LeadingAge Magazine · March/April 2016 • Volume 06 • Number 02

Building and Maintaining an Entrepreneurial Culture

March 13, 2016 | by Mark Crawford

Organizational cultures that encourage entrepreneurial or innovative thinking don’t just appear out of thin air. Here is how some providers have embraced innovation and willingness to take risks.

Freedom, empowerment and creativity of thought are the cornerstones of a robust entrepreneurial culture. Entrepreneurial employees constantly think beyond standard expectations to find new ways to add value to the customer experience. Over time, this pattern of thinking can become ingrained as the corporate culture, anchored by the belief that employees should not be afraid to share new ideas that could benefit a customer’s well-being.

The key implementers of entrepreneurial thinking are the front-line employees who work closely with residents every day. An entrepreneurial culture encourages creativity, responsiveness and shared ownership by all members of the team—as a result, when employees see a way to serve clients better, they are encouraged to bring that potential solution to leadership.

“Having an entrepreneurial culture also helps us expand our reach to include serving not only elders, but their extended families and friends, the neighborhoods in which they live and the communities that provide their extended ecosystems,” says Denise Rabidoux, president and CEO of Evangelical Homes of Michigan in Farmington, MI.

An entrepreneurial team strives for excellence, continually innovating to make everything from programs and services to the environment and amenities the best they can be for customers—both as individuals and groups.

“We challenge each other every day,” says Julie Thorson, president and CEO of Friendship Haven in Fort Dodge, IA. “We talk about innovation in simple conversations, detailed conversations, at board meetings and even during daily huddles. Residents are encouraged to engage and offer their input as well. Friendship Haven is not a static organization. We are constantly looking for ways to provide innovative and responsive services to aging adults.”

Benefits of an entrepreneurial culture can be transformational, showing significant gains in customer satisfaction, employee productivity and reduced turnover. An empowered staff is a content staff—they feel better about themselves, what they do and the positive impact they have on clients. As a result, they have more ownership in their projects, teams and communities.

“This ultimately translates into everyone being excited to see positive experiences and outcomes for our residents and families,” adds Jennifer Crimmins, vice president of campus development for Friendship Haven.

“It’s hard to be strategic when facing the tyranny of the urgent.”

That’s how Carol Barbour, president and CEO of Friends Life Care Partners, Plymouth Meeting, PA, refers to the difficulty of setting aside time to think strategically while also dealing with the day-to-day demands of running an organization.

Friends Life Care Partners is by definition innovative and entrepreneurial, as it is the largest continuing care at home (CCAH) organization in the country. Its mantra, in fact, is “Pioneer. Innovate. Inspire.” Even so, Barbour and her staff face the same pressures as any other aging-services leaders.

“I found that when our executive team was dealing with operational issues, strategic things got put to the side,” Barbour says. “We needed a different kind of structure for looking at strategic opportunities.”

The solution was to create a “strategy council” devoted to “big picture” thinking and devotion to the organization’s long-term goals and vision.

The council’s statement of purpose notes that it “is not intended to address issues related to the current operations such as strategies to improve performance, employee satisfaction/morale, new policies & procedures, etc.”

The council includes Barbour, the CFO, COO, chief marketing officer and the senior director of human resources. It meets every 2 weeks for 60 minutes at a time. Other employees are invited as needed.

“We never come to those meetings with an outcome in mind,” says Barbour. “We just need to all put our heads together.” Meetings are often just brainstorming sessions. The council members will break into workgroups as needed to flesh out ideas.

Barbour says that despite the time required by the meetings, operations have not been negatively affected. “It was a matter of refocusing people so they didn’t have to think about operations,” she says. “We’ve [also] had a couple of newer employees involved and it’s brought some of their skills to the forefront and let them add value … much quicker than they might have [otherwise] been discovered. We’ve also had the unintended consequence of people feeling they have more to contribute. People feel engaged with the organization.”

One positive outcome of this approach has been the launch of a new program to serve those people who are not eligible for CCAH membership because of health reasons. The answer was to develop a new membership category for those people with slightly higher fees and some limits on Friends Life Care’s cost exposure. “It still helps people who have nowhere else to turn,” Barbour says. The council is also discussing ways to update its VigR health and wellness education program and developing a framework for partnering with other faith-based providers in Pennsylvania.

- Gene Mitchell

Building an entrepreneurial culture requires having both a board and a senior management team in place that is committed to it. It also requires training or hiring employees who are open to the challenge of owning their roles in creating a culture that is dynamic.

The most difficult part of the building process is overcoming uncertainties about going too far, or making mistakes.

“Post-acute care companies are typically very risk-adverse,” states Paul Stavros, vice president of marketing and business development for Evangelical Homes of Michigan. “High amounts of regulation and a punitive oversight structure have caused … providers to opt for a culture that encourages compliance and avoids risk.”

It can be difficult to get employees to accept change as part of their daily routine. Employees may initially resist because they fear rejection of their ideas and/or punishment should an idea be proposed and then eventually fail. Therefore, it is paramount to establish trust and a sense of empowerment. “Employees must believe that they are truly valued and that senior management will support them, even if their ideas fail,” Stavros adds.

A good way to get started is to frequently discuss the benefits of an entrepreneurial culture at all staff levels, including the C-suite. All upper-level executives should be readily available to staff members to talk about new ideas. “It would not be uncommon at Evangelical Homes of Michigan for employees to pick up the phone and call the senior vice president or CEO directly if they had something to say,” says Stavros. “Similarly, when senior managers walk the halls, they look forward to interacting with staff members, providing a forum for discussion and sharing of ideas.”

Although consultants are not required for developing an entrepreneurial culture, they can be excellent resources for jump-starting the process, especially if short-staffed, or if the opposite kind of culture exists.

“Early on we used consultants, but now we consider ourselves to be the experts,” says Crimmins. “Advice coming from a source with an outside perspective can bring valuable insights that encourage us to think differently.”

A top goal at the Evangelical Lutheran Good Samaritan Society in Sioux Falls, SD, is growth through the creation of new services—a perfect fit for entrepreneurial thinking. New employees, including innovation designers, are hired to develop these services. Many of these designers have experience as entrepreneurs or founders of startup businesses, or did similar work with large health-care providers. The team uses a human-centered design approach, which has been made famous by organizations like IDEO, to focus on the customer and add value to the customer experience.

“Having permission to experiment with potential new service concepts, at a small scale, and even conduct in-market tests, has proven invaluable in creating an entrepreneurial/startup culture,” comments Kelly Soyland, director of innovation and research for Evangelical Lutheran Good Samaritan Society. Soyland is part of Vivo, the Society’s in-house idea shop and innovation program.

“For example, being able to test just 1 community, and 10 or 20 customers, for 6 weeks, instead of a longitudinal study of 500 seniors that costs $3 million and takes 2 years to complete, is a process that is much closer to how entrepreneurs and providers can nimbly react and learn. Affordable learning with customers, and having some allowance for not having everything be perfect before we test, has been liberating, allowing us to move 5 or 6 times faster.”

When the board of Landis Homes, Lititz, PA, embarked on its strategic planning process in 2008, it began with the Appreciative Inquiry approach, and the board and leadership team contacted 150 key stakeholders of the stand-alone retirement community. This led to a strategic plan focusing on keeping Landis Homes strong and vital, but also expanding its mission in an entrepreneurial pursuit of new affordable living options serving those who do not have the resources for a retirement community, and pursuit of serving persons in their homes, wherever they choose to call home. The board also recognized the importance of creative partnerships with others in support of this mission.

This led to the creation of Landis Communities as an umbrella organization in late 2011. Guided by a very entrepreneurial board, the organization has since opened a market-rate urban loft senior living community, Steeple View Lofts, in partnership with Zamagias Properties, a Pittsburgh-based property developer. Welsh Mountain Home, an affordable personal care provider, affiliated with Landis Communities in 2013, and in 2015 we opened a low-income housing tax credit senior community, Mountain View Terrace, on the Welsh Mountain Home property. All this was done while continuing to increase services to those living in their own homes via Landis At Home and our adult day services.

Landis Communities actively seeks board members that are entrepreneurial. We also want board members who are strongly committed to learning more about the rapidly changing field. Seven of our 10 board members attended the LeadingAge Annual Meeting and Expo in Boston last year, and the lessons learned significantly shaped our board’s recent strategic visioning sessions. The leadership team and board work together to make sure all are clear about our mission and strategic direction, that we communicate it clearly, and that progress toward the organization's vision is realized a step at a time.

Board members include persons with considerable business and entrepreneurial experience. For example, 1 member is a private business owner who has owned and operated several retail home furnishing and commercial real estate enterprises, and who has served or currently serves on numerous boards of banks and other financial and economic development organizations. Another board member has over 30 years of extensive business management experience spanning agriculture, industrial and Internet executive positions. As an entrepreneur, he helped found 22 companies, including 6 IPO’s, raising over $4 billion dollars in capital. Another of our board members has served over 11 years as director of business development for a multistate developer of affordable senior and multifamily housing, and has additional years of experience in banking and real estate. Another has served as the chair of business or sociology departments, and as a professor in these areas, in several colleges across the United States.

Each of these board members, along with others representing health care, legal, business consulting, education and other professions, are committed to being innovative and incubating new models to support seniors in achieving their desired futures, and to pursuing our mission of following God’s call to creatively serve the diverse needs and interests of older adults by developing opportunities and collaborative relationships.

We contributed an article about these topics to the Listening Post Project of the Johns Hopkins University Center for Civil Society Studies.

- Written by Larry Zook, CEO of Landis Communities, Lititz, PA.

Entrepreneurship requires a board that supports creativity and is willing to accept a certain level of risk. It must accept that, although some ideas will not work out, the value of encouraging creativity outweighs the potential cost of occasional failures.

Establishing trust between senior management and the board is essential.

“The board needs to be flexible and have outside-the-box conversations early on to establish broad but actionable strategic directions, and then be willing to listen, engage and act quickly when innovative opportunities arise,” says Crimmins.

Trust between front-line employees and their managers is also critical for achieving the greatest innovation. Employees don’t expect their organization to implement every idea, but they do want to know why their ideas were or were not adopted. Open, honest discussion is the key for maintaining commitment to creativity, after ideas are rejected. “Even when ideas don’t work out, we still learn something from them,” adds Thorson. “We regroup together. And we always celebrate the wins—even small ones are important.”

Soyland emphasizes that dedicated resources and skill sets are required. “Not everyone is, or can be an entrepreneur, so we have to have the right DNA, experience and mindset,” he says. “For example, I would not make a great administrator, but I have come to learn that innovation is a great fit for me, and the passion I have to create.”

He has also learned that being an innovator is a full-time responsibility—it cannot be done effectively in a part-time role. This is especially true in a large organization, where being an entrepreneur can be challenging and complex—in part because large organizations are not geared toward taking risks or moving with speed. “They are also pretty good at killing ideas before they see the light of day, or before they can be tested with customers, because they represent risk,” he adds. “Therefore having methods to test ideas in a low-fidelity way that enables affordable learning are essential for building entrepreneurism.”

To have a meaningful entrepreneurial culture, organizations must be prepared to act on ideas that show promise. This requires investment of time and resources. Creating a strategy that balances the short-term need for quick wins with longer-term, more costly disruptive innovation can be challenging. “Really big ideas take years to accomplish, so organizational expectations and patience are key if this is the strategy,” says Soyland.

Changing from a traditional, compliance-oriented culture to an entrepreneurial culture typically requires a shift in the type of employees that are hired. This can create stress, as employees who are resistant to the entrepreneurial approach leave and new employees are hired. Once the talent is in place, Soyland suggests creating an entrepreneurial center “as a show of the organization’s commitment to the goal, as well as a space that designers and internal and external collaborators can thrive in The size of your ambition and strategy will determine the size of the budget you need to get started, and for each year thereafter.”

Developing an entrepreneurial culture is an ongoing process of improvement. Managers must maintain open-door policies, be visible on the floor and actively engage in the daily activities of the staff. Break down silos and encourage cross-departmental collaboration. Provide sensitive, constructive feedback to employees regarding their ideas. Monthly leadership motivational sessions are a good way to further leadership skills and keeps employees on track.

“Although there are some days where the basics seems to be difficult to conquer, most of the time we are dreaming about the possibilities, asking questions and trying new things,” says Thorson. “Team members develop into transformational leaders, and then these new leaders serve the followers and grow more leaders. I truly believe that embracing this philosophy is essential for creating an entrepreneurial spirit.”

Marquardt Village, a single-site life plan community in Watertown, WI, views entrepreneurialism as a necessity—a way to strengthen and grow itself for long-term survival.

The Marquardt Village board and management launched an 8-month strategic planning process in 2013.

“We realized that if we did not grow, if we did not take some risk we would not survive long-term,” says CEO Matt Mauthe. “We would lose our ability to access the capital markets, lose our ability to hire top-quality employees, and we realized we either need to start looking for someone to partner with or have someone acquire us, or we would need to take an aggressive posture and look for our own acquisition or merger opportunities.”

Hiring entrepreneurial staff and scouting out potential staff became a priority.

“We hired a COO, marketing staff, a business development officer, and created a management company,” says Mauthe. “We began to network very heavily with professionals in the field … people working in different business sectors so that once we have an opportunity that opens up, we can seize it, and they can come work for us so we can in essence build our bench strength.”

Marquardt Village has become very active in at-home services—home health, hospice, personal emergency response systems and supportive home care. According to Mauthe, the economics of home services require a healthy volume of clients to make them viable, the reason why Marquardt Village has, since 2012, acquired 2 home health agencies from nearby hospitals. The purchases allowed Marquardt at Home to increase its client list from 45 (in 2012) to 200 today. Its 4 offices serve 11 counties in southern Wisconsin.

One focus of entrepreneurial outreach for Marquardt Village is community management services. In 2015 it took over management of The Atrium, a retirement community in Racine, WI, that had filed for bankruptcy. Marquardt Village helped it restructure and has been managing the organization since, with the intent to purchase it at some point. Marquardt Village is pursuing more management contracts with faith-based not-for-profit providers in the near future.

Another venture, just launched in September, is Parasol Alliance, an IT company created by 5 not-for-profit providers in Illinois and Wisconsin. The company handles IT services for its founding members but plans to sell client services to other organizations as well.

If growing the organization is necessary to ensure survival, it also carries risk, especially if it aggressively seeks that growth. Mauthe says a mature attitude about failure, plus a “culture of planning” is what his organization has.

“We’ve had our fair share of what I’d call failures or misses,” Mauthe says. “But I’ve been thankful for that because it’s helped us stay grounded and learn from mistakes, and helped the executive team to become a closer unit working together.

“The other thing is that we have a culture of planning,” he adds. “We do a significant amount of strategic planning and operational planning. We have our overall strategic plan and from that every year we pull out 3 to 5 operational goals. That allows us not to ebb and flow so much.”

Mauthe says his organization does careful root-cause analysis of every new program it considers.

“At the end of the day we still make mistakes. We don’t hide from them, we’re not ashamed of them and we recognize we will make them.”

- Gene Mitchell