Over the course of a decade, John Cochrane has led the creation of HumanGood, earning the status of changemaker by cementing the organization’s status as a senior living industry innovator.
Pleasanton, California-based HumanGood initially was created through the 2015 affiliation of be.group and American Baptist Homes of the West (ABHOW), which came together to create one of the largest senior living organizations on the West Coast. Then, last year, HumanGood expanded to the East Coast through the affiliation with Presby’s Inspired Life.
HumanGood’s growth reflects Cochrane’s belief that nonprofits must scale up — and fast — in order to remain successful in the face of increasing for-profit competition and market disruption. He is passionate in making the case for nonprofit senior living providers to move more quickly than they often do. And Cochrane has demonstrated that rapid change is possible, leading HumanGood through its affiliations, creative approach to branding, pursuit of a middle-market model, and toward new ways of meeting the evolving U.S. health care system and reimagining the continuing care retirement community (CCRC).
First, this year has brought unprecedented change. How has HumanGood responded?
The pandemic has changed the world, bringing new challenges on how to protect our communities, team members and residents.
Operationally, we have sharpened our focus on infection control protocols, communications and technology solutions. The pandemic has shined a big spotlight on our ability to operate safely while continuing to provide an on-brand experience in this dynamic environment.
One of the biggest changes we have made, and continue to refine, is to tracking and testing for COVID-19. The ability to trace and test will impact our industry’s ability to provide the services, and care, that can help our residents and team members live their best lives. HumanGood’s testing capabilities have increased significantly. We have improved not only our ability to provide and conduct tests, but also our ability to track testing data and use it to help our operations — this will be one of the longer lasting changes that we think the pandemic has brought to the industry overall.
Now looking back, what’s a change you’re most proud of during the course of your career?
I wouldn’t point to any one change and say I’m most proud of that. What I would point to as what I’m most proud of is how our team has managed effective change in a disruptive environment, and their willingness to rethink core tenets of our business in our field. I really admire that about them.
I think developing that muscle — both the willingness to change inside and a depth with dealing with change from all angles — is a critical business skill for effective leadership both within the company and within our field. I’m really proud of my team for embracing that.
Are there specific things that you think you’ve been able to do or traits you have as a leader that have allowed your team to be able to manage all the changes in recent years?
I think an essential leadership tool is helping people understand the context within which change is occurring — the positive possibilities that come in that context, and the negative ramifications that come if we don’t adapt to disruptive times and help give them the skills and the tools and the equipment they need to effectively manage that change.
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Then, I think one of the essential leadership traits is cheerleading. It’s the ability to help people understand where we need to go, help them understand what it’s going to take to get there, what the rewards are going to be when we get there, what the cost is if we don’t get there, and then help keep people focused on getting up the mountain.
It’s hard to see the disruption going on within your own field. We’re in the weeds every day, we’re on the ground, and it’s really hard to see the big picture. One of the things that I find helpful is to use analogies and examples from outside our field. People can relate to those. I often talk about IBM and Kodak. Kodak was a company facing enormous disruption. It should have been positive disruption since they owned all the patents on their disruptive technology, but they couldn’t get out of their own way of what they were doing.
I use Kodak as an example of, here’s what happens when you have positive disruption if you don’t adapt. When people understand the analogy, then they can apply it to their own circumstances and say, “Wow, I see some of those similar dynamics going on in my business and in my industry. How do I respond, so that we don’t end up being Kodak?”
Aside from the disruption caused by Covid-19, can you describe a couple of the major disruptive forces that are working on the industry?
Yes. It’s a challenge because there are so many disruptive forces coming at us. We see huge disruptions coming just from the demographics of the aging population. We see huge disruption coming in terms of how we age and how we view aging and how we prepare for aging.
From the consumer side, I think there is enormous disruption coming up. We know we need something, but it isn’t what we’re currently offering — but we should be equipped to offer it.
Health care has changed more in the last three years than in my first 25 years in this field. I worry a little bit because I think we get into a rut and it’s hard to get out. We’re seeing health care having a dramatic change on our field in creating what I would refer to as possible destructive influence.
It’s hard to see the disruption going on within your own field.
We’re also seeing labor challenges in our own company, in our individual markets. We’re seeing it across our field, and those labor pressures are not going to go away. The one-size-fits-all approach that we’re taking is not going to solve these challenges.
How we hire, how we engage, how we develop, how we retain people is going to be different. Much like we have to individualize the resident experience, we need to customize and individualize the team member experience. Because the 16-year old that we need to attract into our field is a very different profile than the truck driver who’s been displaced from a job and needs to find a new career, who has a very different profile from the person who stepped out to raise a family and is now stepping back into the workforce, who has a very different profile than a 65-year-old. Every one of those profiles has a unique approach to how we’re going to manage, engage, reward and retain that demographic of the labor force.
Can you talk through some of the change initiatives underway at HumanGood?
I’ve been here just over 10 years, which is an interesting time to start looking back and say, “What did we come through? Where was it successful? Where were we less successful? What would I do differently? More importantly, how do I take what I learned for the last 10 years and then apply going forward?”
Ten years ago, if you remember, and most of your readers probably won’t want to, we were coming out of the Great Recession. There were enormous financial pressures on the business when I came in, and so much so that some of my colleagues were taking bets 10 years ago on how long it would be that we could remain as an independent entity.
Everyone in the field was under stress.
We were just starting to see some of those core economic pressures alleviate as we came out of the recession, but some of them weren’t. There were institutional and embedded issues with the field that needed to be addressed. We did a couple of things. One is we reorganized the company to achieve greater efficiencies and to have greater accountability. We also began talking with our board and constituency groups, including our residents, about the need for this field to consolidate and come together. We needed the strength that came from scale.
I started planting those seeds with our board, and they were willing to execute on it. Understanding what you need to do and getting it done are often two different things. Talking about embracing disruption as an abstract principle is easy in a conversation in a boardroom, it’s much harder when it gets to executing it on the ground. Our board and our leadership team understood that.
In a curious way, I think that the economic crisis was a turning point for the industry, and certainly for our company, in creating urgency and creating the need for clarity and accountability. Looking back, that’s where we really started in this strategy of looking at consumer experience, looking at the team member experience, looking at our business practices and consolidation. That’s where a lot of what we’re doing today started, more than 10 years ago.
One of the things you did in that period was to rebrand to be.group, which was an early example of an unconventional branding. And then you created the HumanGood brand after affiliating with ABHOW. Why did you see that as an imperative?
One of the things that I heard coming into what was then Southern California Presbyterian Homes is, “Oh yes, we talk about change, we all sign up for it enthusiastically, and nothing happens.” The surest way to signal something was going to happen was to change the name from Southern California Presbyterian Homes to be.group. That was important in the market. It’s important to telling the story of where our strategy was going.
I think the most important element of that shift was really resetting the expectation around, “Oh my goodness, they’re serious.” I really needed that cultural shift to occur for people to realize, when I say we’re going from point A to point B, we are going to point B and here’s the first irreversible step that’s real.
A HumanGood rebrand was done for a different reason and that was to unite ABHOW and be.group and [drive] the united future that was built on the strength of both legacy organizations, but was a new organization. It was really important to break away from this idea of legacy that was prevalent in both organizations.
Curiously enough, when we did the Presby’s affiliation, that had a more powerful and positive change on the dynamic than I could have ever imagined. I think it totally shifted away from this binary, legacy be.group, legacy ABHOW, to now this third party in the mix. It’s really curious, and I think my entire team would tell you this, with that next affiliation it totally shifted the dynamic away from any legacy reference, so now it’s just HumanGood. We are building the HumanGood brand with the HumanGood story and that was the most positive, somewhat unanticipated benefit of that affiliation.
Can you talk about the background of the ABHOW and Presby’s mergers? Are you seeing the benefits that you anticipated?
I would say we’re seeing huge benefits. One is there’s a cultural sense from the team member perspective [that] we’ve talked about growth, and we’re really doing it. We’re doing it in an industry-leading way, and so there’s an excitement to that that occurs with the team. That is valuable as you try to navigate disruption.
Then there are a bunch of financial benefits and costs of putting companies together. We’ve also seen enormous benefits in terms of attracting staff. From a leadership perspective, and I think even from an early entry perspective, we are attracting and hiring people who would not have come to either legacy organization. Number one, because we couldn’t have afforded them, two, because we didn’t have a story to attract them.
Similarly, the scale allows us to bring resources to the table, to strengthen our core business of our life plan communities, which is important. We can improve our storytelling, for example, and bring in resources to that storytelling that we didn’t have available to us as a small organization.
We operate 21 life plan communities and 95 affordable communities. We now have the scale and the geographic presence to improve our advocacy efforts, because we serve 8,500 people in affordable housing. That’s a reasonable slice of that population. When we come to the advocacy table we [now] have a louder voice in a bigger boat.
Two, I think the assumption is if we can show something works across our 95 communities, we can then deploy that in the industry and take that to other organizations.
You brought up earlier that consumer expectations are changing and the product that’s offered needs to keep up with that. What do you foresee those expectations being and how do the CCRC and senior living product in general need to adapt?
Part of it is we need to move away from the model where we put the seniors by themselves and call them seniors and we build a wall. I think the marketplace is looking for some intergenerational component. It could be a residential intergenerational component, it could be an interactive and programmatic intergenerational component … We don’t segregate our lives by age almost anywhere else, and we need to stop doing it when we’re 65.
I think people are engaging with aging in a very different way. How do we help people connect to purpose? It may look like different things, but I think the consumer’s looking for something more than, “I want to move in and I want you to do everything for me.” That’s not what people are looking for.
We may reach a place where we have needs and those needs need to be met. That’s fine, but people still want purpose, they want connection, and they want involvement. I think we have to fundamentally rethink how we program and how we price and even how we design our communities.
In the past you’ve talked about the need to segment the middle market. Where are you in terms of creating that middle-market model?
There are multiple markets that will be served with multiple solutions, and we’re starting to see that. There’s the upper-end slice [people are talking a lot about], but there are a whole lot of others who are looking for meaning, purpose and engagement, but who don’t want or can’t afford to move into this community. What does that look like or what does the more affordable community look like?
I think there are going to be technology solutions that reach the middle markets, with different solutions in everything from lifestyle engagement to health care management. You see Minka Homes and what Dr. Bill Thomas is doing; this idea of creating these micro-communities with the sense of, it’s not just housing but creating a social community.
As we look at our existing portfolio, we’re building affordable housing, operating it successfully, and providing service coordination that allows services to be brought into and connected to our residents in a really cost-effective way. We have a development team that I think is the best in the business of building affordable housing. We are experts at it, we know what we’re doing, we’ve been doing it for 30-plus years.
We’re just too afraid of losing.
As we look at a residential component in the middle market and we look at some of our most successful low-income properties, the question we’ve asked is, “Can we take that model and adapt that to a market rate, lower middle-income market?” We think the answer is yes. We’re just now trying to work with architects to figure out the components. The big question is, how do you make it financially viable and financially stable? We’re shifting pieces around between retail and commercial and residential, and in service. How does this all fit together? What are the components of a successful community? Where can we do this? What do we need to get the land acquisitions? We’re actively exploring that. I think we’ll have something ready to propose by the end of this year.
There’s a lot of talk about Medicare Advantage and how it can play a role. Is that something that you’re thinking about?
We are actively exploring Medicare Advantage plans, whether we own our own, whether we start our own, whether we partner with someone else. The least attractive model probably is we just contract for someone else’s plan, because I think that leaves you lacking control.
We’re also working with someone who led innovation at Stanford Health to help us understand what a clinical model looks like, for bringing clinical care into communities so people have early access to the preventive care — that is a key component of Medicare Advantage, but also frankly outside of Medicare Advantage it’s just the key component of living well. This is one of the disruptive shifts that we’re seeing that I think is hugely positive, which is moving away from this fee for service, you-break-it-then-we-fix-it model to, “Okay, we want you not to break it in the first place.”
Do you subscribe to the fail-fast mentality?
Totally, absolutely. Understand what you’re looking for, understand the expected outcomes, be willing to cut your losses and move away and step back. This is actually an important lesson for our field; that if we’re not good at this, we live in fear of failure more than we’re excited by opportunity and achievement.
As a consequence, we don’t take the risks we ought to be taking. We’re just too afraid of losing. We’ve got to get comfortable with some degree of failure or we are never going to get up the mountain.
Do you think the senior living industry is changing fast enough?
Not at all. I think the industry can and must move faster to anticipate and embrace change, and the numbers tell the story. If you look at metrics like market penetration, market share and occupancy, you can see that we have to adapt and embrace operating models that are different, more innovative, and more responsive to customer’s needs, expectations and desires.
We’ve got to double down and be willing to embrace change, and adapt and embrace models of operating that are different than we have in the past.
You talked about this being a period of positive change for those who can embrace it. Again looking past Covid-19 for the moment, is there anything on the horizon that makes you worried about negative disruption?
Our disruption is not going to come from within the room. It’s going to come from the outside. It’s going to come from somebody that we’re not paying any attention to, because we think they’re not paying attention to our field, and they’re going to come from outside.
They’re going to see something we don’t see and they’re going to nibble away at the edges. They’re going to be so far in the fringe of our business that we’re going to discount them. That’s where they’re going to build their strength, and when we realize the inroad into our business, by the time they move in, it’s too late for us.
We’ve got to watch out for that. We can learn from looking at the innovations within our field, but one eye has to be looking at what’s going on at the fringes of our field.
We’ve got to pay attention to what those folks [like Amazon] are doing. They still won’t know our market better than we do, but that will change if we’re not careful.