Changemaker Dale Watchowski has more than 30 years of real estate expertise in both local and national platforms, with a diverse background in acquisitions, development, capital markets and operations. He has also held senior management positions at some of the nation’s largest financial institutions including Travelers/Citigroup, HSBC, and J.P. Morgan Chase, and he currently serves as president and CEO of American House and its parent company REDICO, in addition to others.
Through the Changemakers series, Watchowski talks through his transition from commercial real estate to senior living and explains the lessons he has taken from that experience. He talks about how change has enabled him to build a strong leadership team, and he also discusses the key factors that differentiate his companies and his leadership style from others in the industry.
As you think back on your career in senior living, what changes have you driven that you’re especially proud of?
When I came into the senior housing business in 2008, we started as a small mom-and-pop. Within our American House business, we acquired 13 communities, starting in southeast Michigan. My objective was to grow the business through development and acquisition, both of which I was very familiar with from running a commercial real estate business as well, REDICO.
The second objective was to achieve measured growth geographically. And the third was being able to accommodate higher levels of acuity. Initially, we were offering independent living communities to residents who weren’t receiving services. But since then, we’ve accomplished all three of those objectives. We have grown the business to 72 communities with the completion of our current developments, and we have grown into new markets that were initially targeted as well.
Those markets started with growth throughout Michigan and the Midwest, moving down into Florida, with the intent to move into the Northeast (New Hampshire and Maine) and then into Tennessee and the Carolinas. We will continue our growth from the south to the north to expand on the Atlantic seaboard. The reason for our geographic growth strategy was to plug American House into the eastern seaboard. Our objective was not to spread ourselves throughout the country, but to spread ourselves out throughout adjacent markets.
I’m proud that we achieved the growth objective and we built a tremendous team to get there. Our initial team had much less institutional character and focus on the level of acuity that our current residents require.
Our team today is responsive to the needs of our residents and the acuity that we’ve added to the portfolio. We built our team around four areas of focus: clinical/wellness, life enrichment/hospitality, culinary, and marketing and sales. From there, we were able to build the business around each of those four pillars. That has enabled us to accomplish what has put us where we are today, especially through the pandemic, and I’m proud of all of them.
How have you changed as a leader since you’ve joined American House?
I’ve always seen myself as an investor in real estate, as REDICO is the parent company of American House. REDICO is an acronym for Real Estate Development Investment Company, and throughout my career I’ve been investing in real estate and operating real estate. But the business of senior housing requires much more than that. Of course, you need financial discipline and some institutional character, but the business of serving and caring for seniors has to be top of mind and for me, it’s always felt philanthropic.
I often refer to it as my calling, and it certainly was an unexpected calling because I came into this industry trying to identify a recession-proof business back in 2008. I’ve changed a great deal since then, and I have found my heart in a way that I never expected.
Do you see yourself as a Changemaker, and are you always excited to direct change, even when it is difficult?
Yes, absolutely. I’m always looking for ways to better the business. I’m not looking for the tried and true, I’m looking for the best practices in the industry. At any given point in time, we are looking to identify how our business can best morph to serve the needs of our customers. In the senior space, that changes constantly. Right now, our focus is on acuity and pricing, and we have to rethink the way we do things. Just because we’ve done things a certain way historically doesn’t mean that it makes sense to keep doing them the same way. I think many people make that mistake in this industry.
We need to continue to evolve, and I encourage all the members of my executive committee throughout our four companies to be disruptive, think entrepreneurially and bring new ideas to the table. That is our differentiator.
Do you think the senior living industry is changing fast enough to keep up with the times?
The industry has done a great job of changing with the times. I have to reflect back on when I came into the business in 2008, when our average age was 76. Our average age in our communities now is 84, and we have morphed to meet the needs of our residents. I look to the industry associations I’ve been affiliated with, or involved like Argentum, ASHA, and ULI Senior Housing Council, where I’ve come back from each meeting energized by some of the great ideas in this space. I’m proud to be part of an industry with such great people doing great things.
Talk about a time when you tried to execute a change and things didn’t go according to plan? How did you pivot and what did you learn as a leader?
About four years ago, we tried to ignite a model based on hospitality trends. We hired leaders who were very skilled in hospitality, and what we found was that we needed a more healthcare centric model. The thought of proving hospitality was great, but our residents were coming in older with greater health and clinical needs. We then course corrected and made leadership changes, as well as modified our strategy as a whole. This became the foundation of the leadership team we have in place today, having pivoted to a great COO, Brianne Zitko, who was promoted from within the organization.
Brianne has had a long career in senior living, both in operations and most recently in sales and marketing. She is focused on serving the needs of our senior population from a health care perspective, balancing operational excellence and hospitality simultaneously. We were able to course correct very quickly and it worked for us.
How do you innovate without getting so far ahead of the market that a new idea just doesn’t work?
Timing of innovation is one of the key success factors for innovation. It is important not to be too early, nor to be too late.
In order to benefit from innovation, you need the benefit of the economies and scale. Too small and you may find yourself lacking in financial resources, too large could result in the loss of personalized programming. Our programs are centered around our pillars (Wellness, Culinary, Life Enrichment), and overseen by our executive directors who are dedicated to resident care. It has been our intent to innovate through business units that complement the executive directors initiative for caring for people.
We’ve innovated through business units which we formed outside of American House to serve the needs of our business. A couple of examples include Continuum Services, whose time is spent entirely on bricks and mortar where they manage facilities within our communities and GO +, our internal marketing agency, which replaced our previous model of being outsourced. And timing played an important role for both businesses.
Do you agree that Changemakers tend to be risk-takers, and how do you describe your own appetite for risk?
My appetite for risk is very low, oddly enough. To be a Changemaker, you don’t necessarily have to embrace risk. Sometimes I believe that doing nothing is the biggest risk. You, of course, have to be focused on change, but my focus happens to be on risk mitigation. It probably differentiates me from most developers and, oftentimes I’ve been referred to as the guy whose glass is half empty rather than half full when other developers tend to be a bit more aggressive in strategy. I don’t necessarily believe that you have to be a risk-taker to be a Changemaker.