO at the time, anyway, Jim D'Addario, has been a guest on this podcast. It was episode, I had to look it up, episode 83 in the year 2010. So I don't know, is he, I don't know if he still is working as CEO? It's a family business. Does he have a child who's taken over?
Carlos Scholz: Yeah. One of the family members took over. They have a very good succession plan. So there was a brother prior to Jim that was the CEO, then Jim became the CEO, and now one of Jim's nephews is the CEO. And his name is John D'Addario III. Yeah. And like you said, yeah, you interviewed him and that's where you entered my story because after that blog interview, our CEO, who was at the time on the board of directors of a hospital, you interviewed him and you gave him a copy of your recently published book, Lean Hospitals. And he gave us all copies of the book. And that's when I became really interested in lean in healthcare because to me, from a deep personal sense of purpose, I always knew that while I was happy with my job, I was not fulfilled with my job because I always felt the need to serve others. And I found in lean, in the concept of Lean Healthcare, I found that venue to accomplish that purpose. And that's when I contacted you because you had at that time put your contact information, and we started corresponding, if you remember, back in 2011 probably. And I was asking you questions about how do I get into healthcare? And one random day in March of 2011, you sent me an email saying, “I just know of an opportunity. I was just let know of an opportunity in New York City. Are you interested?” And two months later, I started my journey in New York City Health and Hospitals. Yeah.
Mark Graban: Yeah. I mean, I remember that part of our getting to know each other because, as you mentioned, that second cohort of the Healthcare Value Network, I was still working for LEI and Catalysis, and those conversations with Joanna Omi and others who were there… yeah, about getting involved, I think was how I was aware of the situation. I forgot, I either didn't know or I forgot the connection going back to Jim D'Addario. I think I've just forgotten because it's been almost 15 years.
Carlos Scholz: And Jim was an amazing CEO, one of those CEOs that is just on the production floor every single day, getting involved, talking to people, asking questions, finding opportunities, doing his coaching his own way. But I think that was really the success of the lean transformation for D'Addario, that he owned it himself.
Mark Graban: Yeah. And it sounds like from your starting point, what you were describing about going to single-piece flow, a lot of technical lean method implementation. And that's good. That's part of the equation. But then it sounds, as a lot of us do, and maybe this was more so under Jim, you started getting exposed to more of the lean management system approach. Is that fair to say?
Carlos Scholz: Yeah, that is fair to say. I think with Jim, with the examples that I saw through Jim, I was able to see something more than just simple tools or concepts of a methodology to accomplish a specific result. That's what I believe. Sometimes lean thinkers or leaders associate lean to tools almost immediately because of that connection. I think my initial state in what was initially Sara Lee Branded Apparel and then later became Hanesbrands, which was spun off as another company out of Sara Lee eventually, was mostly tools-related. And when I got into D'Addario, I was able to see those behaviors, those principles, those leadership traits that really make it work from a reliable and sustainable perspective.
Then I transitioned into healthcare, and I saw a little bit more of a focus on tools up until a certain time within my journey there in New York City Health and Hospitals when we started realizing, when we became members of the network, “Hey, there's much more than just doing these rapid improvement events, much more than just thinking about how do we apply flow and takt time in the emergency department, or how do we apply SMED in the operating room or things like that.” And we started to realize this concept of, “Hey, there are these principles, there are these behaviors that are really the secret sauce of making it work.”
It wasn't really until, just to be completely honest, we started the implementation of a management system at New York City Health and Hospitals at some point. But it really wasn't until I transitioned to Kaiser Permanente, specifically the medical group, where I feel that everything really came together. I saw the ownership from the physician leaders, the administrative leaders. They knew. We did an assessment. I remember this part vividly. We did the assessment and out of the assessment, we came to the realization, “We've been doing this for eight years and it's been mostly focused on rapid improvement events and tools. And we feel stuck. We feel like we're in a rut and we know that we need something, but we don't know exactly what it is.” And the assessment really helped capture, “Oh, wait a moment. It's us. It's us, the ones that are creating the waste. It's us, the ones that are not really leading by example. We are asking others to do the things that we want them to do, but we are not willing to change on our own.” That is a little bit arrogant, right? And when there was recognition that if we change that way, it was really going to help unleash the engagement and the creativity of everybody in the organization. I think that switch finally happened when I was working at Kaiser Permanente. Yeah. So it took a while.
Mark Graban: Yeah. So maybe we can bridge from some of that specific experience into talking about healthcare a little bit more broadly. And in the show notes, there'll be a link to an article that you wrote recently. It was published through America's Essential Hospitals. The article was titled, “Leading Through Disruption: How Healthcare Leaders Can Respond to Challenging Times.” And in the roughly 20–it's 20 years ago this month that I've been working in and focused on healthcare–there have been so many different challenges over those 20 years. It's always been challenging–different circumstances and fears and risks and circumstances. And pre-COVID was just one of those challenges and challenging times. But thinking of lean as a methodology and mindsets that help address challenges and help us improve, if not transform… like what was the impetus, the motivation for this within the medical group? Lean is a difficult thing to take on. So there must be some pressing needs, or must have been. How would you describe that back then?
Carlos Scholz: Yeah, the best way I can describe it, Mark, is sustainable and reliable results. To really have a system that can outlive anybody that comes and it doesn't become the next flavor of the month. I think leaders really started realizing at The Permanente Medical Group that it's much bigger than any of us, that this is the right way to unleash the capabilities of everybody in the organization. To me, I see it like David Marquet, the author of Turn the Ship Around!–I love that book. And he has also a video of the submarine, and he talks about clarity and capability as the two pillars. And they realize that their role was not to give people the answers for everything, that they were really robbing people of the opportunity to grow. And if you are robbing people of the opportunity to grow, you're not really a learning organization. You're not really developing those next leaders in the way that is really going to help the organization grow in a reliable and sustainable way. And it may take a while, but they realized, “Some of us will retire and we're not going to be able to see the level of maturity at the end of the day, but we know it's better. It's bigger than all of us, and we need to really do this.”
And that actually happened after we started this journey. Some of them retired, but I remember those leaders that came after them were brought from within the same organization with all of the learnings about these principles, behaviors, practices, habits that really fostered the right environment and the right culture. I think that has been a big piece that has allowed that culture to thrive and to continue in its maturity. Is it perfect? No. By all means, it's not perfect, but I think some of the traits are, yes, the recognition that this is bigger than us, that this is the right thing to do, and if we're really serious about growing people in our organization, they need to be the ones solving their problems. One of the areas that I told them is, “This sounds all very easy, but in practice, you put it in practice and you actually start asking questions, and it's just difficult to contain yourself from telling people what to do or to ask a question in the form of a directive.” And it really required a lot of very deliberate practice to develop those right behaviors because everything that you have learned up to that point that made you a leader, now you have to unlearn and go in a different direction. It's definitely not easy, but everybody, I think in that organization and everywhere where people have done it this way, can recognize it's the right thing to do.
Mark Graban: Yeah. And I think one of the challenges, thinking more broadly, is that I think by the time somebody reaches an executive senior level in healthcare, they've been in there, there may be 20 years into their career, at least. If they've been in the role for a while, they could have 30 or 40 years of habits of doing things that other way, the more, as John Toussaint talks about, the difference between “white coat leadership” and lean leadership. Yeah. That's always stuck with me, even though I've never worn a white coat, unless it was like a temporary lab coat. But thinking about the habits of command-and-control leadership, and I think one of the challenges, a lot of leaders think in a crisis, in challenging times, “We have to have the answers. We have to be directive.” And David Marquet's story as a submarine commander is a great illustration of how engaging others and not needing to have all the answers is a better approach. But it can be really hard to spark somebody to reflect on those command-and-control habits because those leaders have been, to a degree, successful with those methods, or they wouldn't have risen through the ranks. But there's still so much gap and opportunity when it comes to healthcare quality and costs. Like, I think that's the conundrum. It can be, we view it can be better, and then there are some people who might think we're doing the best we can. I don't know if it can be better. Do you know?
Carlos Scholz: Exactly.
Mark Graban: It was a rambling observation. Yeah. I always, what do you think?
Carlos Scholz: No, you're spot on. I always told my leader, and every time I coach an executive leader, I tell them this, “Look, you're about to enter what I call the gray zone. The purpose of you growing another individual or coaching another individual to reach their potential is to push the threshold of their knowledge, right? And to push the threshold of their capabilities. But in doing that, and we know this from Toyota Kata and other books, you enter a zone where there's a lot of uncertainty. You don't know what's going to happen.”
Let me give you a very quick example. When we recently–not recently, but when we started this process, we were telling our leaders, “Focus on just asking the question.” We created standard work. “This is how the performance review meeting is going to go. You're going to go through the scorecard, you're going to ask specific questions, and they're all going to be open-ended, and they're in the form of Kata. What was your challenge? Where are you right now? What have you done up to this point?” et cetera, right? And in doing that, we started that process in any interactions that were occurring because we wanted to create that coaching system, whether it was a monthly performance review or a weekly one-on-one or et cetera, any kind of meeting or a huddle. And the tier up, the tier above, let's say an executive leader was asking these questions and the tier below, the coaching recipient, was trying to answer the questions. The meeting ends, or the coaching session ends, to say it more correctly. And the executive leader is feeling energized. He's feeling like, “I did it. It's great. I feel great.” And the tier below, because the behaviors are still not there, is saying, “This is a complete waste of my time. I came here for answers.”
Yeah. There's this weird sense of freedom in having that command-and-control type of relationship because, you ask how everybody was brought up. “I come to you, you give answers. I go and execute. And you see how good I am at executing those things. And now you're telling me that I am the one that has to figure this out. Yeah. This was a waste of my time.”
Mark Graban: Wow.
Carlos Scholz: And we had to really go through that gray zone. Yeah. And frustration and be very vulnerable. It really required us to be open, transparent, to share those experiences. I remember we had something called “Wednesday Failures” or “Wednesday Boo-Boos,” where leaders would come and say, “I want to tell you about an experience that I had in my coaching with somebody else. And this is what happened, and this is what we learned from it.” And the more we did that, the more we did those cycles of, maybe you call it checking and acting, right, on your approach, the more comfortable we felt and the more people started feeling, “You know what, this really is on me. I am the one who is expected to own this. To own the problem, to own the definition, to own the execution of what we need to do, and to do that exact same thing to the next tier down, and that person to the next tier down, and so forth.” And the more we did that more consistently, I think that's when you really start unleashing the power and seeing the fruits of that work in the form of results. Because trust me, the first two or three years, and COVID was a big reason for that as well, but the first two or three years we were not seeing the results. And all of a sudden it's like you reach a critical point and everything just becomes exponential from there.
Mark Graban: Yeah. Yeah. Working through changing those habits, as you're pointing out, it's difficult from both sides, right? So when leaders try to shift from telling people what to do and asking questions, and whether they're following a humble inquiry type approach that Ed Schein writes about and teaches… and that can be uncomfortable for the leaders. But what you said really resonates, of hearing people say, “There was safety in being told what to do,” because the dynamic I've seen is when people say, “I came to you for answers,” and the leader says, “I want you to figure it out.” In the old way, the employee or the… it could be a middle manager underneath the C-suite, thinking, “If I have this freedom to figure it out, but if I'm wrong, I'm going to get in trouble.”
Carlos Scholz: Correct.
Mark Graban: And leaders have to maybe also remind people we're going to go through PDCA cycles and the “Wednesday Boo-Boos” of being vulnerable and sharing times when you've failed or struggled. That's a helpful part of the dynamic of reducing some of that fear because when people fall back into the, “I'm going to just…” I saw this in General Motors 30 years ago now, of, “Oh, I'm just going to do what the boss tells me to do, and if it fails, it's the boss's fault.” That's part of the dynamic too, that we have to help people get past.
Carlos Scholz: It's tough. Exactly. And not always… the problem with that approach also is that not always the boss will absorb the responsibility and say, “It's on me because I told that person what to do.” That's the other…
Mark Graban: Right. Yeah, the boss might blame the employee for not executing well when maybe the problem was the order.
Carlos Scholz: All of these little exercises and all of these “Wednesday Boo-Boos” or reflection points or having sharing–we organized also some separate sharing sessions. “This is what we're learning, this what's working, this what's not working. This is what's frustrating me, this is what's making me feel scared,” like you say. The more we did that, the more psychological safety it created, and I think it also created something that we forget, which is the accountability part of developing someone, accepting feedback, and not feeling like it's an attack. But it's, “I'm telling you this, I'm giving you this feedback so that you can grow. You can take it, you can apply something different. You can do something different.” And always with the spirit with which it is intended, which is a growth mindset towards becoming a better leader.
For example, “I have noticed that you are taking longer in doing the experiments,” or “I have noticed that your definition of the experiments might not be helping you get the right results because you may be missing what you are actually expecting to happen and how that connects to the obstacle that you're trying to solve for. And if you just do it the wrong way, which is define the experiment so that then you define the obstacle, you're just, you're going to get something, but maybe it's not the right thing.” So I think the more you can build that psychological safety through those ongoing cycles and exercises and leaders actually saying, “I failed, I did this wrong. I told someone what to do,” or “I told someone what to do, but I did not consider what this other person who actually owns the process had to say,” or things like that. Or, “I don't have all the answers. I need your help in giving me all the answers.” The more it really… it's just so powerful. Yeah. It takes a while. It is so powerful to really help mature the culture of the organization.
Mark Graban: So I know one core part of the mission at Catalysis has been the Healthcare Value Network of helping leaders and organizations learn from each other and collaborate and share. And I think through different articles and through the CLEAR Research Initiative at UC Berkeley, part of the mission is to try to share evidence that maybe opens the eyes of leaders about the connections between mindsets and management approaches and measurable value–quality, safety, cost. So if, I think we're still in an era where we're still trying to open people's eyes or even reopen their eyes if they–there are organizations, sadly, that will say, “Oh, we tried lean and it didn't work.” But maybe that was a very tools- and event-driven approach. Who are some of the organizations right now and the leaders that are some of the new exemplar organizations that other CEOs maybe could or should–it's not my place to say should–but could learn from when it comes to the results they're getting and lean thinking and lean management? Who are the people to be learning from these days?
Carlos Scholz: I can tell you a few. Obviously, having made a big fuss out of The Permanente Medical Group in Sacramento, I can tell you that's a good source, and they would tell me like, “Yes, we want to help others learn.” And they're trying to do that. They're actually going to be giving a keynote in the next LEI summit in collaboration. We do it in collaboration with LEI and Catalysis. But other leaders, I have a couple of–three organizations. Besides those leaders in The Permanente Medical Group, I have two that are safety-net hospitals. One of them we collaborate a lot with is UMass Memorial. Yeah. Dr. Eric Dickson has really been one of those leaders that over time, you can see that sustainability and that reliability. Why? Because he has owned it. Yes. And he has made it an expectation for all of his leaders. And we actually have some executive site visits there that we do for learning, if people are interested in that.
The other safety-net organization on the opposite side of the country is Zuckerberg San Francisco General Hospital. And their leader, Susan Ehrlich as well. She was actually one of the first leaders that worked with John Toussaint originally in the definition of what we call our Catalysis Radar Chart for leadership behaviors. We have a whole process around that. And she was one of the first leaders who implemented it, and to this day–I was actually visiting Zuckerberg earlier this month. And I saw, I went into Susan's office, and the first thing is her leader standard work board where all of these behaviors are. That's her accountability, and everybody who comes into her office can see everything that she's working on. It's very transparent, it's very vulnerable, it's very humble. And one of those leaders that I will say, as well as Eric–the two of them have really been shining lights of creating examples of what good looks like.
The other organization that we work with is OhioHealth. Yeah. OhioHealth has done a really tremendous job. Emily Sweeney, the director there, as well as their CEO, Steve Markovich, in really demonstrating the capabilities of the principle- and behavior-approach that I've been describing over the last few minutes. Yeah. And we also do some executive site visits there as well.
Mark Graban: Yeah. I've been able to go to Gemba at UMass Memorial a number of times and OhioHealth. Yeah, Eric Dickson, who has been a guest on this podcast a couple of times, I think is a fantastic example of somebody like a John Toussaint and Kim Barnas and others who have their own kind of personal leadership transformation. Great example. And I know UMass has hit a threshold. They've had a big emphasis on engaging everybody in small kaizen improvements, not just events and big projects. And they've hit the milestone of 200,000 employee ideas. Like I remember when they hit 100,000 and they kept going. This is continuous improvement to such a degree. And combined with strategic approaches to lean management. And then now that I am basically in Ohio, or right across the river from Cincinnati, I know the OhioHealth people from the Society for Health Systems and had an invitation to come up a couple of months ago to learn from them. And I was also really impressed with what they're doing. I've heard about the Zuckerberg story and Susan Ehrlich secondhand through John. But I'd love visiting San Francisco, so maybe I can find an invitation to come in and learn from what they're doing, because yeah, it's just, it's always powerful to see things firsthand. I appreciate you passing along these stories too.
Carlos Scholz: Yeah. And it's not only here in the United States that we see these examples. The exciting thing about working for an organization like Catalysis is the global reach. Yeah. And to be honest, it's deeply connected to my sense of purpose as well of helping organizations transform, helping people grow, helping organizations that can help others–in this case, communities–to be healthier, to thrive. And through that work, part of the work that Catalysis has done over the last few years, we've been heavily involved in a couple of different places. One of them is in the United Kingdom with the National Health Service. And we have had the opportunity to work with around 20, or 18 to 20, different trusts in the UK. And there are some very good leaders there. One that comes to mind just quickly is Steve McManus from Royal Berkshire, which is a trust that is just west of London, in the town of Reading. It serves a population of about a million patients. And they have really demonstrated some amazing work. Others as well in the UK. I don't want to just forget anybody, but from the top of my mind, it's Steve McManus.
And then in South Africa, Mr. Grey Dube. Yes, that one is just a remarkable story because it's a story of how it was done with just the level of imagination, ingenuity, creativity, very limited resources. And just the fact we were able to help them get there. But the ownership, the leadership of Mr. Dube in those hospitals is just amazing. Yeah. And again, that's what we're here for in Catalysis, to really help create those stories of transformation. To this day–I just had a call prior to this recording–and to this day, that work is still thriving. Good. It's still maturing. Good. It's still going. It's still getting better. And Mr. Dube has retired from his position, but those that came after him are doing the exact same job and continue to mature and get better, which is the way it's supposed to be. So those are some of the organizations that I really feel like I'm so privileged to be able to work in an organization like this and help in that capacity.
Mark Graban: Yeah. And Mr. Dube has also been a guest on this podcast, thanks to Catalysis and the introductions that they made. So I'll have to put links to these guests in the show notes, or people can search their podcast feed or on the podcast website. Yeah, the global need and the global promise of lean is still really strong. In Brazil, there's a lot of lean healthcare activity. The Netherlands, Australia, it's just a couple of countries that come to mind. And it's of course more than that. Carlos, I want to go and dig in a little deeper into two things you wrote about and words that have already come up in the conversation today: humility and psychological safety. Yeah. So maybe first off, on humility, I think there's always this big question of, you can't really go to a humility class. How do we–how can we coach people? Someone has to be open to this idea of maybe questioning the old “white coat,” again, citing John Toussaint, and his all-knowing, never-wrong, command-and-control kind of leader to one who can be humble and/or vulnerable. Like how can we, how have you coached people through that? Or how could we do that?
Carlos Scholz: I think there are a couple of things that we can discuss in terms of humility. You are right. You cannot go into a humility class and all of a sudden you're going to learn about how to be humble. Yeah. But one thing that I firmly believe in is you can observe it in action. You can see others actually demonstrating the right behaviors. And that's why I am such a fan of executives going to the gemba and going to see, maybe not just in their own organization, but in organizations outside their four walls, go see what good looks like in that area and see leaders actually demonstrating what leading with humility is in action. And just seeing and observing that is just so powerful. Yeah. You get… there's a trigger if you don't have that ability or that capacity to do it. Sometimes there are travel restrictions or others.
To me, there has to be a trigger. There has to be a point in which you realize, “How do I want to show up as a leader? When I walk through the doors every day in the morning of my organization, I am the CEO or the chief medical officer, or the chief operating officer, or any position in any rank. It could be a director or a manager. I walk through the doors every day to come do my job. How do I want to show up? What does that actually mean? What type of behaviors do I want to see in people? Do I want them to come to me for everything? And just be the one that is busy all the time trying to solve a hundred different problems every single day.” And there are people that have told me that in the past when I have asked them that question. “Yes, I want to be the accessible leader that everybody comes to because I want to show them that I'm here for them.” Versus, “I want to see people solving their own problems. I want them to be the owners and autonomous and have the capability to do it without having me do it for them. I would like to see people following the standard work and not me having to tell them what to do all the time, but also improving the standard work at the same time.” Think of ways in which, if the standard work is the current best-known way, how can we make it better tomorrow? If you want to do that, you have to reflect, “What does that mean for me? Because maybe those behaviors that I'm demonstrating right now are not helping create that type of environment that I want to see every time I walk through the doors every single day.”
The third thing that I can think about is not doing this alone. To always have somebody else that you are having a conversation with, that is your sounding board, your coach, that is asking you tough questions. It could be a mentor, it could be a coach, it could be just a buddy of yours, but you have to develop that relationship so that other person can give you candid feedback or can ask you questions in a way, and you are okay with receiving that feedback or those questions so that it helps you reflect about how do you want to show up as a leader.
Mark Graban: Yeah. Yeah. And there's that trap and that conundrum again, because being the one who is the chief firefighting officer, the one that has the answers, the one that everyone runs to in a crisis, even if it's at 2:00 AM or on a Sunday morning, that feels good. Like people could take pride in that, but that doesn't scale. So I think we would be in agreement. I see you shaking your head in agreement. It doesn't scale. And if we're really trying to deliver world-class value of quality and safety and cost, I think that requires a different way of leading. And then, can we replace the good feelings and the pride of, “I had all the answers,” with the pride of, “We are world-class and we achieved that together”? That's a different thing. Maybe a better thing to hang your hat on instead of being, I don't know. I'm going to make a basketball analogy. The player who leads the league in scoring, but the team doesn't make the playoffs. That could feel good. Like you're the best player on a bad team, but do we really want to win? How do we define winning?
Carlos Scholz: Exactly. And if you are defining winning in that specific way, what are the actions that are taking you through that path, regardless of talent, right? Regardless of physical ability or talent in the team, that can be developed.
Mark Graban: And I think, so let's talk more about leader… we'll come back to Leader Standard Work. I wanted to also dig into, I think Leader Standard Work helps develop this, but let's also talk about psychological safety because it's one thing to understand… I think one challenge to psychological safety, it's like the phrase “lean management” or “lean healthcare.” People hear those words and they'll jump to conclusions about what it means. Yes. When maybe that's not what it really means. The same thing happens with psychological safety. For example, people might hear those words and, “Oh, that means we're comfortable all the time.” And no, it's not. Amy Edmondson and others define psychological safety as a matter of feeling safe to speak up without being punished. So that might mean there's more disagreement in an environment with high psychological safety. We can't just train people how to be humble. Training people around definitions of psychological safety doesn't magically create the environment. So how have you coached leaders, or how would you recommend others coach leaders to act in ways that foster that sense of psychological safety so people do speak up?
Carlos Scholz: Yeah, I think Amy Edmondson just… it doesn't have to be as complicated as it could be, right? I think Amy Edmondson has a very good approach. She, I remember watching some of her videos and reading her book that explains three things that leaders can do to promote psychological safety. One is to really recognize that this is hard work. It's hard, yes. That's not–one person doesn't have all the answers. And if we are thinking that way, then that's a problem in and of itself. If only one person within an entire team has the right answer, that is a problem. How do you recognize and how do you tell people, “This is hard work. We need everybody to make it work, not just one or two people within the team always pulling the entire wagon for the rest of us.” Everybody has to be able to provide their ideas or work or thoughts or feelings to solve a specific situation or to advance a strategic initiative or to create the right culture just in and of itself.
The second is to recognize the leader's fallibility. That “I'm just one person. I don't have all the answers. I need you to tell me what to do sometimes, and that's okay, and I'm opening the door for you to do it.” And to me, leaders have to develop that level of vulnerability to be okay with that. Not everybody feels okay with–Brené Brown talks about that in her book, Daring Greatly. And the third one is to thank the messengers. Every time somebody speaks up, yes, is to celebrate that person has spoken up.
Besides that, I think we have to also create an environment where everybody's fine with candor with respect. Meaning, it doesn't mean that I'm just going to be nice to you all the time so that you can be psychologically safe. There has to be a level of enough candor with respect to be able to push people just enough so that the threshold moves. Yes. Providing feedback or having clear accountability boundaries or guidelines for accountability. And if they're not met, that something's… I'm not trying to say that you have to have a punishment. But you know that if you don't reach a certain goal or a certain target, it's okay to receive feedback about it. “What went wrong? What did you learn about it? What do you think you can do?” “By the way, I observed this, I'm going to give you this feedback.” And be okay with receiving that feedback. Be open and not take the mentality of a victim.
And there's a lot of ways to achieve that through performance management. You can develop performance management standards and you know who is high, who is somewhere in the middle, and who is not performing. And you can develop coaching standards and conversation standards for each person on those levels that basically say, “We recognize this contribution. Here's an area where we feel that you can improve. What do you think about that? What can we do together to help you get there?” And that builds not only psychological safety but accountability at the same time. Yeah. And performance at the end of the day.
Mark Graban: Yeah. That's all really well said. Thinking about… you're making me think about the difference between lobbing criticism at somebody and pointing out that they haven't met a goal or an objective, as opposed to giving kind and constructive feedback. I think back to Dr. Deming who said, “The role of a leader is not to judge. The role of the leader is to help somebody succeed.” And to me, that's a core lean mindset. And you're right, people, it gets complicated, right? It's hard. People are complicated. It's hard to change. We like doing things the way we've done it, and sometimes feedback stings, right? We know people who, you know, maybe very cheerfully say, and they mean it, like, “Feedback is a gift. Thank you for that gift.” But not everybody is in a place where they react that exact same way.
Carlos Scholz: Feedback is a gift for sure. But, and trust me, in my personal experience, receiving feedback is not always been easy. I do have to recognize that myself. I have been in situations where receiving the feedback really made me feel like I was not doing a good job. And, but I took it with the intent that it was given. Yeah. Which is, “I'm helping you, I'm trying to help you grow.” And when you really just step to the side and reflect around that, you realize, “You know what? I'm not the victim here. So I accept this feedback and I can use it to be better.” And you move on from that other mentality of, “No, I disagree with you. Give me more examples.” And there are people that are just getting to that mode of, “No, but tell me what situation I did this,” or “Tell me what situation I did that.” That's not the healthy response. So there are ways to coach people around that as well.
Mark Graban: Yeah. So Carlos, maybe let's spend a minute and then we've got a question to help wrap up. You mentioned Susan Ehrlich and not just leader standard work, but CEO standard work. For people who aren't familiar with what that means at an executive level, could you share either from your experiences directly with it or other leaders, whether it's Susan Ehrlich or others, like what does that consist of at an executive level?
Carlos Scholz: Yeah. The best way I can describe it is a leader's self-accountability system. It's what describes what the management system is for a leader and what helps the leader define how to connect or define the connections from your own purpose to the intent that is going to help drive purpose to the actions and habits that are going to help you meet that intent. That if you notice what I did there, that's a lot of what Katie Anderson says in her book and what she teaches on a constant basis. I have had the privilege to be coached by her. Yeah. And to me, the concept of leader standard work is what connects what you want to be as a leader to what you want to accomplish as well.
It starts with, “Who do you want to be? What is your identity and how do you define that in terms of actions? If I want to be this person, if I want to be this type of leader, what actions do I have to establish to meet my intent? What intent do I have?” If my intent is to grow others, then how do you accomplish that? Define it in your leader standard work. If my intent is to achieve certain results, how do you define that? If my intent is to create the right culture, how do you define? What are the specific things that you're doing around that? How often do you need to do it? How do you know that you actually accomplished that intent by doing that in the first place?
So it's not just a check-the-box type of exercise where, “I need to meet with X weekly, check. I need to do my status exchange weekly with these three people, check, check. I need to do this report, check.” It's not like… it can be that, but it's more about, “How do I earn the check?” How do you earn that? I call it “earning the green.” Because in the way I practice leader standard work, I have green or red. Yeah. And it's okay to have red, but how do I earn the green? If I say that my intent is to grow somebody, I had an opportunity to do it in this weekly status exchange. Did I do it? How do I know that I did it? How do I build my self-accountability in which then I can go and show, like, “Hey, I'm doing these things. I'm having all these checks and all these greens, but I don't feel like I'm progressing. Am I doing something wrong?” And building that as part of your personal growth, personal development plan. If I can say it in very simple words, if you have an A3 for your own personal growth, the leader standard work is part of your solution approach and part of your check-and-act and how you're progressing in that personal growth A3.
Mark Graban: And yeah, I'm glad you mentioned Katie's work. We're name-dropping so many former Lean Blog interviews, podcast guests. And including you, right?
Carlos Scholz: Right?
Mark Graban: Yeah. Yeah. And welcome to that club. Now Carlos, to wrap up here, I think in the article–and again, there will be a link to that in the show notes. I hope people will check it out. To prompt some final thoughts here, if we're at a crossroads as you suggest in the article, and there are a lot of problems and challenges and gaps in healthcare, what gives you hope about where you think lean and healthcare leadership are headed?
Carlos Scholz: Yeah, like you mentioned earlier in the podcast, healthcare has gone through so much disruption over the last few years from the Affordable Care Act. That was a disruption in and of itself. It just changed the entire industry. The advancement of technological tools and the electronic health records–like everybody's now implementing plenty different models of electronic health records. And then COVID came, and I can keep going, right? And now there's another one looming on the horizon, which is the passing of this tax bill that will really wreak havoc in terms of how healthcare is funded for specific types of population, especially those that are in Medicaid, where the government is trying to pay for other tax breaks through the healthcare system. But I'm not going to go into those details, right? It's just going to be disruptive. It's going to create a significant amount of administrative burden in a lot of different ways because now people will have to go through proving that they're working and they have work requirements, and the states have to implement that, and the hospital systems have to implement the system to verify, et cetera. As well as clinical burden because a lot of people that might lose care are going to end up in the ED, and you have to really redesign the work.
The challenges that I see is how do you keep, first of all, what matters the most in your organization? To me, it's got to be the people doing the work. Enabling their capabilities to be able to survive–not survive, but thrive, even in disruptive times–is really critical. Yeah. And it's more than just saying words, actually demonstrating that with actions is, “How do you support? How do you make sure that you keep and maintain those that you really need?” Because replacing people constantly is also a financial burden. “How do you lead with curiosity, with humility? How do you promote engagement to problem-solving?” The people know their process better than anybody. They can help you eliminate tons of waste in your processes.
Second is the alignment that has to exist in your organization. Those organizations that are going to thrive the best, and the ones that give me the most hope in how they're going to do it, are the ones that have better systems for aligning what matters at the top of the organization with the work that is happening every single day. But not from the perspective of keeping rigidity like, “You need to only work on these things.” How do you maintain flexibility knowing that with disruption, there may be multiple future state scenarios? Like how do you create the flexibility that may allow for those multiple future state scenarios?
The third one is, I think this is going to require creativity, co-design of how healthcare is delivered, and innovating how your care model currently works versus how it needs to work in the future. If we learned anything from COVID, we transitioned from in-person care to virtual care by just snapping our fingers. And we never really thought that it was going to be possible to do that. And now it's become a new standard. Just like that. Now we're going to be required to go through that and become creative and co-design, not only with people from within your organization, but maybe with community partners and community-based organizations, how healthcare is delivered so that you help people the right way at the right time. Not just having them end up in someone else's emergency department because that's the only thing that they can do.
And the last thing is technology, but technology done right. With a human lens. Putting processes first. I was just actually at the Epic conference a week ago, and I had the opportunity to see some jaw-dropping technology. What these systems can do is just unbelievable. The AI now built into these electronic health records and how they help augment the capabilities of individuals such as doctors, nurses, other clinicians, staff, et cetera. It's amazing. But at the same time, I saw presentations of failure stories, which is, I'm actually glad that they're presenting. And the common theme in all of those failure stories is, “We rushed to the technology first, and we forgot about putting the right process in place first.” And when that happened, the adoption of that technology went from here, boom. Yeah. Dropped significantly. Nobody was using that technology because you never asked the people doing the work. Or you never went through the process of really taking a look at every step and eliminating the waste to ensure that technology then can accomplish its intent.
So what gives me hope is that there is a proven path, which is if you commit to these principles, your chances of–you're going to be impacted either way because you are going to be impacted–but the chances of you being impacted less and to thrive just grow exponentially. Yeah. If you apply these principles. Yeah. It's not just about rushing to the technological solution that is going to save you hundreds of millions of dollars. It is, everything starts and ends with people. Have the right people, align everybody throughout the organization, unleash their capability to develop new care models, to eliminate administrative and clinical waste, and just use the right technology to enable them to do that. That's the best way I can describe why I feel that there is hope. Yeah.
Mark Graban: That's well said, Carlos. So again, our guest today, Carlos Scholz, now the CEO at Catalysis. So I encourage you, check out their website, createvalue.org. They have a podcast called The Lens. And I've been–I'm going to name-drop in the other direction. I've been a guest on that podcast. But for more conversations with people in the Healthcare Value Network and the others who are kind of part of the broader Catalysis community, you can find that podcast wherever you're listening to this podcast. So Carlos, thank you so much for being a guest here today. We covered a lot, and I hope we can do this again sometime. You can join the club of multi-time guests like Katie and John.
Carlos Scholz: Thank you. Thank you. Very happy being part of the club now. Thanks again.
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