In this episode, James Lee discusses the two halves of what make up a special leader in any business. Once you have the buy-in, how do you articulate your competencies in a way that provides a compelling business vision? This is the business intelligence part of a well balanced and effective leader.
Welcome to part-two of my episode this month. This is the Bridge the Gap Contributor Wednesday Series. My name is James Lee. Hope you have had a chance to listen to last week’s episode, if not go listen to that one first, this one will make a lot more sense because this is intended to be at the back half of that story. We’re going to go ahead and jump right into it because I want to go ahead and get as much of this discussed as possible. Last week’s episode was about the first half of what I feel is a balanced leader and that’s emotional intelligence and business intelligence. The first half of that was kind of talked through last week. And in this episode, I want to take a little bit of a departure from my normal topics that tend to be a little bit more qualitative, like leadership and organizational culture. Although I’d argue there’s some quantitative parts to that, this week’s episode is a little bit more geared towards the quote unquote hard stuff. So let’s jump into that, business intelligence for senior living; what I mean by that is not just the acumen of do you understand budgeting and do you understand how to run a P and L profit and loss financial statement. I mean do you do the other strategic work? Do you do the work around the numbers that really get at studying the business. Maybe even the business model of senior living itself. And so today I want to share my kind of version of that, my vision of senior living in the future or maybe as we come out of the 2020 pandemic. If nothing else, this year has taught us that the way we do business can either be disrupted internally, or it can be disrupted from outside. This year what’s unique about the coronavirus pandemic and kind of global crisis is that we all went through the same hardship together. We definitely had to innovate and change because of external forces. So how can we change that moving forward? How can we make innovation something that we have control over and not just something we have to respond to. When it comes to senior living, I think there are three kinds of core parts of the operations anyway that create optimum flow. And what I mean by optimum flow, think about an athlete that is in the zone; they’re just there clicking, you know, everything is just happening right for them. Athletes talk about that. And that flow, that state of just kind of everything is just kind of clicking that that can happen outside of the sports world that can certainly happen in business. As a former executive director I can tell you that there are times that I felt everything was just kind of not going right necessarily, but that all of the team, all of the residents and families even that everything was just kind of flowing together in an intended way. The three components of that I’ve learned from others and I certainly know use this model to help other people now, the three components that have to always be working in conjunction with one another are; the people side of what you do, the product, the actual service of what we do, and then the processes that we follow. So people, the product, process. That I believe is a core part of the business intelligence of an executive director. Who’s really the heart of that business. And then everybody else supporting the ed and their efforts. So optimum flow is going to be a part of what we discussed today. We’re going to discuss this concept of innovate or die, that was in the intro. But just kind of the need to cannibalize our own business. So I’m going to come back to that.
Technology; I want to talk about the role of technology in senior living. I’m certainly not an expert, so this is a little bit more as a topic, rather than the specific components of it. Another part is the relationship that we have to seniors. Right now, that’s a pretty direct sale, a brick and mortar relationship. I want to explore the concept of acting as their agent in a marketplace. So that’s a fourth topic. Fifth is just kind of reorienting our team to creativity and imagination rather than just kind of giving them ratios and performance metrics to hit. And then I want to end on a topic that’s become very near and dear to me; which is the role of executives and senior team members within a senior living organization. That’s a lot to get through and I have no idea where the length of this episode is going to end. As I’m recording it, I don’t know where it’s going to end. So forgive me if it’s a longer episode, but really want to explore all of those categories.
Let’s start with the idea of innovate or die; the cannibalization of our own business. There’s a lot of cautionary tales out there about businesses that fear building products or services because it competes with what they currently do. And so the fear, the implicit fear, is that they do not want to create a product line or a service that cannibalizes their other products or services. So an example of this might be if you are selling electronics and let’s say you’re Apple and you’re building computers, and it’s your number one source of revenue. It’s the thing that you’ve kind of created a niche position in the market, and you do not want to cannibalize those sales by creating other products within your line. We all know where that story ended, right? We all know that they don’t just sell computers. They of course still do that now, and do it pretty well in fact. But if you think of the company, Apple, you’re probably thinking about the iPhone first. So believe it or not this computers quote unquote computers company did not start off wanting to make phones, try to think back to Nokia. Nokia used to be a pretty significant player in the cell phone market. And you know, imagine if a quote-unquote cell phone company decided to go make televisions, it sounds odd in that context, in quite the same way that probably people thought, well Apple, a computer company, they’re going to start making cell phones now. And then from the cell phone, they started making tablets, iPads, and then their business model has really expanded since then. Can we all be a company that was influenced by a creative mind like Steve jobs? No, probably not, but we can draw a lot of lessons from that. The cannibalization of services and senior living. What do I mean by that? The kind of implicit business model of senior living is a brick and mortar that you come to a central location, a piece of real estate that we have built or acquired for you. We’re going to rent you the room and we’ve packaged all of these services that you’ll ever need, so you never have to leave. We’ll get you your food, we’ll get you to care, all your utilities, all your maintenance, all your food, all your social events; we’ll package all of that for you. And you just pay one convenient monthly fee for that. In fact, we have collateral, we have sales messaging that all centers around that it’s a one-stop shop; come in, live with us, you’ll get everything you’ll ever need. But think about where else in our lives we ever subscribed to that model. Would you live at your gym? You know, they have all of the equipment there. So if they offered an apartment and also a meal plan would you live at your gym? Probably not. Think about colleges, that’s a short period of time. That’s probably the only comparable that I can think of to this kind of business model is that you’re going to get everything under one roof. But the difference is that, in college it’s a finite defined time period. You’re going to be there for four years, five years, if you’re not studying very hard. But you know, you’re going to have a defined period of time where you’re paying the money. But there’s a very aspirational finish to it. There’s something that you’re moving toward. In senior living, that value proposition is different. It’s a kind of a perpetual unknown time period and it’s really hard. It’s really hard to amortize your costs over an unknown customer lifetime and that’s senior living. It’s different for colleges, but yeah, that’s kind of, I’m going down a rabbit hole. There’s probably going to be a few rabbit holes in this episode that I’m going to chase, but to kind of come back to this idea of cannibalizing our own business. Well, if our primary good that we’re selling is a brick and mortar direct sale relationship to seniors, could we cannibalize our revenue stream by doing something different? I think so. And it may not be for everybody, but it certainly will be for some innovators, some teams that are kind of equipped to do this, some executives that have the right risk tolerance and access to the right lenders and capital providers who also have that same vision. So it’s going to be a narrow group of people that I think are going to go for it. But that’s what this episode is about. It’s about dreaming, it’s about a vision of something different than what we have now. So the answer to that question, can we cannibalize our own business of all of those pre-packaged goods sold in one physical location? I think the answer is yes. And I’ll explore that through some of these other topics.
Okay, in order to get through those other topics, we have to first talk about how the components, everything else, are the inputs of that innovation. Earlier I talked about people, product and process, the three. Imagine a venn-diagram that kind of three circles that intersect one another and at the very center where all three intersect that’s optimum flow. When you increase that center intersection the greater you create flow within your team, the more that your business has kind of, that’s the speed that we should all be after, the speed of trust. It’s called a lot of different things, but essentially when you’re all on the same page, your business is gonna have a lot of acceleration to your goals. So there probably, again, could be an entire episode just to this. So let me just try to distill a few things here. Let me start with people; having the best people on your team requires a very kind of creative mindset in the leader. Again, in the last episode I talked about not hiring for culture fit, but hiring for compliments to your culture; what’s missing and how do you fill those gaps in being an employer of choice? You know, we I think as an industry, we really don’t put as much focus on that as we do around trying to create the best care, etc. But companies that really go all in on being the employer of choice and seeing that some of the high skill roles, like an executive director and others depending on your strategy, that they are the heart of whether or not you’re going to be successful and if you’re going to be competitive to anybody else in your market. The reality is, I’ve certainly done enough hiring for community leadership to know that in any given market, your kind of main managerial positions, if they have experience, they typically have experience at another competitor in that market. And if they have that experience, they may even have a second or a third kind of community where they’ve had that experience. In short, all we’re doing is we’re recycling talent from one company to another. That’s not good for senior living, and it’s certainly not good for the person that’s moving around. I get that we’re not going to all want to work in one place for the rest of our careers. I certainly haven’t. But I can understand from both perspectives as an employee and as an employer, that kind of tax that we impose to residents on the inefficiency of keeping our people. So getting really great people I think, begins with identifying what is your strategy and who are the players within those positions that are going to advance your strategy? I have an earlier episode about eight positions versus eight players. And that’s kind of where I’m going with this, is that you need a hire for those eight positions first. Those are the ones that are strategically very important to your organization. So being an employer of choice, there’s a lot of effort that we need to put in there. And a lot of companies, particularly small to mid-size companies outsource their HR, they outsource their recruiting process. And those are all practical needs, certainly at first. But if HR and talent management is not a specific part of your business strategy, it’s just incidental. And I don’t think that even ties to just the size of the company, I’m aware of many larger companies that treat the people development part of their business is really kind of a secondary or a kind of a necessary evil part of their business. It should be one of the core parts of your business. When it comes to products, I think that we tend to be very heavily focused on care, but part of what I’m going to talk about throughout this episode is that care is not a really great; it’s not a compelling value proposition for our customers. In short, they don’t want what we are selling and what we’re selling is care. You need care, so we’re going to get it together for you and then sell it to you. People don’t want that. So, the question here is how do we transform senior living from, I need it to, I want it, and is that possible? I think, yes. So the product, the services of what we provide that has to be really keyed in to our overall strategy. And then the processes are the things that we do to get there. And I think one of the things that we do poorly as an industry is leverage technology. We think of technology generally and generically as electronic devices that seniors can use where it’s a very kind of one note view of technology. Technology is a tool to reduce friction. And I’m gonna talk about that next, but let me pull back to people, product and process. All three of those things have to be working in conjunction with one another in order for your business to be thriving. A colleague of mine notably said, James there’s probably a fourth P in there and that’s passion. I love that. I love passion. I think it’s not so much a competency, but it’s something that kind of binds the other three together.
So passion is the binding agent that keeps that venn-diagram together. And those circles kind of floating off from one another. So to create optimum flow, your teams, particularly from the leadership perspective, need to be looking for in managing those three components. Okay. So if you can do a really great job of managing the people, the product and process parts of your job and fuse those together through passion, you can gain a profit margin. The idea very simply is you can either increase your revenue or you can lower or optimize your cost of goods sold for your operating expenses. And then that gets you a greater net operating income, your NOI, your gross margin. But that’s not the bottom line. The bottom bottom line is after you’ve taken out taxes and insurance and fees and all that. So your net income at the very bottom of your financial statement, that’s what you’re left with after everything is said and done. So I want to take that and kind of launch into this concept that senior living in its current state relies on a principle called operating leverage. It relies on you being able to cover the high costs and the high value of our assets, which is typically our real estate, the building, the land, the equipment, the stuff that we’ve bought to kind of move our business forward. The analogy I use for this, well, actually before I go to the analogy; when we rely on the operating leverage of senior living, what we mean by that is that it takes a lot of effort to cover those costs. But when you do, your margins can grow pretty quickly. That’s why whatever your break even is when you’ve covered all of your basic costs, your margin right after break even might be small; 5%. But then, incrementally as your occupancy goes up, that margin starts to spread bigger. It’s not a linear growth after break even, it’s an exponential growth after breakeven. That’s a basic concept of operating leverage. You know, when times are good, they’re really good. When times are bad, they are really bad. That’s the double-edged sword of operating leverage. So the example that I use for this to kind of simplify it and understand it is the concept of a lemonade stand. You know, if you’re a kid that’s ever operated a lemonade stand, or an adult, maybe adults operate lemonade stands. But if you’re a person that has built one in front of your house, lemonade stands kind of depend on operating leverage. Let’s say that you borrow a hundred bucks from mom and because mom is the lender, and mom has said; okay here’s a hundred bucks to start you off this summer. I want you to pay me back $25 every month, beginning in may. And I want you to pay me back my a hundred bucks plus 8%, so $8 on top of that by the end of the summer. So those are the loan terms. The lemonade stand is gonna be really successful if you’ve covered the cost of that $108 early, everything after is gravy, right? So you go to the store, you buy things to make signs, you buy lemons, water, sugar, all the things that go into building your lemonade stand. And then let’s say it costs you $75 out of that hundred to just get started day one. And then $25, you put that aside to go buy more lemons and other stuff. So you have $25 leftover. Now let’s say that you sell lemonade at $1 per cup, you got to sell 75 cups of lemonade to just cover your startup cost for that lemonade stand. That’s high operating leverage. So if times are bad, if it starts raining, if you have a particularly rainy month of June, right when you’ve started it, that’s not good when times are bad, times are bad. But conversely, let’s say that June is a hot month. Let’s say that people are out and about, they’ve heard your lemonade is really great, and your business has just killed it in June. You’ve sold 125 cups of lemonade in June. You’ve covered all of your startup costs. You’ve covered your debt obligation to your mom. And so everything that you sell in July and August is going to be pure profit. So when times are good, they’re really good. I think senior living, not to oversimplify it into a lemonade stand, I understand there’s going to be nuance to this, but generally that’s what senior living is. There’s a high startup cost, and we got to cover those startups, the cost of those assets. And then everything after that kind of has a snowball effect of profit margin. Sounds good, but when times are bad, they are bad. And in 2020 times were not great for most people in senior living. So it begs the question, can we do something different? Can we kind of reconstitute our risk into a different business model?
Is that possible? Again, the answer is not going to be yes for everybody, because a lot of people have bought lemonade stands, and you’re kind of tied to that. But for organizations that are able to do it, maybe they can think of a different way to take that money and not go buy a lemonade stand. But think about what is the actual value that people in this industry, the customers in this industry want, what do they actually want from us? So operating leverage is something that we need to understand. We don’t need to be tied to it. It’s not the only way I think that senior living exists.
Okay. If you are still with me through this episode, we’re getting more and more into the meat of it. So if we want to change a little bit of our business model or wait, I’m not quite there yet at changing the business model, but where I am at is to talk about, to improve the profitability of our business. We can either increase our revenues or lower our expenses again, way overgeneralizing that, but in principle, I can either charge more for the lemonade, or I can buy less expensive lemons, right? That’s it. In senior living to reduce it down to the lemonade example. We can either charge more people for rent and care or try to lower the cost of the expenses, labor, food, utilities, whatever. And that’s typically how most of our industry manages it. Do we have room to increase market rates? Do we have room to increase our annual level of care? Do we have room and opportunity to reduce over time, to reduce PRD, to reduce whatever spending in any number of categories? I think that one of the things that we’re really missing here is in the kind of realm of technology. The role of technology impacts both revenue and expenses. I think that it can actually optimize your expenses and I think that it can really speed up and diversify revenue. When we think about adopting technology and senior living, most people think; oh, should we get iPods for the caregivers to chart their care? That’s one kind of, yeah that’s something we can do. But just thinking about technology in general, technology makes work easier. It makes the work easier. So what it does is it reduces friction in the work and therefore if you reduce friction, you lower costs. Think about a carpenter or any person that works with his or her hands. And think about the value of those tools to that professional. You know, they’re not piloting technologies, they’re not saying; oh, you know I’ve only used a hammer my whole career, but there’s this thing called a screwdriver that’s kind of hit the market. Eh, let’s pilot that for a month. Let me see if I’m going to use it or not, but probably not. You know, maybe my tool belt has one space on it and that’s my hammer. Technology is nothing more than a tool to help you to reduce friction to get your job done. So what are the technologies in senior living that are going to either diversify and grow your revenue or lower/optimize your expenses? I think the technology that gives you insight to data, to human behavior, to your customer behavior in particular; I think that’s the stuff that’s gonna really expand your revenue. And then it’s going to also really give you insight as to where you’re spending money. Right now, we categorize where we’re spending money in really broad buckets. And I think that on top of the way that we manage people, product, process; there are so many areas of inefficiency. You know, there’s leaks all over the business model where you lose a cent here, you lose a cent there, but in the aggregate in total, those one or 2 cents here or there adds up to a lot. I call that the inefficiency tax that residents have to pay. It’s the margin that we have to put on top of the cost of what we deliver on top of what we hope to gain in terms of profit. We gotta put that in there because we’re leaking inefficiency in different areas of our business. Technology is one way that we can get insight as to where we’re losing those expenses or where our customers are giving us signals of what they need or what they want. As an example, I think one of the most underutilized technologies is resident data around engagement. You know, we all are familiar with electronic health records and EMR and CRMs and financial systems, sure. But that doesn’t really give us data as to what residents want. So I’m going to use EHR, the electronic health record where we store care services, medication administration, falls and occurrences. Okay. So EHR is where we are recording all of that. Let me slow down, I’m starting to stumble my words because I’m so excited about this topic. In the EHR, we are recording care data. Okay, good, but not good enough. All we’re recording there is something that our residents need, but don’t want. Okay, I hope you follow what I mean there, I don’t mean that they don’t want care. It’s just not something that they want, seniors are not knocking down our doors because they want care. It’s a thing that they feel reserved to receive and almost feel resentful that they have to take their money and pay for. What they really want,I think what seniors really want is fulfillment; is the opportunity to pursue fulfillment. And care is a means to that fulfillment. It is not fulfillment itself. Think about it in your own life; eating well, being healthy, exercising, going to your doctor, taking care of yourself. In other words, care; do you get up every day so that you can care for yourself? No, you take care of yourself so you can pursue your goals. I want to stay healthy because I want to be able to play with my children, right? I want to be able to run and do all those things and go hiking. I want to do all that stuff with my kids, so I gotta stay healthy in order to do that. One example: care is not the end, it’s the means to the end. And I think seniors really never change in terms of that mentality, because do you feel older in your mind than you did 20 years ago? No, I have that conversation all the time with my friends, that man I can’t believe I’m X years old. I feel like I was just 18. My body’s changing, but my mind still feels that same kind of eagerness and that same kind of wonder of an 18 year old kid. Seniors are exactly the same way their brains, their aspirations, their kind of aspiration for fulfillment doesn’t change. So if we stop treating care as the end or the primary value but if we see care as a means to an end, it helps our residents get to what they want, which is fulfillment. That was a long tirade, so let me try to reel back in here. Technology allows for seniors to get there and capture the data around resident engagement, I think gets to the want; capturing data around the EHR certainly measures the need, but we need to measure the want more than we need to measure the need. I hope you have a pen and paper, cause that was a little confusing saying out loud, so I’m sure it’s confusing hearing it. So let me say that again, resident engagement technologies that record resident activities, what they want, surveys, communication between them and staff and family, all of these things that fill up the 22 or 23 other hours, besides when they’re receiving care, that’s recording seniors wants: recording did we do the shower reminder? Did we pass the medication? Did we document the fall? All of that in the EHR is just documenting people’s needs, but we need a document people’s wants. That’s where we can expand our business model. Okay, holy smokes this episode is going really long, but if you’re still listening, you probably want to hear the end of it. So I’m just going to keep going. All right.
So we’ve talked about the need to cannibalize our own business. We’ve talked about creating optimum flow by the intersect of people, product, and process, bound together with passion. We’ve talked about operating leverage and what that means to senior living. And then now we have just talked about the role of technology in senior living. Technology; we are very slow in our industry to adopt technology. I think it’s because we look at it the wrong way. Technology is not a thing, it’s not a device, it’s not something that we kind of give in the hands of our residents or families or staff. Technology is a tool to help reduce the friction in our work. It’s to speed up our work and make that cost of friction less burdensome. So now that takes us into my kind of core message here; which is to try and transform our industry from a traditional brick and mortar business model into more of a hybrid between a brick and mortar and a marketplace. I know that’s a buzzword; marketplace, but stay with me here. A traditional brick and mortar store is basically I’ve heard it described as warehousing seniors. It’s putting all of the seniors in one central location so that we can bundle up our goods and services and provide them in one space. Great, but what about the seniors that don’t want to live in your communities, that don’t need to live in your communities, but could probably benefit from the things that you do. Well, the things that we do well is not just care, it’s not just food, it’s not those individual components. I think the thing that is a value is our know how; we know how to do this. We know how to coordinate care, we know how to bring people together. Business professionals, we call them referral sources sometimes, and we know how to do all of those things to optimize value to the resident, to the senior. I think that’s the thing of value. It’s not the real estate itself. The real estate is almost incidental in that value proposition. So if our know-how is the thing that residents, that seniors can benefit from then the question is how do we monetize that know-how? So here’s an off the wall idea, maybe not that off the wall, because I think there’s some people doing this. It’s to create a hybrid customer that’s not just resident, but it includes members. It includes people who are going to pay for certain parts of your business, but are not going to live with you. So think about; go back to the college or university, think about how many people don’t want to quit their full-time jobs and go be in college for four years. Universities have figured out how to create part-time education tracks, executive graduate degrees where you can work and go to school at the same time. You have to change the time that you commit, it’s longer. The cost is going to be different, but they’ve figured out a way to provide services to their customers, the student, without forcing a brick and mortar style to learning. It has expanded even further due to the Coronavirus, a pandemic era of 2020. So online education, which was kind of just on the fringe. Not a lot of institutions wanted to go there, but now everyone’s forced to do it. And I think what’s going to come out of it is that there’s going to be greater reach of education through online means. So, this is not an episode about education, this is an episode about senior living. I think that if we go from just a brick and mortar business model into a hybrid of that plus marketplace, we use our know-how to basically act as agents for seniors, instead of being the seller to our customers. What if we were the network? What if we created the network of sellers to our customers? So right now we have to be experts at very different things, we have to be experts at real estate. You know, we are a multifamily business on top of that, we are also a restaurant. And on top of that, we are also a care agency. And on top of that, we are a social kind of center for seniors, lots of other little ancillary things, but in general, we have to be experts at a lot of different things. So instead of trying to be the expert at all of those things, what if we were the marketplace for other people who wanted to be great at those things? So, you know, if we didn’t want to run a full fledged restaurant that serves three meals a day for X number of residents, but if we had the means to bring together other people who wanted to do that work, but had a place to sell that food, right? So you’re going to like meal deliveries, isn’t that crazy anymore. I’ve had tons of different meal delivery services. I’ve had The Blue Apron and HelloFresh and those kinds of things I’ve used seamless and Grubhub. I’ve leveraged technology to diversify getting food to me. Why don’t we do the same thing for seniors, right. But the interesting thing is for a lot of the residents who are living in that community, there’s one central location for it. If you are a member of that community, then you also access the know-how, the marketplace of getting great diverse food. Where we as an industry could, or a business, kind of pursuing this business model could benefit is that you charge a commission for that or a fee, a transaction fee. So you’re the marketplace, you take a smaller percentage, but think about if it’s a 2%- 3% fee on top of that meal cost; well that’s revenue that you weren’t going to get before. Anyway, you have to put the work into creating the marketplace. And also you’ve expanded your customer base by including people who will not live with you. That’s kinda the main point, the examples I give aren’t going to be perfect cause I’m kind of going off the top of my head. But the principle itself of being a hybrid of brick and mortar plus marketplace, is that we can do that with any number of things.
One other example I’ll give you here is particularly near and dear to me, which is resident engagement. We try to be experts at social engagement, but this is frustrating for me because I have been an activities director, I’ve been a caregiver, I’ve been in ed, and I can tell you I’m going to channel my colleagues that are also passionate about this. I think it is really almost criminal to think about how little money we put into these departments. You know, when you look at trying to run an engaging resident engagement program off of $600 a month,a thousand dollars maybe. I don’t know of many communities that have resident engagement budgets that match the marketing budgets. And you may say; well, that’s not practical. You know, we have to spend money on sales and marketing. It’s the source of our revenue. A counterpoint to that is if you have a great product and service that is better marketing, how often do we say that the best referral is the one that we get from a happy resident? Well, this is putting our money where our mouth is almost literally. That if we put our money, if we put our technologies, if we put our budgets, if we put those positions that I’m talking about in resident engagement, if we created a marketplace that we don’t have to be the experts, but we’re the physical location where those experts can come be a part of our community. You know, right now we have a vendor relationship to those people. So if we want somebody to come in and do yoga, we pay them, I don’t know, a hundred dollars for that session. They do an hour long session for eight to 10 residents. And then next month we do the same thing. Instead of doing that, what if we had a space where any number of yoga instructors; they create their own pricing, they create their own marketing, they create the service and our residents vote based on their dollar, right? So if we’re able to reduce the cost of living in our communities, but we subsidize our revenue by taking a fee from these vendor partners who are vying for the dollars of our residents. I think that’s an interesting way to get at a different margin. If we really went all in after this strategy, we could kind of think about what senior living would look like 20 years from now, if we started that practice and then evolved from there. I think the physical blueprint of our communities would look different. I think our apartments would be less of our total footprint and I think we’d have a lot of different amenities in our communities. And then we would be seeking to monetize those multipurpose rooms, the theaters, the classrooms, you know, I think the physical look of our communities would be different, certainly if we adopted a different business model.
Okay, this takes me into hopefully a quick tangent on the role of leadership within all of this. You can see that I’m kind of building layers onto a different business model. This is a really good time to interject the role of creativity and imagination into the future of senior living. I think I’ve had a chance to work with several different organizations and even if I weren’t employed directly by some of the organizations I’m thinking of I certainly have colleagues that are in enough different organizations that I can get a sense of is this feeling of frustration or kind of the way of doing things is it consistent enough across our industry that is a real thing? I think so. I think this is a real thing. What I’m talking about and this topic I’m about to go into; which is we have a very formulaic approach to community operations. It’s increased sales, lower expenses, and then hopefully you have a good NOI, and not that EDS are not capable; in fact, I think EDS are very capable of doing something different about looking at our business differently. But we don’t coach differently than that and when we have our one-on-one calls with executive directors, we tend to kind of say; hey, here is the etched in stone KPI, here’s the proven method we have to do these things and this is the only way of doing things. I think that it puts people into autopilot. They’re not thinking creatively about their business. Think about the stuff that I’m talking to you about here on this episode. I didn’t like come up with these thoughts as an executive sitting in a C-suite role. These are all things that came from working in a community, these are all things that I start the genesis of, some of these thoughts started years and years ago as a sales director or as an activities director and they just kind of grew over time. Creativity and imagination that I think is the key to innovating in our space. So if we want creativity, we can’t just have a quarterly meeting where we bring people together and say; hey, put all your creative ideas out there. That’s not creativity. I mean, get everybody involved in understanding and defining the problem, get everybody involved in understanding and formulating parts of the strategy, and certainly get everybody involved in the execution of that strategy and where you are in relation to it in the timeline. We have to promote autonomy, we have to promote autonomous thinking at the community level and that means we have to coach differently. We have to budget differently. We have to give money to executive directors and say you’re going to apply this in whatever you see fit, but here’s our strategy a nd you and I have talked about that strategy. So here’s a bucket of resources that you can use to advance your strategy. You are in the best position to make that decision, I trust you. Let’s have weekly check-ins so that I can help answer questions and steer you in the right direction. But you’re in the best vantage point to make that execution decision promoting autonomy starts at the leadership level and we have to change the way that we talk about day-to-day operations in the senior living communities. The second part of that is that we have to embrace risk taking. I can’t tell you how many times as an executive director, my ideas were either given life and the person, the RDO behind me said, go for it, that sounds great. You know you’re doing all of the other right things, let’s take that risk. Let’s go, let’s let’s pursue this opportunity. Or the idea was shot down, right. Or the idea was James, we got to focus on our basics first. We gotta focus on the kind of core parts of what we do before we start getting fancy. I don’t think creativity and imagination are linear and they don’t follow a profitability track, meaning that if your margin is low, that you are going to kind of defer or kind of put creativity and imagination to the side, I think you need it more than ever. I think that’s when you really can benefit from it. So quick aside there, but creativity trumps intelligence and I think imagination trumps experience. So we have to foster those things if we want more of it in our organizations.
Okay. I am at the last prepared category anyway. Thanks so much for sticking with me through this episode. But it’s the last one of the contributor series, some I’m going all out. So to recap where we are here, all of these things that I’ve just discussed; cannibalizing our own business by kind of creating a hybrid of brick and mortar plus marketplace, designing for optimum flow: that’s the intersect between people product process and holding it together through passion, the role of technology within that strategy, the shifting of our mindset to work as an agent on behalf of our seniors and get as many possible solutions to your marketplace, to your community marketplace versus the direct sales relationship kind of commerce relationship that we have with residents now, and then reorienting to creativity versus just the P&L mindset. And I’d argue that we don’t even really have a great P&L mindset, that the way that we coach executive directors and community managers, we have a long way to go, but we should strive to creativity and imagination and not just straight forward business acumen.
The last thing I want to talk about is the role of executives and senior members of an organization. What I think is incredibly important for us as an industry is that we are led by people who have experiential empathy. What I mean by that is that I have had the great privilege of being able to care for our residents with my own hands. I’ve been a caregiver, I’ve worked overnight shifts, I’ve had coworkers that are living paycheck to paycheck. I have helped a resident in the middle of the night in their most profound moment of vulnerability to help them change and to get at this task of dignity in a way that it matters, that it informs the way that I was an executive director, because I helped that person to navigate a very personal and intimate care need. I’ve had to make those phone calls to resident family members that their loved one passed away. I’ve had to be in the room as that’s happening. I have had the great privilege of being at, I don’t know 50 different memorial services. And I think that’s just such a great privilege. It informs everything that I think about. It informs my pace, it informs my need for talking about stuff like this and working at innovation and not just talking about it. Every job I’ve had in senior living for the last six or seven years probably I’ve approached it with the mindset that it is a case study. I want people at the end of my work to look back on it and ask the question, how did he do that? You know, great that the results look good. How did he get there? I have been very intentional about answering that question in the future, that I want to be able to point to these exact things that I talk about on this episode and other episodes. It all comes from a case study approach to my work that’s let’s make sure that the proof is here. So I think when it comes to executives and senior members of our organizations, empathy is, going back to the last episode, empathy is the ability to understand and predict other people’s emotions, especially when it comes to your decision-making. Executives make decisions all the time that impact the lives of residents and families and staff employees. But is it informed by experiential empathy? I think that there’s certainly room for people in C-suite roles that have never worked a shift in senior living at the community level, but it doesn’t have to stay that way. So there are simple ways that we can get our executives that experiential empathy. And I think part of it is just asking that all executives have to regularly go do a caregiving shift. I think it means that executives have to be intimately involved in the day-to-day operations of at least one community. I don’t mean all of them, but if the CEO of a 200 property company adopted one community and got to know those residents had to make those phone calls along with the ed had to take a call from an ed is on vacation for four days. Great. You’re on call CEO, for that community, those types of experiential empathy moments, I think can inform the initiatives that we kind of send down the pipeline. It informs the decisions that we make that empty chair that I talked about in the last episode, making decisions as if those impacted by the decision can hear you.
That’s what I mean by experiential empathy. I think that the future of senior living is bright. I’m in it, I’m in it for the long haul. And I know so many of my peers out there who are feeling a productive level of frustration. I hope that you channel that in the new year. I hope that you take all of this and take ideas like this and create your own, create your own voice in this space. We need it. We want it. Talk about the stuff that matters to you, and you’re not going to be a hundred percent, right? I’m not a hundred percent, right. At best. I hope I’m 50%, right. But the risk, the personal risk is I’m putting it out there and I’m telling you I’m working for it. And I know there are others out there that feel the same way, that maybe think their voice isn’t needed in this space, but it is. And more than your voice, we need your heart. We need your belief that innovation is something that has to come from within our industry and not forced upon us by a pandemic. So here’s to 2021, here’s to the future of senior living and here’s to all of you who are educating and informing and influencing this space, let’s get after it. Let’s get after it together.
I want to thank Josh, Lucas, Sarah, the BTG team for giving me this platform, for the BTG Contributor Wednesday series. And I think it’s okay to say, I’m going to be so I’m so privileged to have had this opportunity and it’s going to lead to something really cool next year, which I’m terribly frightened about, but equally excited. And that’s to spin off into my own show. So a few of us on the Contributor Wednesday series are gonna have an opportunity to do that. And I’m just starting to kind of think through what a show in senior living is. That’s entirely kind of produced out of the thoughts I have and the aspirations I have for our industry. So I don’t have all the details to share with you yet. I don’t even have a title for the show. All I can tell you is that I am committed to this and I’m committed to sharing your perspectives and your story as well. So in 2021, I’m going to keep being vulnerable, I’m going to keep putting myself out there in the hopes that you are in any way sparked with some kind of curiosity or inspiration to do your own thing or to join me in this work. And so in the new year, we’ll have a new show and I’m really excited about all the ways that can serve you, but for now, thank you for letting me be a part of your week or your month for listening to five minutes of this or the entire hour plus whatever this episode ended up being thank you for letting me be a part of that day. Have an awesome day and have a great end of the year. Take care of yourselves. We’ll see you in the new year. This is James Lee signing off from the Contributor Wednesday series.